Corrupt FCA exec reported to Marchionne amid scheme
Detroit — Federal prosecutors Monday drew a direct line between former Fiat Chrysler CEO Sergio Marchionne and Alphons Iacobelli amid a multimillion-dollar conspiracy to corrupt labor negotiations with the United Auto Workers.
In a federal court filing, prosecutors noted that Iacobelli, as Fiat Chrysler's top labor negotiator, reported directly to Marchionne regarding certain aspects of Fiat Chrysler's negotiations and relationship with the UAW.
It was the first time the government referred to Marchionne by title and served as the government's strongest statement about the late auto CEO and a years-long criminal conspiracy designed to wring concessions from the UAW by funneling money and illegal gifts to labor leaders. Those illegal payments included $1,000 pairs of designer shoes, first-class travel, furniture, lavish meals, parties, jewelry and custom-made Italian watches.
The conspiracy continued after Iacobelli left Fiat Chrysler in 2015, prosecutors said while adding that the former labor negotiator has helped expose "vast labor-management corruption" and is "assisting in efforts to end it."
"The seriousness of the corruption of the labor-management relationship cannot be overstated," Assistant U.S. Attorney David Gardey wrote in the filing. "Because of FCA’s conduct, through Iacobelli and others, tens of thousands of hourly UAW workers were deprived of the representation that they deserved and paid for in union dues."
Prosecutors made the allegations in a federal court filing ahead of Iacobelli's sentencing for violating federal labor laws and a tax crime. The government wants Iacobelli, 59, of Rochester Hills, to spend more than six years in federal prison when U.S. District Judge Paul Borman sentences the former auto executive Aug. 27.
The filing came four days after The News reported that 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.
In the filing Monday, prosecutors noted that UAW officials received multiple "custom-made Italian watches," but stopped short of saying Marchionne gave the gifts.
Marchionne, 66, was never charged with a crime before he died July 25 in a Zurich hospital.
A Fiat Chrysler spokeswoman declined to comment on the federal filing.
The watches, money and illegal gifts were part of a conspiracy to buy labor peace from a cash-strapped UAW, prosecutors said.
Iacobelli is the highest-ranking Fiat Chrysler official convicted in the conspiracy. Seven people have been convicted, including Holiefield's widow, Monica Morgan-Holiefield, who was sentenced to 18 months in federal prison last month.
Iacobelli funneled millions to UAW officials through the jointly operated UAW-Chrysler National Training Center.
He also enjoyed a lavish lifestyle bankrolled by Fiat Chrysler cash.
"This additional income that Iacobelli received took many forms, including a Ferrari, jewel-encrusted pens, hundreds of thousands of dollars in improvements and additions to the pool at his residence, personal spending on his credit cards, and more," the prosecutor wrote.
The filing Monday also came one week after Iacobelli's lawyer pushed the judge to sentence the auto executive to less than four years in prison.
Iacobelli could be sentenced to eight years in prison under terms of a plea deal. But prosecutors said he deserves a break for admitting responsibility and cooperating with the ongoing investigation.
". . . the sentence also should account for Iacobelli’s acceptance of responsibility and his sincere efforts at revealing vast labor-management corruption and assisting in efforts to end it," Gardey wrote.
According to prosecutors, one scheme that continued after Iacobelli's departure was reimbursing the UAW for salaries and benefits of labor officials assigned to the training center. The reimbursement is called a "chargeback."
A "large number" of UAW officials provided little, if any, work at the training center, according to the government, which called the practice a "political gift" from Fiat Chrysler to the union.
"It was merely a corrupt mechanism whereby FCA money could be used by the UAW to keep the UAW’s costs down," the prosecutor wrote.
From 2009 to last year, the chargebacks saved the UAW more than $9 million, according to the government.