Was It Arson? July Fire at UAW Headquarters Raises Suspicions Amid Corruption Scandal

On an afternoon in July, a fire broke out at Solidarity House, the United Auto Workers’ national headquarters in Detroit. No union employees were hurt, though two firefighters were injured. According to the union, multiple floors of the building — which houses the union’s accounting, legal, and IT departments — were severely damaged.

Initial reports, recently retracted, called it an accident. Now, months later, the years-long investigation into the expansive criminal conspiracy at UAW has taken down the union president, Gary Jones, who resigned at the end of November.  A police report on the fire has yet to come out, and union activists are wondering: Could July’s fire at Solidarity House have been a plot to obstruct the investigation into corruption in the auto industry?

“When the investigation first started, [former UAW president] Dennis Williams assured the membership that it was only a few bad apples involved in the scandal. Since then, numerous UAW officials including Williams himself have been implicated or have pled guilty as a result of the investigation,” said Justin Mayhugh, an autoworker at the GM Fairfax Assembly plant in Kansas City. “I don’t think that arson is out of the realm of possibility.”

“The investigation into the cause of the UAW fire is still open and active,” wrote Patrick McNulty, Detroit Fire Department’s chief of the fire investigation division. “At this time the exact cause of the fire is undetermined.”

And arson has not been ruled out, according to Theodore Copley, the lieutenant heading up the investigation for the police department. When asked if the earlier press reports were incorrect, Copley said “absolutely.”

It is unclear to what extent documents or electronics on-site were destroyed, but the union’s legal team requested that court deadlines be extended because they didn’t have access to necessary paper records. Investigators are awaiting forensic testing of equipment and electronics from the area of the fire’s origin before making a final determination. Federal investigators also served the union with a subpoena requesting visitor logs and security camera footage from the time of the fire, which the union provided.

The UAW said in a statement, “For more than two years, the UAW’s email and electronic files have been stored in cloud-based servers, maintained off-site by a third-party vendor. They were, therefore, unaffected by the fire that occurred on July 13, 2019.”

Suspicions were raised, in part, because a federal indictment included an allegation that a UAW official said he wished they had “burned the evidence.”  News outlets have consistently identified that official as former UAW president Jones. Jones has not been charged criminally but was brought up on charges by the union and subsequently resigned.

“UAW members are justified in being concerned by that utterance — even if I wasn’t a fire investigator I would be concerned,” Copley said. “We will do our due diligence to determine whether that utterance means anything as far as this fire is concerned.”

A UAW spokesperson denied the possibility. “While a final report has not been issued by the City Fire Department or the insurance company, based on previous public statements from the Fire Inspector and our knowledge of the investigation to date, we do not expect any change to the determination that the fire was caused by an identified equipment malfunction, not an arson,” said Brian Rothenberg.

The ongoing fire investigation is the latest shock in a multi-agency investigation by the FBI, Department of Labor, and IRS that began rolling out indictments in 2017. To date, three Fiat Chrysler Automobiles corporate executives, seven union officials, and the widow of a former union vice president have been convicted of crimes resulting from the investigation. The U.S. attorney’s office has raised the possibility of placing the union under federal oversight, a strategy the government used in 1989 to uproot corruption and organized crime from the Teamsters.

Several others stand accused of crimes, including former UAW Region 5 director Vance Pearson and former president of the Region 5 community council Edward “Nick” Robinson. Pearson and Robinson have both been charged for their alleged participation in a broader criminal conspiracy that embezzled hundreds of thousands of dollars out of the union and are currently awaiting trial.

Government documents name “Union Official A” and “Union Official B” as co-conspirators with Pearson and Robinson. “Union Official A” is widely reported to be former UAW president Gary Jones and “Union Official B” is reported to be former UAW president Dennis Williams.

In September, The Detroit News reported that “Union Official A” is then-UAW president Gary Jones and “Union Official B” is former UAW president Dennis Williams. The Detroit News cited sources close to the investigation, and noted that a federal raid described in court documents lines up with one conduced at Jones’s home.

The UAW’s own internal charges against Jones mirror and reinforce accusations made against “Official A.” Jones was the director of Region 5 during the time period that Pearson and Robinson, his subordinates, were channeling funds through Region 5 events into their own pockets. Additionally, the charges against Robinson detail how “Official A” had put a stop to the cash embezzlement scheme due to a new UAW position they were taking, which aligns with the time period in which Jones being nominated for union president by the union’s ruling political caucus

The decline of the UAW from a powerful force for the country’s working class to a corrupted lieutenant for employers is one of the most important labor stories in decades, and the union’s transformation has an impact that extends far beyond the Big Three automakers.

“The auto industry was the quintessential manufacturing enterprise of the American 20th century and the UAW was the largest industrial union,” said Toni Gilpin, labor historian and author of “The Long Deep Grudge: A Story of Big Capital, Radical Labor, and Class War in the American Heartland.” “For decades, the UAW was the dominant union in a dominant industry and set standards across the entire economy and now what we are seeing is the union bureaucracy collapse after union leaders spent years partnering with management and lining their own pockets.”

