On a Sunday in November, 2012, dozens of Jeep workers were summoned to their Toledo union hall to hear about a new agreement with Chrysler.
The workers, who painted Wranglers, quickly realized their jobs were on the line. At the front of the wood-paneled room sat several United Auto Workers executives from the powerful union’s Detroit headquarters, who made clear that attendees should quickly approve the contract before them.
The one-page agreement — negotiated by Chrysler and the UAW’s international leaders without local input — said the paint shop’s 73 most experienced employees would be laid off within days, and the remaining 100 or so would lose their seniority and be forced to accept pay and benefit reductions.
If they rejected the deal, then everyone would be fired, one of the UAW officials warned. Many of the 73 veteran workers had younger family and friends who were also employed at the paint shop, so risking an even larger layoff didn’t seem prudent.
“It’s kind of like they had a gun to our head,” recalled James DeVol, a longtime Jeep employee whose son was among the younger group of workers.
Years later, federal prosecutors publicly revealed a sprawling corruption scheme involving Chrysler and UAW executives — including more than $3.5 million in bribes that the automaker’s executives paid to union officials to take company-friendly stances.
The UAW is still recovering from the scandal. It is under federal oversight, and will hold its first direct elections in the fall, meant to ensure more accountability of its International Executive Board going forward. On Monday, nearly 1,000 UAW members will arrive in Detroit for a pivotal constitutional convention to chart the organization’s future.
But back in 2012, inside the UAW Local 12 Hall off Ashland Avenue, there was only a general sense that members were being “railroaded,” as former worker Richard Sheets put it. The UAW executives denied motions to delay the vote or consider a strike. Something felt off, multiple attendees recalled: Why didn’t their own union have their back? Why were they essentially being threatened?
Believing they had no choice, the workers, some in tears, voted 125 to 28 to approve the agreement. Within days, 73 of them were fired. The swift and unexpected turn of events upended lives and caused years of financial hardship. A decade later, many remain angry.
See a timeline of the corruption scandal and its ties to Toledo.
“I’ve been pissed off ever since,” said Bruce Baumhower, the longtime president of UAW Local 12, which represents 16,000 workers and retirees in the Toledo area. “It’s unfathomable for me to think that could happen. Unthinkable, that our union could agree to terminate our own workers, for reasons that were totally untrue.”
A few weeks after the 2012 layoffs, word spread that many of the laid-off paint shop workers had been replaced with people from the Detroit area, which at the time was highly unusual for the Toledo Assembly Complex.
Soon, three veteran paint shop employees who had lost their jobs sensed something was wrong. They met with the FBI.
‘No way in hell’
The Toledo Supplier Park opened in 2006 to launch the new-generation Jeep Wrangler. Designed to save Chrysler money, the novel manufacturing setup involved three independent suppliers who built and operated the paint shop, a body shop, and a chassis assembly facility.
But there was a staffing problem. Veteran workers at the old Wrangler facility were needed to help successfully start up the new plants, but many did not necessarily want to leave an established Chrysler-run plant — where they had decades of seniority — for the uncertainty of the new supplier model, according to interviews and court documents.
So Chrysler and the UAW came up with a workaround. The senior members would be able to retire from Chrysler, start collecting their pensions, and then go to work for the suppliers. The union would still represent them.
These senior workers said they were actively recruited by Chrysler to participate in this new arrangement, and were told there would be no expiration date for their employment. Younger workers were also hired from the outside to fully staff up the facilities.
In the ensuing years, a revolving door of suppliers operated the paint shop. By 2012, Chrysler had decided to formally “insource” the paint shop from payroll administrator Gonzalez Contract Services, even though the automaker had already directly overseen the plant since the prior year when Magna International pulled out, court documents and internal memos show.
