FCA officials paid to sway UAW negotiations, feds say
Detroit — Fiat Chrysler Automobiles NV officials paid more than $1.5 million to United Auto Workers officers and employees to sway union contract negotiations, federal prosecutors said, part of a $4.5 million corruption scandal involving Detroit’s No. 3 automaker.
The accusations made Monday in a plea agreement with former FCA labor negotiator Alphons Iacobelli say for the first time in the investigation that executives’ actions were intended to corrupt UAW contract negotiations to favor Fiat Chrysler.
The plea deal suggests the corruption was more widespread than previously disclosed. It lasted for years as Fiat Chrysler officials lavished UAW labor leaders with cash payments and luxury items, including airfare, jewelry and secret $50,000 payments.
Federal court records also portray a cozy relationship between Fiat Chrysler executives and labor leaders after the automaker emerged from its 2009 bankruptcy.
Court records also show the relationship involved illegal payments spent on a Ferrari, gold Montblanc fountain pens and a custom-made Italian watch.
“The UAW is appalled at these charges,” UAW spokesman Brian Rothenberg said in a statement. “We have worked with the (National Training Center) and Fiat Chrysler to implement a range of measures aimed at enhancing transparency and internal controls at the NTC to reduce the risk of any future recurrence of these activities.”
Iacobelli, 58, pleaded guilty Monday to one count of conspiracy to violate the Labor Management Relations Act, and one count of subscribing a false tax return.
The two charges carry a maximum sentence of eight years in prison. Iacobelli could also be ordered to pay more than $835,000 in restitution fees. He will be sentenced in Detroit on May 29.
According to the deal, Iacobelli, Jerome Durden, a former FCA financial analyst, and other unnamed FCA executives and employees made illegal payments to UAW officials to “obtain benefits concessions, and advantages for FCA in the negotiation, implementation, and administration of the collective bargaining agreements between FCA and the UAW.”
The conspiracy dates to September 2009, three months after Chrysler exited bankruptcy and forged an alliance with Fiat.
That month, Iacobelli told other Fiat Chrysler executives, including Durden, to shift from cost-cutting at the automaker’s UAW training center and start spending money.
One of the first expenses Iacobelli identified was giving $50,000 to a nonprofit run by the late UAW Vice President General Holiefield, head of the union’s FCA department.
The payment is among several made over the next few years as part of a conspiracy “to obtain benefits, concessions and advantages for FCA in the negotiation, implementation and administration of the collective bargaining agreements between FCA and the UAW,” prosecutors allege.
In February 2015, Iacobelli directed an unnamed senior manager to offer the UAW a $50,000 lump-sum retirement payment for select labor officials. The “one-time” offer was designed to be hidden from rank-and-file UAW members and only offered to senior UAW officials, according to the government.
“My people will process the transactions to keep them out of the plants,” an unnamed Fiat Chrysler official told a UAW leader, according to federal court records filed Monday.
A UAW source familiar with the federal investigation said the $50,000 offer “never went forward after legal review in Solidarity House,” the UAW’s international headquarters.
In February 2010, an unnamed Fiat Chrysler executive gave Holiefield a custom-made Terra Cielo Mare watch worth several thousand dollars.
The rare, Italian chronograph — only 150 were produced — was a special-edition automatic timepiece that featured the Fiat logo and a mustard-yellow dial.
The watch sells on the used market for about $2,000.
The watch came with a hand-written note from the FCA executive, which said “Dear General, I declared the goods at less than fifty bucks. That should remove any potential conflict. Best regards, and see you soon,” according to federal court records.
It was unclear Monday which Fiat Chrysler executive gave the watch. An FCA spokeswoman declined to comment.
Iacobelli must cooperate with investigators as a condition of his plea, but it was unclear Monday whether he has led investigators to other FCA officials.
FCA CEO Sergio Marchionne has been questioned by investigators amid the widening investigation. He is represented by a white-collar criminal defense lawyer, William Jeffress of the Washington, D.C., law firm Baker Botts.
In a 2011 email to Durden, Iacobelli instructed Durden not to put details of charges made to the “benefit of (Holiefield) in writing.”
According to court documents, Iacobelli has agreed to forfeit the two $35,700 fountain pens and has had $354,000 seized by federal authorities. As part of the plea, Iacobelli cannot contest the seizures of the funds.
He’s also sold the 2013 Ferrari 458 Spider convertible with an “IACOBLI” vanity plate that he is accused of using UAW training center cash to buy.
Monica Morgan-Holiefield, the widow of General Holiefield, is expected to enter a guilty plea to unspecified federal charges on Feb. 6.
Iacobelli told U.S. District Judge Paul Borman in Detroit that he knowingly joined in an ongoing conspiracy from 2009 to 2015 in which FCA officials agreed to pay or deliver more than $1.5 million to UAW officials.
He said he authorized $450,000 given to General Holiefield and others that was used to buy jewelry, electronics and designer clothing.
Iacobelli also said in June 2014 he approved funds to pay off Holiefield’s mortgage. When he pleaded guilty to filing a false tax return, Iacobelli said he submitted in March 2015 tax forms that he did not believe to be true. He owes over $860,000 in taxes.
The plea deals come as federal agents have expanded the corruption investigation to include a former member of General Motors Co.’s board and United Auto Workers training centers funded by all three Detroit automakers.
In a July letter to FCA employees, Marchionne wrote that those charged in the conspiracy “abused their positions and misappropriated substantial funds that FCA US contributed to the NTC — funds that were earmarked for employee training and development.
“I encourage you not to be discouraged by the actions of a few people that betrayed our core principles and our standards of morality, integrity and quality,” he wrote.
“We dealt swiftly with these individuals as we will anyone who does not abide by our code of conduct and who disregard the ethical principles that lie at the foundation of FCA.”
Iacobelli sanctioned the use of training center credit cards by UAW leaders for personal expenses in a bid to keep senior labor leaders “fat, dumb and happy,” according to a court filing.
Iacobelli is also accused of spending more than $1 million of union funds on luxury items, including his house, pool, outdoor spa and kitchen, a Ferrari and the two limited-edition, gold Montblanc fountain pens.
Investigators have seized money and assets during the investigation, including the two gold pens Iacobelli is accused of buying with stolen money.
Search warrant documents obtained by The News reveal that in March 2016, agents seized $354,000.
Between October 2013 and September 2014, Iacobelli and others transferred more than $350,000 from the UAW-Chrysler National Training Center to buy the Ferrari, prosecutors said.
He was indicted alongside Morgan-Holiefield in July on eight counts, including conspiracy to violate the Labor Management Relations Act, making prohibited payments to union officials, conspiracy to defraud and subscribing false tax returns, the most severe of which carry penalties of up to five years in federal prison.
Two others have struck plea deals in the scandal and are awaiting sentencing in federal court. They are:
■Former Fiat Chrysler financial analyst Jerome Durden, who prosecutors say helped transfer millions of dollars in training center funds to Holiefield, Morgan-Holiefield and Iacobelli. He faces up to 37 months in prison and is expected to cooperate with prosecutors.
■Former UAW official Virdell King, who admitted misusing funds that were intended to train and retrain blue-collar workers. She faces up to 16 months in prison and is expected to cooperate with the investigation.