According to government prosecution, Pearson, Robinson, and Union Officials A and B (reported to be Jones and Williams) used the “master accounts” that the UAW established at several hotels to cover hundreds of thousands of dollars in personal expenses. Typically, these accounts would be used to pay for hotel room blocks, audiovisual fees, and other amenities.

More than $1 million in member dues was spent by officials between 2014 and 2017 so they could stay for weeks at a time in luxury condominiums, playing unlimited rounds of golf by day and eating at fine restaurants, smoking expensive cigars, and drinking high-end liquor and wine at night.

In reviewing over a thousand pages of court documents, including the indictments, plea agreements, and sentencing memoranda of everyone who has been convicted or indicted, the catalog of fraudulent expenses revealed is astonishing and reflects a lifestyle that has far more in common with the corporate executives the union is expected to battle than the rank-and-file autoworkers it represents. The documents show:

• While he was president, Dennis Williams allegedly rented a luxury villa in a gated California community for more than a quarter of the year in 2016, at a cost to union members of over $15,000.
• Under the nom de guerre “Gary Jones Group,” officials allegedly purchased enough golf bags, balls, clubs, polo shirts, and “men’s fashion shorts” to rack up over $80,000 in charges over a three-year period at one golf store in a Palm Springs, California, resort.
• Officials, including Official A, allegedly used union funds to go horseback riding on the beach with their spouses and spent thousands of dollars on spa treatments.
• In a single month, between December 29, 2014, and January 29, 2015, the union paid for 107 18-hole rounds of golf for UAW officials. That’s 1,926 holes.
• On New Year’s Eve in 2016, senior officials ran up a $6,599.87 tab partying at LG Prime Steakhouse, which included the purchase of four bottles of Louis Roederer Cristal Champagne. The Cristal Champagne costs $440 per bottle and is touted by the maker as having been created in the 19th century to “satisfy the demanding tastes of Tsar Alexander II.”

Officials tried to “camouflage” these purchases by stringing together bogus meetings and submitting false expense vouchers to the UAW headquarters.

The government also alleges that since 2010, Robinson and Union Official A (reportedly Jones) embezzled up to an additional $700,000 in member dues by providing the union with fraudulent receipts and then splitting the reimbursement checks between themselves.

The investigation first became public in 2017 when the government released their initial indictments against Chrysler executives and has since uncovered a pervasive “culture of corruption” in the UAW extending back at least a decade, toppling the image that the union long enjoyed as one of the cleanest in the country.

The first wave of convictions quickly followed the announcement of indictments in 2017 and centered around a conspiracy, going back at least to 2009, in which Fiat Chrysler executives funneled money through the UAW-FCA National Training Center to the UAW and union officials.

The UAW-FCA National Training Center is a nonprofit entity, jointly managed by both the union and company. The training center was established to provide a number of benefits to autoworkers, such as trainings to apprentices in the skilled trades, health and safety trainings, and tuition reimbursement for union members to pursue higher education. The UAW has similar jointly administered nonprofits with both Ford and GM. In response to the corruption scandal, both the GM and FCA training centers were dissolved as a part of the recently ratified collective bargaining agreements between the companies and the union.

As benevolent as the UAW-FCA Training Center sounded on paper, prosecutors say it evolved to be a “shill” for the company and that its only function was to act as a pass-through for an extensive bribery scheme.

According to the plea agreement of Alphons Iacobelli, FCA’s vice president for employee relations and the company’s chief negotiator with the union, the training center was the conduit through which his employer hoped to “corruptly purchase labor peace.” Iacobelli was sentenced to 66 months in prison for his role in the plot.

Over the course of years, FCA provided the late UAW vice president General Holiefield and his wife, who was sentenced to 18 months in prison for her role in the conspiracy, with first-class air travel, money to install a pool at their home, and even a check for over a quarter-million dollars to pay off the couple’s mortgage. Holiefield’s replacement, Norwood Jewell, was sentenced to 15 months in prison for accepting money from FCA, including allowing the company to finance an extravagant “Miami Vice”-themed party at the training center. Attendees were treated to bottomless premium liquor drinks as women “dressed in provocative outfits” walked around the room lighting cigars that were hand rolled on the spot by a professional torcedor.

But the conspiracy went much deeper than providing bribes to individual union officials.

Between 2009 and 2017, FCA improperly provided the union with $9 million to cover the salaries, benefits, and bonuses of senior union officials who did not actually work there. If that weren’t enough, the union charged the training center a 7% “administrative fee” to process the payments, effectively taxing the very bribe that FCA was providing to the union.

A wave of convictions also resulted from an investigation into the GM training center, which is officially named the UAW-GM Center for Human Resources. Joe Ashton, a former UAW vice president and member of the GM board of directors, pleaded guilty to working alongside two other high-level UAW officials to solicit kickbacks from union vendors. In one contract, a vendor was awarded a $4 million contract by the Center for Human Resources — where Ashton and the other officials were appointed to top positions — to provide the union with 58,000 gold watches, one for every GM employee. The vendor expected to pocket $1.7 million from the deal, and Ashton and other union officials received hundreds of thousands in kickbacks from the vendor for directing the lucrative contract their way. The watches were never distributed and simply sat for years in a warehouse.

When the Administration Caucus — the ruling faction in the UAW that has controlled the union’s top positions for the past 70 years — announced that it had selected Gary Jones as its nominee to succeed Dennis Williams as president in the 2018 union election, the choice was praised by some analysts as marking a responsible shift for a union reeling from the ever-growing corruption scandal. Bloomberg Law said Jones “might be the UAW’s best chance for restoring its reputation” given his financial expertise.

Jones, a certified public accountant who previously worked in a Ford glass plant, was initially appointed to a staff position in the union’s accounting department in 1990 and the following year was elevated to chief accountant. In 2012, Jones was elected to be director of UAW Region 5, which oversees locals in 17 western and southwestern states, including California and Texas.

Rather than unearthing and exposing corruption, it appears that Jones has spent years using his accounting expertise to actively conceal his participation in crimes against the members he was elected to represent.

According to Robinson’s indictment, Union Official A (reported to be Jones) advised him to submit the receipts of expenses paid for with funds from the hotel master accounts to the UAW accounting department, claiming that he had paid for the expenses out of pocket and needed to be reimbursed. Jones also advised Robinson to request checks in odd amounts and to keep the totals below $10,000 to avoid having banks generate currency transaction reports to federal authorities. Union Official A and Robinson used this scheme to steal hundreds of thousands from union members over the years. The UAW’s charges against Jones independently confirms many of the allegations in the Robinson and Pearson indictments.

Official A put a halt to the cash embezzlement scheme after Official A took a “new UAW position,” according to the Robinson indictment. The action apparently coincides with the Administration Caucus’s announcement that they had selected Jones for the top position. As president, Jones publicly denounced the corruption being exposed by the investigation while privately Official A was trying to cover it up.

In March 2019, the same month that the UAW dubbed Jones a “reform president” and unveiled his “Clean Slate Agenda” to address corruption, Union Official A met privately with Robinson, promising to provide a relative of his with a sham job at the union if he would agree to take full responsibility for the fraudulent reimbursement scheme. During the conversation, that official expressed concern about the federal investigation into the hotel accounts and told Robinson that he wished he had “burned the records.”

Four months later, on July 10, Pearson met with Robinson and promised to get him a “burner phone” so they could talk without worrying about federal wiretaps. Pearson also advised Robinson to dispose of any incriminating evidence at his home.

Three days later, a fire began on the third floor of the UAW headquarters building in Detroit. Multiple floors were damaged by the fire, smoke, and water. Soon after the fire, the union began bargaining new contracts with the Big Three automakers.

In late August, federal agents raided the UAW’s Region 5 offices; the homes of Pearson, Williams, and Jones; and a luxurious cabin the UAW built for Williams on the union’s 1,000-acre Black Lake resort in Michigan. The union is now in the process of selling the cabin, which was constructed with nonunion labor.

During the raid, agents seized hundreds of high-end bottles of liquor, hundreds of golf shirts, multiple sets of golf clubs, a huge quantity of cigars, and over $32,000 in cash from the home of Gary Jones.

Pearson was charged by the U.S. attorney’s office in September, and Robinson in October. In November, Jones requested that he be placed on paid leave by the then-13 member UAW International Executive Board. The Board was split six-to-six on the question, and remarkably Jones was allowed to cast the deciding vote, according to the Wall Street Journal.

Over the next few weeks, six union locals passed resolutions calling for Jones to be brought up on union charges that could lead to his being expelled from the union. At the prodding of rank-and-file activists around the country, the International Executive Board voted to bring charges against both Jones and Pearson. By the end of November, Jones made history as the first UAW president to resign midterm.

Jones’s successor, Rory Gamble, the former vice president in the union’s Ford Department, will fill out the rest of Jones’s four-year term. Gamble announced several ethics reforms and has dissolved UAW Region 5 in an attempt to start rebuilding trust with the union’s members and assuage the government that a takeover is unnecessary.

But the government remains unimpressed. U.S. Attorney for the Eastern District of Michigan Matthew Schneider, who is overseeing the investigation, has expressed frustration at what he described, in an interview with the Detroit News, as the union’s continued unwillingness to cooperate with the investigation.

UAW activists are unsurprised that the union’s top leadership has continued to prioritize looking out for themselves over working with the government to clean up corruption.

“Everything the leaders do is to protect the Administration Caucus, not the members of our union,” said Scott Houldieson, a body shop electrician at Ford’s Chicago Assembly plant. “The leadership has spent decades cooperating with company executives and have been isolated from the membership for far too long.”