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Fiat Chrysler Executive Sentenced in Corruption Case (1)

Aug. 27, 2018, 3:28 PMUpdated: Aug. 27, 2018, 9:44 PM

Alphons Iacobelli, a former labor negotiator for Fiat Chrysler Automobiles, was sentenced to five-and-a-half years Aug. 27 for his involvement in the misuse of funds at a training center run by the company and the UAW.

Iacobelli pleaded guilty in January to one count of conspiracy to violate the Labor-Management Relations Act, for which he received 60 months, and one count related to filing a false tax return, for which he received six months, from Judge Paul D. Borman of the U.S. District Court for the Eastern District of Michigan. Iacobelli was also ordered to pay $835,523 in restitution.

Prosecutors said they’ll ask the court to reduce Iacobelli’s sentence at a later date if he continues to cooperate in the investigation.

“The Court’s sentence recognizes the serious harm done to rank and file union members who were betrayed by their UAW leadership who were bribed by Fiat Chrysler and its executives,” U.S. Attorney Matthew Schneider said in an Aug. 27 statement.

More than a year ago, federal investigators revealed a scheme by company and union officials, dating to 2009, to divert funds from the UAW-Chrysler National Training Center. About $1.5 million was used to give cash and expensive gifts to union leaders, court documents show. The investigation has since widened to Ford and General Motors national training centers.

Iacobelli’s attorney, David F. DuMouchel with Butzel Long in Detroit, told Bloomberg Law that his office won’t be releasing a statement.

Money Spent on Luxuries

Prosecutors said in a sentencing memo that the payments were “an effort to buy labor peace.” Participants in the conspiracy got first-class airline travel, designer clothing, furniture, and jewelry, and the mortgage was paid off on a house owned by a former UAW vice president, prosecutors said.

Iacobelli also authorized the expenditure of $30,000 for a party for an unnamed “senior UAW official.” The money went toward “ultra-premium liquor,” more than $7,000 worth of cigars, and more than $3,000 worth of wine with custom labels in honor of that UAW official, prosecutors said.

Iacobelli admitted in a Jan. 22 plea agreement that he delivered the prohibited payments to union leaders during his tenure as a labor negotiator for Fiat Chrysler, from 2008 to 2015. Fiat Chrysler and the UAW negotiated two contracts during that time, in 2011 and 2015.

DuMouchel told the court in a sentencing memo that Iacobelli joined “an already ongoing conspiracy” involving multiple union and company officials when he started the job. Prosecutors have referred to the UAW, Fiat Chrysler, and the national training center as co-conspirators in the crime and said all parties worked together with the goal of violating the LMRA, according to court documents.

The company and the UAW haven’t been charged with any wrongdoing.

Fiat and the union have maintained that this case involves the actions of a few bad actors and that no bargaining was affected by the conspiracy.

Iacobelli is the second person sentenced in the ongoing investigation. Monica Morgan, the widow of UAW Vice President General Holiefield, was sentenced to 18 months on July 13 for her connection to the crime. She has appealed to the U.S. Court of Appeals for the Sixth Circuit.

Five others are waiting to be sentenced: Nancy Johnson, Virdell King, and Keith Mickens, formally of the UAW, and Jerome Durden and Michael Brown, formally with Fiat.

(Updated with additional reporting.)

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story: Peggy Aulino at maulino@bloomberglaw.com