(Bloomberg) -- Federal prosecutors have charged the former head of the United Auto Workers with embezzling more than $1 million as part of a wide-ranging investigation into illegal activity at the highest levels of the labor union.
The government alleges Gary Jones, who stepped down as president in November, conspired with fellow union leaders to steal more than $1 million in UAW assets over a nine-year period that began in 2010. The officials used the funds for their own personal benefit to purchase stays at private vacation villas and items including high-end liquor and cigars, according to a criminal filing unsealed Thursday.
Jones is charged in a document known as a criminal information, which is often used in anticipation of a guilty plea. J. Bruce Maffeo, his lawyer, declined in an email to comment.
Prosecutors have repeatedly criticized the UAW for tolerating a “culture of corruption” and pressured the union to implement far-reaching reforms to prevent a recurrence of illegal activity including bribery, misuse of funds and kickbacks. The scandal has already resulted in more than a dozen convictions of UAW or Detroit automaker leaders.
“We have a systemic problem within the union,” U.S. Attorney Matt Schneider told reporters on Thursday.
UAW Disavowal
The UAW said its current leadership and members are upset about the allegations against Jones and committed to removing any traces of “corrosive corruption” in its ranks. “Jones and all who betrayed the trust of our union should be held accountable to the fullest extent of the law,” the UAW said in a statement.
The labor group also has been implicated in a racketeering lawsuit filed in November by General Motors Co. against Fiat Chrysler Automobiles NV, which alleges illicit payments to UAW leaders from the Italian-American carmaker dating back to 2009. GM says this cost it billions of dollars in the form of inflated labor contracts, but Fiat Chrysler has denied the allegations.
Read more: GM Sues Rival Fiat Chrysler Over Bribery Accusations: A Timeline
Jones, now the highest-ranking former union official to be charged, relinquished his role and resigned his UAW membership after being implicated in the corruption scandal. Federal agents raided his home in August, seizing golf clubs and $30,000 in cash.
Teamsters-like Takeover?
Prosecutors specifically state in the criminal information document that Jones aided racketeering activity. That could lead to broad-based racketeering charges against the union and a potential government takeover.
“We aren't taking oversight off the table. If it worked for the Teamsters, maybe it could work here,” Schneider said Thursday, adding that current union leadership has not been absolved of any potential wrongdoing. “Gary Jones has not been gone very long,” he said. “We aren't ruling anything out.”
The government's 30-year trusteeship of the International Brotherhood of Teamsters, the largest trucking union in the U.S., ended earlier this month. The original case cited violations of the Racketeer Influenced and Corrupt Organizations Act. Unlike the UAW, the Teamsters were under the sway of organized crime, which led to charges against union members of crimes ranging from embezzlement to murder.
--With assistance from David Glovin.
To contact the reporters on this story: Chester Dawson in Southfield at cdawson54@bloomberg.net;David Welch in Southfield at dwelch12@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Melinda Grenier
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