UAW scandal embroils VP Ashton's right-hand man

Robert Snell Breana Noble
The Detroit News
Retired UAW Vice President Joe Ashton, left, and former UAW officials Mike Grimes and Jeff Pietrzyk are accused in a federal criminal case of scheming to defraud UAW members and a training center for blue-collar workers.

 (Max Ortiz/The Detroit News)2017

Detroit — An alleged criminal conspiracy involving former United Auto Workers Vice President Joe Ashton has embroiled his right-hand man, who is accused of taking kickbacks and securing hundreds of thousands of dollars for his boss, The Detroit News has learned.

Three sources familiar with the ongoing FBI investigation identified Ashton's top lieutenant, Jeff Pietrzyk, as one of two unnamed UAW leaders accused in a federal criminal case last week of scheming to defraud union members and a training center for blue-collar workers. His identification represents continued fallout from a years-long investigation that has led to eight convictions and raised questions about the sanctity of labor negotiations.

Jeff Pietrzyk

Pietrzyk, 74, of Grand Island, New York, was referenced in a criminal case filed last week against another top former UAW official, Mike Grimes. Grimes is accused of receiving $1.99 million in kickbacks and conspiring with two unnamed UAW leaders to demand money in exchange for awarding lucrative contracts to UAW vendors.

Three sources familiar with the investigation identified Pietrzyk as one of the unnamed UAW leaders. The identification came one day after four sources identified Ashton as the other unnamed UAW leader who prosecutors have accused of demanding $550,000 in bribes and kickbacks from union contractors.

The ongoing investigation brings a sharp focus on key members of the UAW team that negotiated new contracts with General Motors Co. in 2011 and 2015.

“This raises questions about how vigorously they represented UAW members," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "If they were willing to take kickbacks, they may have been more about protecting their own position than trying to get the best deal possible out of General Motors.

"They all have a bullseye on their back."

Three members of the 2011 UAW negotiating team are alleged to have demanded or received kickbacks and bribes from union contractors.

Pietrzyk, who within UAW circles was known by the nickname "Paycheck" due to his difficult-to-pronounce last name, could not be reached for comment and did not respond to messages Monday. He has not been charged with wrongdoing.

In 2011, Ashton, Pietrzyk and Grimes sat on the UAW team that negotiated a new contract with GM, serving alongside former UAW President Dennis Williams. Williams, who retired last year, was linked to the corruption scandal and accused of directing subordinates to use funds from Detroit’s automakers to pay for union travel, meals and entertainment.

Grimes and Williams also served on the 2015 negotiating team alongside UAW Vice President Cindy Estrada. Grimes was Estrada's top assistant and served on the board of her personal charity.

UAW President Dennis Williams, Vice President Cindy Estrada and her assistant, Mike Grimes, served on the 2015 negotiating team.

The News reported in late 2017 that federal investigators were interested in Estrada and Ashton. At the time, investigators had issued subpoenas for information about training centers financed by GM and Ford Motor Co. that are operated jointly with the union.

In April, The News revealed federal agents were investigating whether UAW leaders received kickbacks after giving business executives contracts to produce union-branded clothes and trinkets. Approximately 10 promotions company executives had been subpoenaed to produce documents sought by a federal grand jury and the subpoenas helped explain the government's interest in Ashton and Estrada, sources told The News.

Unlike the corruption crackdown that roiled the union's Fiat Chrysler Automobiles NV department and led to the convictions of eight people, prosecutors have not to date accused union or GM officials of trying to corrupt the bargaining process.

Instead, prosecutors describe a classic corruption scheme involving alleged secret payoffs, rigged bids and contracts to produce more than $15.8 million worth of union-branded trinkets, including backpacks, jackets and commemorative watches.

The kickback case focused on Grimes and the two senior UAW officials is potentially more serious than the UAW scandal involving Fiat Chrysler, legal experts said.

Grimes was charged with wire fraud conspiracy and money laundering, charges punishable by up to 20 years in federal prison. Labor law violations that comprised the bulk of the UAW-Fiat Chrysler scandal are five-year felonies.

"These are serious charges," Henning said. "That's not small-time."

