A former official of the United Auto Workers pleaded guilty last week to the federal charge of financial misconduct, while nearly 50,000 UAW members voted on whether they should end a five-week strike at General Motors. (Reuters.com).
Jeffrey Pietrzyk, previously a co-director of the UAW-GM Center for Human Resources, pleaded guilty to conspiracy to commit money laundering and a count of wire fraud, according to federal court records. Pietrzyk is the latest former UAW official to plead to guilty to federal charges in a wide-ranging DOJ criminal investigation of UAW corruption.
Department of Justice agents raided the homes of the current UAW president last month, Gary Jones, and ex-president Dennis Williams. Neither man has been charged at this point.
Pietrzyk Hit With Charges for Stealing Organization Funds
Pietrzyk was charged at the federal level for schemes related to using funds from the UAW-GM Center for Human Resources to purchase UAW logo jackets and watches. He then received kickbacks from vendors of those products, per court documents. On Sept. 4, ex-UAW official Michael Grimes gave a guilty plea to wire fraud and money laundering. These federal charges were connected to misusing Center for Human Resources funds, which were intended to pay for worker training.
Federal prosecutors said that Pietrzyk and another UAW official used $3.97 million in funds from the UAW-GM Center for Human Resources to purchase watches the manufacturer said would cost $2 million.
Mortgage for Watch Contract Scheme
The watch company had gotten a contract to sell 23,000 watches to the powertrain divisions at GM. Another man being accused of wire fraud, Michael Grimes, has been accused of ordering the company to pay for a $60,000 mortgage for him. After the company declined, Grimes said he would cancel the watch contract, and the company gave in. (Mlive.com).
The recipient of the loan stopped making the payments, and Grimes came up with another way to recoup his losses. He set up the watch company to make a bid on a $4 million contract to make 58,000 watches for the UAW at the cost of $68 each.
The watch provider started to issue illegal payments that looked like checks. It would sometimes write ‘antique furniture’ on the memo line, according to the Department of Justice. The company then gave kickbacks to the union official for $30,000. Petrzyk got $70,000, and Grimes received $35,000.
The watches were not distributed to UAW-represented GM workers and are being stored in a warehouse at the Center for Human Resources, per court documents.
‘Team UAW-GM’ Jacket Scandal
Another union official was accused of conspiring with Pietrzyk and Grimes. He allegedly proposed that the training center buy 50,000 ‘Team UAW-GM’ jackets in 2011. The contract was worth almost $6 million, according to allegations from the prosecutor, which was given to the watch company where Grimes already was being paid.
With Grimes as the frontman and Pietrazyk as middle man, the company that won the contract was required to pay $300,000 in kickbacks to the union officials who awarded the contract.
Federal prosecutors also say that Grimes levered the company to give him a $500,000 kickback that he used to pay off a property he owned.
Backpack Kickbacks
In 2016, the same company got a $6 million contract to give 55,000 backpacks to members of the UAW. Grimes was accused by federal prosecutors of trying to get a $1 million kickback, but when the company would not do it, he settled for $500,000.
Pietrzyk Took Thousands in Kickbacks
Pietrzyk also admitted that he took more than $120,000 in kickbacks and bribes and tried to hide his illegal actions. Pietrzyk’s sentencing has been set for March 2020. It is expected that a plea deal will result in the man being sentenced to two years in federal prison.
GM and UAW said last week they would shutter the Center for Human Resources and sell the building on the Detroit River that houses the entity.
The federal criminal investigation of the UAW is ongoing. It has cast a long shadow over the UAW’s efforts to get new four-year contracts with GM, Ford, and Fiat Chrysler. Federal prosecutors also have accused ex-UAW officials of taking bribes from Chrysler executives, and taking UAW funds to pay for expensive parties and winter stays at exclusive resorts.
New UAW-GM Contract Would Close HR Facility
A tentative agreement between UAW and GM last week would close the jointly-operated training facility that was the center of the corruption that led to Pietrzyk’s guilty plea. (CNBC.com).
If the union members at GM vote for the deal, the training programs and other services that are overseen by the UAW-GM Center for Human Resources would be given to the Executive Board-Joint Activities organization that is made up of GM and UAW-appointed members.
As of 2017, the Center for Human Resources had assets of $80 million. The Center offers training and tuition assistance programs.
The new union contract also would ban the use of funds from the trusts for any promotional products or novelty items.