Detroit grand jury indicts former mayor Kilpatrick’s fraud and corruption ring

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

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

The U.S. Attorney’s Detroit office announced 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.

Kwame Kilpatrick, Detroit's mayor from 2002 through 2008, is currently serving time in a federal prison for violating parole in another case.

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

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.

The FBI said that it has been investigating the case for six years, and alleges that some of the corruption can be traced back to when the younger Kilpatrick was a state representative, prior to his election as mayor in 2001. The FBI says that its investigation of the Kilpatrick-era city hall corruption is not over.

Besides the FBI, other agencies involved in the investigation include the criminal division of the IRS, the U.S. Environmental Protection Agency and Department of Housing and Urban Development.

Bernard Kilpatrick was involved in the corruption schemes through a consulting firm, Maestro Associates LLC, that 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 group also 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.

The Detroit News

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Detroit grieves teachers union for telling substitutes to do as little as possible

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

The Detroit Public School system has filed an unfair labor practice charge against the Detroit Federation of Teachers for instructing its substitute teachers to act as though they’re on the job for only a day, and do as little as possible.

In the filing with the state’s Employment Relations Commission, the school district says that the union posted instructions on its website ordering substitute teachers to stop developing lesson plans, grading assignments and meeting with parents at conferences.

DPS spokesman Steven Wasko said “It’s highly unusual for an employer to file (an unfair labor practice charge), as the filings usually come from union. But DFT’s actions and instructions to its subs to, in effect, sit around and baby-sit, were not only so outrageous that they generated national headlines, they also specifically violated the existing collective bargaining agreement agreed to by its members.”

The union says that substitute teachers, in many instances, are filling the role of regular teachers because of a teacher shortage in the area. Union president Keith Johnson defended his position saying the school district “wants to treat our substitutes like day-to-day subs and pay them like day-to-day subs,” Johnson said. “I just told them to act like day-to-day substitutes.”

The Detroit News

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Another guilty plea obtained in Detroit City Hall corruption scandal

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A hauling contractor charged last month for his involvement in bid-rigging a HUD project, has pleaded guilty. Rodney Burrell, owner of R & R Heavy Hauling, agreed to plead guilty to the charge of misprision of felony, meaning that he admitted to knowing about a conspiracy to defraud the government but gave misleading and incomplete information about it.

Burrell was implicated in a bidding scheme that set up former mayor Kwame Kilpatrick’s longtime friend, Bobby Ferguson, to be awarded a $12 million contract in connection with a low-income housing project, Garden View Estates. Burrell and another contractor, submitted bogus bids on the contract, so that Ferguson’s inflated bid appeared to be the lowest, and would be awarded the work.

The other contractor, Brian Dodds, was promised a $300,000 subcontract from Ferguson. Dodds pleaded guilty last month to identical charges and is awaiting sentencing.

The Detroit City Hall corruption scandal has resulted in over 10 felony convictions for corruption, all of which were tied to disgraced former mayor Kilpatrick, who is now serving time in federal prison.

The Detroit News

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Detroit school buses 44% unsafe last year, doing better with private operators

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

It turns out there was a good reason for privatizing the busing operation for the Detroit Public Schools. During the last year before the city turned over transportation responsibilities to private operators, over 44% of the 400 buses were red-tagged by inspectors, meaning that they were unsafe to operate.

The new independent operators have done much better according to their first report cards. First Student, of Cincinnati, had 17.6 percent of its fleet red-tagged, ABC Transportation had less than 2% red-tagged and Safeway Transportation had no violations on any of their buses. Overall, the independent companies received red tags on about 10% of their buses. Read more

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Detroit official changes mind on guilty plea, judge says, “I don’t think so”

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

Former City Council President Monica Conyers’ request to change her guilty plea should not be allowed, says Assistant U.S. Attorney Patricia Gaedeke. Conyers attempted to change her plea while she was being sentenced, and the U.S. District Court judge on the case denied her request. Conyers is appealing the decision in the U.S. Sixth Circuit Court of Appeals.

