Feds probe whether Detroit carmakers helped fund Dennis Williams’ UAW cabin

Robert Snell
The Detroit News

Detroit — Federal agents are investigating whether Detroit automakers indirectly paid to build a lakefront home for retired United Auto Workers President Dennis Williams at the union's northern Michigan resort, three sources told The Detroit News. 

Investigators have issued grand jury subpoenas, including at least one to a contractor who worked at the UAW Black Lake Conference Center, to determine whether as much as $1 million from Detroit automakers was spent on personal luxuries for union leaders, according to sources familiar with the investigation who are not authorized to speak publicly. Those luxuries include a three-bedroom, three-and-a-half bath, 1,885-square-foot home for Williams, boats and a dock exclusively used by UAW officers, the sources said. 

The United Auto Workers built a new lakefront home for retired President Dennis Williams at a union retreat in Onaway.

The government is trying to determine whether money from General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV was funneled through jointly operated training centers to pay for perks for UAW leaders at the 1,000-acre Black Lake retreat in Onaway either with or without the consent of auto executives. The inquiry is among the reasons why a team of investigators from the FBI, Internal Revenue Service and Labor Department raided the retreat on Aug. 28 as part of a series of nationwide searches targeting UAW leaders, the sources said.

The UAW used its own money to pay for the Williams home and renovate an adjacent cottage used by the retired president, union spokesman Brian Rothenberg told The News. The expenses were part of a $10 million Black Lake renovation project approved by the UAW's governing board approximately four years ago, he said.

“Black Lake is a 50-year old facility that welcomes tens of thousands of UAW members and the public each year," Rothenberg wrote in an email to The News. "There were renovations to those facilities during President Williams' term of office done by UAW Black Lake employees who belong to the United Steelworkers union.”

There have been no criminal charges filed relating to the Black Lake investigation, which is unfolding amid a broader four-year investigation of corruption within the U.S. auto industry that has led to charges against 11 people.

The automakers finance three training centers in Metro Detroit that are overseen by auto executives and UAW leaders, including vice presidents. One source describes UAW officials jockeying to succeed Williams as president by trying to secure the largest amount of training center money from automakers to pay for Black Lake perks.

The UAW could legally justify spending training funds on improvements at Black Lake that benefit workers, such as renovating conference rooms or an auditorium, legal experts said. But knowingly spending money on perks for senior UAW officials could violate federal labor laws barring auto executives from giving money or things of value to labor leaders, the experts said.

"That's where the impropriety comes in," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "They're not allowed to give any benefit, otherwise it looks like they’re being bought off."

UAW president Dennis Williams calls for auto workers to demand their rights during a speech before thousands gathered at a pro-union rally near Nissan Motor Co.'s Canton, Miss., plant, Saturday, March 4, 2017. Participants marched to the plant to deliver a letter to the company demanding the right to vote on union representation to address better wages, safe working conditions and job security. (AP Photo/Rogelio V. Solis)

The training centers host seminars and conferences at Black Lake, which could justify paying for maintenance at the 49-year-old retreat. But investigators are probing whether the need to maintain Black Lake was a ruse for steering money to pay for Williams' new lakefront home and other benefits, The News has learned.

"If the union misled Ford, GM and Fiat Chrysler, it could be mail or wire fraud," Henning said. "Because if you tell someone you are going to use the money for this and then end up diverting it to a personal use, that can be a scheme to defraud."

The entrance to the UAW property on Black Lake, south of Cheboygan, is seen on October 22, 2018.

The Black Lake retreat has drawn increased scrutiny from the government in the year since The News revealed details about the lakefront home and boats purchased by Williams and a UAW subsidiary.

As part of the investigation, an IRS agent sent a grand jury subpoena in early 2018 to Southfield-based audio/visual firm Bluewater Technologies Group, CEO John Tracy told The News.

Tracy said the company was hired to install audio/visual equipment at Black Lake and the UAW-Ford training center in 2015 and 2016. The work totaled approximately $435,000.

Bluewater fully cooperated with the subpoena, Tracy said.

"Bluewater did not, and has not, engaged in any wrongdoing of any kind," Tracy wrote in an email to The News.

