Free Press
written by Tresa Baldas, Jim Schaefer, David Ashenfelter and M.L. Elrick, Free Press Staff Writers
Wednesday December 15, 2010
A federal grand jury today indicted former Detroit Mayor Kwame Kilpatrick, his father and three former top aides on racketeering charges, accusing them of turning the mayor's office into a criminal enterprise to enrich themselves, families and friends.
Besides the now-jailed former mayor, the 38-count indictment names his father, Bernard Kilpatrick, city contractor Bobby Ferguson, former top Kilpatrick aide Derrick Miller and former water department chief Victor Mercado in one of the largest public corruption investigations ever in the City of Detroit.
Contacted today, attorneys for the two Kilpatricks and Miller said they would energetically battle the charges. Mercado's attorney could not be reached, and Ferguson's attorney had no immediate comment.
The 89-page indictment outlined four general areas of misconduct.
It said the defendants extorted money from municipal contractors, state and non-profit donors and engaged in bribery and extortion involving other public contracts and investments.
The indictment said that Ferguson kicked back at least $424,000 in cash and other items of value to the mayor and that Kilpatrick used more than $590,000 in cash derived from the conspiracy to pay his credit card bills, purchase cashier's checks and clothing and repay loans.
Bernard Kilpatrick, the indictment said, deposited more than $600,000 in cash into his personal bank accounts. He was charged with three counts of filing false tax returns for calendar years 2004, 2005 and 2007.
The penalties for the charges laid out in the indictment range from three to 30 year in prison.
The investigation was conducted by the FBI, EPA Criminal Investigation Division and IRS Criminal Investigation Division.
In a news conference, U.S. Attorney Barbara McQuade said: "People often ask me, ‘What took so long?'…As you see from the indictment, this case involves very complex schemes."
She said investigators reviewed hundreds of thousands of records and interviewed hundreds of witnesses
McQuade said investigators continued to pursue the case even after Kilpatrick went to jail for violating probation because that was a state case (stemming from the text message scandal). She said the new charges are meant to discourage public corruption and change the culture of corruption in Detroit's city hall.
"Getting out of office does not get you off the hook," she said.
McQuade also said that while public corruption is far from over, the investigation into Kilpatrick and his inner circle is over.
"This is the Kilpatrick and his inner circle case that we've been waiting for."
She also said there was no evidence of crimes involving his sister Ayanna or his mother, longtime U.S. Rep. Carolyn Cheeks Kilpatrick.
Asked as she was leaving the Capitol following a vote, U.S. Rep. Carolyn Cheeks Kilpatrick said she had "no reaction" to the indictment of her son and ex-husband.
Mayor Dave Bing and Council President Charles Pugh declined to comment.
Said former U.S. Attorney Alan Gershel: "They really brought out the big guns ... Bringing out racketeering is really dropping a big hammer."
The grand jury foreman presented the indictment to U.S. Magistrate Mona Majzoub at 3:20 p.m., in a courtroom packed with reporters along with 17 other grand jurors.
As reporters raced out of the room to file stories, one grand juror congratulated his colleagues, saying, "Job well done!"
The indictment described 13 instances of attempted or actual extortion and contract rigging, including:
• Kwame Kilpatrick with the help of Miller and his father, held up a $50-million sewer lining contract until the winning bidder agreed to pay Ferguson, who wound up getting $24.7 million in revenue when the contract was increased to $138 million.
• Kwame Kilpatrick and Mercado canceled a $10-million sewer repair contract because the winning bidder refused Ferguson's demand for a 25% cut of the contract, and then awarded the work to another contractor who agreed to include Ferguson.
• Kwame Kilpatrick with the help of Miller, held up a $12-million amendment to a sewer lining contract until a contractor agreed to pay Ferguson $350,000 for work Ferguson wanted at a large sewer collapse at 15 Mile Road in Sterling Heights, even though Ferguson did no work on the projects.
• Ferguson extorted a contractor to give him $1.7 million from a $28-million sewer contract, even though Ferguson did no work for the project.
• Kwame Kilpatrick, Ferguson, Miller and Mercado schemed together to steer subcontracts and emergency orders to Ferguson in connection with a $19.8-million downtown water main replacement contract. They also gave Ferguson downtown work originally assigned to the lowest bidder, resulting in Ferguson getting over $4 million on contract revenue.
• Kwame Kilpatrick and Mercado rigged a water main contract for the east side so Ferguson's team would win the contract. Afterward, Ferguson extorted more than $12.9 million from the other team members.
• Ferguson extorted a contractor for $5.2 million in sewer repair work on the east side. He also extorted a contractor for $5.2 million in work on a sewer repair contract on the city's west side.
• Ferguson, aided by Mercado and Miller, extorted a company for $5 million on a contract to build a combined sewer overflow and recreational facility.
• Kwame Kilpatrick and Mercado, with Miller's help, rigged the award of a $21-million security contract to make sure Ferguson's company would win. Ferguson netted $1.2 million in the scheme. Mercado helped conceal the scheme by funneling more work on the contract into an unrelated project and then misled authorities about what he had done.
• Ferguson, with the help of Kwame Kilpatrick and Mercado, tried to extort a company to give Ferguson a substantial portion of a $140-million pump station contract.
• Kwame Kilpatrick and Ferguson lobbied an official with the city's Department of Buildings and Safety Engineering to take a job as head of the Department of Water and Sewer Department even though he wasn't qualified for the job. The goal was for Ferguson and the new director to work together to make money for Kwame Kilpatrick.
• Kwame Kilpatrick tried to force an official overseeing the demolition of Tiger Stadium to give the contract to Ferguson, even though he wasn't low bidder. When that failed, Kwame Kilpatrick tried to retaliate against the official by having him fired.
• Kwame Kilpatrick tried to get Ferguson demolition work at the Book Cadillac Hotel by pressuring the construction manager of the renovation project to hire Ferguson.
• The indictment said Kilpatrick and his father solicited and accepted bribes and property valued at more than $1.2 million from people seeking business with the city or its two pension systems. Among other things, indicted Cobo Center contractor Karl Kado paid Kilpatrick, his father and former mayoral aide Derrick Miller at least $360,000 in cash to get and keep cleaning and electrical contracts.
It said John Rutherford, head of a nonprofit shelter in Highland Park, gave more than $500,000 to the Kilpatricks to get support for Rutherford's waterfront casino development plan.
James Rosendall, who is serving a prison sentence for bribery in the Synagro Technologies $1.2-billion sludge disposal contract with the city, gave money to Bernard Kilpatrick and private jet flights worth more than $50,000 to both Kilpatricks and Miller to support the deal.
An unidentified city businessman provided free jet service to both Kilpatricks so he wouldn't be harmed in his business dealings with the city, the indictment said.
While Kilpatrick was a state representative and later mayor of Detroit, he, Ferguson and Bernard Kilpatrick obtained more than $650,000 from the state of Michigan and from donors to non-profit entities they controlled under the false pretenses that the money would be used to improve the community or for campaign expenses.
In reality, the money was used for personal or other im proper expenses, the feds charge.
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