Former UAW leader and GM director Ashton charged in fraud, money laundering conspiracies

Robert Snell | The Detroit News

Detroit — Retired United Auto Workers Vice President Joe Ashton was charged in connection with a bribery and kickback scandal Wednesday, becoming the 13th and highest-ranking person charged in a years-long corruption investigation.

Ashton, who retired in 2014 and was appointed as the union's representative on the board of General Motors Co., was charged three months after The Detroit News identified him as the the unnamed union official accused in a federal criminal complaint of demanding $550,000 in kickbacks and bribes from vendors.

In return, a list of vendors that included Ashton's personal chiropractor, received contracts to produce more than $15.8 million worth of union-branded trinkets, including backpacks, jackets and commemorative watches.

The criminal allegations mark a sharp fall for a powerful union leader who resigned from the GM board two years ago after The News revealed he was under investigation aimed at rooting out corruption within the U.S. auto industry and one of the nation's largest and most powerful unions.

The criminal case also ends a period of prolonged uncertainty for Ashton, and leaves two big targets of the federal investigation: UAW President Gary Jones and retired President Dennis Williams. Jones, who is on paid leave, and Williams are accused of participating in a conspiracy that embezzled more than $1.5 million from the UAW.

Ashton, whose lawyer could not be reached for comment immediately Wednesday, was charged with fraud and money-laundering conspiracies. The fraud charge is punishable by up to 20 years in federal prison; money-laundering conspiracy is a 10-year felony.

The scheme outlined by prosecutors involved hand-delivered kickbacks, threats and secret payoffs from Ashton's personal chiropractor who received a rigged $4 million deal to produce commemorative UAW watches during a conspiracy stretching from Detroit to the Jersey shore.

Ashton's career overlapped with that of Williams, who was held at gunpoint in August when federal agents searched his home during a series of nationwide raids that included a search at Jones' home in Canton Township. It was not immediately clear if Ashton, 71, of Ocean View, N.J., was cooperating with investigators in exchange for a lighter prison sentence.

“Joe Ashton’s actions, as set forth in the government’s filings, are completely inexcusable and violate UAW’s long-standing standards of conduct put in place by former leaders like Walter Reuther," interim UAW President Rory Gamble said in a statement. "The UAW remains focused on negotiating and finalizing strong contracts for our members, especially during this round of auto negotiations.”

At the center of the conspiracy is a training center jointly operated by the UAW and General Motors Co. Ashton helped oversee the training center, which was financed by the Detroit automaker. Under the new contract with GM ratified last month, the UAW-GM Center for Human Resources will be dissolved and its building on the Detroit Riverfront sold.

Ashton, his top aide Jeff Pietrzyk and former UAW official Mike Grimes steered contracts to vendors to produce UAW merchandise purchased with training center money, prosecutors said. The vendors, in turn, paid bribes and kickbacks to the three UAW officials.

Pietrzyk and Grimes both pleaded guilty and are awaiting possible prison sentences.

Prosecutors say the conspiracy defrauded UAW members and the UAW-GM Center for Human Resources, a jointly operated training center for blue-collar workers.

“GM is deeply disturbed by Joe Ashton’s alleged criminal conduct," GM said in a statement. "GM was not aware of this illegal activity until it was recently revealed by the government’s investigation, or that he allegedly continued to benefit from this conduct after the UAW Retiree Medical Benefits Trust (VEBA) appointed him to the GM Board, a position he resigned in December 2017.”

Ashton, who until Wednesday was referred to in court records as "Union Official 1," sat on General Motors Co.'s board of directors until resigning under a cloud of suspicion two years ago. He is the highest-ranking official linked to a criminal investigation into whether money and illegal benefits corrupted UAW leaders and the collective bargaining process.

One part of the alleged conspiracy stems from a failed business deal in 2010. At the time, Ashton was a regular client at Oxford Rehabilitation Center, a clinic in Philadelphia operated by physical therapist Wendy Wang and chiropractor Marc Cohen.

In 2010, prosecutors say Ashton convinced Cohen to loan $250,000 to a construction company owned by one of Ashton’s associates, according to federal court records. Wang told The News she and Cohen loaned the money.

By 2012, the construction company had stopped repaying the loan. By September 2012, the debt had ballooned to $283,000 and led to a lawsuit, according to court records.

So Ashton pitched a plan to repay the construction loan — and help himself. In 2012, the UAW was planning to buy more than 50,000 watches. Ashton contacted Cohen, telling him to create a company that could win the contract and supply the watches, according to the government.

“Union Official 1 suggested that the profits from the watch contract would repay ... what he was owed on the $250,000 loan to the construction company,” prosecutors wrote in the Grimes case.

"Union Official 1" drafted the deal, helped award it to his chiropractor and demanded a $250,000 kickback in spring 2013, according to court records.

Cohen's watch contract described by prosecutors included steep profits. The watches cost less than $2.3 million to produce, but the contract was for $3.97 million.

Cohen, 58, a chiropractor who lives in Cherry Hill, New Jersey, confirmed in an interview with The News in August that he is the watch contractor identified in federal court records.

Federal prosecutors shielded the name of Cohen's watch company in court records, but New Jersey business records indicate a company called USA Countrywide LLC is registered to Cohen's house. The company was incorporated in August 2012, according to New Jersey business records. That is the same date listed by prosecutors in the Grimes case.

USA Countrywide's website is defunct, but an archived version of the website touts the company's watches and is decorated with American flags and a patriotic logo. The website includes watches featuring several union brands, including the UAW.

Cohen is a partner of AC Best Docs, a multi-discipline practice based in an office building in Linwood, New Jersey. AC Best Docs leases space at the building to the UAW, according to the union's annual Labor Department filings. The UAW has paid AC Best Docs more than $418,000 in rent in recent years.

rsnell@detroitnews.com