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Jones admits stealing from UAW as feds lose patience

Detroit — Former United Auto Workers President Gary Jones on Wednesday pleaded guilty to helping steal more than $1 million from rank-and-file workers as part of a racketeering scheme as U.S. Attorney Matthew Schneider demanded the union reform itself or face a possible government takeover.

Jones, 63, faces up to five years in federal prison, but prosecutors have agreed to recommend a sentence of up to 57 months in prison because he is cooperating with an ongoing corruption investigation. During a brief tenure leading one of the nation's largest and most powerful unions, and despite touting himself as a reform-minded president, Jones' criminal conduct has helped push the UAW to the brink of federal takeover.

UAW President Gary Jones gives a speech in 2019.

“We have to live with this the rest of our lives,” said Brian Schneck, president of UAW Local 259 in Hicksville, New York, which represents dealership service technicians. “It is a horrible, horrible day for the UAW. We put our blood, sweat and tears into it, and this is what they do?

“Whatever sentence he gets, whatever restitution he gives does not right the theft he committed or the damage he has done to the movement — the entire labor movement. It was all about him.”

The guilty plea comes seven months after Jones resigned in disgrace following raids by federal agents of his home and former office in Missouri. The raids led to his 16-month career atop the UAW disintegrating amid allegations he helped embezzle money and betrayed the union's roughly 400,000 active members.

Jones admitted wrongdoing after federal prosecutors and a team of investigators from the FBI, Internal Revenue Service and Labor Department portrayed him as a thief who tried to convince an underling to take the blame while obstructing the investigation. Investigators spent years building a case against him with undercover recordings, bank records and a team of former confidantes and senior UAW officers who cooperated with the government.

Jones, who recently moved to Texas, attended the plea hearing via Zoom video conference from an undisclosed location because federal courts are closed during the COVID-1 pandemic. No video recording or screengrabs were permitted by the court. 

He sat impassively, dressed in a dark suit, dark tie and white shirt before seeking forgiveness for his crimes.

“I apologize to my UAW family for this betrayal of trust and pray that they will forgive me," Jones said.

That did little to ease the hurt expressed by the rank-and-file: “I’m glad to hear that he owned up to his misdoings but … he just seemed unmoved by it,” said Johnny Pruitte, a General Motors Co. tradesman in Arlington, Texas, and former Local 276 president who worked with Jones while he headed his region. “I feel he may be upset not about that he did wrong, but that he got caught."

Jones is obligated to cooperate with the investigation and prosecution “of other individuals and entities." That would include numerous former union officials linked to the conspiracy, as well as the UAW, Fiat Chrysler Automobiles NV and a jointly operated training center, all of which prosecutors have labeled as co-conspirators in the corruption scandal.

If Jones provides substantial assistance, prosecutors could recommend a sentence of less than 46-57 months in prison. U.S. District Judge Paul Borman ultimately will decide the sentence, which is scheduled for Oct. 6.

Minutes after Jones pleaded guilty, the region's top prosecutor warned UAW officials that they had one last chance to reform the union and said his patience has almost evaporated. Schneider plans to meet with UAW President Rory Gamble soon in what he said could fairly be described as the union's last chance to avert government takeover.

"My patience has pretty much run out," Schneider told The Detroit News. "I would like to have some serious dialogue and serious action about reforming the UAW itself ... within a couple of months."

Schneider revealed he has been in talks with Justice Department officials about filing a civil racketeering lawsuit. Such a move would enable the government to seize control of the UAW and take broad control of union operations, including the ability to fire senior officers and to empower rank-and-file members to directly elect new leaders.

Federal oversight of the UAW is an option once government investigators determine the depths of corruption within the union, Schneider has said. He has faulted Gamble for failing to impose real reforms and to cooperate with investigators. 

In a statement, UAW spokesman Brian Rothenberg said: "President Gamble looks forward to meeting Prosecutor Schneider. The UAW has made significant changes since Mr. Jones resigned and continues to look at ways to reform."

