Former Mich. State Rep. Mary Waters backtracks on corruption guilty plea

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After pleading guilty last year in a corruption case involving her then-boyfriend, convicted Detroit political consultant Sam Riddle, former politician state Rep. Mary Waters has changed her mind and wants the plea reversed.

Waters, 55, pleaded guilty for her role in a bribery case in which Riddle allegedly took $45,000 in cash, and a $5,500 Breitling watch, for his help in getting an approval from the city of Southfield, Michigan, for the relocation of a jewelry store and pawnshop. As part of the arrangement, Waters received a $6,000 Rolex watch.

A Southfield city councilman, William Lattimore, was paid a $12,500 bribe by the couple to push the approval through Southfield city council.

Waters and Riddle were indicted in July 2009 by a grand jury investigating widespread corruption in Kwame Kilpatrick’s city hall administration.

Riddle pleaded guilty to charges of bribery and extortion, and is serving a 37-month sentence in federal prison.

As part of a plea deal, Waters claimed the Rolex was a gift from Riddle, and plead guilty to a misdemeanor charge of filing a false tax return. She was sentenced to one year’s probation.

Waters filed a brief on Friday claiming her Constitutional rights were violated, and wants the plea arrangement overturned.

In the court papers, Waters court-appointed lawyer, Melvin Houston, said that her Six Amendment rights to effective legal representation were violated, that U.S. District Judge Marianne O. Battani failed to establish a factual basis for her guilty plea and it was unfair to make her guilty plea part of an overall plea deal involving Riddle.

The legal brief asks that the conviction be set aside, and for a new plea and sentencing hearing.

Information from: The Detroit News

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Mass. politician convicted of extortion was also tax dodger

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Newly unsealed court documents show that former state Sen. Dianne Wilkerson had far more issues than just the extortion conviction she earned for taking $23,500 in bribes from a Boston businessman-turned-FBI informant.

Following her arrest on public corruption charges, Wilkerson resigned from the Massachusetts Senate in November 2008, after serving 16 years as one of its most high-profile members.

The court documents made public this week show that Wilkerson had also failed to report “gifts” she solicited in 2004 to help settle an old tax bill.

After agreeing to pay the IRS over $80,000 for unpaid income taxes dating back to 1991 through 1994, Wilkerson solicited a number of benefactors to help bail her out, having cleared the plan with the state’s ethics commission.

Under the pretense of paying off the IRS, Wilkerson quickly raised $115,750 in the first half of 2004. After paying the IRS $80,000, Wilkerson spent at least $20,000 of the money on furniture, paying down credit cards, making mortgage payments and handing out checks to her children.

Among those who gave her $10,000 each were developer Arthur M. Winn, Senate Majority Leader William “Biff” MacLean Jr., Partners HealthCare Chairman John “Jack” Connors and lawyer Thomas R. Kiley.

“It is unclear whether her solicited ‘donors’ knew that she ended up with a net profit from this solicitation, or whether they were defrauded by her claims that the funds would be used to pay the outstanding tax debt,” the records state.

Although gifts are considered taxable income, Wilkerson neglected to report any of the monies to the IRS. The U.S. Attorney’s Office declined comment on whether she would face new charges on tax evasion, according to The Boston Herald.

Wilkerson was sentenced last week to 3 ½ years in prison.

After her sentencing, Wilkerson told the press that the government’s action against her was “the most corrupt and outrageous abuse of the justice system.” Although she said she accepted her sentence, she added “My acceptance can’t negate the despicable actions of the government and its collaborators.”

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15 percent of IRS contract employees found to be tax deadbeats

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An audit report prepared by the Treasury Inspector General for Tax Administration has turned up a large number of delinquent taxpayers– independent contractors working inside the offices of the IRS. Although technically not considered employees, the contractors are individuals and firms “conducting business and doing work on behalf of the agency whose mission is to ensure taxpayers meet their tax responsibilities.”

The report was published in September, but was not made public until Monday, pending a legal review by IRS lawyers.

Conducting the study, auditors examined a sample of 135 current IRS contractors and found that 20, or 15 percent, had delinquent tax liabilities and penalties amounting to $5.2 million. Six of the contractors had tax delinquencies of $943,000 at the time that they were hired.

The period of the auditor’s review was from 2006 through 2008, and the report said that tax checks were not completed for seven of the contractors, as required by IRS guidlines.

Previously, federal guidelines permitted authorities to perform tax checks only at the time of hiring the contractor. Even if a contractor was found to have tax indebtedness, the IRS was not able to use the information to prevent the hiring, unless it was determined it would jeopardize contract performance.

In January 2010, an Obama administration directive was issued that required the IRS to determine if contractors seeking government work owed back taxes.

