A senior member of the United Auto Workers union was arrested on Thursday and charged with conspiring to embezzle hundreds of thousands of dollars in union money with fellow union officials, Reuters reported. The arrest comes as the result of a widening investigation into the UAW and just days before the union is set to negotiate with General Motors, as we noted in a recent article.
Search warrants were executed by the FBI last week and, as a result, Vance Pearson of the UAW was arrested. The 58-year-old served as a member of the union's International Executive Board and a regional director. In addition to Pearson's house being searched, UAW president Gary Jones also had his Michigan home searched, although he has not been charged with wrongdoing yet.
The complaint against Pearson notes that he became "second in command" of Region 5 in January 2016, which was headed up by Jones at the same time. The complaint says that between 2014 and 2018, Pearson and other UAW officials "submitted fraudulent expense forms seeking reimbursement from the UAW's Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences" but "used the conferences to conceal the use of hundreds of thousands of dollars in UAW funds to pay for lavish entertainment and personal spending for the conspirators."
Member dues were reportedly spent on "$440 bottles of champagne originally created to please a Russian czar and scantily clad women to light union leaders’ cigars." The suit also claims that "UAW officials, including Pearson, and others would spend weeks and/or months living in Palm Springs enjoying an extravagant lifestyle paid for with UAW funds."
Nine people have pleaded guilty in connection with the ongoing criminal investigation into UAW, including former official Michael Grimes, who pleaded guilty to wire fraud and money laundering last week.
Recall, we recently reported that a strike at GM seems more possible now than ever. We also reported days ago that the UAW had authorized its leaders to strike and that the chance of a strike is at a "12 year high".
Union leaders will be in Detroit this weekend to determine whether or not they will take a proposed labor contract from GM back to their members for a vote, or if they will strike.
Kristen Dziczek, vice president of the industry and labor economics group at the Center for Automotive Research commented: "It’s just difficult to see how both sides can come to an agreement. Union membership expectations are very high given how well GM has been performing."