After being contacted by The News on Sept. 11, Bluewater's lawyer obtained a letter from the U.S. Attorney's Office in Detroit stating Bluewater Technologies "is not presently the target of an investigation."

"This investigation involves, in general terms, corruption within the United Auto Workers union and related employers," Assistant U.S. Attorney David Gardey, chief of the public corruption unit, wrote to Bluewater's lawyer. "I am providing this information to you in anticipation of your client's continued, complete, and truthful cooperation in this investigation."

UAW President Gary Jones, left, received an award in 2018 for raising money for the union's political action committee from former UAW President Dennis Williams, right. Both of their homes were raided by federal agents Aug. 28.

Federal agents have spent four years investigating corruption within the top ranks of the UAW and have implicated Williams and President Gary Jones in a conspiracy to spend member dues on personal luxuries, according to sources and a federal court affidavit written by Labor Department Special Agent Andrew Donohue. Those luxuries include more than $1 million spent in Palm Springs on private villas, food, liquor, cigars and clothes.

The Black Lake inquiry sheds light on steps taken by investigators since the government expanded the investigation two years ago to determine whether UAW officials benefited from money funneled through all three training centers. 

Government officials declined to discuss the Black Lake raid or simultaneous searches in California, Missouri, Wisconsin and Michigan, including the homes of Williams and Jones.

An FBI agent enters the home of UAW President Gary Jones during an Aug. 28 search of the labor leader's home in Canton Township.

But in a sealed search warrant affidavit, investigators would have had to persuade a federal magistrate judge that they had probable cause to believe a crime had occurred and that evidence would be found at the locations, including Black Lake.

Besides looking into whether money was misspent, agents are investigating whether executives from Ford, Fiat Chrysler or GM, which is the target of a four-week-old UAW strike, knew about how money was being spent at Black Lake, the sources said. 

Officials with Detroit's three automakers declined comment about the government's focus on Black Lake.

"As always, we cooperate with any inquiries," Ford spokeswoman Kelli Felker wrote in an email to The News.

GM spokesman Pat Morrissey said the company is "fully cooperating with the government's investigation." 

The UAW and Detroit automakers operate three training centers in Metro Detroit. They are (clockwise from top left): the UAW-GM Center for Human Resources in Detroit; the UAW-Ford National Programs Center in Detroit; and the UAW-Chrysler National Training Center in Warren.

The wide-ranging investigation of auto industry corruption has revealed attempts by Fiat Chrysler executives to influence labor negotiations by bribing UAW officials with training center money.

Before former Fiat Chrysler Vice President Alphons Iacobelli was sentenced to 5½ years in federal prison last year for his role in the scandal, he admitted paying more than $1.5 million in training funds to UAW officers to sway labor negotiations.

The Dennis Williams cottage includes a master bedroom with a secret storage room hidden behind a bookshelf.

The investigation brought federal agents to the Black Lake retreat Aug. 28. The retreat, a half-hour south of Cheboygan, is hallowed UAW ground.

The ashes of former UAW President Walter Reuther and wife May were scattered on the center’s grounds after the couple were killed in an airplane crash nearby in 1970. Opened the same year, the retreat features a campground, gym, Olympic-size pool and an adjacent golf course.

The retreat is financed with interest from the union's $721 million strike fund. The strike fund is financed by worker dues.

The UAW considered selling the Black Lake retreat in early 2010 during the Great Recession, citing declining membership. At the time, the retreat had lost an estimated $23 million during the previous five years and the UAW was forced to borrow to keep it afloat, according to Labor Department filings.

Last fall, the UAW was finishing construction on the Williams home. The home's design plan includes granite counters, stainless-steel appliances, a wood-burning fireplace, a wine cooler, a patio and a storage room hidden behind a hinged bookshelf door, according to blueprints obtained by The News.

The Dennis Williams home is on the edge of Black Lake at the UAW retreat in Onaway.

The UAW used nonunion labor to build the home for Williams after the union solicited bids that showed the project would cost more than $1.3 million.

Williams retired in June 2018 and spent several weeks this summer at the Black Lake home, sources told The News. The Black Lake retreat is listed as his address on state records for two boats purchased last year that would have retailed for approximately $92,000, according to state watercraft registrations. 

