At the heart of the probe is whether funds that were meant to train autoworkers at all three companies were instead secretly funneled to union officials and auto executives who were scheming together to line their own pockets.
Since the investigation surfaced four months ago, criminal charges have been filed against two FCA officials and three UAW officials, including ex-FCA Vice President Alphons Iacobelli and Monica Morgan-Holified, the widow of the late UAW Vice President General Holiefield. The pair, along with others, are accused of siphoning millions of dollars from a UAW training center and spending it on themselves, buying everything from luxury vehicles to $35,000 Mont Blanc ink pens.
The Free Press has now learned that the FBI is also eyeing at least one GM official for similar conduct, and is looking into the financial records of training centers that are funded by GM and Ford with the goal of training union autoworkers.
“We are cooperating with the inquiry,” Kelli Felker, manufacturing & labor communications manager at Ford, said in a statement. “We are confident in the UAW-Ford National Programs Center leadership team and the policies and procedures used to govern the program operations that benefit approximately 57,000 members of our UAW-Ford hourly workforce.”
GM also is cooperating, stating: “We have been contacted by the Eastern District of Michigan U.S. Attorney’s Office regarding an investigation into the UAW-GM Center for Human Resources. We are fully cooperating with the investigation.”
The UAW declined comment on the latest development, but has emphasized that the union continues to cooperate with the investigation.
As first reported by the Detroit News, the FBI’s latest targets in the probe include Joe Ashton, 69, a retired UAW vice president who was appointed to GM’s board in 2014, and Cindy Estrada, Ashton’s successor who oversaw the union’s GM department.
Neither could be reached for comment Thursday morning.
So far, the investigation has focused on allegations that FCA auto executives and UAW officials ran a sophisticated money laundering scheme. The executives allegedly stole money from the training center, then funneled it to themselves through various organizations, including a children’s charity called the Leave the Light On Foundation and the Hospice of Metropolitan Detroit.
As prosecutors alleged in court documents, the scam was part of a bigger goal by FCA execs to keep UAW officials “fat, dumb and happy.” And the schemers were careful not to get caught, they said, claiming they warned one another not to leave a paper trail about what was going on.
According to court documents, the training center was funded by FCA and received between $13 million and $31 million a year. Prosecutors say least $4.5 million of that money was misspent.
Here is what the accused have been charged with:
Iacobelli is accused of steering $1.2 million in employee-training funds to Morgan, Holiefield and others. Iacobelli also is accused of pocketing $1 million in training funds and using it to buy a Ferrari, pay off his personal American Express and Chase credit cards, buy two Mont Blanc pens at $35,700 each, install a swimming pool, outdoor kitchen and spa at his Rochester Hills home.
Morgan, whose photo business allegedly once received $70,000 from a charity that was supposed to help children struggling with hardships. The government claims the charity was really a sham, set up by Holifield and Iacobelli.
Virdell King, 65, of Detroit, the first African-American female to be elected president of a local union in UAW-Chrysler’s history. She is accused of buying designer shoes, clothing, jewelry and luggage using credit cards that were issued through the UAW-Chrysler National Training Center. King also is accused of making more than $40,000 in additional purchases that pampered other senior UAW officials, including a shotgun, golf equipment, luggage, concert tickets, theme park tickets and other items.
Jerome Durden of Rochester, a financial analyst at FCA who allegedly helped conceal the fraud. He pleaded guilty to his role in the scheme and faces up to five years in prison.
UAW and FCA officials have said that no labor contracts were perverted by the alleged scandal. Prosecutors have said they don’t know if that happened, but that laws were broken: auto executives were giving things to union officials when the law prohibits that.
Fiat Chrysler officials declined comment on the latest developments, but FCA CEO Sergio Marchionne has previously expressed “disgust” at the alleged conduct and called it the “most egregious breach of trust by the individuals involved.”
“These acts were of course neither known nor sanctioned by FCA US,” Marchionne has previously stated. “In fact, upon learning of some possible malfeasance in June 2015, the company investigated and, once credible evidence of wrongdoing was discovered, the individuals involved were immediately separated from the company.”
Iacobelli, who had led the company’s contract talks with the UAW in 2011, abruptly resigned one month before he was set to lead negotiations on a new four-year contract with the UAW in 2015.
“This conduct had nothing whatsoever to do with the collective bargaining process,” Marchionne previously said, “but rather involved two bad actors who apparently saw an opportunity to misappropriate funds entrusted to their control and who, unfortunately, co-opted other individuals to carry out or conceal their activities over a period of several years.”
The U.S. Attorney’s office and FBI both declined comment.