Crystal bottles and steak dinners mark the UAW-led corruption investigation

DETROIT – The New Year celebration in 2017 was particularly decadent for at least one of the biggest leaders of the United Auto Workers union.

The manager was reported to be in Palm Springs, California early for the UAW's five-day annual conference in January and the night's festivities began with a $ 6,599.87 dinner at the LG Prime Steak House, including $ 1,942 for Alcohol, $ 1,440 of wine and four bottles of Louis Roederer. Champagne Cristal for $ 1,760. The servers were generously rewarded; the tip was $ 1,100.

A purchase of $ 2,000 at the Indian Canyons professional golfer's shop earlier in the day allowed to buy an assortment of polos, shoes, jackets, hats and "men's fashion shorts".

Purchases, wines and meals were expensed for the UAW Region 5 conference that was taking place in more than a week.

This New Year's Eve was just one of many that the UAW leaders would have had at the discretion of the UAW leadership and which were presented by federal prosecutors in court documents this week.

The arrest and charges against a member of the UAW board of directors on Thursday accused union leaders of leading luxurious lifestyles, including high-end alcoholic beverages, California private villas, sumptuous dinners and golf outings – all paid for with blue collar silver workers from Ford, General Motors and Fiat Chrysler that they were supposed to represent.

Andrew Donohue, a special investigative officer with the United States Department of Labor's Investigations Bureau, described an undisclosed criminal complaint following the arrest of Vance Pearson, director of UAW Region 5, a member of the United States Department of Labor. highest board of directors of the union which also oversaw its operations. the west and southwestern United States

Donohue's affidavit also involves UAW President, Gary Jones, and former President of that, Dennis Williams, whose homes were raided alongside Pearson by agents of the United States. FBI, IRS and the Department of Labor two weeks ago. Pearson, who joined the UAW in 1981, succeeded Jones as director of the UAW Region 5.

Neither Jones nor Williams have been charged with any wrongdoing.

The new charges and Jones' involvement, as announced by the Detroit News Thursday night, raise important questions about the union's credibility as it strives to sign new work contracts. on behalf of 158,000 members before the expiry of the agreements in effect shortly before midnight Saturday.

Pearson, 58, of St. Charles, Missouri, has been charged with misappropriation of union funds, money laundering, aiding and abetting, conspiracy, postal fraud and fraud, and filing and update false union reports to the government.

Donohue, in his complaint, accuses Pearson of conspiring with other union leaders to divert hundreds of thousands of dollars in union funds "for their personal benefit as well as for other crimes".

The alleged misdeeds described against Pearson and his "co-conspirators" – identified in the complaint as three former and one current UAW official – This four-year investigation into union corruption, which began with a federal investigation into the misuse of training center funds by many former Fiat Chrysler union leaders and executives, including corporate executives who corrupted executives of the UAW, marked a decisive step.

Prosecutors would not comment beyond the complaint. Ford and Fiat Chrysler officials declined to comment. General Motors said it was "scandalized and deeply concerned by the leadership of union leaders revealed by the government's investigation and growing accusations". None of the automakers are involved in the latest charges.

The UAW, in a statement sent Thursday by email, said that "the allegations are very worrisome, we are firmly convinced that the government misinterpreted a number of facts and point out that it is not safe". only acts of allegations, no evidence of wrongdoing ".

The new charges also mark a more aggressive approach by federal prosecutors, who have used indictments and grand jury evidence in previous arrests.

"They are adopting a hard line here," said Peter Henning, former federal attorney and law professor at Wayne State University of Michigan, who followed the case. "A criminal complaint like this … is a way to act faster."

According to the number of unidentified official co-conspirators, Mr. Henning said federal officials probably had "other people in the sights".

The arrest of Pearson comes as the union negotiates new contracts with Detroit's three major automakers. It also falls two weeks after the FBI, the IRS and DOL agents broke into the premises of a union, as well as into the homes of Pearson, Williams and Jones. As President, Jones is actively involved in contract negotiations.

During the raids, the agents "seized hundreds of bottles of high-end alcohol, hundreds of polos, multiple sets of golf clubs, a large quantity of cigars and similar items, humidifiers and tens of thousands of dollars in cash, "Donohue said in a statement. complaint.

Pearson, who succeeded Jones as Regional Director, is the first active leader of the UAW to have been arrested and charged as part of a four-year investigation, which resulted in the conviction of nine union leaders or executives of companies affiliated with Fiat Chrysler.

Donohue, in the record, said that Pearson and other anonymous union officials had conspired to embezzle money by concealing personal expenses to cover the costs of the UAW Region 5 conferences. in California and Missouri.

This includes renting expensive villas for weeks or months, instead of several days, for union conferences at the Renaissance Palm Springs Hotel, where union leaders control a "main account" allowing them to "drop in". advance funds in UAW and manage a tab ". about everything – clothing, golf equipment, meals, alcoholic beverages, expensive cigars and off-site villas with private pools and whirlpools, according to the complaint.

In total, the union has paid the hotel more than a million dollars between 2014 and 2017, prosecutors said. More than $ 600,000 of this sum was used to pay other businesses in Palm Springs, including vacation home rental companies, local restaurants and the Indian Canyons Golf Resort. Between 2014 and 2018, the resort donated more than US $ 60,000 to the Tinder Box Cigar Store.

"The investigation established that the conspirators had used the main account as a means of concealing the embezzlement of union funds for their personal use," said Donohue, adding that over $ 60,000 in UAW funds were also used for meals at Palm Springs-area restaurants between 2016 and 2018, including at "very far" dates from the union conference calendar.

According to Donohue, witnesses stated that such expenses had been grouped together without a specific description at the request of the union leaders.

According to Donohue, federal officials also noted a similar pattern regarding other UAW events in Region 5, including a Four Seasons hotel in Lake Ozark, Missouri, where officials allegedly used funds from the UAW to buy "hidden" golf clubs. larger bills for UAW conferences in Region 5. "

Donohue also said the agents had developed "important information about the existing" alcohol culture "in the UAW's highest ranks".

The allegations include the use of union funds to purchase custom wine bottles, high-end alcohol bottles and allow union leaders to purchase unlimited amounts of alcohol in Palm Springs. .

The arrest of Pearson and the charges against him should add to what was already expected at controversial contract negotiations between the union and the three major automakers of Detroit.

On Thursday, the union said it would not let the new charges or Pearson's arrest "distract" officials from the ongoing talks.

Distraction is inevitable, said Art Wheaton, a professor at Cornell University's Worker Institute. It undermines the credibility of union leaders and will weigh heavily on members when ratifying any agreement, if any, he said.

"As more and more members of management find themselves in trouble, the contract is compromised in terms of ratification," he said. "It erodes trust."