One, a 24-foot Berkshire pontoon boat, is promoted as a "bar boat" for entertaining people. The 2019 model retails for approximately $55,000.

Williams and his wife last year also registered a Lund 1875 Crossover XS fishing and skiing boat. The boat features a 150-hp motor that cost $13,000, bringing the overall price to approximately $37,000. 

There is no indication loans were obtained to buy the boats, according to Secretary of State records.

Feds aimed guns, handcuffed ex-UAW boss Dennis Williams during raids

It is unclear what was seized during the search at the UAW retreat, but sources said investigators searched the Williams home overlooking Black Lake.

The UAW has provided homes at Black Lake for generations of retired presidents, but the Williams home was the first constructed during a federal investigation into union spending.

"Importantly, the new cabin is, and always will be, the property of the UAW, and is not owned by Dennis Williams," Rothenberg, the UAW spokesman, wrote in an email to The News.  "It is a permanent asset of the UAW’s Black Lake Education Center.” 

This cabin near the lakefront home of Dennis Williams also underwent renovations. Williams lived in this cottage during construction of his new lakefront home, sources said.

In court filings, prosecutors and federal investigators have portrayed some UAW vice presidents and regional directors as greedy, ambitious schemers. The UAW officials tried to ingratiate themselves with bosses, including Williams, by spending member dues and training money on cigars, golf, meals and private villas in the Palm Springs area.

UAW Vice President Norwood Jewell was one such official. Until retiring under a cloud of suspicion in January 2018, Jewell helped oversee the UAW-Chrysler National Training Center.

Norwood Jewell, UAW vice president, reimbursed the training center for a shotgun and luggage purchased with training center funds.

Jewell was sentenced to 15 months in federal prison in August for accepting bribes and receiving illegal payments from Fiat Chrysler that were spent on parties for members of the union's governing board. The board includes regional directors, vice presidents and the UAW president.

From 2014-15, when Williams was president, Jewell hosted two parties paid for by Fiat Chrysler that cost more than $50,000. One party featured a "Miami Vice" theme with "ultra premium" liquor, hand-rolled cigars and "kandy girls," provocatively dressed women who lit cigars for senior UAW leaders, according to government filings.

During a 2015 UAW party paid for with Fiat Chrysler cash, attendees received a wine bottle honoring union Vice President Norwood Jewell.

"It is apparent that the blow-out party at the (UAW-Chrysler National Training Center) by Jewell was an opportunity for Jewell to showcase his position and to curry favor with the UAW’s leadership, with an eye towards future union leadership positions for Jewell," Gardey, the federal prosecutor, wrote in a court filing

Jones, the UAW president, is portrayed as spending member dues to boost his career when he headed a union regional office in Missouri. 

His deputy Danny Trull told investigators about Jones' ambitious behavior, according to an affidavit filed in federal court that refers to Jones as "UAW Official A."

Trull believed "UAW Official A" spent money on villas, cigars and other Palm Springs luxuries "to curry favor" with Williams, according to the affidavit.

Investigators also are interested in the UAW's fleet of watercraft at Black Lake, The News has learned.

On June 9, 2015, the UAW subsidiary Union Building Education Inc. registered two Lund fishing boats and two Aqua Patio pontoon boats, according to the Michigan Secretary of State. The boats were worth $65,000 based on average retail price data compiled by J.D. Power.

The News reported about the government's focus on Black Lake last year and revealed the boat purchases. The UAW spokesman said the union has since returned the boats to the dealership but would not elaborate.

Michigan Secretary of State records show the UAW subsidiary still owns the pontoon boats. Gordon Day, president of a fire suppression company, bought one of the fishing boats July 3.

The UAW sold this Lund fishing boat about two months ago amid the federal investigation into union spending.

The Alden resident said he bought the boat on consignment from Maple Bay Marine near the Black Lake retreat.

"Of all the frickin' boats I got to buy," Day, 58, said in an interview, "I get wrapped up in the UAW."

The boat was listed for $8,000, he said. Day offered $7,000.

"They ended up biting on that," said Day. "It was a hell of a deal, to be honest with ya'."


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