UAW Reaches Settlement With U.S. in Multiyear Corruption Probe

Under this latest deal, federal prosecutors aren’t expected to pursue a racketeering lawsuit against the union, the people said. Such an effort was used to force the Teamsters union to sever ties with organized crime in the 1980s and resulted in the union spending about three decades under federal oversight.

The U.S. attorney’s office in Detroit is expected to release details of the proposed settlement early Monday afternoon at a press conference in Detroit, held jointly with UAW President Rory Gamble. The Justice Department said the settlement deal aims to outline reforms for the union but declined to comment further.

The federal investigation, which first became public in 2017, is one of the largest involving a national labor union in decades and has led to the more than a dozen convictions, including two former UAW presidents.

The UAW has previously condemned the financial misconduct uncovered in the probe and has said it is committed to making reforms.

The proposed settlement reached Monday doesn’t rule out future criminal charges against individuals and a criminal investigation is still ongoing, according to people familiar with the probe. But it brings the UAW a step closer to resolving a difficult chapter in its 85-year history.

The sprawling probe, led by the U.S. attorney’s office in Detroit, has penetrated the UAW’s top ranks and exposed what federal prosecutors describe as a culture of corruption among its leadership built around kickback schemes, embezzlement and other illicit activities. It has led to 15 convictions so far and some union members say the charges and indictments have dented trust in the UAW’s leadership.

Investigators had initially focused on dealings between UAW officials and their labor management counterparts at Fiat Chrysler Automobiles NV. There, prosecutors say they found evidence of the company’s former top bargainer and two other employees providing gifts and money to union leaders through a shared training center facility.

Fiat Chrylser has said it was the victim of illegal conduct by certain individuals looking to personally enrich themselves, and that these actions didn’t affect labor negotiations.

Investigators say they later uncovered a kickback scheme worth hundreds of thousands of dollars at another training center the union ran with General Motors Co. , ensnaring a UAW vice president and two of his associates.

In the past year, the federal probe centered on corruption within the top ranks of the UAW, implicating several high-ranking officials prosecutors say were involved in embezzling union funds.

Former UAW President Dennis Williams, who served a four-year term starting in 2014, pleaded guilty in September to one charge of embezzling union funds. His successor Gary Jones —who led a 40-day strike at GM last fall—has pleaded guilty to embezzlement and racketeering charges.

Both presidents were first embroiled in the investigation last summer when federal agents searched their homes in California and Michigan.

Prosecutors later tied Messrs. Williams and Jones to a scheme where hundreds of thousands of dollars in union funds were used to pay for rental villas, golf outings, expensive meals, cigars and other expenses for labor leaders and their associates. The expenses were then represented as legitimate union expenses, they say.

Mr. Jones, in his plea hearing earlier this year, apologized to UAW members and asked for forgiveness. Mr. Williams, in his plea hearing, said he deliberately overlooked Mr. Jones’s financial misconduct.

Write to Ben Foldy at [email protected] and Nora Naughton at [email protected]