UAW President Rory Gamble under federal investigation
Detroit — Federal agents investigating a kickback and bribery scandal within the United Auto Workers are probing financial ties between President Rory Gamble, retired Vice President Jimmy Settles and one of the union's highest-paid vendors, sources told The Detroit News.
The agents are investigating whether UAW leaders received cash kickbacks or bribes in exchange for awarding lucrative contracts to Huntington Woods businessman Jason Gordon to supply union-branded merchandise, according to two sources who spoke on the condition of anonymity because they were not authorized to discuss the investigation.
Agents are investigating a tip that secret cash payments were delivered to UAW officials at a Detroit strip club, which The News has been told is the Bouzouki Greektown.
Federal documents, interviews and public records shed light on Gordon, one of the union's highest-paid contractors. And they provide new details about Gamble, the new UAW president with a long trail of financial problems who last month was put in charge of a union with more than $1 billion in assets.
“I would not have accepted the role of president if I couldn’t withstand the scrutiny," Gamble, 64, said in a statement to The News. "Our union has suffered enough as a result of corrupt leaders. On my watch, we cannot and will not allow financial improprieties to rob our members of their hard-earned dollars. My sole focus as president is to strengthen the union’s financial controls, oversight and accounting system — and most importantly, to restore the trust of our union members.”
The probe is ongoing and the team of investigators has not proven the allegation. Gordon, 48, has not been charged with wrongdoing and his lawyer, Christopher Andreoff, said: “My client vehemently denies all of the allegations as being untrue.”
Gamble, appointed in November to complete the unexpired term of former President Gary Jones, is the third consecutive UAW president linked to the broad, years-long investigation into union corruption that has led to charges against 13 people, convictions of 11 and exposed the union to possible government oversight.
Prosecutors have accused Jones and past President Dennis Williams of participating in a racketeering enterprise that embezzled more than $1.5 million in union funds, but they have not been charged with wrongdoing. Jones resigned amid last fall's national contract talks with Detroit's automakers.
“This is a disaster for the union,” said Erik Gordon, a University of Michigan business professor, who is not related to Jason Gordon. “The union needs a president who is beyond reproach. Somebody cleaner than Mr. Clean. They don’t need somebody who is just cleaner than the prior guy.”
In a statement, UAW spokesman Brian Rothenberg said Gamble "can say he never took one red cent personally from Mr. Gordon or directly solicited anything from Mr. Gordon. And President Gamble has never been to that establishment with Mr. Gordon. It simply is not true and never happened."
Settles, meanwhile, was the union's top negotiator with Ford until retiring in 2018 and being appointed by Detroit Mayor Mike Duggan to a $155,000 job as head of the city's Department of Neighborhoods. Settles, 69, has hired prominent Detroit criminal defense attorney Steve Fishman in recent months, The News has learned. Fishman declined comment Wednesday.
The focus on UAW officials who oversaw labor negotiations with Ford Motor Co. — Gamble last year and Settles before him — marks a significant expansion of a years-long federal corruption investigation that largely has centered on labor leaders assigned to the union's General Motors Co. and Fiat Chrysler Automobiles NV departments.
A video primer on corruption: Count the kickbacks, cash and bribes pocketed by Metro Detroit's most corrupt UAW bosses, auto execs and politicians. The Detroit News
It is unclear what prompted the investigation. But sources close to the investigation say the probe has intensified in recent weeks since three UAW officials — former UAW Vice President Joe Ashton and aides Mike Grimes and Jeff Pietrzyk — pleaded guilty for their roles in the bribery and kickback scandal involving union contractors.
Their criminal wrongdoing involved contracts for promotional union items totaling nearly $16 million. In return, Grimes admitted receiving at least $1.5 million in bribes and kickbacks.
“Assuming these allegations have merit, that puts the UAW in a very difficult situation. It raises fundamental questions about whether it is capable of governing itself,” said Marick Masters, a business professor at Wayne State University. “This brings us to a far different level of implications for the UAW going forward. This would substantially increase the likelihood that the federal government would want to come in and take over."
The ongoing investigation involves recurring characters and settings. Last year, The News reported that Jason Gordon had been subpoenaed to produce documents sought by a federal grand jury as part of an investigation into whether UAW leaders received kickbacks from promotions company executives in exchange for awarding contracts to produce union-branded clothes and trinkets.
Gordon is president of several companies, including Custom Promotions, Idea Consultants, and Organization Services of Michigan. He is a recurring focus of the investigation led by agents from the FBI, Internal Revenue Service and Labor Department.
Gordon's firms are part of the so-called "trinkets and trash" industry, a collection of companies vying for a piece of the more than $29 million spent in the last six years on promotion, advertising and UAW-branded items distributed at union rallies, conventions and factories. The items include shirts and lanyards, Frisbees and flash drives, pencils and ponchos, Kangol hats and key chains, as well as novelty items like bowling ball buffers.
Trinkets and trash companies vie for contracts awarded by the UAW — from training centers jointly operated with and funded by GM, Ford and Fiat Chrysler, from the union's political action committee, and from union Community Action Program (CAP) councils.
The joint-training centers, in the process of being disbanded in the wake of last fall's national contract talks, historically were funded by the automakers. The councils, however, are financed with a "per-capita" tax payment withheld from UAW worker paychecks.