“In accordance with the presidential directive, the Internal Revenue Service must ensure that businesses contracting to provide services to the IRS are compliant with Federal tax laws,” said J. Russell George, the Treasury Inspector General for Tax Administration. “IRS contractors should be held accountable to the same tax compliance requirements as IRS employees.”

In the future, agreeing with the recommendations of the inspector general’s office, the IRS said it will perform tax checks before contractors are hired, and establish procedures to require an annual check of all contractors.

See the Treasury report here

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Businessman latest to plead guilty in Detroit City Hall corruption scandal

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Andrew Park, 46, is the latest figure in the Kilpatrick city hall corruption scandal to plead guilty to charges in Detroit U.S District Court. Property developer and businessman Park, admitted to hiding income totaling $898,000 from three companies controlled by him: Asian Village, Pangborn Technovations Inc. and Security Communication Alert Network.

Park’s tax evasion charges were a byproduct of an FBI investigation of business dealings with former mayor Kwame Kilpatrick’s high school buddy, Derrick A. Miller.  After Kilpatrick was elected mayor in 2002, he appointed Miller as his chief aide and subsequently chief information officer. Miller resigned in 2007 to start his own firm.

In 2008, FBI agents raided the home of Park taking records and computers, looking for evidence of payments to Miller. Investors in a failed real estate development, Asian Village, told authorities that they believed Park was paying bribes to Miller for his help in steering money and business to Park and his ventures. The city helped fund the Asian Village project, providing a $2.75 million loan from the General Retirement System Fund.

In another transaction involving Miller, Park’s company Security Alert Communication Network was given a $4 million city contract to install security cameras in downtown Detroit using federal funds from the U.S. Department of Homeland Security. His company was paid in full, but failed to complete the project.

Prosecutors say that Park failed to report income from the ventures, and then claimed that the receipts were loans. The unpaid tax amounts to over $300,000. In addition to the taxes, he faces up to $100,000 in fines and five years in prison.

Miller was charged last week as part of group of city hall insiders, including Kilpatrick, Kilpatrick’s father, Bernard, close friend Bobby Ferguson, and former Detroit water chief Victor Mercado. The U.S Attorney’s office announced a 38-count indictment against the men, charging them with extortion, bribery and fraud.

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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Rangel officially gets censured, back to business as usual

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Charles Rangel has now become the 23rd member of the U.S. House of Representatives in the nation’s history to be censured for misconduct.

The vote by the full House on Thursday was 333-79, and punished him by censure for failing to pay income taxes on a rental property, using his office to raise monies for a college center named in his honor, and accepting a rent-subsidized apartment in Manhattan from a developer who had official business with a committee led by the congressman.

The vote was expected in the matter, which consumed $2 million in legal costs and two years of his attention, and was recommended by a special panel in a trial two weeks ago that Rangel walked out on after asking for a delay so that he could raise more money for a legal defense fund.

Aside from the public reprimand, Rangel has evaded being charged with any crime for his wrongdoings. “I am at rest with myself, and I am convinced that when history of this has been written that people will recognize that the vote for censure was a very, very, very political vote,” Rangel said.

The Associated Press

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House Ethics Committee Urges Censure for Rangel

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House Ethics Committee voted to censure him

The House ethics committee has recommended by a vote of 9-1, that Representative Charles B. Rangel (D-N.Y.) be censured for unethical misconduct after a two-year inquiry into a number of alleged illegal activities. A censure is just one disciplinary step away from expulsion. A full vote in the House on the matter is the next step in the disciplinary process, and is expected to occur after the Thanksgiving recess.

Rangel was under investigation for tax evasion resulting from his failure to pay income taxes on rentals from a vacation home, using his Congressional office as a fundraising hub for a college center named after him, and illegally occupying a rent controlled apartment owned by a developer who had business dealings in Congress with Rangel. Read more

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Rangel Found Guilty of 11 Ethics Violations

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A House panel found Rep. Charles B. Range (D-N.Y.) guilty on 11 counts of ethics violations, including failing to pay income taxes on a house he owned in the Dominican Republic, using his congressional office to raise monies for a college center named in his honor, and accepting a rent-subsidized apartment in Manhattan from a developer who had official business with a committee led by the congressman.

The quick decision comes only a day after the trial began which was marked by Rangel’s absence, due to a falling out with his attorneys over his mounting legal costs. Rangel asked for a delay in the case so that he could put together a legal defense fund, but panel members moved ahead.

The matter now moves to the House ethics committee for action. It is expected that Rangel will receive a public reprimand. The 80-year-old Rangel was just reelected for another term, and has been a House member since 1971. In 2007 he became the chairman of the powerful House Ways and Means Committee, a position from which he has since resigned.

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