GM General Motors Company

By Nora Naughton 

Federal prosecutors charged former United Auto Workers vice president and ex- General Motors Co. board member Joe Ashton with fraud and money laundering, according to court documents filed Wednesday, the latest in a yearslong criminal investigation into corruption in the union's top ranks.

Mr. Ashton, who retired from the UAW in 2014 and left the GM board in 2017, is accused of helping to orchestrate a scheme to personally enrich himself and other UAW officials by steering contracts to vendors in exchange for bribes and kickbacks, prosecutors alleged.

GM said in a statement it was disturbed by the charges involving Mr. Ashton, and the company wasn't aware of the alleged illegal conduct. Acting UAW President Rory Gamble said in a statement the charges were inexcusable and violate the union's standards of conduct.

Mr. Ashton's attorney, Jerome A. Ballarotto of New Jersey, didn't immediately return a phone message requesting comment.

Mr. Ashton, who ran the UAW's GM department and led negotiations with the auto maker earlier in the decade, is now the 13th person charged in the Justice Department's widening criminal probe into allegations of corruption, bribery and other financial misconduct among top-ranking officials at the UAW, one of the nation's oldest unions. The investigation has potentially implicated UAW President Gary Jones, who over the weekend stepped aside to take a leave of absence. Mr. Jones hasn't been charged and his attorney said he took voluntary leave and didn't face pressure to do so.

Mr. Ashton is also the second former UAW vice president to be charged in the investigation, which first became public in 2017 and had initially focused on misuse of UAW training-center funds at Fiat Chrysler Automobiles NV. Fiat Chrysler has said the misconduct was perpetrated by a small group of individuals acting in their own interest.

The latest charges mark another setback for the UAW leadership at a time when union officials are still trying to secure new labor contracts at Ford Motor Co. and Fiat Chrysler. The UAW late last month reached a new labor agreement with GM after a 40-day nationwide walkout.

The UAW's governing board is also trying to move past internal divisions over the terms and timing of Mr. Jones's leave of absence and mend the union's reputation, people familiar with the matter said. On Saturday, six of the board's 13 voting members voted against the union leader's request for paid leave, but Mr. Jones prevailed as he was able to cast a vote, the people said.

As part of the alleged fraud scheme, Mr. Ashton in 2012 and 2013 arranged a nearly $4 million contract for his personal chiropractor to provide more than 50,000 custom-made wristwatches to union members, according to the charging document filed in a U.S. federal court in Michigan. The money came from a jointly run UAW-GM training center in Detroit, the document says.

GM and the UAW agreed to close the training center in a new labor contract approved late last month by GM workers.

In exchange for arranging the contract, Mr. Ashton, along with two other UAW officials, accepted hundreds of thousands of dollars in bribes and kickbacks from the chiropractor, prosecutors alleged. The chiropractor visited Mr. Ashton's house regularly to deliver cash payments of $5,000 to $30,000, prosecutors said.

The watches were delivered to the training center in 2014 but never distributed to workers and remain stored in a warehouse, the document said.

The allegations involving Mr. Ashton come as federal investigators continue to build a case that they say has also uncovered evidence of UAW leaders using union funds to pay for extravagant trips, cigars, high-end liquor and golf clubs. Some of the most lavish spending, federal prosecutors say, happened on trips to Palm Springs, Calif., for conferences hosted by Mr. Jones when he was the top official at UAW Region 5.

A number of mid-level and top ranking UAW officials, two of which were close associates of Mr. Jones, have already been charged or convicted in the criminal probe. According to a charging document filed by federal prosecutors, Edward Robinson, a former UAW Region 5 official, allegedly split embezzled union dues with an unnamed official referred to as "UAW Official A." That unnamed official is Mr. Jones, a person familiar with the investigation said.

Mr. Jones's attorney J. Bruce Maffeo hasn't commented directly on the investigation.

Mr. Ashton was appointed to GM's board of directors in 2014 on behalf of the voluntary employees' beneficiary association, or VEBA, a major GM stockholder which administers health-care benefits for UAW-represented retirees at GM.

--Mike Colias contributed to this article.

(END) Dow Jones Newswires

November 06, 2019 12:58 ET (17:58 GMT)

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