UAW corruption scandal nears milestone with Jones plea

Detroit — Gary Jones on Wednesday will become the first president of the United Auto Workers convicted of racketeering and embezzlement during a years-long crackdown on corruption. But he won’t necessarily be the last as several labor leaders remain under criminal investigation.

Jones, 63, is scheduled to plead guilty at 2 p.m in federal court. The move solidifies a milestone conviction as part of a plea deal expected to require ongoing cooperation with the investigation of a racketeering conspiracy that prosecutors say involves his predecessor, retired UAW President Dennis Williams. 

“This is a real black eye for the union,” said Peter Henning, a Wayne State University law professor and former federal prosecutor. “Jones could help (investigators) quite a bit in pointing out where there were violations.”

In return for any cooperation, Jones could receive a lighter prison sentence. The embezzlement and conspiracy charges he is facing are punishable by up to five years in federal prison.

Some UAW members said they would like Jones to receive the maximum penalty, but they also hope a plea deal can be used to rid the union of other corruption. Thirteen people have been convicted as a result of the federal investigation into union corruption, and a movement among the rank-and-file seeks to transform how elections of international leaders are held.

“I hope the despicable coward takes as many corrupt union officials with him as possible,” said John Barbosa, a 49-year-old block machining line team leader at Fiat Chrysler Automobiles NV’s Dundee Engine plant. “I hope he sings like a bird. I feel the slate needs to be wiped clean.

“A culture takes time to develop. Anyone who is currently in office is exposed and brought up in that corrupt culture. They need to be removed, and put in a new honest and transparent culture that gives the power to the membership.”

The cooperation of Jones comes as prosecutors consider seizing control of the UAW by filing a civil racketeering lawsuit, and as the union copes with a burgeoning scandal involving sexual harassment allegations against top labor leaders. Seizing control under civil racketeering law would give the government broad control of UAW operations, including the ability to fire senior officers and to enable rank-and-file members to directly elect new leaders.

Meanwhile, U.S. Attorney Matthew Schneider’s spokeswoman Tuesday said the region’s top federal law enforcement officer is trying to arrange a meeting with UAW President Rory Gamble as part of union efforts to avoid government takeover. The meeting has been delayed by COVID-19 stay-at-home restrictions, some of which were lifted by Gov. Gretchen Whitmer on Monday.

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U.S. Attorney Matthew Schneider talks about the ongoing corruption case involving leaders of the UAW The Detroit News

Gamble offered to meet with the U.S. Attorney after Schneider criticized his attempts at reform and faulted labor leaders for failing to cooperate. Gamble’s agreement to meet carries risks, legal experts said, considering agents are probing ties between Gamble and one of the union’s highest-paid vendors as well as whether labor leaders received bribes.

Agent are investigating allegations of strip club payoffs to union leaders in exchange for contracts to supply union-branded merchandise, sources told The Detroit News, as well as financial ties between Gamble, retired Vice President Jimmy Settles and one of the union’s highest-paid vendors. Gamble has denied wrongdoing, and a lawyer representing Settles declined comment.

Some UAW members say they believe in and support Gamble’s leadership.

“He’s a people person,” said Julian Wyatt, a 30-year-old machinist at General Motors Co.’s Romulus Engine plant who has known Gamble for years through labor activism. “He has the same background as far as working in the plant and working on the line. He knows the frustrations of the employees. He doesn’t have the boss mentality.”

Others, including a group inside the UAW known as Unite All Workers for Democracy, are calling for members to directly elected officers to the governing International Executive Board.

“The same group has been in power for 70-some years,” said Scott Houldieson, a 58-year-old electrician for Ford Motor Co. who help found Unite All Workers for Democracy. “We need strong checks and balances put in. The membership can be that check for their power. Under the current circumstances, that is not possible.”

A team of federal agents from the FBI, Internal Revenue Service and Labor Department has spent at least five years investigating a range of potential criminal activity, including racketeering, embezzlement, labor law violations and bribery.

In charging Jones, prosecutors accused him of conspiring with six other UAW officials to embezzle union money spent on personal luxuries, including private villas in California, liquor and cigars. The list of officials includes former regional Director Vance Pearson and UAW official Nick Robinson, both of whom have pleaded guilty and cooperated with investigators.

The racketeering conspiracy described by prosecutors also included labor leaders identified in the Jones plea deal as “UAW Official B,” “UAW Official C,” “UAW Official D” and “UAW Official E.”

Sources told The News the officials, who have not been charged with wrongdoing, are:

• “UAW Official B” is Williams, the former union president who retired in 2018. Agents are investigating whether Detroit automakers indirectly paid to build a lakefront home for Williams at the UAW’s northern Michigan resort.

Williams was implicated in the scandal in 2018 when a former labor official told prosecutors Williams directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.

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Tour golf courses and resorts frequented by UAW officials in Palm Springs, Calif., where the union has spent more than $1 million in recent years. The Detroit News

The former UAW official, Nancy Adams Johnson, told investigators Williams issued the directive to relieve pressure on the union’s budget.

Federal agents raided his California home in August and the lakefront retirement home as part of a series of nationwide raids targeting UAW leaders. Williams was outside his new $610,000 home near Los Angeles, smoking a cigar while awaiting agents, who later held him at gunpoint before handcuffing the retired labor leader, sources told The News.

• UAW Official C” is Danny Trull, a former Jones aide. Trull served as Jones’ deputy overseeing a 17-state regional office based in Missouri and retired in late 2015. He was accused in the criminal complaint against Pearson that outlined a scheme to use member dues to pay for golf, meals and shopping in Palm Springs and trying to conceal the expenses, including $400 bottles of Louis Roederer Cristal Champagne.

• “UAW Official D” is Amy Loasching. Federal agents raided the former Williams aide’s home in Wisconsin in August. UAW funds paid for private villas for Loasching in California from 2014-16, including one villa rented for 67 days at a cost of more than $11,000, according to the Pearson complaint.

The rental overlapped with a villa leased for Williams nearby that cost more than $15,000, prosecutors said.

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The government also alleges Loasching bought $1,000 worth of golf apparel and equipment at a pro shop in Palm Springs and put the purchases on Jones’ tab. Prosecutors say the purchases were part of a broader pattern of UAW officials spending union money and training funds from auto companies on personal luxuries.

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Jones will be the 14th person to plead guilty to federal crimes as part of the government crackdown on auto industry and UAW corruption. The list of convicted officials includes former UAW Vice Presidents Norwood Jewell and Joe Ashton, both of whom served on the union’s governing board.

Current members of the UAW executive board are embroiled in a separate scandal involving sexual harassment allegations.

Regional Director Richard Rankin made a “sexually violent threat” to a woman in the workplace in 2015 in response to complaints about inappropriate jokes and comments he had made, according to internal charges issued by the UAW board. The UAW is trying to remove him from office following an investigation.

And last week, a high-ranking female UAW officer filed a sex harassment lawsuit against the UAW and several officials, including Vice President Gerald Kariem. Patricia Morris-Gibson accused three union leaders of sexual harassment, including grabbing, kissing and propositioning her in recent years.

“The sexual harassment allegations are something the government can point to and say the union is out of control,” Henning said. “If the government can show that there was a pattern of sexual harassment in the union, that’s going to help if prosecutors want to bring a RICO lawsuit.”

rsnell@detroitnews.com

Twitter: @robertsnellnews

bnoble@detroitnews.com

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