Former UAW official pleads guilty to U.S. corruption charges

ANN ARBOR, Mich. — Michael Grimes, who worked as an assistant in the UAW's General Motors department, pleaded guilty Wednesday in U.S. District Court here to wire fraud and money laundering charges.

Count one was the conspiracy to commit honest services wire fraud, which carries up to 20 years' imprisonment. The second count, conspiracy to commit money laundering, carries up to 10 years imprisonment.

Federal recommended sentencing guidelines range from 46 to 57 months.

Grimes is the ninth UAW or corporate official to plead guilty in the ongoing federal corruption investigation into illegal payoffs to UAW officials by Fiat Chrysler executives "and corruption within the UAW itself," the Justice Department said in a statement. 

U.S. prosecutors say Grimes, 65, conspired with two unidentified senior UAW officials on multiple schemes going back to at least 2006. Grimes, according to prosecutors, pressured a vendor of custom UAW logo products into giving him a $60,000 mortgage and periodic bribes totaling nearly $900,000.

The prosecution's criminal information against Grimes says the trio also arranged for the same vendor to sell the joint UAW-GM training center 50,000 "Team UAW-GM" jackets for $6 million in 2011 and 55,000 backpacks for $5.8 million in 2016. Grimes got the vendor to give him more than $1 million in kickbacks for those orders, according to the prosecution.

Grimes used bribe payments to buy, among other things, a 2017 Jeep Wrangler Unlimited along with property in Florida.

Grimes, who retired last year, said in court that he was dealing with a financial burden.

His attorney, Michael P. Manley, said after the proceedings that Grimes is devastated by his actions. Manley -- no relation to Fiat Chrysler Automobiles CEO Michael M. Manley -- added that Grimes was crushed by what he has done to the union's reputation.

Manley said people don't want to hear excuses, they want accountability, and that was what Wednesday's guilty plea was about.

Manley said Grimes accepting responsibility for his actions is the first step to redemption.

Grimes' next court appearance is set for Jan. 11 in Detroit.

“The hard-working members of the UAW deserve to be represented by leaders who give them true leadership -- and that means leadership that isn’t driven by corruption and greed,” U.S. Attorney Matthew Schneider said in a statement. “Today’s guilty plea is another step in the right direction of our battle against corruption in the union leadership."

Manny Muriel, special agent in charge of Detroit’s IRS criminal investigation unit, said in the statement: “For more than a decade Michael Grimes and other UAW officials were part of a corruption club that conspired to launder proceeds generated from the illegal kickback scheme. Grimes and others concealed the source of the money through a series of convoluted transactions totaling millions of dollars. This behavior served one purpose; self-enrichment and this greed became an epidemic throughout the corruption club."

The UAW said "the conduct admitted by Mr. Grimes in his plea today is shocking and absolutely disgraceful."

"In June 2018, as part of our Clean Slate reform agenda, the UAW adopted and reaffirmed a strict three-bid process for vendor purchasing, a policy that must be followed by all UAW officials and employees, and similar strict bid-process policies have been implemented at the Joint Program Centers, to ensure this type of conduct cannot be repeated," the union said in a statement. "That is among the stronger reforms and financial controls that have been adopted by the UAW and each of the Joint Program Centers."

The union said it "will not be distracted from fighting for our members and negotiating strong labor agreements with General Motors, Ford and FCA."

GM, in a statement, said the automaker is “deeply disturbed by the conduct of Michael Grimes and other union officials as uncovered by the government’s investigation and admitted to by Mr. Grimes in today’s hearing.

"These actions represent a stunning abuse of power and trust. There is no excuse for union officials to enrich themselves at the expense of the union membership they represented -- and to steal CHR funds invested by GM for training our hourly employees.”

Frank Hammer, the retired president of UAW Local 909 that represented workers at the GM Powertrain plant in Warren that was recently shuttered, said the Grimes incident makes “sad and angry at the same time.” He said he once worked with Grimes.

“I worked side-by-side with Mike Grimes at the UAW-GM department until I retired in the beginning of 2007, and he was a great guy, really friendly," Hammer told Automotive News. "And it seems to me that the culture of this UAW-GM partnership has really gotten to a lot of the reps, and they've sort of forgotten where they came from, and stopped representing the rank and file and began to enrich themselves at their expense.”

He added:  “It also makes me very angry, because at a moment in time when the unions are under attack from groups like the National Right to Work Committee and other right-wing groups, that we ought to be on our best behavior, and we ought to be doing the max to represent our workers so that the workers believe in the union that represents them.”

Paul Wohlfarth, a Chrysler retiree who worked at the Toledo Jeep plant, said there’s  a lot of good UAW officials out there, but they’re being quiet right now. Wohlfarth said now’s the time for them to speak up. 

The various corruption charges brought against UAW officials over the years, Wohlfarth said, is hurting the union’s reputation and making it difficult to organize in the south.

"It's pretty disheartening when UAW members are spending so much of their strike fund to organize plants down south," he said. "And then we find that the companies down south are using all these corruption charges against us, and it's really a waste of our strike-fund money to try and organize when we've got our top leaders working against us." 

Nick Bunkley contributed to this report.