Chrysler and the UAW entered bargaining over how to proceed with the unusual insourcing situation. But Local 12 officials and the paint shop’s employee bargaining committee were “systematically locked out” of the closed-door process, according to a lawsuit. Negotiations were instead handled by General Holiefield, a vice president in charge of the UAW’s Chrysler division, and Alphons Iacobelli, Chrysler’s labor chief.
Automaker and union officials eventually drew up a one-page agreement titled “Wrangler Paint Shop Understandings,” which was signed by Mr. Holiefield and Chrysler executives. These officials maintained that, because the senior workers had already technically retired back in 2006, they couldn’t return to the company.
Yet this position never added up for Mr. Baumhower or the fired employees. For one, the paint shop had already been under direct Chrysler control for months, workers said. Chrysler managers ran the facility and treated them as Chrysler employees. Internal and external Chrysler communications dating back to early 2011 referred to the paint shop as a Chrysler facility.
In addition, the workers could have suspended their pensions and continued to work for the automaker, as was specified under the company’s master pension agreements.
At the November 2012 meeting, Mr. Baumhower recalled workers’ escalating tensions as he stood and tried to convince them to reject the proposed agreement.
“I said, ‘Brothers and sisters, listen, the UAW is the one that talked you guys into going over here, to launch these plants. And now they’re firing their own members? There’s no way in hell we can let this happen. I’m pleading with you to turn this contract down.’”
But the senior UAW leaders from Detroit were forceful, Mr. Baumhower and others said, claiming there would be no further bargaining, and that all 174 would lose their jobs if the agreement wasn’t ratified. Attendees said among the most active pushing this position was James Hardy, Mr. Holiefield’s aide at UAW headquarters, known as Solidarity House.
Mr. Baumhower publicly and privately hammered the paint shop agreement in the days after the meeting.
At a news conference, he called it a “money grab” by Chrysler to eliminate the veteran employees, who made about $28 per hour, and hire new workers under the company’s two-tier wage structure, at about $16 per hour.
In a letter to then-UAW President Bob King, he warned that the union would “wear this injustice for a long time,” adding some workers would “be financially devastated, with only fifteen days to restructure their lives.” And in a Toledo union newspaper, Mr. Baumhower wrote that the layoff was “the worst betrayal of loyalty and trust I have ever seen.”
Job selling in Toledo
In late 2012 and early 2013, as current and former paint shop workers wondered about the sudden influx of Detroit-area employees, additional reports from the plant offered a potential explanation: job selling.
As lawsuits filed by two groups of paint shop workers would later describe it, “selling jobs” referred to UAW officials taking cash payments of $1,000 or more from prospective employees in exchange for securing them a position in a Chrysler plant.
In early 2013, two new paint shop hires told Local 12 officials that they bought their jobs, Mr. Baumhower said. Mr. Sheets said that around the same time in 2013 he was on a smoke break one day when a coworker, one of the new hires from Detroit, quietly confessed to him she had also bought her job.
As word of job-selling spread, the three former paint shop workers told FBI agents at the agency’s downtown Toledo office what they knew, two of them told The Blade. Separately, Mr. Baumhower said he also agreed to meet with agents from the FBI and Department of Labor, and turned over a list of the paint shop’s newest hires at their request.
In the fall of 2013, Mr. Hardy — the UAW aide to Mr. Holiefield who had pushed through the paint shop vote in Toledo — abruptly departed his job at Solidarity House. News reports and court papers later attributed his departure to allegations he was selling jobs.
Shortly thereafter, in late 2013, Mr. Holiefield announced he would not seek another four-year term as a UAW vice president.
The Blade requested Department of Labor records related to an investigation into Mr. Hardy over job-selling, but was denied because the newspaper did not have “an official acknowledgment of an investigation of him, or an overriding public interest.” The agency added, “we can neither confirm nor deny that our agency has investigative records about the named individual.”
Yet Mr. Hardy himself acknowledged to the Detroit Free Press in 2017 that he had been investigated by the feds and stressed he was cleared in 2015. The article said the probe started in 2013 and was related to job selling.
