FBI eyes Jones' charity, UAW officials' California junkets

Robert Snell
The Detroit News

Detroit  Federal agents are investigating United Auto Workers President Gary Jones for a range of potential crimes, including financial dealings involving the nonprofit charity he founded and whether he or other union officials spent member dues on junkets to California, sources told The Detroit News.

The government's focus emerged Thursday, one day after a team of federal agents executed search warrants at six locations in four states. Jones has ties to half of the search sites, including his home, the UAW regional office he once commanded in Missouri and the home of a UAW official who helped run Jones' charity.

UAW President Gary Jones speaks before the ceremonial handshake to mark the beginning of negotiations between the United Auto Workers and Fiat Chrysler Automobiles at FCA's North America headquarters in Auburn Hills, July 16, 2019.

The focus of the raids was unclear a day earlier because related search warrant documents are sealed in federal court.

The raids came four years into a sprawling investigation of corruption within the U.S. auto industry that has led to charges against nine people and eight convictions. The searches coincided with a prolonged focus on UAW spending in Palm Springs, California, where Jones held annual conferences before becoming president.

A team of agents from the FBI, Internal Revenue Service and Labor Department have devoted more than a year to analyzing how UAW officials spent member dues in the desert oasis on condominiums, liquor, food and golf while simultaneously scrutinizing Jones' defunct nonprofit, the 5 Game Changers Charity Fund.

Annual tax filings for the Missouri-based charity, created in August 2014 to help the poor, were not available Thursday and did not appear in online databases that track nonprofits.

But IRS records obtained by The News indicate Jones' nonprofit received $20,000 from a charity linked to Joe Ashton, a former UAW vice president and director of General Motors Co. whom prosecutors have accused of participating in a multimillion-dollar bribery scheme.

"Whenever money is changing hands, the IRS is going to be very interested," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "They are tracing the money."

Jones did not respond to a message seeking comment Thursday.

Joe Ashton was a member of the General Motors Board of Directors, from 2014 until he abruptly resigned in December 2017. He was previously the head of the United Auto Workers' GM department and a leader of the UAW-GM Center for Human Resources, which is now the subject of a federal investigation.

Ashton, meanwhile, is the unnamed union official who federal prosecutors say demanded $550,000 in kickbacks and bribes from union vendors and steered a $4 million watch contract to his personal chiropractor. The watches were purchased with money from GM that was supposed to benefit blue-collar workers.

The allegations are contained in a criminal case unsealed earlier this month against former UAW official Mike Grimes. The case charges Grimes with wire fraud conspiracy and money laundering and accuses him of teaming with Ashton and Ashton's top aide, Jeff Pietrzyk, to demand and receive kickbacks and bribes from UAW contractors.

Ashton of Ocean View, New Jersey, has not been charged with wrongdoing. Neither has Jones, Pietrzyk or any UAW official targeted during the nationwide searches Wednesday.

Ashton is vice president of his own charity, the Ashton Fund, and until 2015, its board included Pietrzyk, who has been implicated in the scandal. The nonprofit has received $1.3 million in recent years, though donors are not identified in tax filings.

The tax filings, however, identify how the Ashton Fund spent some of its money.

From 2016-17, the fund gave $20,000 to Jones' charity, according to tax filings.

UAW President Gary Jones

Jones did not respond to questions about whether his charity kept the money or how the funds were spent.

"The money received by 5 Game Changers from the Ashton Fund was donated to local charities, like Heartland Habitat for Humanity in Kansas City ... and Arlington Life Shelter in Texas," UAW spokesman Brian Rothenberg said in a statement to The News. "And 5 Game Changers, a small tax-exempt charity, has filed all the appropriate IRS forms detailing its finances. Any suggestion that 5 Game Changers acted inappropriately is simply false."

Ashton's lawyer, Jerome Ballarotto, could not be reached for comment.

The federal raids Wednesday included two locations in Missouri.

Agents searched the home of Vance Pearson, who served on the board of directors overseeing Jones' charity. Pearson succeeded Jones as the head of UAW Region 5 near St. Louis last year.

Agents also searched the UAW Region 5 office in Hazelwood, Missouri. Jones' charity was registered to the office building.

Vance Pearson

Pearson also is linked to a type of fund drawing government interest in a parallel thread of the federal investigation. That thread involves federal agents examining secretive, loosely regulated pots of money controlled by union leaders. 

In March, The News reported that agents were investigating whether senior UAW staff were forced to contribute money to funds originally established to buy flowers for auto workers' funerals, and whether union executives kept the money.

Investigators are questioning whether UAW leaders threatened to send high-level staffers back to the assembly line if they failed to contribute to so-called flower funds controlled by union presidents, vice presidents and regional directors, three sources familiar with the investigation said. 

Until this year, Jones was president of one flower fund called Members in Solidarity. According to state documents obtained by The News, "the objects of this association shall be to advance the interests and welfare of its members ... to provide flowers for the sick and to the families of deceased members and to friends of the club," among other charitable and social causes.

After Jones was elected UAW president last year, Pearson assumed control of the flower fund, state business records show.

Flower fund contributions were voluntary, Rothenberg told The News in March.

“No UAW employee was or is forced or compelled to contribute to any 'flower fund,'" Rothenberg wrote in a statement. "Participation has always been voluntary and at the discretion of the individual.”

Pearson did not respond to messages seeking comment.

The region Pearson oversees spans 17 states, including California.

Each year, the region holds training conferences in Palm Springs.

UAW officials spent almost $1 million in 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.

The details about Palm Springs are attributed to former UAW official Nancy Adams Johnson, who pleaded guilty in July 2018 to violating a federal labor law and was sentenced to one year and a day in prison.

Former UAW official Nancy Adams Johnson was sentenced to one year and a day in federal prison. She is cooperating with investigators.

She is cooperating with the ongoing investigation and has not reported to prison yet. That's because she could get a lesser sentence if her cooperation is substantial, observers say.

She also told investigators that former UAW President Dennis Williams directed subordinates to save the union money by using funds from Detroit’s automakers to pay for union travel, meals and entertainment.

Williams' home near Los Angeles was raided Wednesday.

Williams, the union's president from 2014 until June 2018, 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.

Rothenberg, the UAW spokesman, has called the Palm Springs expenses "reasonable."

The Palm Springs focus of the investigation helps explain part of the federal raids Wednesday, according to two sources familiar with the probe.

The government's focus on Jones and the raids at his home send a clear message, according to Erik Gordon, a University of Michigan business professor.

"It says that the government believes that he’s not squeaky clean," Gordon said.

During the raids, a Jones neighbor saw federal agents counting "wads" of cash in the UAW leader's garage.

“That is evidence that will need explaining," Gordon said. "For him to remain as president, it has to be that not only was he uninvolved but that he didn’t know about it.

"If he knew about wrongdoing and didn’t stop it, that’s the end of his presidency.”


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