The United Auto Workers union and Chrysler are distancing themselves from the executives at the center of a multimillion-dollar embezzlement scheme.
The Department of Justice announced that former Fiat Chrysler vice president Alphonse Iacobelli received a five-and-a-half-year prison sentence for his role in diverting more than $4 million from a worker training center known as NTC. U.S. Attorney Matthew Schneider said the sentence reflected his betrayal of United Auto Workers members who were supposed to benefit from the job training at the training center.
"The Court’s sentence recognizes the serious harm done to rank and file union members who were betrayed by their UAW leadership who were bribed by Fiat Chrysler and its executives," Schneider said in a statement. "Labor-management corruption poisons and undermines the collective bargaining process, and today’s sentence demonstrates that it will be vigorously prosecuted."
The Department of Justice has expanded its investigation into the training center beyond the individuals from the company and union who siphoned money meant to train workers for their own means. The federal investigation found that Fiat Chrysler and UAW officials used funds to pay off credit card debt, mortgages, and make luxury clothing, jewelry, and automobile purchases, including a $350,000 Ferrari for Iacobelli. The agency is now looking into Fiat Chrysler and the UAW to see if such payoffs affected collective bargaining agreements for workers since some of the embezzlement took place during contract negotiations.
Both Fiat Chrysler and the UAW have denied knowledge of the corruption scheme before the federal government announced its charges against Iacobelli and union officers. They have said that the scheme reflects the action of bad actors, rather than systemic problems, and both say they are cooperating with federal investigators. UAW said it was "appalled" by Iacobelli's actions and welcomed the stiff sentence handed down on Monday.
"Whatever may be said about the misconduct of others at the NTC, these thefts from the NTC by Al Iacobelli had nothing to do with trying to influence collective bargaining," the union said in an email. "They had everything to do with Al Iacobelli’s personal greed."
UAW emphasized that it is taking steps to safeguard against future wrongdoing from individuals involved in collective bargaining. It says the bribes played no role in contract renegotiations with the company.
"We are confident the terms of our UAW contracts were not impacted by Iacobelli’s fraudulent conduct at the NTC," the union said. "The UAW has and continues to respond by making changes to ensure this type of criminal behavior will not happen again."
Fiat Chrysler also emphasized that the bribery and embezzlement payoffs did not affect its negotiations with the union. The company said any benefits accrued from the misdirected funds went to individual criminals, rather than to the employer. A spokesman said Fiat was a "victim of illegal conduct by Al Iacobelli and certain other rogue individuals."
"The conduct of these individuals—for their personal enrichment and neither at the direction nor for the benefit of the company—had no impact on the collective bargaining process," Fiat Chrysler said in an email. "The behavior involved a small number of bad actors who stole training funds entrusted to their control and co-opted other individuals who reported to them to carry out or conceal their activity over a period of several years."
Iacobelli's sentence followed the announcement that Monica Morgan, the wife of late-United Auto Worker official General Holifield, will spend 18 months in prison for fraud perpetrated at the center. The NTC is now suing to recover the embezzled money from union and company officials.