But job selling never became a part of the larger UAW scandal, and Mr. Hardy was never charged. A Detroit News report from 2019 stated he had cooperated with investigators, offering a window into the union’s internal affairs and corruption in the Chrysler department. Mr. Hardy did not respond to messages seeking comment.
The Blade also requested investigative documents related to the Toledo paint shop and job selling from the FBI. Nine heavily redacted pages — with many others withheld entirely — confirm the agency was working with the Department of Labor and conducted several interviews related to the issue over the years, with the first taking place in 2013.
The FBI declined to comment for this story. The Department of Labor also declined comment beyond reiterating it could not “confirm or deny” the existence of investigations beyond those already made public. A UAW spokesman in Detroit did not respond to questions.
‘Sold us down the river’
In the years after the November 2012 meeting, several paint shop workers unsuccessfully tried to internally challenge what they saw as blatant wrongdoing by the union and corporation, through grievance and appeals processes.
They didn’t yet know about the federal corruption allegations, only that they had been mistreated.
But after learning in 2017 of the first federal indictments involving UAW and Chrysler executives, the paint shop workers figured they might have a case for a lawsuit against the automaker and union.
“Then, you really knew why you lost your job, and how betrayed you felt,” former paint shop employee Beth Wesley recalled of learning the details in the indictments.
The federal bribery and embezzlement investigation has so far resulted in the conviction of 17 people, including two former UAW presidents. Central to the scandal were Mr. Iacobelli, the Chrysler labor chief, and Mr. Holiefield, the UAW vice president, who died of cancer in 2015 before he could be charged.
The court documents described a scheme starting in 2009 involving the two bargaining-table opponents, where Mr. Iacobelli diverted millions of dollars from the automaker, through a joint UAW-Chrysler training center, and into the pockets of Mr. Holiefield and his family.
Prosecutors said the flow of cash was all part of an effort by Chrysler to keep Mr. Holiefield and other labor leaders “fat, dumb and happy” — more willing to agree to company-friendly contracts.
During the later investigation, prosecutors also detailed one payment from Mr. Iacobelli to Mr. Holiefield that the labor leader used for more than $1,000 worth of designer clothing. Also in 2012, there were several payments worth nearly $250,000 to three companies owned by Mr. Holiefield’s girlfriend, Monica Morgan, prosecutors said.
Over the years, some Chrysler money that flowed through the training center was used to pay off Mr. Holiefield’s mortgage; other payments went toward jewelry, furniture, and airline tickets. Mr. Iacobelli also paid himself using the training center, purchasing $35,000 Mont Blanc fountain pens and a red Ferrari.
The Chrysler executive served more than two years in federal prison, much shorter than his original sentence.
The federal investigation ultimately went in several different directions — ensnaring officials for embezzlement, money laundering, racketeering, and more. Frank Goeddeke, an assistant professor in management at Wayne State University who co-authored a book about the UAW, said it’s easily the worst scandal in the union’s history.
"It's really not just one, but several [scandals],” he said. “And that's what makes this one really the worst. Not only was it across several different parts of the organization, but also, the very top leadership was involved. Two former presidents, even, and former vice presidents.”
In 2018, the paint shop workers decided it was time to sue the union and automaker. One class-action lawsuit was filed by those who had lost their jobs, the other by the group who’d seen their seniority stripped.
Pointing to key details involving Mr. Holiefield and Mr. Iacobelli in the federal criminal cases, they alleged that back in 2012, senior union officials had bargained away their jobs and benefits for bribes.
Workers said by this point they had finally realized the full extent of the wrongdoing: First, Mr. Holiefield had been accepting bribes from Chrysler to take company-friendly positions. And second, the UAW and Chrysler had “developed a lucrative side business” of selling jobs, as one of the lawsuits stated. By laying the workers off, the suit said, “these officials created over 70 open positions that could be sold.”
