UPDATED: 7/26/17 5:57 pm ET - adds details, photo
DETROIT -- Fiat Chrysler’s former labor-relations chief, Alphons Iacobelli, used $1 million intended to train UAW members to buy himself a Ferrari, two solid-gold pens costing $37,500 each, a swimming pool and other luxuries, according to an indictment from a federal grand jury on Wednesday.
Iacobelli, who abruptly left the automaker in June 2015, also allegedly helped funnel $1.2 million from the UAW-Chrysler National Training Center to General Holiefield, who was in charge of the UAW’s negotiations with FCA at the time. Holiefield died in 2015, but his widow, Monica Morgan, also was indicted. Holiefield and Morgan, 54, used the money to buy first-class airfare, jewelry, designer clothing and furniture, the indictment says, in addition to paying off the $262,000 mortgage on their suburban Detroit home.
Iacobelli, 57, and Morgan, 54, were charged with criminal violations of the National Labor Relations Act. Separately, federal officials announced fraud charges against a former FCA financial analyst, Jerome Durden, who is accused of creating false tax returns to hide the payments to Holiefield, Iacobelli and other beneficiaries who were not identified.
A spokeswoman for the U.S. Attorney’s Office Eastern District of Michigan declined to comment on if other individuals would be charged, citing it is an ongoing investigation. David DuMouchel, Iacobelli’s lawyer, declined to comment. Steve Fishman, Morgan’s attorney, didn’t immediately respond to an email seeking comment.
The charges come at an inopportune time for the company and union, as thousands of Nissan workers in Canton, Miss., are scheduled to vote next week on UAW representation. For FCA, it adds to a wave of legal trouble for a company beset by federal investigations into possible environmental, safety and securities violations.
The alleged actions occurred between 2009 and 2014. There was no date set for an arraignment.
A Ferrari, jewelry & private jet
The 42-page indictment charges Iacobelli and others acting in the interest of FCA with making over $1.2 million in prohibited payments to Morgan, Holiefield and others. There was no date set for an arraignment. It was not immediately clear if other individuals would be charged. The indictment lists several unnamed individuals who may have been involved in the conspiracy.
The alleged prohibited payments and gifts occurred between 2009 and 2014.
The payments were made, according to the grand jury, using funds from FCA that were transferred to the Chrysler-UAW training center to provide education, training and retraining of workers. The indictment says Iacobelli gave Holiefield and “other senior UAW officials” virtually unlimited and unscreened use of credit cards to keep them “fat, dumb and happy.”
Iacobelli also was charged with tax violations related to diverting over $1 million in funds from the training center for his own benefit, including purchases of: a Ferrari 458 Spider costing more than $350,000; leasing a private jet; two limited-edition Mont Blanc pens costing $37,500 each; a pool and hundreds of thousands of dollars in improvements to his residence; and hundreds of thousands of dollars in personal credit card expenses, among other purchases.
Morgan also was charged with using the companies Monica Morgan Photography, Wilson's Diversified Products and a third company to conceal payments made by Iacobelli and others acting in the interest of FCA to Holiefield and with failing to report the income she received through those companies on her individual tax returns.
Acting U.S. Attorney Lemisch also announced that a separate information was unsealed charging Durden, 61, with conspiracy to defraud the United States by impairing, impeding, and obstructing the Internal Revenue Service. Durden served as the controller of the training center from 2008 through 2015.
"The funds misapplied deprived working men and women of critical workforce and professional development opportunities and calls into question the integrity of contracts negotiated during the course of this criminal conspiracy,” said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI, in a statement.
FCA, in a statement, said it has “cooperated fully” with the U.S. Attorney’s office, and it continues to “pursue all potential legal remedies against Mr. Iacobelli and any other culpable parties.”
"FCA US and the UAW were the victims of malfeasance by certain of their respective employees that held roles at the National Training Center (NTC), an independent legal entity,” the company said in a statement. “These egregious acts were neither known to nor sanctioned by FCA US.”
The company said it first learned about the alleged actions in June 2015, and after an internal investigation fired Durden and Iacobelli. FCA originally said Iacobelli retired from the company.
FCA says it also has worked with the UAW to implement governance, auditing and structural reforms to improve the accountability and transparency of the NTC.
'Betrayal of trust'
UAW President Dennis Williams said in a statement late Wednesday that he is “appalled” by the allegations laid out in the indictment, saying they would constitute “a betrayal of trust” on Holiefield’s part.
Williams said the union has hired independent counsel to lead an internal investigation into the allegations. He said the UAW and FCA would implement a host of changes “aimed at enhancing transparency and internal controls at the NTC,” including requiring an annual, independent audit of the NTC’s finances and banning donations from the center to charities run by UAW officials.
Iacobelli, meanwhile, was most recently hired by General Motors in January 2016 as executive director of labor relations. A spokesman for GM said the company is aware of the charges, and is “checking into it.” He declined to confirm if Iacobelli remains an employee.
Congress enacted the National Labor Relations Act, commonly known as the Taft Hartley Act, in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.
An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government's burden to prove guilty beyond a reasonable doubt.