FCA chief failed to disclose gift to UAW, sources say
Detroit — Fiat Chrysler's longtime CEO Sergio Marchionne gave an expensive Italian watch to United Auto Workers Vice President General Holiefield and failed to disclose the gift while being questioned by federal investigators, two sources told The Detroit News.
The sources describe a dramatic "gotcha" moment during a secretive July 2016 meeting between Marchionne, head of Fiat Chrysler Automobiles NV, and investigators. It ended with the auto executive exposed to the possibility of federal charges.
Marchionne, 66, was never charged before he died July 25 in a Zurich hospital.
The auto executive's gift of a watch to a ranking union leader could bolster any criminal case against FCA, which has been named co-conspirator in the case along with the UAW. Both organizations could face criminal charges, fines and governmental oversight.
Flanked by his white-collar criminal defense lawyer, William Jeffress, at the U.S. Attorney's Office in Detroit, Marchionne was asked by investigators whether he had given UAW leaders valuable items.
Marchionne said no, according to the two sources, who spoke under the condition of anonymity because they were not authorized to discuss the case.
Investigators then confronted Marchionne with evidence he had given Holiefield a custom-made Terra Cielo Mare watch in February 2010. The Italian watchmaker has produced custom-made, limited-edition timepieces with the Fiat logo emblazoned on the dial since at least 2006.
A 2014 model featuring the Fiat logo and a mustard-yellow dial retailed for $2,245.
The watch given to Holiefield came with a hand-written note from what documents identify only as an unnamed FCA executive: “Dear General, I declared the goods at less than fifty bucks. That should remove any potential conflict. Best regards, and see you soon,” according to federal court records obtained by The News.
It is unclear whether investigators showed Marchionne the watch and note or just photographs of them, and it is unknown whether federal agents have the watch.
"There is a lot of intrigue here," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "Prosecutors had him and had leverage over him. This was an arrow in the government's quiver."
Holiefield died in March 2015. The next year, Holiefield's home in Harrison Township was raided by federal agents investigating his widow, Monica Morgan-Holiefield, who was convicted and sentenced to 18 months in federal prison last month for her role in the scandal.
An inventory of items seized during the raid at Morgan-Holiefield's home is sealed in federal court.
Also unclear is how Marchionne explained the watch after being confronted by investigators. It is unknown whether Marchionne reached an agreement before talking to the government that would have granted him limited immunity as long as the auto executive told the truth.
"If you don't tell the truth, all bets are off," Henning said. "If you lie, the government can use what was said against you. The FBI doesn't give you a free pass on lying."
It is unclear why Marchionne was never charged. The potential charges include making a false statement and violating a federal labor law barring employers from giving union officials money and valuable items.
"Prosecutors are playing the long game," Henning said. "We don't know what would have happened in six months if his health had been all right."
It is possible FBI agents and prosecutors continued to build a criminal case against Marchionne, Henning said.
"He could have said he forgot about the watch, so the government has got to be a little careful," he said. "When he said 'no,' it looks like they've got him, but the government has to ask if maybe it's not worth charging him but get his cooperation."
The custom-made timepiece by Terra Cielo Mare is described in court records as an example of a stream of illegal benefits flowing from Fiat Chrysler to labor leaders during a years-long conspiracy designed to wring concessions from the UAW.
Federal prosecutors have left clues to Marchionne's involvement in hundreds of pages of federal court filings that referenced, but never publicly identified, the auto executive. Instead, the government identified Marchionne only as "FCA-1" as the investigation continued and prosecutors secured convictions against three Fiat Chrysler officials.
Fiat Chrysler released a statement to The News on Wednesday: “FCA US continues to cooperate fully with this investigation. The company also confirms that Sergio Marchionne met with the government in July 2016, in the spirit of full cooperation, where he answered questions to the best of his recollection. As the U.S. attorney’s investigation is ongoing, the company cannot comment further.”
The U.S. Attorney's Office would not discuss the meeting with Marchionne or say whether he was a target of an investigation that has led to seven convictions. Those include Iacobelli, who is scheduled to be sentenced Aug. 27.
Iacobelli was accused of using more than $1 million in Fiat Chrysler funds on a Ferrari 458 Spider convertible, which he outfitted with an “IACOBLI” vanity plate, a pool at his Rochester Hills mansion and two solid-gold, bejeweled Montblanc fountain pens that cost $35,700 each.
The first reference to Marchionne in federal court records is on page 19 of a 42-page indictment last year charging Iacobelli and Holiefield's widow with conspiring to violate federal labor laws.
The indictment outlines a scheme by Fiat Chrysler executives to keep UAW officials "fat, dumb and happy." Executives funneled money and gifts to labor leaders through the jointly operated UAW-Chrysler National Training Center, according to the indictment.
UAW leaders who served on the training center's board were given credit cards paid for by the automaker. UAW officials were given free rein to buy personal items, including $1,000 pairs of Christian Louboutin shoes, jewelry, purses, and a $2,180 shotgun for Jewell, according to court records and interviews. Jewell has not been charged with a crime.
In January 2014, then-UAW President Bob King was investigating how Holiefield and other union officials were using training center credit cards, according to the indictment.
That month, King’s senior assistant asked an unnamed Fiat Chrysler official for the credit card records, according to the Iacobelli indictment.
The unnamed Fiat Chrysler official emailed Iacobelli.
“We can’t provide the requested type of information to such people,” the email read. “If we tell (King and his assistant) that we aren’t giving them (expletive), what are they going to do, tell (FCA-1) we are being uncooperative? If so, so what?”
“We are providing nothing,” Iacobelli responded, according to the indictment. “We’re gonna have fun with these evil people.”
The conspiracy is damaging and sows distrust among UAW members, Henning said.
"More than anything, it shows union leadership appears to have been bought with trinkets," he said. "The mistrust this fosters among union members is incredible."