UAW corruption scandal deepens as feds charge 16th person after $2M misspent

Robert Snell
The Detroit News

Detroit — Federal prosecutors charged a local United Auto Workers official Wednesday with embezzling more than $2 million in union funds, money laundering and spending the funds on gambling, guns, cars and child-support payments.

UAW Local 412 Financial Secretary/Treasurer Tim Edmunds, 53, of South Lyon is the 16th person charged in a years-long investigation of corruption within one of the nation's largest and most influential unions, a probe that revealed UAW leaders and auto executives broke labor laws, stole union money and received bribes and kickbacks. The investigation has led to prison sentences for two former presidents, court-ordered oversight of the union and the conviction of Fiat Chrysler Automobiles.

The unsealed criminal case describes a prolonged embezzlement scheme starting in 2015 and involving union money from the Warren-based union local that bankrolled high-end shopping sprees at Louis Vuitton, Balenciaga and Apple, and more union funds spent on child support payments and Greektown Casino gambling binges.

The case represents the first criminal charges filed since a court-appointed corruption watchdog was installed to oversee reforms within the union. Prosecutors filed the charges more than one month after the UAW revealed that its auditors discovered more than $2 million in improper expenditures of union dues at Local 412, whose members include Stellantis NV workers.

“Our No. 1 priority right now is turning himself in, and we intend to face this,” Edmunds' lawyer, Joseph Arnone, told The Detroit News. “He is entitled to the presumption of innocence just like anybody else is. We will work through this process.”

Tim Edmunds

Edmunds, who worked at the UAW from 2011-20, “systematically drained” the union local’s bank accounts of about $2 million by using the labor group’s credit cards for personal purchases, cashing local checks and transferring money into his accounts, according to the criminal case.

He used the money to gamble, buy luxury clothes, high-end automobiles and firearms, prosecutors alleged. That includes more than $30,000 in unauthorized ATM transactions using a union debit card at Greektown Casino from 2018-20, prosecutors alleged.

He was a Greektown Casino regular, prosecutors said, had cash buy-ins of more than $1 million, and put more than $16 million in play while at the casino from 2016-20.

Edmunds also tried to cover up the crimes by creating false bank statements and false federal labor reports, according to the criminal case.

Casino surveillance footage shows Tim Edmunds gambling. Prosecutors say he put more than $16 million in play while gambling at a Detroit casino from 2016-20.

Edmunds was charged with five different crimes, including theft or embezzlement of union funds, filing false labor reports and money laundering. If convicted, he faces more than 20 years in federal prison.

“The members of the UAW deserve a union free of corrupt and crooked leadership,” Acting U.S. Attorney Saima Mohsin said in a statement. “We will continue to root out and prosecute those corrupt leaders who seek to use UAW funds as their own personal piggybank.”

The allegations against Edmunds are reminiscent of crimes committed by former UAW leaders at the union's international level, including former President Gary Jones, who spent more than $1.5 million in member dues on luxuries that included private villas, lavish meals, cigars, alcohol, clothing and more.

Former UAW President Gary Jones, left, and attorney Bruce Maffeo, both warn this Detroit News photographer to be careful not to trip over the cracks in the sidewalk as he backpedals to photograph the former UAW boss, Thursday morning, June 10, 2021.

"The UAW's old approach to auditing was as loose as the big shots needed it to be," Erik Gordon, a professor at the University of Michigan’s Ross Business School, wrote in an email to The News. "It didn't take real auditors long to find a couple of million missing dollars that you might think were hard to miss if you had your eyes open."

Tesla Inc. founder Elon Musk criticized the UAW on Twitter after learning about the criminal charges, tweeting that the union's new slogan was "Fighting for their right to steal money from workers!"

The investigation emerged in August when Labor Department investigators learned about a “sizeable embezzlement” involving Edmunds and Local 412, prosecutors alleged.

Union auditors revealed they had uncovered about $1.5 million in unauthorized transfers by Edmunds from union accounts into an unknown account at PNC Bank since 2015, according to the criminal complaint.

Union auditors also discovered more than $170,000 in UAW Local 412 rebate checks were deposited into the PNC Bank account. They also learned about $142,000 in unauthorized charges on a union debit card at retailers, including Louis Vuitton and Balenciaga.

The audit also revealed about $255,000 worth of cashier’s checks drawn on the union’s savings account from 2015-18. The checks included the signature of union local President Jerry Witt, but he denied knowing about the checks and said the signature was forged, according to the complaint.

Investigators later traced the PNC Bank account to Edmunds after realizing he was a signatory on the account, according to the complaint. The money was supposed to be used to purchase election-related materials and for events related to internal union officer elections.

The money-laundering charge involves Edmunds gambling at Greektown Casino, according to the complaint. He left the casino with almost $90,000 worth of uncashed casino chips from 2016-19, which investigators said is a deliberate attempt to avoid alerting the Internal Revenue Service to gambling winnings.

“Mr. Edmunds held a position of trust within the UAW and his alleged theft of nearly $2 million from UAW accounts is a betrayal to every UAW worker,” Timothy Waters, special agent in charge of the FBI’s Detroit office, said in a statement.

Edmunds, meanwhile, amassed an arsenal and fleet of vehicles during the alleged crime spree, according to the complaint.

He has registered at least 10 firearms since last year that each ranged in price from $500-$2,000 and spent large sums on five vehicles in recent years. That includes a 2020 Jeep Grand Cherokee Trackhawk that cost $96,419, prosecutors said.

The 2020 Jeep Grand Cherokee Trackhawk

The international UAW based in Detroit implemented new monetary control measures amid a years-long federal investigation into corruption within the union that has resulted in the convictions of 15 people, including two former UAW presidents, and put it under an independent monitor. Secretary-Treasurer Frank Stuglin championed the measures as an effective tool to clean up the union.

It was not immediately clear for how long the improper expenditures at Local 412 had been made. In a letter to members, though, Local 412 President Jerry Witt said he was recommending the local's executive board consider placing the local in administratorship to assist in correcting the breach. The union also is working with the international to file a bond for its losses.

The enhanced auditing system was put in place by Stuglin's predecessor, now-UAW President Ray Curry. Auditors on staff this summer identified the irregularities. The union hired four additional auditors as part of its financial reforms that also included expanded internal training.