Unsealed UAW raid records hint at broader investigation

Federal agents were hunting for cash, cigars, top-shelf booze and golf gear bought with more than $1 million allegedly embezzled from the United Auto Workers when investigators raided a union official's home and office, according to unsealed search warrant affidavits that hint at a broader investigation.

The records outline probable cause to search the UAW Region 5 office and director Vance Pearson's home in suburban St. Louis on Aug. 28, two stops in a series of nationwide raids targeting union leaders, including President Gary Jones and former union President Dennis Williams.

The documents were unsealed Monday almost one month after Pearson was arrested and charged with money laundering, mail and wire fraud, and embezzling union funds. Pearson, who served as Jones' deputy until last year and sat on the UAW governing International Executive Board, is the first sitting UAW official charged in the corruption scandal.

The search warrant affidavits are heavily redacted and hint at a broader scope of an investigation that has implicated the top echelon of the UAW. The public parts of the records are near-verbatim copies of the Pearson criminal case and read like a millionaire's shopping list as a federal agent listed luxury items that investigators wanted to seize while searching Pearson's home and the UAW office.

The list includes 21 brands of cigars, including Ashton Monarch Tubos that sell for $274.50 per box; golf clubs, clothes and equipment produced by 40 companies, including Titleist and Nike; and 20 brands of alcohol, including bottles of Louis XIII cognac.

The cognac costs at least $3,750 per bottle — a price equal to 15 weeks of strike pay each UAW worker is receiving during an ongoing nationwide strike of General Motors Co.

Lists of items seized during the raids are sealed in federal court. But investigators previously revealed the seizure of "hundreds of high-end bottles of liquor, hundreds of golf shirts, multiple sets of golf clubs, a large quantity of cigars" during the nationwide raids, plus more than $30,000 from Jones' home.

“These guys just handed the prosecution great courtroom props,” said Erik Gordon, a University of Michigan business professor and lawyer. “One by one you plunk the bottles on the table in front of jurors and it makes a big visual impression.”

Pearson, 58, of Saint Charles, Missouri, was placed on leave from his $223,000-a-year job last week. UAW spokesman Brian Rothenberg did not respond to a message Wednesday asking if Pearson is being paid while on leave.

Pearson's lawyer Scott Rosenblum declined comment about the searches.

The 40-page affidavits and criminal case describe an alleged conspiracy involving Pearson, Jones, Williams and other UAW leaders and sought records dating to 2011. During the raids, investigators were looking for evidence relating to embezzlement of union funds, filing false Labor Department reports, mail and wire fraud.

"There is nothing in today’s search warrant affidavits that wasn’t previously reported in greater detail in the Pearson complaint,” Jones’ lawyer Bruce Maffeo told The News. “And it still leaves unanswered how these transactions are criminal when they were reported in sufficient detail to the UAW’s secretary/treasurer and accounting department, neither of whom made any further inquiry, and both of whom are responsible for making appropriate filings with the Department of Labor.”

U.S. Magistrate Judge John Bodenhausen approved the searches, which also sought cash, checks, bank and tax records, photographs and more.

Labor Department Special Agent Andrew Donohue chronicled the four-year investigation and how it started with UAW officials receiving illegal payments and benefits from Fiat Chrysler Automobiles NV executives. The government has charged 11 people so far and secured nine convictions.

"However, the investigation has more recently uncovered a multi-year conspiracy involving the most senior of UAW officials to embezzle, steal, and unlawfully and willfully abstract and convert UAW funds to purchase luxury items and accommodations for their own personal benefit," Donohue wrote in the search warrant affidavits.

The accommodations included private villas for Jones, Williams and other UAW leaders in Palm Springs, California.

Pearson's lawyer and prosecutors filed paperwork in federal court Wednesday delaying key deadlines in the criminal case. The delay gives Pearson's lawyer time to review the criminal charges and "determine whether there could be any pre-indictment resolution."

"We are absolutely entering a plea of not guilty," Rosenblum wrote in an email to The News on Wednesday. 

Legal experts say pre-indictment resolutions typically include a guilty plea and potentially cooperation with the government.

"If there was wrongdoing, Pearson is in a position to know about it, and if Pearson knows about wrongdoing and starts cooperating with the government, it’s real trouble for Gary Jones," Gordon said.

Prosecutors already have secured cooperation from another Jones deputy and one of the union's most powerful officers, who are helping federal prosecutors build a criminal case against Jones for embezzling union funds.

Former deputy Danny Trull and retired UAW Secretary/Treasurer Gary Casteel have met with investigators and provided an insider's view of an alleged conspiracy and cover-up involving more than $1 million spent on personal luxuries, The News previously reported.

The News also reported federal agents are investigating Jones for a range of potential crimes, including financial dealings involving his defunct nonprofit, the 5 Game Changers Charity Fund.

In addition to his UAW duties, Pearson served on the board of directors overseeing Jones' charity.

In March, The News reported that agents were investigating whether senior UAW staff were forced to contribute money to funds originally established to buy flowers for auto workers' funerals, and whether union executives kept the money.

Investigators are questioning whether UAW leaders threatened to send high-level staffers back to the assembly line if they failed to contribute to the so-called flower funds controlled by union presidents, vice presidents and regional directors, three sources familiar with the investigation said. 

A UAW spokesman has said flower fund contributions were voluntary.

Until this year, Jones was president of one flower fund called Members in Solidarity. According to state documents obtained by The News, "the objects of this association shall be to advance the interests and welfare of its members ... to provide flowers for the sick and to the families of deceased members and to friends of the club," among other charitable and social causes.

After Jones was elected UAW president last year, Pearson assumed control of the flower fund, state business records show.

rsnell@detroitnews.com

Twitter: @robertsnellnews