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Corrupt Fiat Chrysler exec gets 5.5 years in prison

Robert Snell
The Detroit News
Alphons Iacobelli, far right, leaves the U.S. District Court in Detroit on Aug. 1, 2017, with wife Susanne Piwinski-Iacobelli and lawyer David DuMouchel.

Detroit — Alphons Iacobelli, the former Fiat Chrysler vice president for employee relations who bought a Ferrari, bejeweled pens and a backyard pool with money siphoned during a conspiracy involving the automaker and the United Auto Workers, was sentenced to 5 ½ years in federal prison Monday.

It is the stiffest sentence issued by U.S. District Judge Paul Borman during a case that has led to seven convictions, reshaped the top ranks of the auto industry as FBI agents investigate all three Detroit automakers and raised troubling questions about the conduct of the late Fiat Chrysler CEO Sergio Marchionne.

Sergio Marchionne

Iacobelli, 59, of Rochester Hills was sentenced seven months after pleading guilty to one count of conspiracy to violate the Labor Management Relations Act and one count of subscribing a false tax return.

The specter of more people being charged during the ongoing investigation dominated Iacobelli's sentencing. The full extent of Iacobelli's ongoing cooperation is sealed in federal court, but prosecutors have identified additional targets and Iacobelli could spend less time in prison if his help proves substantial.

"It is difficult to imagine a more egregious offense and a more impactful offense of corrupting the labor management process," Borman said.

Iacobelli, head bowed and hands clasped, apologized to the court.

"I fully accept responsibility," Iacobelli said while his wife sat in the front row of the courtroom. "I am extremely sorry for what I did."

Several auto workers attended Iacobelli's sentencing hearing, including UAW retiree Richard Sheets, 63, dressed in a black T-shirt with the words "Betrayed UAW Worker" emblazoned on the back.

Sheets said he felt betrayed by Iacobelli's crimes.

"People lost their jobs, people lost their benefits," Sheets told reporters.

Iacobelli is the second person sentenced so far. The late UAW Vice President General Holiefield's widow, Monica Morgan-Holiefield, was sentenced to 18 months in federal prison last month.

The conspiracy dates to at least 2009 and was designed to wring concessions from the UAW by funneling money and illegal gifts to labor leaders.

"He wishes he could go back years and make different decision, but he can't," Iacobelli's lawyer David DuMouchel told the judge. "Al Iacobelli doesn't get a do-over. The hardest part is Mr. Iacobelli has to face the fact he brought it on himself at a time when his life went off the rails."

The conspiracy was born, in part, out of the UAW’s financial problems.

Nancy Adams Johnson, a former labor leader awaiting sentencing for her role in the scandal, told federal prosecutors that UAW President Dennis Williams directed subordinates to use funds from Detroit’s automakers to pay for union travel, meals and entertainment.

Former UAW President Dennis Williams.

Williams, the union's president from 2014 until mid-June, has not been charged with any wrongdoing. He is the highest-ranking labor official linked to the investigation.

Iacobelli, meanwhile, admitted paying more than $1.5 million to UAW officers and employees to sway union contract negotiations during a scheme that involved funneling money and illegal gifts to labor leaders through a training center funded by Fiat Chrysler. Those illegal payments included $1,000 pairs of designer shoes, first-class travel, furniture, lavish meals, parties, jewelry and custom-made Italian watches.

The scheme involved at least three co-conspirators: Fiat Chrysler, the UAW and the UAW-Chrysler National Training Center, prosecutors said.

The former labor negotiator's plea deal indicates the conspiracy started before Iacobelli and continued after he was fired in 2015.

The News has reported that Marchionne gave an expensive Italian watch to Holiefield and failed to disclose the gift while being questioned by federal investigators.

Marchionne, 66, was never charged with a crime before he died July 25 in a Zurich hospital.

Iacobelli's use of Fiat Chrysler money drew headlines.

Former Fiat Chrysler executive Alphons Iacobelli unloaded the 2013 Ferrari 458 Spider amid an FBI investigation into the exotic sports car purchase, records show.

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.

Former Fiat Chrysler Vice President Alphons Iacobelli was Chrysler's chief labor negotiator and indicted in a scheme to keep center officials “fat, dumb and happy,” according to the indictment. He's also accused of siphoning more than $1 million in training center funds that were allegedly spent on a $365,000 Ferrari, two $35,700 fountain pens, a pool, outdoor kitchen and spa at his Rochester Hills mansion.

Federal investigators have seized both pens. Iacobelli unloaded the Ferrari during the investigation.

Iacobelli also has agreed to pay $835,523 in restitution to the Internal Revenue Service.

The training center's lawyers are fighting to secure restitution, arguing the center was victimized by the conspiracy.

The judge will determine later if the center will receive restitution and how much.

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," Assistant U.S. Attorney David Gardey wrote in a court filing. 

From 2009 to last year, the chargebacks saved the UAW more than $9 million, according to the government.

In a statement, the UAW called Iacobelli's action's "personal greed."

"Whatever may be said about the misconduct of others at the (National Training Center), these thefts from the NTC by Al Iacobelli had nothing to do with trying to influence collective bargaining.  They had everything to do with Al Iacobelli’ s personal greed. And the NTC has now sued Mr. Iacobelli to recover the millions of dollars he stole from it," the statement said.

"There are many layers of checks and balances in our contract negotiations and ratification, including membership voting, and we are confident the terms of our UAW contracts were not impacted by Iacobelli’ s fraudulent conduct at the NTC.

"The UAW has and continues to respond by making changes to ensure this type criminal behavior will not happen again.”

A statement from Fiat Chrysler reiterated that the company considers itself a victim of Iacobelli and other "rogue individuals."

"FCA US also confirms that the conduct of these individuals – for their personal enrichment and neither at the direction nor for the benefit of the company –  had no impact on the collective bargaining process," the statement reads. "Rather, the behavior involved a small number of bad actors who stole training funds entrusted to their control and co-opted other individuals who reported to them to carry out or conceal their activity over a period of several years.” 

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