A class action lawsuit has been filed against Fiat Chrysler and the United Auto Workers union in the United States District Court for the Eastern District of Michigan.
The suit, which was filed by several UAW employees of Chrysler, alleges that the automaker and members of the union's leadership colluded and misused dues paid by the union.
It also alleges that the automaker bribed the UAW leadership members to give them more favorable terms both during collective bargaining and then during a purchase of an equity stake in the automaker.
The suit alleges the primary conspirators as being Fiat Chrysler's Vice President of Labor Relations Alphons Iacobelli, and high level UAW officials General Holiefield and Virgell King.
Both Iacobelli and King have pled guilty the federal crimes. Holiefield has passed away.
The named UAW officials, as well as several who have not yet been named, are accused of taking $1.5 million in payments and gifts to influence the purchase of a equity stake in Fiat Chrysler by purchasing the interest the was held by the UAW Retiree Medical Benefits Trust when the automaker emerged from bankruptcy protection, as well as giving the automaker more favorable concessions during the two latest contract negotiations between the UAW and Fiat Chrysler.
The lawsuit alleges both of these cost the dues paying members of Fiat Chrysler millions through both an inflated purchase price for the stake in Fiat Chrysler, as well as costing them more money in the long run through concessions given to the automaker during those contract negotiations.
The suit demands both restitution and damages.
On Friday the UAW sent the following letter to their members regarding the allegations found in the lawsuit:
Brothers and Sisters,
You may have seen earlier this week that former Fiat Chrysler executive Al Iacobelli plead guilty to corruption charges in federal court.
While Mr. Iacobelli will have to answer for his criminal conduct, it appears that in an attempt to get lenient treatment from the government he is now falsely spinning his crimes as an effort to corrupt the collective bargaining process between the UAWand Fiat Chrysler. In reality, it is plain as day that his motivation was nothing more than outright greed.
Let me speak clearly. Al Iacobelli by his own admission is a crook and a liar. He stole funds for his personal gain. With that stolen money, he built a custom swimming pool and lavish custom entertainment patio in his back yard, bought himself a $300,000 Ferrari convertible with vanity “IACOBLI” plates, paid over $1 million racked up on his and his wife’s personal credit cards, paid off college student loans for his kid and even bought not one, but two $35,700 gold pens. We are talking about millions of dollars in total that went directly into his pockets.
Mr. Iacobelli also appears to have corrupted a handful of former UAW officials who worked at the NTC, most significantly former UAW Vice President General Holiefield. The fact that Mr. Holiefield and others allowed themselves to be corrupted by Mr. Iacobelli was and is a terrible betrayal of our union’s trust. But there is simply no truth to the claim that this misconduct compromised the negotiation of our collective bargaining agreement or had any impact on union funds. Mr. Iacobelli did what he did for a very simple reason: He wanted to steal massive amounts of money for himself, and he wanted those around him to look the other way while he committed his crimes.
As I have discussed before, General Holiefield did not single-handedly control the collective bargaining agreement. That collective bargaining agreement passed through many hands, and its terms were reviewed, negotiated and approved at the highest level of our union, including the UAW president and ultimately the membership. In addition, the 2011 agreement – which Iacobelli suggests was influenced by his criminal actions – was in fact patterned after the agreements our union negotiated at Ford and General Motors. The 2015 agreement was among the richest for workers ever reached, even renegotiating a more generous profit sharing formula that recently produced $5,500 on average to every FCA worker. In fact, during bargaining in 2015, Iacobelli was not employed by FCA and had nothing to do with those contract negotiations. There’s just no truth to the allegation that the terms of the collective bargaining agreement were compromised by Iacobelli’s crimes.
Other claims by Mr. Iacobelli in his plea agreement are half-truths or belied by the facts altogether. For example, the plea agreement claims Iacobelli and other Fiat Chrysler officials offered to pay $50,000 retirement packages to select senior UAWofficials, while offering to hide the payments from rank and file members. What Iacobelli’s plea agreement fails to disclose is that these proposed retirement payments were reviewed by UAW legal counsel, immediately rejected by me and never paid to anyone.
Iacobelli’s plea agreement also claims General Holiefield had been “scripted” in advance of a UAW board meeting to discuss the UAW Retiree Medical Benefits Trust sale of Chrysler Group stock back to Fiat. I am not here to defend General Holiefield or excuse his conduct with Al Iacobelli, but the fact is Mr. Holiefield said nothing at the meeting that anyone who participated can recall, let alone did Holiefield have any impact on the stock sale decision by the UAW Retiree Medical Benefits Trust. In fact, a third-party independent fiduciary retained by the UAWRetiree Medical Benefits Trust controlled the Trust’s handling of the stock sale and that independent fiduciary had sole discretion and authority regarding the sale of the stock. This simply was not a matter that Holiefield influenced, much less controlled.
Although Mr. Holiefield died three years ago before this investigation began, his widow also is reportedly soon going to enter a guilty plea on charges that she too benefited from Iacobelli’s scheme. We have been shocked and saddened by these revelations, and we have initiated many reforms so they will never be repeated.
Mr. Iacobelli’s case is one of personal greed, plain and simple. Iacobelli stole money because he’s a thief who wanted to live a lavish lifestyle well beyond his means. And he corrupted a few UAW officials because he needed their silence to protect his own crimes. Those were terrible acts on all sides. But the fact is those people’s misdeeds did not affect your collective bargaining agreement and no union funds were stolen or lost.
Together we will stand strong and weather this storm as we have so many others. We will not be distracted from our mission to zealously represent and improve the lives of working men and women. Thank you for your hard work and support.
In solidarity,
Dennis
Read the lawsuit below:
Complaint & Jury Demand by WXYZ-TV Channel 7 Detroit on Scribd