Pietrzyk, who is identified by prosecutors in court filings as "Union Official 2," served as Ashton's top administrative assistant until retiring in 2014 and was paid $110,055, according to UAW regulatory filings. He and Ashton also served on the board of the UAW-GM Center for Human Resources, a jointly operated training facility for blue-collar workers financed by GM.

Retired United Auto Workers General Motors Vice President Joe Ashton, inset, and the UAW-GM Center for Human Resources, whose operations are now subject to federal scrutiny as a probe of training centers spreads to all three Detroit carmakers.

The UAW’s constitution bans the acceptance of kickbacks, and the union has introduced policies to reduce corruption. At its annual convention in June 2018, UAW leaders unveiled a "clean slate" agenda, a series of reforms. They include requirements for a three-bid process for awarding contracts, stricter oversight of staff expenditures, requirements for disclosing conflicts of interests and a gift ban.

The kickback scandal, however, continued despite the "clean slate," according to prosecutors.

The criminal case against Grimes involves vendors being awarded contracts from the training center to produce UAW-branded merchandise in exchange for paying bribes and kickbacks.

For example, in 2011, Ashton proposed buying 50,000 UAW-GM jackets using training center funds, according to sources familiar with the investigation and court records.

Grimes recommended a family-owned company identified in court records as "Vendor A," which was awarded a $6 million contract, prosecutors said.

Then, prosecutors say "Union Official 2" told Grimes to demand a $300,000 kickback for "Union Official 1," who sources said is Ashton.

Pietrzyk served as the middleman, delivering the kickbacks to Ashton and was given $30,000, according to the government.

General Motors Chairman and CEO Dan Akerson, left,  shakes hands with United Auto Workers President Bob King, marking the ceremonial start of labor negotiations between GM and the UAW as GM Vice President Labor Relations Cathy Clegg and UAW Vice President GM Joe Ashton look on Wednesday, July 27, 2011 at the Detroit-Hamtramck Assembly Plant in Detroit, Michigan.

Ashton, 71, of Ocean View, New Jersey, continued receiving kickbacks for two years after he was promoted to GM's board of directors in 2014, according to the court records.

He resigned in December 2017, one month after The News linked him to the criminal investigation.

Ashton is the highest-ranking official linked to a criminal investigation into whether money and illegal benefits corrupted UAW leaders and the collective bargaining process.

Pietrzyk, meanwhile, played a central role in a $4 million watch contract awarded to Ashton's chiropractor, prosecutors said.

In 2013, the UAW-GM training center awarded a $3.97 million contract to New Jersey chiropractor Marc Cohen, according to sources and the criminal case.

Ashton, who helped negotiate the contract, demanded a $250,000 kickback, prosecutors allege.

Marc Cohen

Cohen hand-delivered the kickbacks to the UAW vice president's house, prosecutors said. Ashton also told his chiropractor to pay kickbacks to Pietrzyk, according to the criminal case against Grimes and sources familiar with the investigation.

Pietrzyk received $95,000 from the chiropractor and gave $25,000 to Grimes, according to the government.

Grimes is expected to plead guilty Aug. 27 in federal court in Ann Arbor.

"I can neither confirm nor deny whether Mr. Grimes has or will cooperate in the ongoing investigation by the U.S. Attorney's Office," said Michael Manley, a lawyer for Grimes.

Ashton’s connection shows the broadening scope of the probe and begs questions about whether prosecutors will file new criminal charges against other high-level UAW officials, said Erik Gordon, a professor at the University of Michigan’s Ross Business School.

“Union members traditionally will tolerate a certain amount of corruption as long as leadership gets them the goods,” he said. "You have to wonder whether (UAW leaders were) taking this seriously enough or whether they think 'if we get a good contract, all will be forgotten.'”

Given what federal investigators have found so far, Gordon said he would expect them to keep digging.

“(The allegations) involve people who are negotiating for you but made money on the side. Union members could wonder if union leaders pulled any punches. They don’t need the kind of evidence a federal prosecutor needs. All they need is to be worried about whether negotiators pulled any punches for them to demand change. I think a reform slate of candidates for UAW leadership has as good a chance of winning now as ever.”

UAW members elected international leaders during a constitutional convention in 2018. The next one is slated for June 2022.

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