Acting U.S. Attorney Saima S. Mohsin announced that progress has been made towards reforming the International Union, United Automobile, Aerospace, and Agricultural Workers of America (“UAW”). The UAW represents over 400,000 active members and over 580,000 retired members in more than 600 local unions across the United States.
Previously, numerous high-level officials of the UAW had been the subject of criminal prosecutions based on fraud, corruption, embezzlement, and labor law violations. These prosecutions had resulted in the criminal convictions of two UAW Presidents, Gary Jones and Dennis Williams, two UAW Vice Presidents, Joseph Ashton and Norwood Jewell, as well as seven other senior UAW officials.
Following the completion of a significant portion of the criminal investigation, the United States brought an anti-corruption and anti-fraud civil action against the UAW in December 2020 seeking injunctive and equitable relief in order to stop the fraud and corruption and to reform the UAW. After the United States filed its civil complaint against the UAW in United States of America v. UAW, Case No. 20-cv-13293-Lawson, and after extensive negotiations, the United States and the UAW entered into an agreement to resolve the case through a Consent Decree. The Consent Decree governing the UAW was entered by the Honorable David M. Lawson, United States District Judge, on January 29, 2021.
Under the terms of the Court’s Consent Decree, the Court appointed an independent Monitor who has the authority to exercise disciplinary powers within the UAW, to investigate possible fraud or corruption within the union, and to seek discipline against UAW officers and members before a UAW Trial Committee, or before an independent Adjudications Officer appointed by the Court. Members can report misconduct by UAW officials to the Monitor at https://www.uawmonitor.com. The Monitor’s oversight of the union will last for six years, with a possible early termination if the Monitor were to find that his work is complete, and the UAW no longer needs the Monitor’s services, or extension if the Monitor or the parties feel that a longer period is appropriate.
The Consent Decree fully and finally resolved the criminal and civil investigation of the UAW as an entity. The UAW agreed to resolve a tax investigation by making a payment of $1.5 million to the Internal Revenue Service in connection with administrative fees that the union received from the three joint training centers that were operated with the three car manufacturers. The UAW has made that payment to the IRS. In addition, the UAW has already paid back over $15 million to the training centers for improper chargebacks that the union received from two of the training centers. This money will be used by the joint programs for the health and safety of auto workers. The National Training Center, which was the mechanism whereby FCA US LLC executives corruptly funneled money and other things of value to UAW officials will be dissolved and replaced with an untainted entity.
After undergoing a rigorous selection process, the U.S. Attorney’s Office selected Neil M. Barofsky to serve as the Monitor of the UAW and asked the Court to so appoint him. On May 12, 2021, Judge Lawson entered an order appointing Mr. Barofsky as the UAW Monitor. Mr. Barofsky is a partner at the law firm of Jenner & Block. There, he leads the firm’s monitorship practice, and has served as a monitor in other matters, including his appointment to monitor Credit Suisse Securities LLC and Credit Suisse AG following billion dollar settlements. In these matters, Mr. Barofsky was separately appointed by the Department of Justice and the New York State Department of Financial Services. Prior to Mr. Barofsky’s employment with Jenner & Block, he worked as an Assistant United States Attorney in the United States Attorney’s Office in the Southern District of New York. He was also appointed to be the initial Special Inspector General for the Troubled Asset Relief Program (or TARP), an investigative agency that he built from scratch. The Monitor’s staff includes experts in auditing, compliance, internal investigations, labor law, and labor elections.
Since Mr. Barofsky became the Monitor in May 2021, he has taken a number of actions in furtherance of the Consent Decree’s goal of reforming the UAW and blocking additional criminal conduct.
First, the Monitor has been diligently working towards holding the referendum provided for by the Consent Decree. The Consent Decree requires that the referendum occur by November 12, 2021. The Monitor has directed that the referendum take place by a secret-ballot vote of all of the membership, overseen by the Department of Labor. The referendum will determine whether to change the UAW’s election method from the current delegate system to a direct election model, where the entire UAW membership could vote for the UAW President and the other members of the UAW’s International Executive Board. Through the referendum, members will decide whether the UAW’s constitution will be changed to provide for a direct election system in the union, sometimes referred to as “one member, one vote,” starting in the 2022 election cycle.
