An active member of the United Auto Workers executive board was charged with money laundering, conspiracy and falsifying reports required by the U.S. Department of Labor while embezzling as much as $1 million.
The charges against Vance Pearson, director of UAW Region 5 in St. Louis, Missouri, which come on the eve of the expiration of the UAW’s critical contracts with General Motors, Ford Motor and Fiat Chrysler N.V., also could implicate UAW President Gary Jones in what federal investigators describe as criminal conspiracy by a select group of senior union officials to use dues money to finance an expensive lifestyle.
In an affidavit filed with the criminal complaint, an investigator for the U.S. Department of Labor said that Pearson used legitimate union conferences to disguise the rental of expensive accommodations at expensive resorts in San Diego and Palm Springs, California.
Pearson and other UAW officials, identified as UAW Official A, B and C would extend their stays at the Renaissance Hotel in Palm Springs or Loew’s Coronado Resort in San Diego for up to a month during the winter and spring when it was still cold in Michigan and Ohio and well beyond time of the conference as well as a Four Seasons Resort in the Ozarks.
The investigators also found questionable expenditures for expensive liquor and cigars as well as golf equipment and rounds of golf at courses in Southern California such as Del Mar and Torrey Pines, according to the affidavit from Andrew Donohue, an investigator from the Labor Department’s Detroit Field Office.
“The senior UAW officials concealed the embezzlement by reporting that the monies were advanced for legitimate conference expenses,” noted the affidavit, which said the LM2 reports the UAW are required to file with the DOL were deliberately falsified by Pearson and other UAW officials for a period that extend from 2014 to 2018.
Jones is not specifically identified in the charges filed against Pearson. But Pearson was the assistant director of Region 5 when Jones was director and the affidavit offered a description of items seized from UAW official A during a raid on his private dwelling. Items seized during the highly publicized raid included sets of expensive golf clubs and $30,000 in cash.
In the court documents, UAW official A is described as a current senior UAW officer, clearly suggesting Jones, while UAW official B is described as a retired UAW officer, possibly former UAW president Dennis Williams and UAW official C is described as a senior UAW official, suggesting he did not hold an elective post.
The court documents also said the some of the money for golf, lodging, cigars and golf came from $190,000 from a UAW political action committee controlled by Region 5.
Norwood Jewell, the former UAW vice president, who last month was sentenced to 15 months in prison, acknowledged that at least part of the reason for maintaining a villa and throwing expensive parties in Palm Springs was because he was campaigning for the union members.
Members of the union’s executive board, acting as a nominally independent caucus, select the UAW president and the court papers suggest at least part pf the motivation for the free spending was the desire of UAW Official A to have UAW Official B to select him as his successor.
“UAW official A used the events to curry favor UAW official B, who also enjoyed the lavish lifestyle,” the affidavit said.
Williams support was decisive in making Jones, a dark horse candidate with little bargaining experience the UAW president, outside observers have said.
The campaign was fueled by what federal investigators described as a “culture of alcohol” where top union officials acquired bottles of expensive whiskey or paid $40 for a drink of Crown Royal Reserve or MacCallum’s 18-year-old Scotch.
Federal investigators said their probe into union finances grew out of the investigation in the joint training funds used by FCA executives to soften up UAW officers, such as Holiefield and Jewell, but was quite separate from the probe triggered by the misconduct of FCA vice president Alphons Iacobelli
The scandal has fed the skepticism of union members about Jones and the rest of union’s leadership and diminished the credibility of union leaders at a critical juncture when the focus is on the negotiations with Detroit’s automakers.
“Our highest priority is maintaining the trust and confidence of United Auto Worker members. While these allegations are very concerning, we strongly believe that the government has misconstrued any number of facts and emphasize that these are merely allegations, not proof of wrongdoing. Regardless, we will not let this distract us from the critical negotiations underway with GM to gain better wages and benefits for the more than 400,000 members of our union,” the union said in an e-mailed statement.