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Detroit — Federal agents are investigating whether leaders of the United Auto Workers received kickbacks after giving business executives contracts to produce union-branded clothes and trinkets, four sources told The Detroit News. 

Approximately 10 promotions company executives have been subpoenaed to produce documents sought by a federal grand jury, two sources told The News. The subpoenas mark another phase of a federal corruption investigation and could lead to more criminal charges in a case that has yielded eight convictions, including former vice presidents of the UAW and Fiat Chrysler Automobiles.

The subpoenas are part of a broader investigation into whether UAW officials received money or things of value directly or through their tax-exempt nonprofits and help explain the government's interest in UAW Vice President Cindy Estrada and her predecessor, Joe Ashton. Ashton resigned from the board of General Motors Co. in December 2017, one month after The News reported investigators probing corruption within the U.S. auto industry were interested in him and Estrada

The subpoenas shed light on the so-called "trinkets and trash" industry, a collection of companies vying for a piece of the more than $29 million spent in the last five years on promotion, advertising and UAW-branded items distributed at union rallies, conventions and factories. The items include shirts and lanyards, Frisbees and flash drives, pencils and ponchos, Kangolhats, key chains, and novelty items like bowling ball buffers.

MOBILE USERS:  Trinkets and trash: A database of UAW spending on swag

“Whenever there is a large pot of money, the government is going to try and figure out whether it was spent properly or not,” said Peter Henning, a Wayne State University law professor and former federal prosecutor. “Whether they find anything, that’s another question.”

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Prosecutors have not filed charges against anyone related to the ongoing investigation into trinkets and trash deals.

Federal agents also are investigating UAW officials' use of almost $1 million of membership dues on condominiums, liquor, food and golf in California, where Gary Jones held annual conferences before becoming UAW president last year.

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Tour golf courses and resorts frequented by UAW officials in Palm Springs, Calif., where the union has spent more than $1 million in recent years. Robert Snell, The Detroit News

A parallel investigation is focused on whether senior UAW staff were forced to contribute to accounts originally established to buy flowers for auto workers' funerals, and whether union bosses kept the cash.

In the promotions investigation, federal agents are probing whether company executives inflated the cost of UAW-branded clothes and trinkets and shared the extra money with UAW leaders, two sources told The News.

There are several UAW-related pots of money available for trinkets and trash companies. Companies vie for contracts awarded by the UAW, from training centers jointly operated with Fiat Chrysler, GM and Ford Motor Co., and from the union's political action committee.

The pots are funded several ways. 

UAW contracts are paid with money from member dues.

Detroit's automakers fund training centers according to a formula negotiated with the UAW. Fiat Chrysler, for example, gives the UAW-Chrysler National Training Center a nickel for every hour worked by union members.

The UAW's political action committee is funded by voluntary contributions from union members, retirees and relatives.

Since 2013, the training centers have spent more than $22.5 million on promotions and advertising, according to federal tax filings reviewed by The News. Publicly available tax filings do not identify which firms received the money, which also was spent sponsoring sporting events, donating bottled water to Flint residents, and other purposes beyond trinkets.

The UAW and its political action committee, meanwhile, have spent more than $6.7 million on trinkets since 2013, according to Labor Department and Federal Election Commission records.

“Many times, the swag is for the UAW to promote the union to its own members and the community,” said Kristin Dziczek, vice president of industry, labor & economics at the nonprofit Center for Automotive Research. “If you see someone wearing a UAW T-shirt at the grocery store, it gets people thinking a certain way about the union.”

The UAW and its political action committee require three bids before awarding contracts based primarily on pricing and "timing of the product," according to UAW spokesman Brian Rothenberg.

"All three joint training centers have and enforce a three-bid system as well,"  Rothenberg wrote in an email to The News. "Those purchases are conducted independently by each of the separate joint training centers, all of which have tightened their enforcement and controls."

