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untanglingwebs
El Supremo

March 17, 2013 12:00 p.m. UPDATED 3/19/2013
Biz takes the stand: Key testimony against ex-Mayor Kilpatrick
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Detroit City Council General Motors Co. Soave Enterprises LLC More +

Associated Press
Kwame Kilpatrick

Although a lot of the government's work with business leaders happened behind the scenes in the federal trial of former Detroit Mayor Kwame Kilpatrick, his friend Bobby Ferguson and father Bernard Kilpatrick, prosecutors chose witnesses who had the most insight and would be memorable to jurors after nearly six months of testimony.

"For the government, there's a delicate balance to walk, to be able to get the testimony they need (for) the conviction they were seeking and yet not bore the jury by dragging on -- because you can lose juries sometimes," said Lloyd Semple, dean of the University of Detroit Mercy School of Law.

"I was concerned that would be an issue, but it really turned out not to be... they did the job and must have had the evidence they needed to evaluate."

George Donnini, a shareholder in the white-collar criminal defense practice at Butzel Long PC, said private sector witnesses to public sector corruption sometimes need legal advice of their own -- and in this case, some clearly had reached various agreements with the government before testifying.

"Sometimes immunity is available, but that's not easy to obtain," he said. "Sometimes it's a lot less formal, and you just try to work out an understanding as to what your client can do to help."

Kilpatrick, 42, was taken into custody last week along with Ferguson, 44, owner of excavation and construction contractor Ferguson's Enterprises Inc. on Wyoming Street in Detroit, after jurors convicted them on 24 and nine counts, respectively, in the federal indictment.

Bernard Kilpatrick, 70, was convicted on one tax charge out of four counts he faced. All three have until May 10 to file any motions to challenge their convictions or seek a new trial.

Crain's reporter Chad Halcom sifted through the testimony of Detroit's business community and came away with the following key moments on the witness stand. Unless otherwise noted, testimony is identified by those counts for which the defendants listed were found guilty.
CHECK FURNISHED FROM WRONG ACCOUNT

Mary Fleming

Retired owner, Mary J. Fleming & Associates LLC, Detroit; board member, Detroit Riverfront Conservancy; former board member, Manoogian Mansion Restoration Society

Testified Oct. 11, 2012, regarding counts 18-30, mail and wire fraud, Kwame Kilpatrick. Kilpatrick was found guilty of all but counts 27 and 29.

In September 2008, as Kwame Kilpatrick was preparing to leave the mayor's office, Mary Fleming received a check from the Kilpatrick Civic Fund to buy furniture from the Manoogian Mansion.

Fleming, then a board member for the Manoogian Mansion Restoration Society, had accompanied the mayor's wife, Carlita Kilpatrick, and two appraisers in a tour through the residence.

The society pays for new mayors to consult with decorators and refurnish the mansion and gives outgoing mayors an option to buy furniture they wish to keep. The Kilpatricks requested about $11,000 of furnishings, and the mayor told Fleming that his cousin, Nneka Cheeks, would deliver a check.

When the check that came was from the civic fund, Fleming returned it. She said the mayor apologized and told her Cheeks had written it on the wrong account.

Why her testimony is important: Thirteen of Kilpatrick's 24 convictions were for mail fraud and wire fraud involving the Civic Fund, ostensibly created in 1999 to promote neighborhood improvement and activities for young people, among other things.

Instead, the indictment alleges, he spent tens of thousands of dollars on personal and political expenses contrary to the nonprofit's mission -- and tried to use it for the Manoogian furniture.

COBO CONTRACTS AND CASH

Karl Kado

Former owner, Metro Services Organization Inc., Detroit

Testified Dec. 3-4, 2012, regarding count 1, racketeering, Bobby Ferguson, Kwame Kilpatrick and Bernard Kilpatrick; count 6, bribery concerning programs that receive federal funds, Ferguson and Kwame Kilpatrick. No verdict on count 1 for Bernard Kilpatrick; count 6 dismissed.

In 2002, Karl Kado formed Metro Services Organization to acquire a new janitorial contract for Cobo Center that he had purchased from Massachusetts-based Unicco Service Co. for $150,000.

The new contract, he testified, added more than $4 million of revenue to Kado above his existing food service contract at Cobo.

He also told jurors he'd paid Kwame Kilpatrick $10,000 in 2001 -- because he believed Kilpatrick held sway on whether he would be selected to hold Cobo contracts.

Kado also picked up a contract for his Trade Show Electric electrical service to Cobo event exhibitors, but said he also made a series of cash payments to Kilpatrick, aide Derrick Miller, father Bernard Kilpatrick, a nonprofit operated by the Kilpatrick family and former Cobo director Lou Pavledes. These bribes were over and above fees Kado owed Detroit under his various contracts.

He believes he paid more than $200,000 to Bernard Kilpatrick and allowed him to work rent-free in an office Kado owned on Jefferson Avenue from 2003 to 2010.

