Feds question UAW officials' spending on Palm Springs trips
Detroit — Federal investigators are questioning United Auto Workers officials' use of almost $1 million of membership dues on condominiums, liquor, food and golf in California, where Gary Jones held annual conferences before becoming president.
UAW officials spent member dues from 2014 to 2016 in Palm Springs for little, if any, legitimate union business or labor-management purposes, according to a key government witness who is helping investigators unravel a broad conspiracy that has shaken the auto industry. During those three years, the union spent $953,692 in Palm Springs, according to the UAW's annual financial filings.
The allegations reveal a new thread of a federal corruption investigation into a multimillion-dollar conspiracy involving the UAW and Fiat Chrysler Automobiles. The focus on Palm Springs is emerging at a crossroads in the investigation as federal prosecutors have secured convictions against all seven labor leaders and auto executives charged so far.
Federal court records, Labor Department filings and interviews shed light on the activities of UAW leaders who attended a week-long convention in Palm Springs, but stayed for months. In the desert oasis, UAW leaders used either membership dues contributed by blue-collar workers or money from Fiat Chrysler, its adversary across the bargaining table, to pay for dinners, condominiums, golf fees and $1,217 at a salon run by the Hollywood stylist from "Mad Max: Fury Road."
The government's focus on Palm Springs is at odds with the UAW's oft-repeated stance that member dues were not involved in a conspiracy that lasted from 2009 to 2017. UAW members pay about $670 to $1,600 in dues annually, depending on their hourly wage, according to the government.
UAW spokesman Brian Rothenberg called the Palm Springs expenses "reasonable."
“UAW expenditures on these annual training conferences — all of which are publicly reported — are entirely reasonable," Rothenberg said in a statement to The News. "Over three years, more than 650 union attendees, from all over the western half of the country, attended all-day meetings during week-long conferences. Those are the facts, which stand in contrast to unattributed allegations.”
Jones, 61, a certified accountant whose ascension to the top of the UAW in June was perceived by some as bringing financial credibility to a labor union embroiled in a widening corruption scandal, is not named in federal court records. He has not been charged with wrongdoing during the ongoing investigation.
"This branch of the investigation is potentially more dangerous in terms of what it says about the UAW," said Erik Gordon, a University of Michigan business professor. "If proven, this says that the union leadership is corrupt."
The details about Palm Springs are attributed to former UAW official Nancy Adams Johnson, who pleaded guilty in July to violating a federal labor law and faces up to 18 months in federal prison.
Adams Johnson, who was the second-highest-ranking union official in the Fiat Chrysler department, revealed the expenditures after reaching a deal with prosecutors that she would not be punished for conduct involving UAW funds, according to court records.
Until now, the criminal investigation has focused on auto executives — including the late Fiat Chrysler CEO Sergio Marchionne — funneling money, gifts and illegal benefits to UAW officials. The conspiracy was designed to keep labor leaders "fat, dumb and happy" and help Fiat Chrysler gain concessions during contract negotiations, prosecutors claim.
Adams Johnson also told federal prosecutors that former UAW President Dennis Williams directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.
Williams, the union's president from 2014 until mid-June, issued the directive to relieve pressure on the union’s budget, Adams Johnson told investigators.
Simultaneously, top UAW officials hiked membership dues while using some of the money to pay for luxury expenses, according to federal court records.
"In 2014, 2015 and 2016, in Palm Springs, California, high-level UAW officials used UAW funds to pay for extravagant meals, premium liquor, multi-month stays at condominiums, and multiple rounds of golf for little, if any, legitimate union business or labor-management purposes," according to Adams Johnson's plea deal.
The only Palm Springs-related expenses identified in the UAW's financial reports for those years are the union's Region 5 leadership conferences. Jones headed Region 5 before becoming UAW president in June.
Region 5 is headquartered in Missouri and represents UAW members in 17 states, including California, who work in auto parts, aerospace and beverage container industries.
Region 5 holds a leadership conference every year. In recent years, the week-long event has been held at the Renaissance Palm Springs Hotel, a four-star hotel with views of the San Jacinto Mountains and a palm tree-lined pool.
The UAW spent $856,886 at the Palm Springs hotel from 2014 to 2016, according to the union's financial reports. Last year, the UAW spent $219,698.
Watch this overview of the Renaissance Palm Springs Hotel. (Video: YouTube)
The UAW also spent $96,806 at the nearby Desert Princess resort in 2014, according to a Labor Department filing.
