Former UAW Official Pleads Guilty in Federal Probe of Union Corruption--Update

By Nora Naughton

A former top aide at the United Auto Workers union pleaded guilty Wednesday to conspiracy charges, the latest development in a federal investigation into corruption within the leadership ranks that recently expanded to current and former UAW presidents.

Michael Grimes, a retired official who was assigned to the UAW's General Motors Co. division and once served as an administrative assistant to a union vice president, stood accused of wire fraud and money laundering. He entered into a plea deal with federal prosecutors for a lesser sentence. The charges carry a maximum of 20 years in prison.

Mr. Grimes is the first senior official from the UAW's GM department to be charged in the ongoing criminal probe, which first became public in 2017 and has largely focused on financial misconduct involving executives at Fiat Chrysler Automobiles NV and their union counterparts.

Federal prosecutors say Mr. Grimes received about $2 million in kickbacks and bribes from vendors hired to provide clothing and other promotional accessories to the UAW's training center for GM workers. In one instance, they say he used his power as a union official to coerce a watch vendor to pay $60,000 on his mortgage, according to court documents filed last month.

The charges allege Mr. Grimes and other unnamed union officials spearheaded the scheme -- which started in 2006 and lasted until July 2018 -- to enrich themselves. Before retiring from the union last year, Mr. Grimes had worked alongside UAW Vice President Cindy Estrada and was on the UAW-GM training center's board.

Mr. Grimes told the court he was experiencing financial hardship when he accepted the kickbacks. His attorney, Michael Manley, told reporters after the plea hearing that Mr. Grimes was devastated by his actions.

The Justice Department's investigation has already resulted in eight convictions, including a prison term for Fiat Chrysler's former head of labor relations. Last week, federal agents searched the homes of UAW President Gary Jones, the union's highest-ranking official, and his predecessor, Dennis Williams, marking a significant elevation in a probe that has mostly centered on allegations of union officials using funds set aside for worker training programs for personal benefit. Neither man has been charged with a crime.

The UAW has said its leadership is cooperating with federal investigators and the search warrants weren't necessary.

"The conduct admitted by Mr. Grimes in his plea today is shocking and absolutely disgraceful," the UAW said Wednesday. The union said it has recently enacted reforms that provide more oversight and restrictions to the vendor-bidding process to ensure such behavior doesn't occur again.

As the investigation accelerates, the UAW is working to negotiate new four-year labor contracts with the Detroit auto makers. The union on Tuesday said it would target GM to bargain with first, aiming to reach a deal with the car company that it can use as a template for similar agreements with Fiat Chrysler and Ford Motor Co.

The current contracts, representing nearly 150,000 U.S. factory workers at GM, Ford and Fiat Chrysler, expire on Sept. 14.

(END) Dow Jones Newswires

September 04, 2019 13:15 ET (17:15 GMT)

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