“I’m a strong union person, but the union is the one that sold us down the river,” said Carole Wawrzyniak, one of the veteran paint shop workers who were fired.
In late 2018, a federal judge wrote in a ruling that he sympathized with the workers’ plight, but their claims had been filed too late. He dismissed the cases.
Pay cuts and uncertainty
What happened at the paint shop in 2012 left behind deep financial and emotional scars, former workers told The Blade. Many were nowhere near ready to retire and planned to continue working at Jeep for years as they supported extended families and continued to save.
Mr. DeVol, 73, who voted to lay himself off because his son also worked at the plant, found a job delivering prescriptions for $10 an hour.
Ms. Wawrzyniak, 72, whose granddaughter still works at the plant, went from making $28 per hour at the Jeep plant to $9 or $10 cleaning doctor’s offices and working in the Lourdes University cafeteria, income that was supplemented by her late husband’s military pension.
“What a difference in lifestyle, huh?” she said.
Mrs. Wesley, 67, said she might still be working in the paint shop today if it wasn’t for the layoff, helping support family and paying off debts. Instead, she was unemployed for a while after the layoff, refinanced her house, and found jobs cleaning for a school, working at an assisted living facility, and finally as a home caregiver.
She went from making $30 an hour to about $9. She called the union’s actions a “stab in the back” that had caused much financial distress among her former colleagues.
Pam Heams, 70, said she went from a proud team leader putting in 13-hour days in the paint shop to waitressing and working as a janitor for a school. For many of her former colleagues, she said, the whiplash of suddenly losing their jobs, and how it occurred, was traumatic.
“We were threatened by our own union officials,” Mrs. Heams said.
Monitor raises fresh concerns about UAW
The UAW’s constitutional convention in downtown Detroit this week is the first since the union settled with the Justice Department and was placed under the watch of a monitor appointed by a federal judge.
It comes at a pivotal time, as the union seeks to move past years of corruption and lays the groundwork for its first one-member, one-vote leadership elections later this year, meant to give rank-and-file workers more of a voice. The convention also comes as the union gears up for new contract talks with Detroit’s three big automakers next year.
But some are skeptical whether the union can ever fully recover and regain the trust of its almost 400,000 members and 600,000 retirees. Mr. DeVol and Ms. Wawrzyniak recalled decades earlier in their careers, how forceful union leaders were in fighting for employees — demanding they halt work until the company agreed to meet about a problem, for example.
“You need someone who’s going to say, ‘This is not good for my people,’” Ms. Wawrzyniak said.
Mr. Goeddeke, the Wayne State professor, said the UAW will bounce back. The scandal and its fallout hurt the union financially but has not significantly damaged its organizing efforts around the country, he said.
“This will make the union stronger,” he said of the scandal. “I think more members are engaged now, internally, because of this, and that will be a good thing for the union in the long run."
One central question ahead of this fall’s first direct election will be whether the current 13-member International Executive Board, led by President Ray Curry, should stay largely intact, or whether a total reset is needed.
Mr. Baumhower said he’s happy the election system has changed, but believes the current crop of leaders has done a good job righting the ship. “It was a great injustice that was done to our members at the paint facility by a previous, corrupt administration,” he said. “I don’t believe this would have happened under our current UAW leadership.”
Yet fresh questions arose in recent days about whether the UAW really has moved past its old ways.
Neil Barofsky, the court-appointed monitor tasked with overseeing the union’s conduct for six years, released a new report accusing the UAW of concealing evidence of misconduct by one of its regional directors, and not turning over other key documents required by the government settlement agreement.
Confronted with the findings, Mr. Curry, the UAW president, pledged to federal officials that the union would do a “total reset,” the monitor wrote, adding that cooperation has improved since that promise.
Mr. Sheets said he had one thought as he read the details of Mr. Barofsky’s latest UAW findings last week: “They’ve got a long ways to go.”
First Published July 24, 2022, 11:00 a.m.
