‘We are not done’: Feds signal ex-UAW chief Gary Jones will cooperate

Detroit — Federal prosecutors Thursday signaled they are not done investigating corruption within the top ranks of the United Auto Workers after charging former President Gary Jones with embezzling more than $1 million, racketeering and income tax evasion.

Federal agents from the FBI, Internal Revenue Service and Labor Department continue to investigate President Rory Gamble and former President Dennis Williams, sources told The Detroit News, as part of the years-long probe that has yielded 13 convictions and continues to generate tips. Gamble and Williams have not been charged.

"We are not done," U.S. Attorney Matthew Schneider said. "We are another step closer to ridding the UAW of its corrupt leadership and returning the UAW to the hardworking men and women of the UAW."

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Schneider and his team of investigators spoke hours after unsealing a criminal filing that signals Jones will plead guilty and cooperate with an investigation that could lead to the government seizing control of one of the nation's most powerful unions.

Taking control of the UAW through a civil racketeering case remains an option to root out corruption within the union's senior leadership ranks, Schneider said during a news conference in downtown Detroit. He repeatedly refused to address other UAW officials under investigation, including Gamble.

"It doesn’t matter who it is, whether it’s (Gamble) or not, we’re not going to be able to comment on who our targets are, who our investigation is focusing on," Schneider said. "Our focus is on any corrupt activity in the UAW."

Jones is the highest-ranking UAW official charged during a years-long crackdown on corruption within the U.S. auto industry that has revealed labor leaders and auto executives broke federal labor laws, stole union funds and received bribes.

Jones, 63, was charged in a criminal information — which indicates a guilty plea is imminent — following months of increasing pressure from investigators. The investigators are armed with bank records and cooperation from several Jones aides who admitted helping embezzle money from rank-and-file workers that was spent on personal luxuries, including private villas, lavish travel, food, liquor and golf.

“Jones is a guy who contributed to taking down the union, and now he may cooperate in a process that saves the union from its leadership,” said Erik Gordon, a University of Michigan business professor. “This could be a favorable development for the union, if by union you mean the rank-and-file members who get up every day at 5 a.m. to go to work, as opposed to the brass who used union money to lie around in the sun at resorts."

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Steven D’Antuono, special agent in charge of the Detroit FBI office summed up the case as "pure and simple greed," adding: "The charges against Gary Jones are offensive to the hard-working men and women of the UAW."

In a statement that only describes Jones as a former UAW member, the union said Thursday: "All UAW members including the UAW leadership are and should be angry about the charges of former UAW member Gary Jones and his alleged actions. 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.

"Jones and all who betrayed the trust of our union should be held accountable to the fullest extent of the law, with no exceptions.  The UAW — under the leadership of President Gamble and the entire IEB — moved last November to remove Jones from office and force his expulsion from the UAW.  Action has been taken against other former UAW staff and officials who have violated Union policies or laws. 

"As we continue to move forward under the leadership of President Rory Gamble and the IEB, we are 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."

Long fall

The criminal case against Jones culminates a tumultuous period and marks a prolonged fall for a labor leader who ascended to the top of the UAW two years ago, vowing to reform an embattled union. Since August, federal agents have raided his home, searched his bank accounts, seized more than $32,000 and portrayed him as a thief who tried to cover up crimes and obstruct investigators, according to court records that identified him by the alias "UAW Official A."

Jones is facing two charges, each of which could send him to prison for up to five years. The charges are conspiracy to embezzle union funds and using a facility of interstate commerce to aid racketeering activity, and conspiracy to defraud the U.S. by evading income taxes. His lawyer declined comment.

Jones is expected to cooperate with ongoing investigations of Williams, Gamble and former Vice President Jimmy Settles, The News has learned. Settles also has not been charged with wrongdoing.

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The criminal filing reinforces the need to give members the power to elect UAW leaders, said Scott Houldieson, a 30-year UAW member at Ford Motor Co.’s Chicago Assembly Plant. In the meantime, Jones could help dig out further corruption within the union.

“He could help us heal our wounds,” said Houldieson, 58. “It could be a good thing, too. Either way, we have a lot of work to do to make it a union that truly represents its membership.”

After leading a 40-day strike against General Motors Co. that cost the automaker $3 billion, Jones resigned in November as the union's governing International Executive Board moved to revoke his membership and distance itself from the embattled president.

Jones was first publicly linked to the scandal in September 2018, less than three months into his tenure. That's when The News reported that federal investigators were questioning UAW officials spending almost $1 million on condominiums, liquor, food and golf in California, where Jones held annual conferences before becoming president.

The investigation escalated last August when teams of federal agents launched a series of nationwide raids, including searches at the homes of Jones, Williams, a lakeside UAW retreat in northern Michigan and at locations in Missouri and Wisconsin.

Federal prosecutors implicated Jones in wrongdoing one month after the raids, accusing him and Williams of orchestrating a years-long conspiracy that involved embezzling member dues. More than $1 million was spent on private villas in Palm Springs, lavish meals, expensive liquor and $60,000 cigar-buying sprees.