But in 2005, he said, he confronted Bernard Kilpatrick after receiving a letter informing him Kado was the target of an FBI investigation. Bernard allegedly told him all his contracts would be renewed for 10 years if he didn't cooperate with federal agents.

Kado refused, and later lost his electrical and janitorial contracts before meeting with Bernard again in 2008 while wearing a recording device, to assist the FBI.

He pleaded guilty at U.S. District Court in 2009 to making false statements on tax returns in 2003 and 2004 in connection with income used to bribe director Pavledes and two city officials, but received probation and agreed to cooperate with the investigation.

Why his testimony is important: Like other witnesses, Kado's success as a contractor fluctuated along with his willingness to pay the Kilpatricks during the administration. He also shows that the enterprise pattern of extortion was not limited to water and sewer contracting. Pavledes went on to plead guilty to a banking law violation for receiving $98,000 from Kado as Cobo director and received 14 months in federal prison.
'FORCED MARRIAGE'


McCann

Kathleen McCann

CEO, United Road Services Inc., Romulus

Testified Dec. 7 and 10, 2012, regarding count 1, racketeering, Kwame Kilpatrick and Bobby Ferguson; counts 2 and 3, extortion, Ferguson; count 11, extortion, Kilpatrick and Ferguson. Count 11 was dismissed.

Kathleen McCann, a former senior vice president of Soave Enterprises Inc., recounted meeting with Bobby Ferguson in early 2002 after CEO Anthony Soave visited Kwame Kilpatrick and was informed that Soave's proposed subcontractor on a sewer lining contract "was out and Ferguson was in."

McCann joined Soave Enterprises in 1990, around the time Soave acquired what is now Inland Waters Pollution Control Inc. and appointed her to the Inland board. Soave has since sold all but 10 percent in that company. Kilpatrick administrative aide Derrick Miller later checked up with McCann on the status of negotiating Ferguson's share of that contract during the 2002 Mackinac Policy Conference, a conversation that she said made her uncomfortable.

"We were essentially in a forced marriage, and we knew that this was a relationship that we were going to have to endure, and so we did our very best to ultimately get to these contractual arrangements ... to satisfy the promise we made ... to do this work," she testified.

She testified that Ferguson ultimately negotiated for a 20 percent, or $10 million, share of contract revenue on the lining contract and for a share of the profits. He allegedly sought to expand on that same arrangement when Inland Waters became prime contractor on emergency repairs to a sinkhole in Sterling Heights.

She also compiled a company "diary" starting around 2003 to document illegal or questionable requests that Miller, Ferguson and others made of Soave or Inland.

Why her testimony is important: McCann told jurors that Soave and Inland Waters received veiled threats and that the "risk of losing the work kind of was hanging over our heads."

Since then: McCann left Soave in 2011 and became president of Romulus-based United Road Services.

THE 'RIGHT' CONTRACTOR


Soave

Anthony Soave

President-CEO, Soave Enterprises Inc., Detroit; part owner, former full owner, Inland Waters Pollution Control Inc., Detroit; owner, City Aviation Services Inc.

Testified Dec. 5-7, 2012, regarding count 1, racketeering, Kwame Kilpatrick and Bobby Ferguson; counts 2 and 3, extortion, Kilpatrick; counts 18-30, mail and wire fraud, Kilpatrick. Counts 27 and 29 were dismissed.

After Kwame Kilpatrick became mayor, Anthony Soave testified, he noticed that a $50 million sewer lining contract his company Inland Waters Pollution Control had at the close of the Dennis Archer administration was still languishing on the mayor's desk. He paid a visit in April 2002 to ask why.

At that time, Inland had hired a company owned by former Detroit Water and Sewerage Department Director Charlie Williams as a subcontractor.

"I just asked (Kilpatrick) what was wrong, and he said I had the wrong subcontractor. I think I asked him, 'What's the right one?' So he told me, Ferguson was the right one."

Ferguson then displaced Williams' company on the contract, but Soave said he "felt bad" for Williams and paid him $200,000. Soave is now a 48 percent owner of Williams' contracting company, MPS Industrial Services.

He also told jurors he allowed Kilpatrick and his family the use of private planes through his company City Aviation Services Inc. for at least 20 round trips, including from the Bahamas to Detroit and back again during and after the summer 2003 power blackout in Michigan, and shopping trips to New York.

Between 2004 and 2008, he also donated $175,000 to the nonprofit Kilpatrick Civic Fund, which other witnesses established the mayor used for personal and political expenses.

While Soave said he was reluctant to get on bad terms with the mayor, he was more firm with Ferguson and resisted efforts to grow Ferguson's share of the profits or to be paid for work he didn't perform.

