It’s official: The United Auto Workers has been declared a racket. On January 6, recently departed UAW President Gary Jones (in photo) and his immediate predecessor, Dennis Williams, were cited, albeit under assumed names, in Detroit federal court as participants in a racketeering enterprise. The designation was part of a new charge against Vance Pearson, former director of a major regional affiliate and a member of the union’s international executive board, of embezzlement conspiracy. U.S. Attorney Matthew Schneider had been hinting at such action these last few months. Jones had resigned his post under pressure in November. The actions follow a joint probe by the FBI, the IRS and the Labor Department’s Office of Labor-Management Standards and Office of Inspector General.
Union Corruption Update more than once has covered this scandal, the details of which provide a hard look into how the Detroit-based union, with around 400,000 active members, does business with its vendors. So far, the investigation has yielded guilty pleas from three former UAW officials. One of those persons, Michael Grimes, had been an administrative assistant to current UAW Vice President Cindy Estrada until his retirement in 2014. For several years, he exacted a price on his clients if they wanted to do business with the union. According to prosecutors, Grimes engaged in honest services fraud and money laundering in shaking down union vendors for a combined $2 million in payments in exchange for contracts to produce nearly $16 million in union-logo clothing and sundry items. He allegedly pocketed around $1.5 million of that $2 million. He was charged last August, and pleaded guilty in September. Another union official, Jeff Pietrzyk, pleaded guilty in October to honest services fraud and money-laundering related to his acceptance of almost $125,000 in vendor bribes and kickbacks.
Connected to all this is the third convicted defendant, Joe Ashton, a union vice president until 2014, and after that, the UAW retirement plan representative on the General Motors board of directors until December 2017. Like Grimes, he extracted a price for his favors. Charging documents indicate that several union vendors, which included his personal chiropractor, received UAW contracts to produce union-branded items after they had given him the requisite payola. He pleaded guilty this past December 4 to conspiracy to commit wire fraud and money laundering. Each became a target of an investigation following federal raids last August of various UAW workplaces and private homes. Among the sites searched were the homes of President Gary Jones and his immediate predecessor, Dennis Williams. This led to federal indictments, the most recent of which were handed down on January 6. Jones and Williams were mentioned in the charges, respectively, as “UAW Official A” and “Union Official B.”
Whether or not either former chieftain is convicted may depend heavily on testimony from another union official, Vance Pearson. Until his resignation on November 20, Pearson headed United Auto Workers Region 5, which covers a large swath of the U.S. and is based in the St. Louis suburb of Hazelwood, Mo. His indictment a few weeks ago augments charges filed against him in September for conspiring with several unnamed persons to embezzle, defraud and launder hundreds of thousands of dollars from the UAW. He and other union officials allegedly submitted numerous fraudulent requests during 2014-18 to Detroit headquarters for reimbursement of travel, lodging and other expenses related to conferences and training sessions that were little more than pretexts for covering personal expenses, especially related to golf and cigars. The new charges accuse Pearson of submitting fraudulent vouchers totaling more than $32,000 during June and November of 2016. The indictment also cites fake reimbursements filed by six other union members. Five of these persons are listed under pseudonyms, but the sixth is Edward “Nick” Robinson, president of the Hazelwood, Mo.-based UAW Midwest Community Action Program Council. Robinson already had been charged on October 31 with obtaining roughly $1.5 million in phony reimbursements and splitting large portions of the money with “Union Official A” and “Union Official B” – that is to say, former Presidents Gary Jones and Dennis Williams.
The feds clearly view Pearson and Robinson, each a mid-level union official, as a means of getting at the top of the UAW food chain. Pearson, in fact, succeeded Jones as Region 5 director when the latter became president in June 2018. And Robinson allegedly met with Pearson and Jones to discuss a job for one of the former’s relatives, the need to use “burner” phones to evade federal surveillance, and the need to destroy potentially incriminating evidence. Prosecutors say Jones received $93,000 in stolen cash from Robinson and deposited the funds in a personal bank account. A plea deal almost certainly would involve Pearson and Robinson becoming cooperating witnesses, which is about the last thing current and former higher-ups want.
It’s likely that when the dust settles in the Department of Justice’s nearly three-year investigation of United Auto Workers corruption, the result will be a federal takeover. The charges of January 6 represent the first time that prosecutors have referred to the union as a racketeering enterprise. “Using the term ‘racketeering’ shows that the government may not stop with indictments and convictions of individual union leaders,” said Erik Gordon, a business professor at the University of Michigan. If prosecutors conclude that corruption is endemic to the union, he noted, that could lead to the government putting the union “in some de facto trusteeship so that all of the leaders can be swept out.” Andrew Kochanowski, a Detroit-area attorney with extensive experience in civil racketeering suits, likewise remarked, “(I)f they use the term ‘racketeering enterprise,’ that could be a signal that the union itself is becoming part of the probe.” To its credit, the union isn’t mobbed-up, as the Teamsters long had been until its racketeering consent decree with DOJ in back 1989. But that might not be enough for the UAW to retain its independence.