A former Fiat Chrysler Automobiles NV labor negotiator accused of pocketing employee training funds to pay for a Ferrari and solid-gold Mont Blanc pens has been indicted by a federal grand jury for allegedly conspiring to give $1.2 million in money and goods to officers and employees of the United Auto Workers.
Alphons Iacobelli, 57, of Rochester Hills, who abruptly left FCA a month before the start of 2015 UAW contract negotiations, has been charged with criminal violations of the Labor Management Relations Act.
Also charged was local businesswoman and photographer Monica Morgan, 54, of Harrison Township, whose $262,000 mortgage allegedly was paid off through the scheme. She is the wife of the late General Holiefield, a UAW vice president who died in March 2015. From 2008 through June 2014 he was the top negotiator for the UAW with Chrysler.
Morgan was charged with conspiracy for violations of the act, which prohibits employers or those working for them from giving money or valuables to officers or employees of labor organizations – and vice versa – for labor union representatives.
Iacobelli was vice president for employee relations at FCA, where he had worked since 1993. Fiat Chrysler said in June 2015 he had decided to retire, but on Wednesday the company said he had been fired.
General Motors Co. hired Iacobelli in January 2016 as executive director of labor relations. A GM spokesman declined to comment on Iacobelli’s employment status.
Jerome Durden, 61, of Rochester was charged separately with conspiracy to defraud the U.S. He was a financial analyst with FCA’s corporate accounting department and from 2008 through 2015 was controller of the UAW-Chrysler National Training Center.
FCA said it intends to pursue “all potential legal remedies” against Iacobelli and any others involved.
“FCA US and the UAW were the victims of malfeasance by certain of their respective employees that held roles at the National Training Center, an independent legal entity. These egregious acts were neither known to nor sanctioned by FCA US,” the company said in the statement. “Upon learning of possible malfeasance in June 2015, the company investigated the matter and, as a result, Mr. Iacobelli and Mr. Durden were promptly separated from the company upon FCA US obtaining credible evidence of wrongdoing.”
UAW President Dennis Williams in a statement said the union is “appalled” by the allegations in the indictment. It has hired external counsel to conduct an internal investigation into the allegations.
“The UAW had absolutely no knowledge of the fraudulent activities detailed in this indictment until they were brought to our attention by the government,” Williams said. “We nevertheless take responsibility for not doing more to exert our influence over the governance policies of the NTC, which might have uncovered this corruption sooner.”
The indictment charges Iacobelli and others associated with FCA for making more than $1.2 million in prohibited payments from 2009 to 2014 to Morgan, Holiefield and others. The indictment claims money went toward designer clothing, jewelry, furniture – and paying off a $262,219 mortgage on the home of Holiefield and Morgan.
Authorities say the payments came from a bank account and credit cards from the UAW-Chrysler National Training Center in Detroit, which provides training for union FCA employees.
FCA finances the training center, which from 2009 to 2014 received $13 million to $31 million per year, according to court filings. The government alleges Iacobelli, Durden and two other unnamed people controlled the finances and spending at the training center.
Iacobelli also has been charged with tax violations related to diverting more than $1 million of funds from the UAW-Chrysler center for his own benefit and using them to pay for a $350,000 2013 Ferrari 458 Spider; lease of a private jet; two limited-edition solid-gold Mont Blanc fountain pens costing $37,500 apiece; nearly $100,000 for a swimming pool, outdoor kitchen and outdoor spa at his Rochester Hills home; and landscaping. There were hundreds of thousands dollars of personal credit card expenses, and a relative’s student loan was paid off.
Morgan was also charged with using companies including Monica Morgan Photography, Wilson’s Diversified Products and a third entity to hide FCA payments made by Iacobelli and others to Holiefield – and for failing to report that income on her individual tax returns.
The filing alleges some payments from FCA to Holiefield were funded through the nonprofit Leave the Light on Foundation in Detroit, which was controlled by Holiefield. Tax records indicate that the group supported youth organizations and education.
The court filing says between July 2009 and May 2011, more than $150,000 was given to the foundation through the training center, including payments of more than $70,000 to Monica Morgan Photography for Morgan’s spending at retailers, night clubs and restaurants. Durden was foundation treasurer from 2009-14.
Court documents indicate that in 2011, former UAW President Bob King confronted Holiefield and Iacobelli for selecting Morgan as a vendor for the training center and Holiefield’s foundation.
“During a face-to-face meeting in Auburn Hills, Michigan, the UAW president warned Holiefield and Iacobelli that paying Monica Morgan was a bad idea and that they could ‘go to jail’ and instructed them not to direct any additional business to Monica Morgan,” according to the filing.
King and other UAW senior officials began to look into the spending involving the training center, the foundation and Morgan in October 2013, according to court documents.
Durden said he, Iacobelli and others created a spending policy for training center credit cards to keep senior members of the UAW’s Chrysler department “fat, dumb and happy,” according to the filing. Durden also personally collected credit card statements for Holiefield and other UAW officials at the training center offices and was instructed (by an unnamed FCA employee) to take steps to conceal training center expenditures that benefited UAW officials that could “raise eyebrows,” court records say.
Morgan’s lawyer, Steve Fishman, declined comment Wednesday. Iacobelli’s lawyer, David DuMouchel, also declined to comment.
Durden was charged in a criminal “information,” which typically means a guilty plea is expected. His lawyer declined comment Wednesday.
“Today’s indictment exposes a disturbing criminal collaboration that was ongoing for years between high ranking officials of FCA and the UAW,” David P. Gelios, special agent in charge of the Detroit Division of the Federal Bureau of Investigation, said in a statement: “The funds misapplied deprived working men and women of critical workforce and professional development opportunities and calls into question the integrity of contracts negotiated during the course of this criminal conspiracy.”
Morgan has a history of financial problems. Since 2002, the state and Internal Revenue Service have accused her of failing to pay more than $76,000 in taxes, according to public records. A year before Holiefield died, he took a leave of absence from the union after he accidentally shot Morgan in the stomach at their Harrison Township home. She underwent emergency surgery and recovered.
The charges in the Wednesday indictment, “if proven true, are quite shocking,” said Kristin Dzcizek, director of the Industry, Labor and Economics Group at the Center for Automotive Research. “These type of activities are highly irregular uses of joint funds, which are intended to be used for training and other benefits for the membership — not individuals.”
While the reputations of both Fiat Chrysler and the union may be bruised by the allegations, Wayne State Law School professor Peter Henning said it looks like a case of greedy embezzlement.
“Essentially this a crime that takes place because no one is looking,” said Henning, a former federal prosecutor. “Everyone trusts the chief company negotiator and the union person to act appropriately.”
Staff writers Ian Thibodeau, Henry Payne and Keith Laing contributed