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FCA US LLC (FCA) was sentenced Aug. 17 in federal court in Detroit after pleading guilty in March to conspiracy to violate the Labor Management Relations Act, also known as the Taft-Hartley Act, by making more than $3.5 million in illegal payments to officers of the UAW between 2009 and 2016. FCA’s sentence requires payment of a $30 million fine, triple the base amount provided for the offense by sentencing guidelines.

In addition, FCA will serve a three-year term of probation and be subject to three years of oversight by Frances McLeod, an independent corporate compliance monitor selected by the U.S. McLeod is a founding partner of Forensic Risk Alliance and head of its U.S. offices, and recently served as the independent compliance monitor for IAV GmbH, a German company recently prosecuted in connection with the Volkswagen emissions conspiracy.

FCA is one of the big three American automobile manufacturers and the North American operating subsidiary of Stellantis. The illegal payments to UAW officials took various forms, including extravagant meals, rounds of golf, lavish parties for the UAW International Executive Board, an Italian-made shotgun, clothing, designer shoes and other personal items paid for with credit cards issued by the joint training center.

FCA executives also paid off the $262,000 home mortgage of former UAW Vice President General Holiefield. Holiefield and his widow also received hundreds of thousands of dollars funneled through Holiefield’s purported charitable organization, as well as sham companies under Holiefield’s control that had lucrative contracts with the training center.

In many instances, FCA passed the illegal payments through the UAW-Chrysler Skill Development & Training Program d/b/a the UAW-Chrysler National Training Center (NTC). Ostensibly, the NTC was supposed to provide training and health and safety protections for FCA workers.

The sentencing was announced by Acting U.S. Attorney Saima S. Mohsin. “The sentencing of FCA marks a significant milestone in this historic case,” said Mohsin. “Congress enacted the Taft-Hartley Act to ensure that union members could have confidence in their union leaders. FCA violated these principles through corruption. By lavishing millions of dollars in gifts and cash upon UAW leaders, the FCA sought to improve its relationship with UAW leaders, and FCA thereby harmed the hardworking men and women of the UAW.

“A compliance monitor and a significant fine are important steps towards ending this type of systemic corruption and deterring future corporate malfeasance.”

Thus far, as part of this investigation of illegal payments by FCA to UAW officials, as well as fraud and embezzlement by other UAW officers, 14 individuals have been convicted of federal crimes, including three former FCA executives:

Former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison) Former FCA Financial Analyst Jerome Durden (15 months in prison) Former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison) Former UAW presidents Dennis Williams (21 months in prison) and Gary Jones (28 months in prison) Former UAW vice presidents Norwood Jewell (15 months in prison) and Joseph Ashton (30 months in prison) Former UAW Region 5 Director and UAW board member Vance Pearson (12 months in prison) Former UAW Midwest CAP President Edward “Nick” Robinson (12 months in prison) Former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Michael Grimes (28 months in prison) and Monica Morgan, widow of Holiefield (18 months in prison). Holiefield died in 2015.

Mohsin commended the outstanding work of the IRS-Criminal Investigations, the U.S. Department of Labor–Office of Labor-Management Standards and Office of Inspector General, and the FBI in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.

Source: U.S. Attorney’s Office Eastern District of Michigan

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by SEMA Editors

“At a time when COVID is back in the headlines, SEMA wants you to know that the association is 100% committed to holding the 2021 SEMA Show, Nov. 2–5, and showcasing two years of product innovations, vehicle trends and industry-leading education,” said Tom Gattuso, SEMA vice president of events.

“The SEMA Show is the only place in the world that brings together the people, products, vehicles and ideas that drive the aftermarket industry.”

Concerning safety measures, the COVID landscape and state and local requirements are changing week to week. With this rapid pace of change, SEMA expects to know more in the coming weeks about the specific measures that will be required in November.

“Meanwhile, the basics are in place. The Las Vegas Convention Center has been awarded the GBAC STAR certification, which demonstrates the highest standards for daily cleaning, air filtration and sanitization. It is the gold standard for safe facilities,” said Gattuso.

Select aisles have been widened for enhanced attendee flow. An updated floorplan will also make the Show easier to navigate and allows for optimal locations for new and returning event features.

“SEMA is committed to delivering an event that exhibitors and attendees can rely on to network and conduct business,” said Gattuso. “We are working with Nevada authorities amidst an evolving landscape to deliver an outstanding event consistent with local health and safety requirements in November.”

To register and learn more about the 2021 SEMA Show, visit www.SEMAShow.com.

