September 4, 2019 / 5:45 PM / 19 days ago

Former UAW official pleads guilty to fraud, money laundering

DETROIT (Reuters) - Former United Auto Workers official Michael Grimes pleaded guilty Wednesday to wire fraud and money laundering as part of an ongoing FBI corruption probe that could hamper upcoming contract talks with the Detroit-based automakers.

FILE PHOTO: United Auto Workers President Gary Jones delivers remarks at the opening plenary session of the National Association of the Advancement for Colored People's annual convention in Detroit, Michigan, U.S. July 22, 2019. REUTERS/Rebecca Cook

Grimes was charged with soliciting hundreds of thousands of dollars in kickbacks from vendors supplying watches and jackets to union members, including a General Motors-funded non-profit training center jointly run with the UAW.

Grimes was a member of the executive board of the training facility, the Center for Human Resources, and an official in the union’s GM department until his retirement in July 2018. The center’s executive board, which included several GM executives, had responsibility for allocating funds and monitoring expenses, according to the government’s case, which also cited two unnamed UAW officials who were CHR board members.

The UAW said in a statement on Wednesday, “The conduct admitted by Mr. Grimes in his plea today is shocking and absolutely disgraceful.”

After Wednesday’s court session, Grimes’ attorney Michael P. Manley said his client was “devastated.” Grimes could face prison terms of up to 20 years. Government attorneys recommended a sentence of 48 to 56 months.

Grimes is scheduled to be sentenced Jan. 14, 2020.

As part of a long-running federal investigation of illegal payments to union officials, the FBI last week conducted searches at the home of UAW President Gary Jones, a union retreat and multiple other locations.

The investigation has overshadowed upcoming contract talks with General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles.

GM this week was named as the union’s strike target. The current four-year contract expires Sept. 14.

The UAW statement on Wednesday said the union “will not be distracted from fighting for our members and negotiating strong labor agreements” with GM, Ford and FCA.

Before last week’s raids and the charges against Grimes, the FBI had been conducting a wide-ranging investigation into illegal payoffs to UAW officials by FCA.

To date, seven people linked to the union and the automaker have been sentenced in that investigation.

Federal prosecutors meanwhile have aggressively expanded the probe.

The office of the U.S. Attorney in Detroit said last week’s raids included the home of current UAW President Jones in the Detroit suburb of Canton.

A source familiar with the investigation said a raid had also been conducted on a residential address in Corona, California. Public records list former UAW President Dennis Williams and his wife as the owners.

Reporting by Paul Lienert; Additional reporting by Nick Carey in Detroit; Editing by Steve Orlofsky

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