With Jones pleading guilty, the government crackdown on UAW corruption that started at least five years ago has reached a new phase, Schneider said, and “that phase is the union needs to change. We need to reform the UAW.

“The workers haven’t changed. They’re going to work and doing their jobs. The leadership has progressively gotten worse and corrupt. The leadership has really lost its way.”

Schneider is particularly interested in giving UAW members the ability to directly elect international union leaders, a change that likely would break the Reuther Administrative Caucus' decades-long monopoly on selecting candidates for top officer positions.

The International Brotherhood of Teamsters union underwent such a change after the government took control of the union 30 years ago. Teamsters General President James P. Hoffa “indicated it was good for the leadership," Schneider said. "Well, if it was good for them, I want to learn more about how it can be applied to the UAW.”

Jones' lawyer, Bruce Maffeo, urged UAW officials to start cooperating. "Gary stepped forward and accepted responsibility for his actions and (has) done everything he can to make amends," Maffeo wrote in a statement Wednesday. "The UAW would be well advised to follow his lead."

In a separate statement, Gamble said: "Our union and mission will always be more powerful and resilient than any single individual or obstacle. Together, we've overcome insurmountable challenges from the Great Depression and the near-collapse of the American auto industry, to the GM-UAW strike and now COVID-19.

"Former President Gary Jones and others abused their high-ranking positions and violated the trust of our members," Gamble added. "Their actions were selfish, immoral and against everything we stand for as a union."

But the union's insistence that Jones had been clean and its reluctance to cooperate fully with the investigation, according to Schneider, "adds to a sense that getting Jones out may not be enough to protect members from abuse at the hands of their own leaders," said Erik Gordon, a professor at the University of Michigan's Ross Business School, in an email.

Government oversight that helps to clean out the union’s corrupt culture would be a positive, says John Barbosa, a team leader at Fiat Chrysler Automobiles NV's Dundee Engine plant. But he is unenthused by the idea overall. He would rather the union take action itself and implement “one member, one vote” elections through a special convention to amend the union's constitution.

“You can’t trust the government to do what’s best for the members,” Barbosa said. “It was not an easy process for the Teamsters, and it cost them a lot of their dues money to do that. That’s money taken from supporting the workers to pay for government oversight.”

Jones is the highest-ranking person to plead guilty to federal crimes during a prosecution that has secured 14 convictions, including two UAW vice presidents, a union widow and Fiat Chrysler Automobiles executives.

Jones admitted embezzling the money in support of racketeering activity, evading taxes and causing the UAW to file false tax returns. The crimes spanned from 2010-19, a period that matched Jones' rise from heading a union regional office near St. Louis, Mo., to his tenure atop the UAW.

He admitted scheming with at least six senior UAW officers in a multi-year conspiracy to steal money spent on luxury items for labor leaders. Jones helped conceal the crime by hiding the expenses in the cost of holding UAW conferences in Palm Springs, Calif., Missouri and elsewhere.

The conspiracy involved submitting phony expense forms to conceal that labor leaders were spending member dues withheld from worker paychecks on lavish entertainment and personal expenses. Those expenses included more than $750,000 spent on private villas, cigars, golf equipment and apparel, meals and liquor — including $400 bottles of Louis Roederer Cristal Champagne and Canadian vodka served in a crystal skull.

Jones also admitted helping to embezzle more than $60,000 in cash from co-conspirator Nick Robinson, who cashed more than $500,000 in checks from a UAW community action program.

As part of his guilty plea, Jones will forfeit $151,377. That includes his interest in $81,000 from a so-called "flower fund," an account originally established to pay for flowers for auto workers' funerals. Prosecutors, however, said senior staff were forced to contribute to the funds, which are controlled by top UAW officials.

He also is forfeiting $38,000 from an account intended to pay for UAW political campaigns, and $32,377 seized from his home during a series of nationwide raids targeting UAW leaders, including Williams. 

That's OK with Jonathon Mason, a line worker at Ford Motor Co.'s Dearborn Truck plant: "Whatever it takes to clean up this cesspool. Dues-paying members deserve better. Period."

rsnell@detroitnews.com

@robertsnellnews

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