UAW embezzlement scandal puts union on path to a possible U.S. takeover
The federal government looks increasingly likely to take over the United Auto Workers, with the U.S. attorney leading a years-long criminal investigation of the union citing “systemic” corruption and one of its top leaders sounding resigned to the prospect.
Hours after filing criminal charges against Gary Jones, who stepped down as UAW president after being implicated in the scandal, U.S. Atty. Matt Schneider reiterated that federal oversight of the union is a possibility.
Federal prosecutors only recently stepped aside after being involved in managing the International Brotherhood of Teamsters for 30 years.
“We have a systemic problem within the union,” Schneider said of the UAW. “We have systemic corruption within the union and that is why we aren’t taking oversight off the table. If it worked for the Teamsters, maybe it could work here.”
Cindy Estrada, a UAW vice president, countered that the union has taken measures to prevent abuses, such as adding an ombudsman and ethics officer. When asked about the prospect of prolonged government oversight, she said that decision was out of the union’s hands.
“So much of that is not within our control,” she said. “I feel confident in the steps that we’re taking right now.”
Prosecutors charged Jones on Thursday with conspiring with other union officers to embezzle more than $1 million that they spent on lavish vacations, high-end liquor and cigars. He resigned in November, months after federal agents raided his Detroit-area home, and is now the most prominent figure to go down in a scandal that has resulted in more than a dozen convictions of UAW or Detroit automaker leaders.
A lawyer for Jones declined to comment.
The union announced a seven-point plan of ethics reforms after Jones stepped down, but prosecutors panned the move as inadequate. The UAW then said it would eliminate the regional office that Jones headed before becoming president and that is alleged by prosecutors to have been the epicenter of schemes involving bribery, misuse of funds and kickbacks.
Federal officials have not specified what actions they seek from the UAW but have hinted they may charge the union with violating the Racketeer Influenced and Corrupt Organizations Act, known as RICO. Some dissident UAW members have called for direct election of top executives rather than selection by delegates appointed by the union’s dominant and long-ruling faction.
The criminal charges against Jones, which were unsealed Thursday, specifically allege he aided in racketeering activity.
Your guide to our new economic reality.
Get our free business newsletter for insights and tips for getting by.
You may occasionally receive promotional content from the Los Angeles Times.