The UAW has vice presidents assigned to GM, Ford and Fiat Chrysler. The vice presidents handle contract negotiations with automakers, oversee training centers and nonprofit charities that, in several cases, have received more than $1 million in contributions in recent years.

Estrada, who oversees the union's Fiat Chrysler department after being reassigned from GM last year, chairs the Cynthia Estrada Charity Fund. It is unclear whether the nonprofit has received contributions from trinkets and trash contractors because donors are not identified in public tax filings.

"GM has been fully cooperating with the government on its investigation of the UAW Center for Human Resources, and will continue to do so," company spokesman Pat Morrissey wrote in an email to The News. "As a matter of practice, we do not comment on the specifics of an ongoing investigation."

He also would not address whether GM or the training center had donated money to charities controlled by Estrada or Ashton.

Ford spokesman Said Deep would not answer whether the automaker or its training center had contributed money to charities controlled by UAW President Gary Jones or former President Dennis Williams, who retired last year.

"We are cooperating with authorities," Deep wrote in an email to The News. "We believe in the UAW-Ford National Programs Center and their operations that benefit approximately 56,000 members of our UAW-Ford hourly workforce and the broader community."

Estrada declined comment through a UAW spokesman. Ashton's criminal defense lawyer Jerome Ballarotto did not respond to a message seeking comment.

"The UAW has now instituted a policy that prohibits any charity run by a UAW official from accepting donations from any vendor, joint training center, or employer," Rothenberg said. "Many of the charities run by UAW people are now dormant."

The investigation of trinkets and trash companies has its roots in the earliest days of the corruption prosecution.

In July 2017, Monica Morgan-Holiefield, widow of the late UAW Vice President General Holiefield, was indicted and accused of receiving illegal payments from Fiat Chrysler executives.

Prosecutors said the UAW-Chrysler National Training Center hired her company Wilson's Diversified Products in 2011 to provide shirts, key chains, coffee mugs and other novelty items.

"Wilson's Diversified Products was selected as a vendor without submitting a competitive bid or a quote...," prosecutors alleged in the indictment.

By July 2012, Fiat Chrysler executives who helped oversee the training center had approved paying her company more than $425,000 to the company, according to prosecutors.

"FCA officials viewed those payments as an investment in 'relationship building' with UAW Vice President General Holiefield," prosecutors alleged.

The investigation into the trinkets and trash industry has expanded since Morgan-Holiefield was indicted in summer 2017, four sources told The News.

Executives of some of the highest-paid promotions companies have been subpoenaed to produce documents sought by federal investigators, sources told The News. 

The executives are from Impressions Specialty Advertising in Taylor and Custom Promotions in Southfield.

Impressions is a family business headed by company President Louise Leveque of Dearborn. Husband Al Leveque is a company director and son Jason Leveque has worked as sales manager.

Louise Leveque and son Jason Leveque have provided documents sought by investigators, The News has learned.

Their lawyers, Allison and Mark Kriger, declined comment, saying it was inappropriate to discuss pending investigations.

The UAW and its political action fund have paid Impressions more than $3.1 million since 2013, according to federal filings.

Neck wallets were ubiquitous at the 2013 UAW National Community Action Program (CAP) Conference in Washington, D.C., dangling from the necks of attendees. Impressions Specialty Advertising sold $17,512 worth of neck wallets and portfolios to the UAW that year.

In March 2017, Impressions Specialty Advertising sold the union $21,160 worth of T-shirts for a march in Mississippi, UAW filings show.

That coincides with a union march and rally near Nissan Motor Co.'s plant in Canton, Miss. Williams the UAW president at the time, delivered a speech during the rally while wearing a red shirt that also was worn by dozens of marchers.

Former UAW President Dennis Williams and other attendees wear matching red T-shirts at a March 2017 march and rally in Mississippi.

One of Impression Specialty Advertising's chief rivals for trinkets and trash contracts is Jason Gordon. The Huntington Woods businessman is president of several companies, including Custom Promotions, Idea Consultants and Organization Services of Michigan.

