Federal Indictment Alleges Chrysler And UAW Execs Stole Millions From Employee Training Programs

For any UAW employees out there who still think their union is anything more than a ponzi scheme designed to effectively tax membership while enriching a few ‘bosses’ at the top of the pyramid, you should probably take note of a federal indictment that was filed late last week alleging that Chrysler executives conspired with UAW leaders to siphon millions in funds earmarked for employee training to line their own pockets.

As Automotive News points out, as of now, only two Chrysler employees have been charged but the indictment lays out a scenario in which many more charges could be levied against Chrysler employees and other high-ranking UAW officials who may have been involved.?

The indictment, unsealed last week, describes the alleged illegal dealings of former FCA labor relations chief Alphons Iacobelli, deceased UAW Vice President General Holiefield and his widow, Monica Morgan, a prominent Detroit photographer. Morgan will be arraigned in a Detroit federal court today, July 31. Iacobelli will be arraigned Tuesday, Aug. 1.

Federal investigators claim the three were at the center of a conspiracy from 2009 through 2014 that included Iacobelli personally pocketing $1 million and helping funnel $1.2 million from the UAW- Chrysler National Training Center to Holiefield, Morgan and other high-ranking members of the union.

The indictment specifically mentions at least eight unnamed people while vaguely mentioning “other” groups of people. Separately, federal officials announced fraud charges against former FCA financial analyst Jerome Durden, who is accused of creating false tax returns to hide payments to Holiefield, Iacobelli and other beneficiaries who were not identified.

“More could be charged,” said Peter Henning, a former federal prosecutor in Washington, D.C., and professor at Wayne State University Law School. Henning said it’s typical in investigations such as these for additional witnesses, informants and co-conspirators to be named after the initial round of arraignments.

So, what did they buy with their embezzled funds?

Alphons Iacobelli, Chrysler’s Labor Relations Chief, apparently really needed a brand new Ferrari and $100,000 pool in his back yard...

• A $350,000 Ferrari 458 Spider

• Lease on a private jet

• 2 limited-edition Mont Blanc pens costing $37,500 each

• A $96,000 swimming pool, outdoor kitchen and outdoor spa at his home in Rochester Hills, Mich.

• $73,000 in landscaping

• More than $300,000 in personal credit card expenses

• Paid off a relative’s student loan for $44,491

…looks like it all turned out really nice.

Meanwhile, UAW Vice President General Holiefield and his widow, Monica Morgan, invested their stolen loot in jewelry, designer clothes and expensive vacations.

• Paid off the $262,219.71 mortgage on their Harrison Township, Mich., home. Less than a year later, Morgan took out a new mortgage for $130,000.

• Credit card charges of $200,000 for jewelry, designer clothes and furniture

• $30,000 in airfare for San Diego, Miami, Las Vegas and Los Angeles

• 4 nights at the Beverly Hills Hotel for $3,100 per night

But federal investigators appear to think the situation involved more than two people. In addition to the eight unnamed FCA executives or UAW leaders in the indictment, “other” groups of people are referenced as well.

The document says Bob King, who was UAW president from June 2010 to June 2014, told Iacobelli and Holiefield in 2011 that they could “go to jail” for giving union and charity business to Morgan, Holiefield’s girlfriend at the time. They married in 2012.

King, according to the indictment, instructed them to stop giving business to Morgan. The three allegedly reacted to King’s warning by setting up a new company in early 2012, the indictment said.

Other unnamed people, according to the indictment, were responsible for approving the illegal spending.

“It’s quite possible some of the unnamed people in the indictment are going to cooperate and provide information and testimony,” Henning said.

Of course, the UAW was ‘blindsided’ by these latest corruption allegations.

“The UAW is appalled at the allegations contained in the Department of Justice’s (DOJ) indictment, which constitute a betrayal of trust by a former vice president of our union. The UAW has zero tolerance for corruption or wrongdoing of this kind at any level,” according to the statement. “The UAW had absolutely no knowledge of the fraudulent activities detailed in this indictment until they were brought to our attention by the government. We nevertheless take responsibility for not doing more to exert our influence over the governance policies of the (UAW-Chrysler National Training Center), which might have uncovered this corruption sooner.”

Fiat Chrysler issued a statement saying the Auburn Hills automaker has cooperated fully with the U.S. Attorney’s Office and “intends to pursue all potential legal remedies against Mr. Iacobelli and any other culpable parties.”

“FCA US and the UAW were the victims of malfeasance by certain of their respective employees that held roles at the National Training Center (NTC), an independent legal entity,” the company said in a statement. “These egregious acts were neither known to nor sanctioned by FCA US. “

We simply can’t imagine why the OEMs can’t seem to turn a profit on their U.S. plants…