Source: SEMA Crash Champions, LLC, one of the nation’s fastest growing independent collision repair companies, announced Sept. 14 it has acquired Robbie’s Auto, located at 238 Route 46 East in Dover, NJ; Total Auto Body, located at 1635 N. Port Washington Road in Grafton, WI; and Racine Auto Body, located at 1100 S. Airline Road in Racine, WI.

With the addition of Robbie’s Auto, Crash Champions marks its first entrance into the New Jersey market, a natural complement to the Pennsylvania presence the company gained following its acquisition of Signature Collision Centers earlier this year.

The additions of Total Auto Body and Racine Auto Body strategically supplements the company’s recent acquisitions of D&M Auto Body, Quality Auto Body, Silver Spring Collision Center and Gillette’s Collision Center, bringing the company’s number of locations in Wisconsin to eight.

“With these three acquisitions, I am excited for Crash Champions to enter the New Jersey market and strengthen our presence in the Milwaukee market,” said Matt Ebert, founder and CEO of Crash Champions. “What unites these three facilities is that they each possess highly trained technicians that work in state-of-the-art facilities and provide the highest quality repairs. Their dedication to the customer experience and commitment to safety exemplify everything that we stand for at Crash, making each of them a natural addition to our growing national footprint of locations.

“I am pleased to welcome them to our championship team, and I look forward to leveraging our resources to further enhance the services provided to customers and partners.”

For more information about Crash Champions, visit www. crashchampions.com.

Source: Crash Champions

Observations on Collision Works Sale to Gerber

By David Roberts, Focus Advisors Automotive

The following is a letter sent Sept. 1 to Focus Advisors’ clients and colleagues by Managing Director David Roberts.

Gerber’s recent acquisition of Collision Works (CW) is the largest acquisition of an independent MSO in the last three years. Combined with the acquisition of John Harris Body Shops in South Carolina, we estimate Gerber has added nearly 10% to its overall revenues with these two large acquisitions.

These two acquisitions by Gerber reflect the continued strength of large consolidators in growing their businesses. It takes a lot of revenue to move the dial on a big enterprise like Gerber.

We estimate Collision Works’ revenues in the $100 million range in Oklahoma and Kansas, three fast-growing Midwestern markets (Oklahoma City, Kansas City and Tulsa), and a host of smaller adjacent markets. John Harris operated 16 shops with an estimated revenue of $40 million with large and small shops across South Carolina and parts of Georgia.

The growth of Collision Works is a template for other rapidly growing MSOs

Jake Nossaman and his team built a solid foundation, beginning with large well-located operations in and around the Oklahoma City market. They continued to grow with both greenfield and acquisition strategies.

CW entered a second large market, Kansas City, with a greenfield development and proceeded to acquire shops in and around that market. With an eight-shop MSO acquisition (Auto Craft), CW expanded its reach into the Wichita market and continued adding single shops to reach the full complement of 36 shops upon sale to Gerber.

To finance some of its initial growth, CW teamed up with a substantial capital partner—Bank of Oklahoma. In 2019, it refinanced its real estate portfolio to acquire $50 million in additional capital and used these resources to pay down debt, continue buying and integrating shops across their markets.

Exit Strategies

Along the way, Collision Works also looked at the possibility of joining forces with a very large private equity firm. In the end, because of its scale and infrastructure, Collision Works had multiple exit opportunities—from selling to a consolidator to recapitalizing the company with a large private equity investor to merging with other strong operators.

With few remaining regional MSOs left in the U.S. approaching the size of Collision Works, we expect the scarcity value will allow those remaining operators with more than $50 million in sales to continue to find enthusiastic buyers—or private equity investors.

For rapidly growing regional and super-regional MSOs, scale, infrastructure, relationships with insurers and access to capital will be the primary elements determining future success.

Source: Focus Advisors

ASE Awards Busch Memorial Scholarships

The ASE Education Foundation announced the recipients of the Michael Busch Memorial Scholarships for the 2021-22 school year.

The two honorees, Brendan Arthur of Huntington Valley, PA, and Najah Brown of Philadelphia, PA, were each awarded Busch Scholarships in recognition of their outstanding academic achievement. The Michael Busch Memorial Scholarship fund was created in memory of the son of a former collision shop owner and ASE board member, Jim Busch, who operated a shop in Issaquah, WA, until his retirement. His son, Michael, was an automotive technology student who tragically lost his battle with cancer. Each year, two scholarships are awarded in Michael Busch’s name. Qualified applicants should be a graduating high school senior or have graduated from high school or received a GED certificate, and be enrolled or planning to enroll in a two- or four-year-college or an ASE-accredited program.

Source: ASE Education Foundation