Iacobelli pleads guilty in FCA-UAW criminal case as probe spreads

DETROIT -- Former Fiat Chrysler Automobiles labor relations chief Alphons Iacobelli pleaded guilty Monday to two charges related to a conspiracy to siphon millions from an employee training fund, overturning the not-guilty plea entered on his behalf in August.

Iacobelli pleaded guilty to conspiring to violate the Labor Management Relations Act and for subscribing a false tax return before U.S. District Judge Paul Borman in Detroit.

Sentencing was set for May 29. Iacobelli faces a statutory maximum of eight years in prison, and prosecutors said he will be required to repay $835,000.

Iacobelli is at the center of an ever-expanding federal probe into executives at the automaker and the UAW for allegedly pulling funds slated for employees to line their own pockets.

The probe since has spread to the UAW training centers for Ford Motor Co. and General Motors.  In November, GM and Ford confirmed they were cooperating with the investigation into alleged misspending at UAW union training centers funded by U.S. automakers. GM is conducting an internal investigation into the matter.

Federal investigators also met with FCA CEO Sergio Marchionne more than a year ago, according to reports.

According to a plea agreement made public late on Monday, Iacobelli has agreed to cooperate in an ongoing investigation by the Justice Department into alleged misspending at UAW union training centers funded by U.S. automakers. A lawyer for Iacobelli declined to comment on Monday, Reuters reported.

If Iacobelli chooses to cooperate with prosecutors, it's unclear how effective his testimony would be, according to Peter Henning, a Wayne State University law professor and former federal prosecutor.

"It will depend on whether he has agreed to cooperate, and also what information he could provide. With a defendant at his level, what interactions did he have with senior executives is an open question," he told Automotive News. "He has admitted he's engaged in fraud. That means his testimony wouldn't be all that trustworthy. He would have to be able to provide information that the government could confirm and be able to introduce in court beyond just his word."

Several indictments naming Monica Morgan, widow of UAW Vice President General Holiefield; Virdell King, a retired UAW associate director; and Jerome Durden, a former FCA financial analyst, were released last summer.

Detailed charges

In addition to the counts he pleaded guilty for, the arraignment names Iacobelli for two counts of paying and delivering prohibited money and things of value to a union official, and one count of conspiracy to defraud the United States, according to the 42-page indictment.

Notable among Iacobelli's alleged purchases with money taken from the UAW-Chrysler National Training Center are a 2013 Ferrari 458 Spider and two solid-gold Mont Blanc pens, each valued at $37,500. Reports say Iacobelli sold the sports car when news of the probe emerged.

He also said he knowingly authorized more than $450,000 in credit card charges for jewelry, furniture, electronics and other luxuries for FCA-UAW members. He also admitted to $262,219 in training center funds used to pay off Holiefield’s mortgage.

Both pens are in the possession of the government at this time.

On the tax charge, Iacobelli said he omitted more than $840,000 in income for the calendar year 2014, obtained illegally through FCA funds. Iacobelli was given 14 days to produce accurate tax forms for 2012 through 2015, but his lawyer, attorney David DuMouchel, asked for an extension.

Other charges

Others charged in the case have court appearances scheduled over the next several months, according to public records.

Morgan is scheduled for a another plea hearing Feb. 6, while Durden is to be sentenced in May and King is to be sentenced in June. Durden and King pleaded guilty.

According to the plea deal, Iacobelli's sentencing will not exceed 96 months. Henning said he would be "shocked" if time in federal prison was not recommended.

"This was a substantial abuse of authority, both inside the company and in the union," Henning said. "Sometimes you see crimes of opportunity, where it's a one-time transaction. This was systematic corruption inside the corporation. That's what's likely to lead to a prison sentence."

The UAW said in a statement Monday that it is "appalled at these charges. We have worked with the (national training center) and Fiat Chrysler to implement a range of measures aimed at enhancing transparency and internal controls at the NTC to reduce the risk of any future recurrence of these activities."

Marchionne has said the “deplorable” conduct “had nothing whatsoever to do with the collective bargaining process” and the “egregious acts were neither known to nor sanctioned by (Fiat Chrysler)." The company had no further comment Monday.

Reuters and Michael Wayland contributed to this report.