Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Monday, July 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Former Auto Union Head Charged in Sprawling Corruption Case

A federal judge in Detroit unsealed an indictment Thursday charging the former president of the powerful United Auto Workers union with fraudulently embezzling union money to pay for liquor, golf, cigars and private villas.

DETROIT (CN) – A federal judge in Detroit unsealed an indictment Thursday charging the former president of the powerful United Auto Workers union with fraudulently embezzling union money to pay for liquor, golf, cigars and private villas.

The 18-page indictment, docketed in U.S. District Court Judge Paul Borman’s court last Friday, is the latest development in a sprawling federal investigation into bribery, racketeering, embezzlement and conspiracy among the UAW’s top brass.

Gary Jones, the former UAW chief, is charged with conspiring with other top UAW officials to arrange kickbacks and siphon over $1 million of union money to fund his luxurious lifestyle.

Jones faces one count of conspiracy to embezzle union funds and using a facility of interstate commerce to aid racketeering activity, as well as one count of conspiracy to defraud the United States, according to the indictment.

He stepped down from his post in November amid calls for his removal, and is the latest UAW executive to be charged in the far-reaching investigation, bringing the total to nearly a dozen union officials in addition to at least one spouse and three Fiat Chrysler employees.

The former union president and other officials at UAW carried out their scheme in part by submitting vouchers for up to $750,000 of supposedly legitimate expenses for conferences at UAW Region 5, based in Hazelwood, Missouri. The former director of that regional office, Vance Pearson, pleaded guilty to a single charge of conspiring to embezzle union money in February. Pearson inherited the post from Jones, who sat atop the St. Louis-area office from 2012 to 2018.

“In reality,” the indictment says, “the vouchers concealed the true destination of the funds and the true purpose of the expenses, which was for the personal benefit of select senior UAW officials.”

The indictment states that another union executive, Edward Robinson, negotiated between $500,000 and $700,000 in fraudulent checks from the UAW’s Midwest regional center, converted them to cash and supplied no less than $60,000 of that cash to Jones, who spread it around his personal bank accounts between 2010 and 2017.

Jones allegedly used the embezzled money to live the high life, spending over $13,000 on cigars, over $5,000 for golf green fees and a staggering $10,000-plus on golf apparel including pants, shoes, hats and sunglasses, according to the indictment. Prosecutors say he also spent embezzled money on private villas, high-end liquor and meals.

The second count in the indictment details alleged tax fraud that was part and parcel with the embezzlement. Using the already phony UAW accounting cooked up by the officials, prosecutors claim Jones submitted bogus IRS forms that did not report more than $400,000 in income he pocketed in the course of the scheme.

The indictment unsealed Thursday calls for him to forfeit any property that can be traced to the multifaceted embezzlement scheme.

Jones is now the highest-ranking UAW official to be snared in the massive federal investigation, supplanting former UAW Vice President Joe Ashton, who pleaded guilty to wire fraud and money laundering charges in Detroit federal court in December. Ashton was found to have demanded more than $500,000 in kickbacks for lucrative contracts in which vendors would produce more than $15 million worth of union-branded trinkets and related merchandise for union workers.

The corruption scandal has been a colossal embarrassment for one of the nation’s most powerful unions, whose heated contract negotiations with GM last fall, led in part by Jones, included a highly publicized 40-day strike organized by UAW employees.

In a statement Thursday, U.S. Attorney Matthew Schneider said the charges against Jones “demonstrate our continuing progress towards restoring honest leadership for the over 400,000 men and women of the UAW.”

Steven M. D’Antuono, an FBI special agent in charge of the Detroit office, said trust between union members and their leadership “has been broken over and over again.”

“While union corruption is not new, each instance slowly undermines the trust members have in their organization. In order for unions to be effective, their members must trust their leadership to do what is best for the entire union and not just for themselves,” D’Antuono said in a statement.

Based on the two counts of conspiracy leveled against Jones, he faces a maximum of five years in prison and a fine of up to $250,000, according to prosecutors.

Jones’ counsel with New York-based firm Cozen O’Connor, Bruce Maffeo, could not be immediately reached for comment Thursday.

A statement on UAW’s website Thursday stated the entire union’s members and leadership “are and should be angry about the charges of former UAW member Gary Jones and his alleged actions. This is a violation of trust, a violation of the sacred management of union dues, and goes against everything we believe in as a union.”

The union went on to say that under the leadership of current President Rory Gamble, “we are continuing to implement the critical reforms necessary to ensure our union is free from the type of corrosive corruption we have witnessed from those who betrayed our trust.”

General Motors sued Fiat Chrysler for its role in the scandal in November, with the automaker being accused of paying millions to UAW executives to curry sweetheart concessions in collective-bargaining negotiations between itself and the UAW. Fiat Chrysler is accused of bankrolling the Venice, Italy destination wedding of the head of UAW’s Chrysler branch, General Holiefield, among myriad other financial indiscretions totaling in the millions.

Federal prosecutors listed four more unnamed union employees in its indictment against Jones, listed as UAW Officials B, C, D and E.

Follow @cnsjkelly
Categories / Criminal, Employment

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.