A former president of the United Auto Workers has been charged with embezzlement of union funds and other crimes, the biggest step yet in a broad investigation of financial wrongdoing that the prosecutor said could justify a federal takeover of the union.
In a criminal filing unsealed Thursday, the former official, Gary Jones, is accused of conspiring in the misuse of more than $1 million of union money for extravagant meals, golf outings, cigars and apparel over several years, even before he was elected president in 2018.
He is the highest-ranking UAW official to be prosecuted in the inquiry, in which more than a dozen people have been charged. Among them are three former Fiat Chrysler executives, including the company’s chief negotiator with the union.
Jones resigned as UAW president on Nov. 20 after the union’s executive board found he had submitted false and misleading expense records and took steps to oust him. His home in Canton, Michigan, had been raided in August by agents from the FBI.
The union distanced itself from Jones and denounced the activity attributed to him. “This is a violation of trust, a violation of the sacred management of union dues, and goes against everything we believe in as a union,” it said in a statement Thursday. It declared that the union was “continuing to implement the critical reforms necessary to ensure our union is free from the type of corrosive corruption we have witnessed from those who betrayed our trust.”
But at a news conference in Detroit, the U.S. attorney overseeing the investigation, Matthew Schneider, said he could not rule out a federal takeover of the union. The government resorted to such measures for over 25 years to root out corruption within the International Brotherhood of Teamsters.
Schneider alluded to comments by James P. Hoffa, the union’s president, indicating that government oversight had made the union more democratic. Oversight could be a “good model here,” Schneider said, before adding that it was premature to elaborate.
He said his office had “productive discussions” with Jones’ lawyer but that it remained to be seen whether or not Jones would plead guilty. A guilty plea could lead to cooperation with prosecutors seeking to bring further charges in the case. Schneider said he would have to “wait and see” when asked if he expected such cooperation.
The U.S. Attorney’s Office said that on each of the two counts in the indictment, Jones faced a maximum of five years in prison and a fine of up to $250,000.
Bruce Maffeo, a lawyer for Jones, declined to comment.
Last fall, Jones guided the union through a 40-day strike against General Motors that ended with substantial pay increases, promises of large investments in plants in the United States and a process for temporary workers to become permanent employees.
The federal investigation began in 2015 and has focused on the misuse of millions of dollars of UAW funds in various ways. The three former Fiat Chrysler executives have been sentenced on charges that they allowed UAW officials to divert money from worker training to personal travel and shopping. One of those executives was found to have used training funds to buy a Ferrari and renovate his home.
The allegations have also prompted a lawsuit by General Motors accusing Fiat Chrysler of bribing union officials to get a leg up on GM in contract negotiations.
Schneider, the prosecutor, said Thursday that there was an “ongoing investigation touching on all the auto companies” and that investigators were “still receiving tips from UAW members.”
Jones’ predecessor as union president, Dennis Williams, has also been a focus of the investigation. A plea agreement in February with a onetime deputy to Jones indicated that Williams had urged the use of union money to benefit himself and other officials.
Another senior union official, Joe Ashton, who once held a seat on GM’s board, has been charged with taking kickbacks from companies that supplied the union with commemorative watches.
Before becoming UAW president, Jones headed a regional office spanning 17 states and organized union conferences in Palm Springs, California. Prosecutors contend in court filings that he and other officials spent more than $1 million in union money for extended stays in luxury villas, lavish dinners, and expensive clothing, cigars and golf clubs.
In the charges filed against Jones, prosecutors focused both on his role in diverting union funds for these purposes and on what they contend is tax fraud that resulted from the embezzlement conspiracy. They write that the union failed to report income it paid to officials like Jones in its tax filings because the outlays were concealed as legitimate expenses, and that Jones failed to report income he received on his own tax returns.
For example, the filing says that in 2017, Jones and his accused co-conspirators orchestrated the transfer of more than $500,000 in union funds to four resorts throughout the country but that more than $290,000 of those funds were diverted to illegitimate uses like meals and cigars. It says that this caused a UAW accounting official to unknowingly file a false tax form with the IRS because the form did not list the $290,000 as reportable income to the union’s officers.
On the day Jones’ home was raided, federal agents also searched other locations, including the union’s 1,000-acre retreat, known as Black Lake, in Onaway, Michigan; the Hazelwood, Missouri, office of UAW Region 5, which Jones once led; and Williams’ home in Corona, California.
Among the sites searched at the Michigan retreat was a lakeside cabin being built for the exclusive use of Williams, who led the union from 2014 to 2018.
Williams, who joined the union as a welder, later served as a regional leader and secretary-treasurer. When the charges involving the misuse of training funds to benefit Fiat Chrysler and UAW officials emerged in 2017, he said the union “had absolutely no knowledge of the fraudulent activities detailed in this indictment until they were brought to our attention by the government.”
As the case widened this year, an associate of Jones’ in Region 5, Edward N. Robinson, was charged on Oct. 31 with drawing more than $1.5 million from union accounts over several years and sharing the money with a person prosecutors identified only as “UAW Official A.”
Two days later, the UAW board convened and announced that Jones would take a paid leave. Rory Gamble, a union vice president who led the bargaining with Ford, was named interim president.
Union officials have confirmed that references in court filings to “Official A” and “Official B” referred to Jones and Williams.
Another union official, Vance Pearson, was charged in September with embezzlement, money laundering, wire fraud, conspiracy and other offenses. Pearson, who led the Region 5 office after serving as Jones’ lieutenant there, resigned on Nov. 24 as the union’s board took steps to remove him. He pleaded guilty on Feb. 7 after agreeing to cooperate with prosecutors in the investigation and awaits sentencing.
The plea agreement stated that a request by Williams, Jones’ predecessor, was “to a great extent” behind an order for over $13,000 worth of cigars and cigar paraphernalia in 2016. The agreement also said that Williams had directed Pearson to procure a private villa for him in California for months at a time, and that Pearson also helped arrange for Williams’ wife to charge expenses to the union through a resort.
At the time of Pearson’s plea, a lawyer for Williams did not respond to a request for comment.
The federal investigation is also looking into other unidentified union officials, according to court filings.