The Monitor has been working closely with officials from the Department of Labor’s Office of Labor Management Standards (“OLMS”) to plan and organize the referendum. OLMS is the department’s expert in conducting and overseeing labor union elections. The Monitor has directed that the referendum will be conducted by mail-in voting so-as-to ensure that all active and retired UAW members will have an opportunity to participate fully in the referendum. The Monitor has issued interim rules governing the conduct of the referendum. The rules direct that no UAW dues money can be used to campaign for or against the referendum. The rules can be found here: https://www.uawmonitor.com/electionsreferendum.
Acting US Attorney Mohsin stated, “The UAW Monitor has made significant progress over the past three months in implementing reform in the UAW. The November referendum provides a historic opportunity for the UAW’s rank and file membership to be heard on whether to change the union’s election system. We insisted that the Consent Decree give the union’s membership the opportunity to decide for themselves whether to change to a direct election system because of the pervasive culture of corruption that has plagued the UAW’s leadership for so many years. We encourage all UAW members to educate themselves on the issues in the referendum, make up their own minds, and let their voices to be heard by casting a vote in the referendum.”
As part of the referendum process, the UAW Monitor has gone live with a Website, www.uawmonitor.com, to provide information to the UAW’s membership and to the public about the Referendum and about the Monitor’s activities. The Monitor is planning a joint webcast in the fall so that both sides on the issue presented by the referendum will be able to make their case to the UAW’s membership.
A second aspect of the work of the UAW Monitor is to investigate misconduct by UAW officials and then, where appropriate, to bring internal UAW charges against any official found by the Monitor to have engaged in misconduct. The UAW Monitor will present and try these charges before the UAW Adjudications Officer. The Adjudications Officer is another official to be appointed under the terms of the Consent Decree. The Adjudications Officer will have the power to act as the judge and factfinder of the disciplinary charges brought by the UAW Monitor. The Adjudications Officer will have the power to punish UAW officials who engage in misconduct as found by the Monitor. The punishments could include, for example, expulsion from the UAW or termination from UAW positions.
The UAW Monitor has already begun investigating historical acts of misconduct that were discovered by the United States during the criminal investigation in instances where the United States has decided not to bring criminal charges. As part of this process, prosecutors with the U.S. Attorney’s Office and federal law enforcement agents have been meeting with the Monitor’s staff to provide information about historical misconduct. As part of this process, the United States has provided the Monitor, as an arm of the Court and pursuant to Court order, with various investigative materials to assist the Monitor in investigating historical misconduct. The United States has also sought and received permission from the Court to provide the Monitor with certain grand jury materials relating to closed matters and with copies of sealed search warrant applications. Finally, members of the Monitor’s staff have met with a number of individuals who have been cooperating with the government’s criminal investigation. The Monitor is seeking to gather additional information for purposes of deciding whether any internal disciplinary charges are appropriate against any UAW officials or members.
Besides planning and organizing the upcoming referendum and beginning to investigate possible internal misconduct, the Monitor is also in the process of reviewing audit, accounting, and financial controls at the UAW. The Monitor is assessing the controls the UAW has implemented to meet its obligations under the Consent Decree, is identifying gaps and areas of improvement through rigorous testing protocols, and is overseeing the implementation of further reforms by the UAW and its consultants. In addition, the Monitor has the right under the Consent Decree to disapprove certain employment and contractual decisions by the UAW, and to review relevant financial data, books, records, audit findings, and other similar records.
The United States will soon propose to the Court a candidate to serve as the UAW Adjudications Officer. The Court will then decide whether to appoint that individual as the Adjudications Officer. If appointed, the Monitor will be able to bring internal UAW disciplinary matters before the Adjudications Officer if appropriate.
The Consent Decree governing the UAW is being handled by Assistant U.S. Attorneys David A. Gardey and Steven Cares.