Ex-Detroit mayor and cronies arraigned on 38 counts of corruption

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Former Detroit Mayor Kwame Kilpatrick, his father Bernard, and three other men were arraigned on Monday in U.S. District Court, on federal racketeering and corruption charges.

Disgraced ex-Detroit mayor Kwame Kirkpatrick has his most difficult legal struggle ahead of him, perhaps in 2012.

Kilpatrick is currently serving time in federal prison in Milan, Mich. on a parole violation charge. Instead of the typical prison uniform, Kilpatrick appeared in a coat and tie, although he appeared to have lost some weight and sported a bushy beard.

Kilpatrick appeared to be in good spirits, joking around with his fellow co-defendants and blowing air kisses to his sister in the courtroom audience. All five men entered non-guilty pleas to U.S. Magistrate Judge Mark A. Randon. All but Kilpatrick were released on $10,000 bail.

Observers say the current charges are the most serious brought to date against Kilpatrick, 40, who was considered a rising star in Michigan politics until forced to resign in 2008, after state convictions of perjury and obstruction of justice.

In mid-December, a 17-member federal grand jury indicted Kilpatrick, his father Bernard Kilpatrick, former mayoral aide Derrick A Miller, Kilpatrick close friend and contractor Bobby Ferguson and former Detroit water chief Victor Mercado.

The 89-page indictment described a culture in which Kilpatrick orchestrated million dollar schemes to steer city business to contractors who would pay kickbacks to Kilpatrick and his group. The U.S. Attorney’s Detroit office filed the 38-count indictment, charging the group with racketeering conspiracy and accusing them with extortion, bribery and fraud. Tens of millions of dollars of municipal contracts were steered to Ferguson using coercion exerted by Kilpatrick’s office.

The government brought charges under the Racketeer Influenced and Corrupt Organizations Act which makes it easier to sue interconnected entities in complex cases. A RICO case, often used in instances of organized crime, also provides harsher sentencing provisions and recovery of triple damages.

Ferguson is a close friend of Kwame Kilpatrick and a hauling and construction contractor. He was previously indicted in September on separate charges of bid-rigging a $12 million contract connected to a HUD affordable housing project in the Detroit area.

Bernard Kilpatrick was involved in the corruption schemes through a consulting firm, Maestro Associates LLC, which he started around the time his son was elected mayor. He was part of the team including Kwame Kilpatrick, Derrick Miller and Victor Mercado that regularly extorted monies from legitimate contractors involved in city sewer and water main work, often steering a portion of the contract to pal Bobby Ferguson. In some cases, Ferguson received big fees for doing no work at all.

The government alleges that Ferguson kicked back over $420,000 to Kilpatrick and his father Bernard, and said Bernard Kilpatrick deposited more than $600,000 in cash into his personal bank accounts while his son served as the mayor of Detroit from 2002 through 2008.

Most of the contracts were valued in the tens of millions of dollars, although the men tried to extort a company into giving Ferguson a large piece of a $140 million contract for a new pumping station. The Kilpatrick group, called Kilpatrick Enterprises by prosecutors,  worked together in instances of rig-bidding, so that Ferguson would be guaranteed contract wins by manipulating the bidding process.

Kilpatrick resigned from office in 2008 after being charged with 10 felonies, including perjury, misconduct in office and obstruction of justice. He pleaded guilty to lesser charges and served 99 days in jail, but was sent back for violating the terms of his parole.  He is currently serving time in federal prison in Milan, Michigan.

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