UAW moving to disband Region 5 embroiled in federal corruption probe

Ian Thibodeau , Daniel Howes | The Detroit News

The United Auto Workers is disbanding its 17-state Region 5, a hotbed of the financial wrongdoing exposed by the continuing federal crackdown of union corruption.

The move, announced Friday by President Rory Gamble, aims to break up the region whose St. Louis-based headquarters organized perennial conferences in Palm Springs, Calif., and Missouri. Events over a two-year period spent more than $1 million in member dues on poolside villas, booze, cigars, golf and steak dinners, federal authorities say — much of it fraudulently expensed to the UAW accounting department.

Details of the regional reorganization are not yet complete, in part because UAW regions typically are apportioned according to the density of members. But a source familiar with the situation told The Detroit News that Region 8, based outside of Nashville, Tennessee, likely would absorb the southern tier of Region 5, including Texas and stretching all the way to the Pacific southwest. Chicago-based Region 4, which stretches west to Montana, likely would absorb the northern tier of Region 5 states.

“Today’s action was taken in the interest of maintaining continuity in representing and servicing our members," Gamble said in a statement. "Both Regions 4 and 8 have been prudently managed, cover wide geographic territories and have proven experience effectively representing UAW members. This will not impact any individual locals or state CAP councils or retiree councils.

"When a vacancy occurs on the IEB — as happened with Region 5 — the UAW Constitution allows for the International Executive Board to combine regions, an action that has been taken in the past. These consolidations have no impact on regional staffing, international union programming or the operation of local unions.”

The move is the latest by Gamble to reform the union and clean up the nation's largest labor group. Gamble's restructuring effort comes after U.S. Attorney Matthew Schneider earlier this week told The News the union's efforts to cooperate with the federal investigation have been incomplete and insufficient.

Since becoming president, Gamble ordered the sale of a posh lakehouse built for former President Dennis Williams at the union's Black Lake resort. Gamble is implementing "stringent monetary controls," has hired an outside auditor and plans to increase oversight by the UAW accounting department, including "reviewing every financial ... transaction that goes on in the UAW."

In a separate interview with The News, Gamble said he is trying to "save" his union, that he wants to deliver his successor a "clean" UAW at the 2022 convention, and conceded that federal oversight of the union is a real possibility if the leadership cannot demonstrate its ability to "self-govern."

Gary Jones, director of Region 5 until he ascended to the presidency last year, resigned his union membership a week ago after he had stepped down as president of the UAW. That move came in the middle of a federal corruption investigation that has produced 11 convictions and charges against 13 people.

Jones has not been charged, but he has been implicated as an unnamed UAW official in the federal probe. Jones went on paid leave Nov. 3 after The News identified him as "UAW Official A" who embezzled, split and pocketed $700,000 in member dues with a top aide, according to prosecutors.

The union's executive board sought to oust Jones and Region 5 Director Vance Pearson, a former aide to Jones, under Article 30 of the UAW constitution. Pearson resigned his position and UAW membership Sunday. He was charged in September with embezzlement of union funds, mail and wire fraud, and money laundering. He was later put on paid leave after advising UAW negotiators on labor talks with General Motors Co.

Pearson, Jones and Williams are accused of embezzling more than $1.5 million in member dues that were spent on private villas, liquor, golf and cigars. Williams also has not been charged.

Jones and Pearson "directed the submission of false, misleading and inaccurate expense records to the UAW Accounting Department and further concealed the true information concerning those expenses, in violation of the UAW’s Ethical Practices Code and applicable federal labor laws," according to the union.

The Region 5 office, based in suburban St. Louis, was raided by federal agents Aug. 28, along with the home of Pearson. Pearson is facing federal criminal charges including embezzling union funds, money laundering and fraud.

Federal agents were hunting for cash and items bought with more than $1 million allegedly embezzled from the United Auto Workers when investigators raided a union official's home and office, according to unsealed search warrant affidavits that hint at a broader investigation.

The Region 5 office in Hazelwood, Missouri, and Pearson’s home in St. Charles, were two stops in a series of nationwide raids targeting union leaders, including the homes of Jones and Williams.

The search warrant affidavits are heavily redacted and hint at a broader scope of an investigation that has implicated the top echelon of the UAW. The public parts of the records are near-verbatim copies of the Pearson criminal case and read like a millionaire's shopping list as a federal agent listed luxury items that investigators wanted to seize while searching Pearson's home and the UAW office.

The list includes 21 brands of cigars, including Ashton Monarch Tubos that sell for $274.50 per box; golf clubs, clothes and equipment produced by 40 companies, including Titleist and Nike; and 20 brands of alcohol, including bottles of Louis XIII cognac.

Detroit News staff writer Robert Snell contributed

ithibodeau@detroitnews.com

Twitter: @Ian_Thibodeau

daniel.howes@detroitnews.com