Gordon's companies have been paid from several of those pots of money, according to Labor Department filings reviewed by The News. Custom Promotions also donated $12,285 worth of T-shirts to the UAW Region 1A CAP council in 2011, a Labor Department filing shows.
His companies have supplied UAW-branded jackets, bags, hats and towels in recent years and been paid approximately $3 million by the UAW, its political action committee and CAP councils since 2013, according to Labor Department filings. That total includes nearly $54,000 from a CAP council in UAW Region 1A, the region headed by Gamble from 2006 until he became vice president of the UAW-Ford Department in 2018.
It is unclear how much — if anything — Gordon's companies have been paid from the training centers. As vice presidents, Settles and Gamble oversaw the UAW-Ford training center.
Rothenberg, the UAW spokesman, wrote in an e-mail that Gamble "instituted a strict three-bid process for any purchases above $5,000 when he became vice president. If Mr. Gordon got any business ... during that time it would have been because he won a bid."
Custom Promotions, however, has donated more than $191,000 worth of backpacks, shirts and a handicap ramp to the UAW-Ford training center from 2016-17, according to tax filings. During that time, Settles served as co-chair and co-president of the training center, which had $31.9 million in net assets.
The subpoenas sent to Gordon and other UAW contractors are part of a broader investigation into whether UAW officials also received money or things of value directly or through their tax-exempt nonprofit charities.
The News reported in August that agents were investigating Jones, the former president, for a range of potential crimes, including financial dealings involving his nonprofit charity.
Gamble also had a nonprofit. After being appointed regional director in 2006, he became president of the charity GIVES — an acronym for Giving is Very Extra Special. The charity held annual golf events to raise money for various organizations, including Gleaners, Muscular Dystrophy Association, labor organizations, community groups and churches, according to annual tax filings.
The nonprofit also contributed money for funeral costs, low-income retirees and needy families. The nonprofit received $540,544 from 2008-14, according to the filings, which do not disclose donors. It spent $534,717 in that same period and had $28,812 remaining at the end of 2014.
"As Region 1A Director, President Gamble's CAP program did purchase items from Mr. Gordon as they did from other union vendors as well," Rothenberg wrote in an e-mail. "But President Gamble never personally solicited any money directly for the GIVES charity from Mr. Gordon or any other vendor, and we can say with certainty every proceed from that charity went to programs for the homeless and to provide lunches for underprivileged children. The charity has been shut down, but helped many children and many homeless in Detroit when it was operating."
Settles, meanwhile, is listed in tax filings as president of JUST, a Detroit-based nonprofit that has received almost $1.3 million in recent years. Donors are not identified in the filings.
In November, Gamble announced a package of reforms that includes banning all charitable contributions from joint-training centers, vendors or employers to charities run or controlled by UAW officials — direct reactions to the mounting legal troubles weighing on individuals and the joint-training centers.
U.S. Attorney Matthew Schneider talks about the ongoing corruption case involving leaders of the UAW The Detroit News
The investigation is part of a broader probe entangling Ford. The News reported in October that agents were investigating whether Ford and other Detroit automakers indirectly paid for a lakefront retirement home for Williams, the retired union president, at the union's northern Michigan resort.
Investigators are focused on Gamble's tenure as director of UAW Region 1A, a geographic area that covers most of Wayne County, Monroe and Washtenaw counties and extends to the Ohio border. Gamble headed the region for 12 years before replacing Settles as vice president in 2018.
Gamble, meanwhile, experienced financial problems during his tenure heading Region 1A, according to public records. Since 2006, Gamble has lost two homes to foreclosure, including one on Eldorado Place in Lathrup Village, and owed approximately $18,000 in delinquent property and state income taxes despite receiving a six-figure salary.
"Like many in Detroit and across the nation, the property President Gamble had on Eldorado suffered in the economic collapse as the real estate market shifted downward," Rothenberg said. "As such, it was a short-sale that covered the cost of the property. Any filings were part of the short-sale process as was the income tax, which was part of the short-sale process."
Despite the tax problems, in 2009 Gamble paid $130,000 for a 3,480-square-foot home in a gated cul-de-sac in the Marina District of Detroit.
Rothenberg attributed Gamble's past housing problems to the Great Recession and a divorce. The back taxes have been paid.
"If you were looking to corrupt somebody, somebody who has money problems is a good target," Erik Gordon told The News. "And if the money problems are not gigantic, they’re a better target. You can solve their problems without a lot of cash."
Settles, who preceded Gamble as vice president of the UAW-Ford Department, also has had financial problems. He also lives on Gamble's cul-de-sac, a few doors away.
The state and his neighborhood association have filed liens against Settles and his wife for $3,889 in unpaid income taxes and assessments since 2007, according to Wayne County property records. The tax liens — which have been released — were filed when Settles was paid $158,964 a year by the UAW.
That same month he retired in 2018, Settles and his wife bought a $462,500 home near Orlando, Fla. They obtained a $370,000 mortgage for the 4,061-square-foot, five-bedroom, five-bathroom home, according to public records.
Detroit News Staff Writers Breana Noble, Ian Thibodeau and Kalea Hall contributed.