The resort borders a 27-hole championship golf course that is lined with condos and villas.
Watch this overview of the Desert Princess Palm Springs Country Club. (Video: YouTube)
The government has filed embezzlement charges against the heads of other labor unions in recent years.
Labor leaders convicted of embezzling union funds could face up to five years in federal prison and a $10,000 fine.
In 2015, John Hamilton, the former top official of Operating Engineers Local 324, was charged with embezzling union money. Hamilton and other union officials also were accused of charging the union more than $51,465 for meals at area restaurants, according to the government.
Hamilton later pleaded guilty to extortion conspiracy and was sentenced in March to two years in federal prison.
In the UAW investigation, federal court records provide more specifics about Palm Springs expenses than what is contained in the UAW's annual financial reports filed with the U.S. Department of Labor.
The UAW refused to provide The News an itemized list of Palm Springs expenses or copies of audited financial statements.
"For companies, travel and entertainment is often where they hide things," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "If UAW officials are out there six weeks for a one-week conference, what was the justification?"
"There’s a requirement when dues are being spent that everything be properly accounted for," Henning added. "You can’t spend money for personal benefit. If it’s a lot of money going to individual officials, then there are also tax issues."
Palm Springs is playing an increasingly significant role in the investigation.
When Adams Johnson was indicted in March, prosecutors accused her of receiving tens of thousands of dollars in illegal payments and benefits from Fiat Chrysler, including $1,100 Christian Louboutin shoes, first-class flights to California and resort stays.
The personal items were purchased with Fiat Chrysler money funneled through the UAW-Chrysler National Training Center, which Adams Johnson helped oversee, prosecutors allege. The center, which is financed by Fiat Chrysler, covered expenses for a training conference in Palm Springs in 2015.
Adams Johnson was UAW Vice President Norwood Jewell’s top administrative assistant and they served on the 2015 national committee that negotiated a labor deal with Fiat Chrysler. At least three UAW officials on the committee have either been charged or linked to the investigation, and that figure could climb, The News has learned.
Sources described Adams Johnson as one of the more egregious abusers of the training center’s credit cards, saying she charged more than $75,000 from 2014 to 2016 for personal items, including clothes, jewelry, luggage and meals.
The illegal payments and benefits included:
■$6,912 at the London Chop House.
■$6,678 on flights between Detroit and California.
■$4,587 spent at LG’s Prime Steakhouse in Palm Springs.
■$1,259 for luggage.
■$1,652 at Cardliff Limousine in Palm Springs.
■More than $1,800 at Indian Canyons Golf Resort in Palm Springs.
■More than $1,800 at St. John Knits and other retail stores in and around Palm Springs.
■More than $6,900 at the Renaissance Resort & Spa in Palm Springs.
■$1,160 for a pair of Christian Louboutin shoes at Neiman Marcus.
■More than $1,700 for a set of graphite women’s golf clubs and a diva cart bag.
■More than $1,000 at Divalicious and other retail stores in Orlando, Florida, and Clinton Township.
■$1,217 at Salon Bilal in Pasadena, California.
Nefertiti Bilal owned and operated the Pasadena salon with sister Kya Bilal, a Hollywood cosmetologist who worked as the hair stylist on the 2015 post-apocalyptic film "Mad Max: Fury Road."
Nefertiti Bilal does not remember Adams Johson and was surprised to learn her salon was identified by prosecutors in federal court records.
"Oh wow," Bilal told The News. "That sounds crazy to me."
The UAW contingent in Palm Springs was unremarkable, limousine company owner Gary Cardiff said.
In January 2015, UAW officials rented a 56-passenger bus for a round-trip excursion from Palm Springs to San Diego, which is a two-hour drive southwest, Cardiff said. Jones was among UAW officials on the bus, The News has learned.
"That is what convention people do: come here to get together to learn, have sales meetings, conference meetings, you name it, and along the way they get a little bit of golf," Cardiff told The News. "We're the golf capital."
After being installed as UAW president in June, Jones said "specific individuals, not institutions like the UAW" are to blame for the conspiracy. That statement is at odds with prosecutors, who have labeled the UAW and Fiat Chrysler as co-conspirators, a designation that exposes the union and automaker to criminal charges, fines and governmental oversight.
"We are cooperating with the investigation and I’m not going into much further details than that," Jones said in June.
"The UAW is absolutely devoted to bettering the lives and job conditions of America’s men and women," Jones added. "We will not be distracted from that mission."