Source: More indictments coming in FCA-UAW bribery scandal

In the wake of new revelations by federal prosecutors that Fiat Chrysler executives bribed union officials to corrupt contract negotiations, the UAW and FCA are continuing to deny the scheme went any deeper than a pair of bad actors looking to enrich themselves.

The feds say don't believe it — more criminal charges are coming in the $4.5 million bribery scandal uncovered by the FBI.

According to a source familiar with the investigation, three more FCA executives and three more UAW officials are next on the indictment list in the growing scandal.

New federal documents disclosed last week show a conspiracy that goes deeper into the executive ranks at FCA and the union than previously acknowledged by prosecutors, the union and Fiat Chrysler.

They also publicly disclose for the first time that FCA executives were bribing union brass with the intention of giving the company a better position at the bargaining table. In one incident cited in the documents, FCA officials scripted a top union official on what to say during a meeting when the company was negotiating to purchase a large stake in Chrysler owned by the UAW Retiree Medical Benefits Trust.

More: $30,000 party, secret lump sum payments among gifts lavished on officials

The documents were part of Ex-FCA Vice President Iacobelli's guilty plea last Monday in which he admitted that he and others at FCA paid more than $1.5 million in perks to union bosses, hoping to help the company in the process. The perks included jewelry, trips, custom-made watches and a $30,000 party for a UAW official, complete with ultra-premium booze, $7,000 worth of cigars and $3,000 in wine with custom labels honoring the union boss.

The UAW and FCA both concede that bad things happened. But at issue is this: Is the scandal only about greedy people stealing FCA training funds to line their own pockets? Or, is it about a more sinister plot involving auto execs trying to corrupt the union contracts to favor the company?

The government say its both. So does Iacobelli, one of four people charged since the FBI probe surfaced last July. Three have pleaded guilty, including an FCA financial analyst who admitted to cooking the books to help pull off the scheme. The fourth defendant, Monica Morgan-Holiefield, the widow of the late UAW Vice President General Holiefield who is accused of using training funds for herself, has a guilty plea hearing in February.

UAW President Dennis Williams in a letter sent out to the union rank-and-file on Friday said Iacobelli is lying when he claims there was a deeper conspiracy.

"It appears that in an attempt to get lenient treatment from the government (Iacobelli) is now falsely spinning his crimes as an effort to corrupt the collective bargaining process between the UAW and Fiat Chrysler," Williams said. "In reality, it is plain as day that his motivation was nothing more than outright greed."

Williams admitted that a "handful" of former UAW officials were corrupted — which he called a "terrible betrayal of the union's trust" — but said "there is simply no truth to the claim that this misconduct compromised the negotiation of our collective bargaining agreement or had any impact on union funds."

According to Iacobelli's detailed plea agreement, Holiefield and others at the UAW sold out tens of thousands of autoworkers so they could drink top-shelf booze and custom-labeled wines, smoke exotic cigars and wear luxury watches — all paid for by Fiat Chrysler executives who prosecutors say were part of a bigger, sinister plan. .

Related:

Embezzlement plagues union offices around U.S., records show

Feds: Bargaining rivals stole millions from FCA; kept UAW officials 'fat, dumb and happy'

The executives were stealing from the UAW-Chrysler National Training Center, funded by FCA with money meant to train blue collar workers, and funneling it to UAW leaders through cash payments and gifts..

Iacobelli faces up to eight years in prison when he is sentenced in May for his crimes, which also include embezzling nearly $1 million in training funds to buy himself a Ferrari and two Mont Blanc pens at $35,700 each, pay off his credit cards, and install a swimming pool, outdoor kitchen and spa at his Rochester Hills home.

The 58-year-old auto executive was indicted in July and is the highest ranking Fiat Chrysler executive named so far in a probe that has since spread to training centers at General Motors and Ford.

In pursuing the case, the federal government is relying on the Labor Management Relations Act — a 1935 law that was specifically designed to combat the type of corruption that prosecutors say Iacobelli and others were involved in.

UAW: Contracts not compromised

As was spelled out in Iacobelli's plea agreement, the money and perks were given to UAW leaders "in an effort to obtain benefits, concessions and advantages for FCA in the negotiation, implementation and administration of the collective bargaining agreements between FCA and the UAW."

