UAW corruption probe pits president vs. president

Robert Snell
The Detroit News

Detroit — Retired United Auto Workers President Dennis Williams helped embezzle more than $1 million spent on personal luxuries and illegally used money from Detroit automakers to renovate the union’s northern Michigan resort, where the union built him a $1.3 million lakefront home, according to federal court records. 

The allegations are outlined in the 45-page deal his successor, former President Gary Jones, reached with prosecutors to plead guilty Wednesday to embezzlement, racketeering and tax charges.

UAW President Dennis Williams

The deal provides the first glimpse into cooperation from Jones in exchange for a shorter prison sentence and reveals two longtime friends and union allies pitted against each other during the federal probe. 

“If Gary Jones is pointing the finger, that’s not going to go well for Dennis Williams,” said Peter Henning, a Wayne State University law professor and former federal prosecutor.

Williams, 67, has not been charged with wrongdoing during an ongoing investigation that has led to the convictions of 14 people. He was implicated in the corruption investigation last year when federal agents raided his California home. His lawyer, Sean Berkowitz, did not respond to messages seeking comment.

UAW spokesman Brian Rothenberg on Thursday said the union has reimbursed automakers for various charges, including for improvements at the union’s Black Lake resort in northern Michigan.

The records portray Williams as a glutton with a big appetite who orchestrated multi-million dollar schemes that benefited him and the union. He is described ordering Jones and others to use UAW money to rent private villas for him in California, to pay his wife’s booze bill, to buy $130 bottles of Crown Royal XR whisky and boxes of cigars, and to have cases of wine shipped to his home and office.

He also hatched plans to have Detroit automakers spend millions covering payroll expenses. Prosecutors have said the payments violated laws barring labor leaders from receiving money or things of value from company officials. 

The Jones plea deal does not refer to Williams by name. Instead, prosecutors call him "UAW Official B," which multiple sources have said is Williams.

Allegations included in the Jones plea deal date to at least 2010. That’s when prosecutors say he directed Jones, the late UAW Regional Director Jim Wells and others to conceal using UAW money for personal expenses at union conferences. Wells is referred to by prosecutors as "UAW Official E."

'Cronies,' 'side chicks,' corruption mark dissolution of Region 5

From 2015-18, Williams directed Jones and former Regional Director Vance Pearson to spend UAW money renting private villas in Palm Springs, Calif., for him for months at a time, prosecutors said. Jones and Pearson also spent UAW money buying cases of wine and boxes of cigars and shipping them to Williams.

"This was done even though Gary Jones knew that UAW Official B had no legitimate union business purpose for being in Palm Springs for such extended periods of time," according to the Jones plea deal. "On at least one occasion, UAW Official B directed Gary Jones to provide a villa in Palm Springs for a family vacation during the Christmas holidays for UAW Official B, unrelated to UAW business."

The UAW failed to disclose $290,852 in reportable compensation to Jones, Williams, Pearson and others on the union’s 2017 tax filing, prosecutors said.

In talks with investigators, Jones portrays his former friend and mentor as overseeing schemes to save the UAW millions of dollars by having automakers cover payroll expenses and pay fees associated with training centers jointly operated with Ford, GM and Fiat Chrysler.

For example, from at least 2014-16, Williams directed automakers to pay 100 percent of the salaries and benefits for a "large number of UAW officials and employees, nominally assigned to joint training centers with the automobile manufacturing companies," according to Jones' plea deal.

Williams and others had the automakers pay the salaries and benefits even though the UAW employees assigned to the training centers spent most of their time working for the union, Jones told investigators. The so-called chargebacks saved the UAW millions at a time of declining membership and budget pressure.

The UAW has reimbursed money improperly charged to the union’s Fiat Chrysler training center and is working with officials at the UAW-Ford training center to determine any reimbursements, said the union spokesman, Rothenberg, adding that the union is unaware of any money improperly charged to the UAW-GM training center.

Prosecutors have labeled Fiat Chrysler, the UAW and the training center as co-conspirators. The Auburn Hills automaker last year revealed executives were negotiating a settlement that would resolve a federal criminal investigation into whether executives conspired to pay bribes and break labor laws during a years-long conspiracy with the UAW. 

Last month, the U.S. Attorney’s Office assured GM that the government is not targeting the automaker in the corruption investigation.

Williams and other senior UAW officials also required auto companies to pay a 7% fee in addition to the chargebacks, Jones told investigators.

"UAW Official B and other senior UAW officials caused the fee to be charged in order to benefit the UAW with funds from the companies even though the fee had no legitimate justification relating to the administrative costs associated with the chargebacks," prosecutors wrote in the plea deal.

In private talks with the U.S. Attorney’s Office, Jones also provided insight into how money from Detroit automakers paid for improvements at the union’s 1,000-acre Black Lake retreat in Onaway. 

"UAW Official B caused the automobile manufacturing companies to pay hundreds of thousands of dollars for capital improvements, including the installation of audio-visual equipment, to the UAW’s Black Lake conference facility," according to the Jones plea deal. "In this way, UAW Official B illegally caused car company funds, intended to support the three joint training centers, to be used for the benefit of the UAW."

“In an abundance of caution the UAW has previously reimbursed all three training centers for the portion of the audio visual equipment costs they contributed at the Black Lake Education Center," Rothenberg wrote in an email to The News. "The A/V equipment was used both by the UAW, and by the joint program centers when they held educational programs at Black Lake."

He noted that 2019 contract negotiations with Detroit automakers resulted in substantial changes, including increased policies and oversight. 

A Ford spokeswoman declined to address the allegation: "As always, we would cooperate with any inquiries," Kelli Felker wrote in an email.

GM spokesman Jim Cain said: ”We think it’s a good thing that there are such strong efforts to eliminate corruption."

UAW cottage #4 near Onaway, Mi on Black Lake, Monday, Sept. 16, 2019.

Last fall, The News reported investigators had issued grand jury subpoenas, including at least one to a contractor who worked at the UAW Black Lake Conference Center, to determine whether as much as $1 million from Detroit automakers was spent on personal luxuries for union leaders, according to sources familiar with the investigation.

Those luxuries include a three-bedroom, three-and-a-half bath, 1,885-square-foot home for Williams, boats and a dock exclusively used by UAW officers, the sources said. The home was built with non-union labor and was recently listed for sale for $1.3 million as part of a broad series of reforms announced by UAW President Rory Gamble. 

The inquiry is among the reasons why a team of investigators from the FBI, Internal Revenue Service and Labor Department raided the retreat on Aug. 28 as part of a series of nationwide searches targeting Williams and other UAW leaders, the sources said.  

The UAW used its own money to pay for the Williams home and renovate an adjacent cottage used by the retired president, the union spokesman, Rothenberg, previously told The News. The expenses were part of a $10 million Black Lake renovation project approved by the UAW’s governing International Executive Board approximately four years ago.