Custom Promotions and Organization Services have received more than $2.6 million from the UAW and its political action fund since 2013. It is unclear how much, if anything, Gordon's companies have received from the training centers.

Gordon's lawyer Christopher Andreoff declined comment.

Custom Promotions' trinkets occasionally play prominent roles in helping the UAW project the image of solidarity.

In 2015, UAW negotiators were at the bargaining table with Detroit's automakers. The union's negotiators and Fiat Chrysler executives attended the ceremonial handshake ceremony wearing dark blue polo shirts.

Even Fiat Chrysler CEO Sergio Marchionne, known for his trademark sweaters, wore one.

Custom Promotions sold $19,806 worth of polo shirts for the 2015 negotiations and $16,876 worth of negotiation jackets, according to the UAW's annual financial filing

During the ceremonial handshake between UAW and Ford leaders in 2015, Williams and his bargaining committee members appeared in matching dark-colored blazers with a gold UAW lapel pin over polo shirts that featured mini UAW logos on the collar.

UAW leaders wore matching blazers over Polo shirts branded with mini UAW logos during a press conference marking the start of 2015 contract negotiations. (Video: YouTube)

According to financial filings, the UAW bought $20,464 worth of jackets from Custom Promotions for the union's bargaining committee members.

Macomb County businessman Eric Flynn also provided documents and testimony in front of the federal grand jury investigating auto industry corruption.

The Tonic Events executive told The News he changed his Chesterfield Township production company’s name and split with a partner after becoming embroiled in the corruption scandal.

"It's a whole new Tonic," Flynn, 54, told The News in an interview.

Flynn said he testified in front of the federal grand jury after being subpoenaed in late 2015 or early 2016.

Flynn’s company counted Fiat Chrysler and the UAW-Chrysler National Training Center as clients, producing training videos, commercials and vehicle launches.

Tonic also produced embroidered shirts.

“We never got into the keychains and s--- like that,” Flynn told The News.

Then, UAW Vice President Norwood Jewell had a coming-out party at the training center in August 2014.

Fiat Chrysler executives spent $30,000 in worker training funds on the party, a bash that included “ultra-premium” liquor and strolling models who lit labor leaders’ cigars, according to prosecutors. The party favors were bottles of wine with custom labels featuring Jewell’s name.

“We were hired by the UAW to throw that party for Norwood Jewell,” Flynn said in an interview with The News.“The champagne and cigars were from us.”

Fiat Chrysler paid the $30,000 tab with money that was supposed to help train blue-collar workers, prosecutors alleged in court records.

“That’s one of the things the FBI subpoenaed from us,” Flynn said. “It was like a TV show. The FBI comes in and takes everything. They took my bank records going back 10 years, they took every document and it damn-near busted us. I’ve spent almost a year with the FBI, the Labor Department, the IRS, you name it.”

Federal agents were focused on whether Flynn’s company paid kickbacks to anyone to obtain contracts.

“They hammered me on that stuff,” Flynn said. “They flat-out asked us. But we never did.

“We are not a target” of the investigation, Flynn added. “We are basically a witness. Nothing we did was, you know, illegal."

Other vendors have had a hard time securing a larger piece of the trinkets-and-trash industry.

Steven Wojtkowiak runs a small silkscreen shop in Buffalo, N.Y., called Ameritee USA. The company has received $51,000 worth of work from the UAW and its political action committee in recent years. 

“There’s a lot of work there but it’s tough to break into (Metro Detroit),” Wojtkowiak said. “There are some huge vendors there and they’re pretty well embedded.”

Wojtkowiak, who has not been questioned by federal investigators, remembers a former salesman being approached by a UAW official years ago who promised to steer work to the silkscreen shop in exchange for a free vacation.

"I don’t give nobody nothing," Wojtkowiak said. "That’s why I struggle, probably."

rsnell@detroitnews.com 

(313) 222-2486

Twitter: @robertsnellnews

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