The conspiracy described by prosecutors started in 2010 and ended in September.

Williams is referred to in numerous court filings as "UAW Official B."

The accusation dismantled an oft-repeated defense from a UAW spokesman that while union leaders bought $1,000 pairs of shoes, Italian-made shotguns and paid for $15,000 steak dinners with bribe money from Fiat Chrysler Automobiles executives, no member dues had been misspent.

In June 2018, Jones assumed the union presidency and ordered the union to tout him as a "reform president" whose "Clean Slate" agenda would implement changes to end corruption within the union and its company-funded joint training centers. Federal court filings would soon challenge Jones' reputation as a reformer who started staff meetings with a prayer. 

At the UAW's special bargaining session that March in Detroit's Cobo Center, the union distributed a list of 10 reforms it would make that would aim to prevent further corruption. Called "The UAW's Clean Slate," it largely replicated reforms presented by Williams a year earlier — a list that included a three-bid process for awarding contracts, stricter oversight of staff expenditures, requirements for disclosing conflicts of interests and a gift ban.

Growing scandal

After Jones formally became the 12th president of the international union, he made a rare appearance before the news media: "I am deeply saddened and irritated that some leaders in this union and some leaders at the auto companies exploited their positions to benefit themselves. It is my responsibility from this day forward to strengthen your trust in your union."

Instead, a continuing spiral of convictions and new details in federal court records portrayed a widening corruption scandal that implicated the past two UAW presidents, three former vice presidents, current and former regional directors and staffers in schemes financed by training center funds, member dues or both.

Jones joined the UAW in 1975 when Ford Motor Co. hired him at its glass plant in Broken Arrow, Okla. When the Blue Oval closed its glass plant there, he later transferred to its Kansas City Ford Assembly Plant and began to develop a reputation as a hard-nosed union official.

In 1990, former UAW President Owen Bieber and then-Secretary-Treasurer Bill Casstevens appointed Jones to the international staff. A certified public accountant, Jones was assigned to the union’s accounting department. A year later, the UAW named him its chief accountant, a position that helped him understand the money flows within the union.

From there, he was named top administrative assistant in 1995 to former UAW Secretary-Treasurer Roy Wyse. By 2004, he had been appointed assistant director of the UAW's St. Louis-based Region 5, then the union's largest geographic region stretching across 17 states from Missouri to California. After the death of Director Jim Wells in September 2012, Jones was elected director and then re-elected in 2014.

He served as Region 5 director until becoming UAW president in 2018. Despite his previous tour at Solidarity House, Jones was considered something of a fresh face at union headquarters in Detroit, untainted by scandal and disconnected from the culture of what one local president called "liquor and side chicks" in an interview with The News.

Former UAW local leaders in Region 5 recall Jones as a distant leader who had local leaders handle problems through representatives at the region's satellite offices. He always had his crew, particularly former aides Vance Pearson and Nick Robinson — both convicted in the continuing crackdown — at his side.

Jones became president after securing the support of the Reuther Administrative Caucus, a sort of political party inside the union that had essentially controlled appointments to top UAW leadership positions since the late 1940s. He was an unusual choice.

Under UAW tradition, vice presidents who've led one of the union's three automotive departments have ascended to the president's seat, said Marick Masters, a professor of business and the former director of labor studies at Wayne State University. Jones appeared to be an outsider at a time when the federal investigation was heating up with authorities labeling the union and Fiat Chrysler as co-conspirators in the widening scandal.

Jones is a CPA, one of the "principal reasons why he was able to catapult himself over nominal front-runners," Masters said. Jones, he said, "was picked for this position because he was outside of the Detroit area, not implicated in the (corruption) and brought a background in accounting that I think people thought would get favorable public reviews."

But Jones was a thief, prosecutors said in October. On Halloween, prosecutors said Jones and aide Edward "Nick" Robinson conspired to embezzle as much as $700,000 in member dues and split the money.

Court filings provide insight into how Jones and others conspired to defraud the U.S. The UAW's 2017 tax filing contained false statements that prevented the IRS from making an accurate tax assessment regarding money diverted from the union that benefited Robinson, Jones, Williams, Pearson and others, according to the criminal case filed Thursday.

The UAW's tax filing falsely reported the diverted income as a legitimate business expense. The filing also failed to disclose $290,852 in reportable compensation to Jones and other UAW officials, according to the government. In 2017, Jones and others helped transfer $133,611 in union money by issuing checks, prosecutors said. Jones split some of the money with Robinson, prosecutors said.

“We’ve gotten a glimpse into how widespread the misuse of higher office was,” Gordon told The News on Thursday. “Many more UAW officials who enjoyed the benefits should now be worried about paying the price.”

rsnell@detroitnews.com

Twitter: @RobertSnellnews

Staff Writer Kalea Hall contributed.