Conyers, the wife of U.S. Rep. John Conyers, reported to a West Virginia prison after she was found guilty of corruption charges upon admitting to taking cash bribes of $6,000 in 2007. She said she pleaded guilty to the charges under pressure from her own lawyer, the government and the media.

The Detroit News

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Highly Paid Teachers Feel the Heat in Michigan

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

Despite its relatively low cost of living, teachers in the Detroit area are some of the highest paid in the nation, according to a Detroit News study. Compensation data, mandated to be online by the state, shows just how well school districts are paying teachers, despite a looming $1.6 billion deficit for the next school year.

The information covers school districts in Wayne, Oakland, Macomb and Livingston counties and cover teachers in the K-12 grade levels. Over 300 teachers in the region made more than $100,000 per year- that is, a year that’s nine months long with most holidays off.

The beginning salary for teachers is about $40,000, but those with an advanced degree earn considerably more.  With a master’s degree and ten year’s experience, the average salary is about $82,000, about 50 percent higher than the area’s median household income.

The average Michigan teacher made $56,096 last year, ranking it 11th in the nation. However, the median household income last year in Michigan ranked it 36th in the nation, resulting from the state’s recession that long preceded the national slowdown.

A few districts have won concessions from the teachers’ unions, but even with cuts, deficits are persistent. In some districts, two-tier wage scales have been implemented with new hires taking double the years to reach salary limits. Some districts are freezing salaries and preventing scheduled raises if funding goes down.

Given the size of projected deficits, the scope of cuts in union and non-union employees pay is not enough to balance the districts’ budgets. Officials say that cuts in school programs are inevitable.

Rick Hess, the director of education policy studies at the Washington D.C. –based conservative think tank American Enterprise Institute said “I think Americans are going to be surprised by how high (teacher salaries) are and (legislators) are going to be surprised by the amount of support for reductions.”

Hess said that fears of a reduction in pay, will lower the quality of teachers in the system, is overblown. Even with a 5% reduction in salary and a requirement to pay a greater portion of health insurance costs, a teacher making $80,000 now will still make over $70,000. Compared to cuts in the manufacturing and other sectors, teachers are far better off in the current economy.

The Detroit News

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

Michigan City Teeters on Bankruptcy

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

Hamtramck, a community of 22,000 that is part of the Detroit metro area, is seeking permission from the State of Michigan to file for bankruptcy. The city is claiming a current budget deficit of $3 million, partially as a result of a financial dispute with Detroit, and that it will be unable to pay its 100 employees or 153 retirees beginning early next year.

According to state law, Michigan municipalities are required to get permission from the state Department of Treasury before they are allowed to file for bankruptcy protection. Under the 1990 law, only an emergency financial manager appointed by the state can take a city into bankruptcy. Since the law passed, no cities have used the process to restructure.

A dispute with neighboring Detroit is blamed for the current crisis. The city has a revenue sharing agreement with Detroit covering taxes paid by General Motors for its Poletown plant. Detroit claims that it overpaid Hamtramck’s share in the past and is withholding current payments until the matter is resolved. Hamtramck is suing Detroit, but a court resolution is expected to take months and a resolution favoring Hamtramck is not assured.

City Manager Bill Cooper said that Hamtramck will run out of cash around Jan. 31. The city operates on an annual budget of around $18 million. Nonunion employees agreed to take a 5% pay cut and are paying 15 percent of their health insurance premiums for spouses and families, to help conserve cash flow.

Cooper said that the city approached the police, firefighters and other unions about pay cuts, but concessions have been minimal. A bankruptcy filing would set aside the current contracts and bring the unions to the bargaining table. “While this step may seem radical in its approach, it is the only approach that will quickly and effectively allow us to address our shortfall,” he said in his letter to state officials.

The cities of Pontiac, Benton Harbor and Ecorse are currently under management of an emergency financial manager. Bill Nowling, a spokesman for Gov. elect Rick Snyder said that he believes that Michigan cities in financial crisis is a growing problem, and that’s expected to get only get worse. The issue right now is to get a handle on exactly how many municipalities out there are at the point where Hamtramck is,” Nowling said. “There are probably several that are sitting on the bubble.”

The Detroit News
View Larger Map

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon