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Is UAW headed for federal takeover? Feds say it's 'on the table'

Tresa Baldas and Eric D. Lawrence, Detroit Free Press on

Published in Automotive News

DETROIT -- The embattled UAW is in for more indictments and more scandal, sources say, as scores of tips about corrupt labor leaders continue to pour in -- all of which could end in a federal takeover of the nation's sixth largest labor union.

U.S. Attorney Matthew Schneider said Thursday that once the criminal case is over -- and it's far from over -- there's a possibility that the federal government will step in and oversee the UAW.

"What we need to do is get the criminal cases further," Schneider said, adding "we'll be in a better position" to consider a takeover "after that is done."

"All options are on the table. And (a takeover) is one of the options," Schneider said.

As for what a federal takeover would look like, Schneider has said that it could include everything from a consent decree to changes in how leaders are elected to make the process more democratic.

"This isn't a situation where the Justice Department would just impose its demands on the union. ... . This has to be an amicable discussion if and when we're going to get there," Schneider said in December. "Again, this is down the road. These things have to be discussed, talked about and, you know, have good negotiations."

More: UAW Region 5 leader expected to plead guilty in corruption probe

More: Rory Gamble picked as UAW president, will serve until 2022

For now, Schneider said, the federal government is focused on the criminal investigation, which has led to charges against 13 ex-UAW and Fiat Chrysler Automobiles officials, triggered resignations and planted a black eye on UAW leadership as three presidents in a row have come under scrutiny, the latest being President Rory Gamble.

According to sources familiar with the probe, Gamble is not a target of the corruption investigation. The Free Press is not identifying the sources because they were not authorized to speak to the media.

However, they said that federal agents are looking into financial ties between Gamble, retired UAW Vice President Jimmy Settles -- who now works for Detroit Mayor Mike Duggan -- and a vendor named Jason Gordon, who supplied UAW trinkets to the union, such as T-shirts and key chains.

Specifically, the sources said, the FBI is looking into whether that vendor gave cash kickbacks or bribes to UAW leaders in exchange for their help in securing trinket contracts. They are also looking into a tip that some of those bribes were handed over at the Bouzouki strip lounge in Greektown, possibly by a middleman, the sources said.

But Gamble himself is not a target, they said.

Gamble has adamantly denied any wrongdoing, pledging transparency and accountability for the UAW since he took over presidential duties of the union last year.

"I want to say this clearly to all UAW members and staff: I would not have accepted the role of president if I couldn't withstand the scrutiny that I knew this job would bring," Gamble wrote in a letter to union staff on Thursday in a response to allegations first reported in The Detroit News.

Gamble acknowledged working with Gordon's business, Custom Promotions, in its role as a union vendor, but defended the relationship.

"In all those years of working with this vendor, they never approached me in any manner that was less than professional or questionable in any way, and I absolutely never requested or received any cash or kickback from that vendor or any other. Nor did I ever approach them in any unprofessional or questionable manner," Gamble states in the letter.

Moreover, Gamble said that when he became vice president of the union's Ford Department, which predated his role as president, he instituted a "strict three-bid process for all purchases over $5,000" and that any successful bids were the result of winning that competitive process.

Gamble also said he never solicited money from any vendor for his GIVES charity, which, in line with new union policies, is no longer operating, and he said all proceeds went to help homeless people and provide lunches for underprivileged children.

"I will continue to be transparent and very direct about any issues that come up concerning me personally or this union. Our union has suffered enough as a result of corrupt leaders," Gamble wrote. "My sole focus as president is to strengthen the union's financial controls, oversight and accounting system -- and most importantly, to restore the trust of our union members."

Labor watchers have been generally supportive of Gamble's moves since his elevation to acting president and then president as the scandal brought down his predecessor, Gary Jones, who has been ensnared in the probe.

Jones and his predecessor, Dennis Williams, have both been implicated as unnamed union officials in the corruption scandal. Prosecutors have accused Jones, Williams and others of embezzling more than $1.5 million in union funds, according to sources and court records.

 

Jones and Williams have not been charged.

Neither have Gordon, the UAW trinket vendor, or Settles, the UAW's onetime top negotiator with Ford who is now head of Detroit's Department of Neighborhoods -- a job that Duggan appointed him to. Settles' lawyer, Steve Fishman, had this to say of his client, and allegations that he took bribes from Gordon:

"Jimmy Settles never took bribes or kickbacks from Jason Gordon or anyone else. Anyone who believes that is, in the immortal words of Jack Nicholson in the movie Chinatown, even dumber than he thinks I think he is," Fishman wrote in an email to the Free Press.

Gordon's lawyer, Christopher Andreoff, also defended his client, stating:

"He denies any of the allegations that have been raised concerning his alleged, improper interaction with Gamble and Settles regarding his vending contracts with the UAW," Andreoff said Thursday, adding his client responded to government subpoenas in 2018 and 2019, and that's it.

"He has cooperated in producing company records relative to two subpoenas," Andreoff said.

The UAW also has denied any wrongdoing by Gamble, 64, a Detroit native who started his UAW career as a welder fixture repairman. He rose to the acting president's role after Jones took an unexpected leave of absence after the union's 40-day strike against General Motors was settled.

In his first week on the job as president, Gamble discussed the possibility of a federal takeover, telling the Free Press:

"We intend to do everything we can to show that we can manage our business," Gamble said in November. " ... The government is going to do what the government is going to do, but it's my job to make sure whoever comes in and looks at this union, they're going to be presented with a clean union."

The FBI declined comment for this article.

U.S. Attorney of the Eastern District of Michigan Matthew Schneider speaks to the press Monday, Dec. 2, 2019.

U.S. Attorney of the Eastern District of Michigan Matthew Schneider speaks to the press Monday, Dec. 2, 2019. (Photo: Mandi Wright, Detroit Free Press, Mandi Wright, Detroit Free Press)

Meanwhile, Schneider said that more tips involving corruption at the UAW are continuing to pour in. He said the UAW investigation is not about giving the labor movement a bad name -- as some critics have alleged -- but about enforcing laws and giving union members what they deserve: honest leadership.

"Anytime you have criminal wrongdoing in a large organization, it's significant. And we need to make sure that entities, whether unions or businesses, are serving the needs of the people," Schneider said. "The purpose of the union is to serve the men and women of the union. It's not to serve the needs or desires of the leadership."

Schneider also denounced earlier claims by the UAW and FCA that the corruption investigation involves only a handful of bad actors.

"I think the public record already indicates that it's not just a few people. The previous cases have shown that this is a widespread problem, and that's why we're focusing on it so much," Schneider said. "And when you have any situation where greed replaces your duties, that's a problem ... that's something we can't tolerate."

Neither can the rank and file, if the rash of new tips coming in are any indication.

"Right now we are receiving more tips from the public ... we're getting plenty of tips," Schneider said, adding the information "so far has been really helpful."

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