But the attempt at influence buying went beyond that.

According to Iacobelli's plea agreement, Holiefield, who died in 2015 at age 61, was once "scripted" by FCA officials on what to say at a 2013 meeting with the UAW executive board. This was disclosed in an email that Iacobelli wrote to another Fiat Chrysler executive, stating that Holiefield had been "scripted" before the meeting and would "create a dialogue pursuant to our outline."

At the time of the email, the executive board was considering the terms of a multibillion-dollar offer from the company to purchase the nearly 42% stake held by the UAW Retiree Medical Benefits Trust, or VEBA, in what was then known as Chrysler Group. That deal was completed in January 2014.

But Williams in his letter to UAW members said Holiefield had no influence in the sale.

"A third-party independent fiduciary retained by the UAW Retiree Medical Benefits Trust controlled the Trust’s handling of the stock sale and that independent fiduciary had sole discretion and authority regarding the sale of the stock," he said. "This simply was not a matter that Holiefield influenced, much less controlled.

Williams also said Holiefield did not single-handedly control the union contract negotiations.

"That collective bargaining agreement passed through many hands, and its terms were reviewed, negotiated and approved at the highest level of our union, including the UAW president and ultimately the membership," Williams said. "In addition, the 2011 agreement – which Iacobelli suggests was influenced by his criminal actions – was in fact patterned after the agreements our union negotiated at Ford and General Motors."

By the time of the 2015 agreement, which Williams called among the richest for workers ever reached, Iacobelli was gone from FCA: "There’s just no truth to the allegation that the terms of the collective bargaining agreement were compromised by Iacobelli’s crimes."

Labor attorney Richard Mack, whose law firm Miller Cohen specializes in representing organized labor, agrees with that contention, noting numerous people at many levels oversee the bargaining process. There are folks at the national level, UAW international representatives, local leaders and a bargaining committee.

"You've got a lot of different eyes looking at what's being proposed and why," Mack said. "There are too many checks and balances to corrupt contract negotiations."

FCA Chief Executive Officer Servio Marchionne has expressed "disgust" in the scandal, stating last year: "This conduct has nothing whatsoever to do with the collective bargaining process, but rather involved two bad actors."

Marchionne has maintained that the criminal "acts" alleged by the government were " neither known nor sanctioned by FCA" and that once the company discovered evidence of wrongdoing, the individuals involved were immediately separated from the company."

Iacobelli was never fired. Rather, he resigned from the company shortly before he was to oversee the 2015 contract talks.

At issue for the UAW, which has been battling organizing drive losses in the South, is preserving the sanctity of the contract and assuring its members that the contract was never compromised. The UAW has condemned the acts of Holifield and others. But it maintains checks and balances were in place to prevent contracts from being corrupted.

The other two defendants charged in the scheme are:

Virdell King, 65, of Detroit, the first African-American female to be elected president of a local union in UAW-Chrysler's history. She is accused of buying designer shoes, clothing, jewelry and luggage using credit cards that were issued through the UAW-Chrysler National Training Center. King also is accused of making more than $40,000 in additional purchases that pampered other senior UAW officials, including a shotgun, golf equipment, luggage, concert tickets, theme park tickets and other items. King pleaded guilty to misusing training funds and faces up to 16 months in prison.

Jerome Durden of Rochester, a financial analyst at FCA who allegedly helped conceal the fraud. He pleaded guilty to his role in the scheme and faces up to 37 months in prison under his plea agreement.

Williams said the UAW has implemented many reforms to protect against such corruption in the future.

"Mr. Iacobelli’s case is one of personal greed, plain and simple" Williams told union members. "Iacobelli stole money because he’s a thief who wanted to live a lavish lifestyle well beyond his means. And he corrupted a few UAW officials because he needed their silence to protect his own crimes. Those were terrible acts on all sides. But the fact is those people’s misdeeds did not affect your collective bargaining agreement and no union funds were stolen or lost."

Tresa Baldas can be reached at tbaldas@freepress.com. Follow her on Twitter @Tbaldas