"(Vice President Kathleen McCann told me that) Bobby said next time we bid on the next contract, he wants to be our partner, (that) he wants to bid ... (as) either as a partner or 50-50," he said. "I told her, 'You can tell him to go F himself.' I'd rather not have the work than be partners with him."

Why his testimony is important: Although McCann handled many of the particulars of dealing with Ferguson, Soave's testimony explained the mayor's role in the leverage that Ferguson was able to gain.

Since then: Soave sold an 80 percent stake in Inland Waters, which he acquired around 1990, to Strength Capital in 2005. He retains a 10 percent share after selling another 10 percent.

SINKHOLE REPAIR PROJECT

Walter Rozycki

Senior project manager and sales manager, Inland Waters Pollution Control Inc., Detroit

Testified Jan. 16, regarding count 1, racketeering, and count 3, extortion, Bobby Ferguson.

An 11-foot-diameter sewer interceptor -- then owned by the Detroit Water and Sewerage Department near 15 Mile and Hayes roads in Sterling Heights -- collapsed in August 2004, causing part of the roadway to sink as well.

Repairs took about a year to complete, and project manager Walter Rozycki was site representative for Detroit-based Inland Waters Pollution Control, the general contractor on the project.

Rozycki testified that Bobby Ferguson first reported to the site on Sept. 14 and a work crew showed up the following day. Ferguson's Enterprises Inc., as a subcontractor, handled excavation work for a bypass to be installed at the sinkhole site, as well as fueling generators, site restoration and landscaping.

Rozycki reviewed invoices and work records submitted on site but said a federal agent later showed him other invoices on behalf of Ferguson's company billing for work before he was hired at the project site. In one case, the record appears to be a bill before the sinkhole had even happened.

Why his testimony is important: Prosecutors alleged Kilpatrick steered a portion of the sinkhole repair project to Ferguson's company and held up approval of a contract amendment for Inland Waters until it agreed to pay Ferguson at least $350,000 for work his company did not perform.

LAKESHORE LEARNS HOW TO PLAY BALL


Rachmale

Avinash Rachmale

Chairman, Lakeshore TolTest Corp. and The Lakeshore Group, Detroit

Testified Nov. 15-27, 2012, regarding count 1, racketeering, Bobby Ferguson, Kwame Kilpatrick and Bernard Kilpatrick; counts 7-9, extortion, Ferguson and Kwame Kilpatrick. There was no verdict on count 1 for Bernard Kilpatrick, and no verdict on counts 7 and 8 for Kwame Kilpatrick.

Avinash Rachmale testified that his then-midsize business, Lakeshore Engineering Services Inc., was in dire straits after losing two city contracts, until he made Bobby Ferguson a subcontractor on sewer repairs in 2004 and got the work.

His subsequent move to give in and play ball enriched Ferguson's companies more than $1.7 million for work not performed, prosecutors argued.

Rachmale testified that Lakeshore lost two contracts totaling $15 million to a competitor in 2003, including one it had previously won, after Ferguson, as a subcontractor to the competitor, asked to be dealt in for 25 percent of the work -- and was rebuffed. At the time, Lakeshore's entire annual revenue was only about $15 million.

"It was devastating that both contracts (were) canceled, and I had stomach aches and I couldn't come to the office for a while," Rachmale said. "I just felt that we worked all along ... writing these humongous proposals, and ultimately our jobs are canceled."

Rachmale later agreed to deal Ferguson in for a 36 percent cut of a contract for inspection and rehabilitation of 10 outfalls (stormwater discharge points).

Doing so meant having to exclude Hayes Excavating Co., an excavating subcontractor Lakeshore had used in the previous failed bids. Rachmale did it, but felt the Ferguson cut was oversized for its relatively small share of work. Lakeshore landed that contract in late 2004, and Hayes Excavating went out of business sometime later, Rachmale testified.

Why his testimony is important: Rachmale's tale of reversing his fortunes after paying Bernard Kilpatrick consultant fees and meeting with Ferguson helped prosecutors establish he was initially extorted out of the first two contracts. Prosecutors also established Ferguson got 5 percent of a subsequent asbestos contract for which he did no work -- the basis of a single charge on which Ferguson was convicted, but jurors could reach no verdict for Kilpatrick.

Since then: Rachmale is now chairman of Lakeshore TolTest Corp., formed after Lakeshore merged with Toledo-based TolTest Corp. in 2010.

DLZ: IN AND OUT OF FAVOR

Pratap Rajadhyaksha

Former COO, DLZ Corp., Columbus, Ohio

Testified Oct. 24, 2012, regarding count 1, racketeering, Bobby Ferguson; count 6, bribery, concerning programs that receive federal funds, Ferguson and Kwame Kilpatrick. Count 6 was dismissed.

In early 2004, Ohio-based DLZ Corp., through its Detroit-based DLZ Michigan Inc. subsidiary, was asked to replace a downtown water main by the Detroit Water and Sewerage Department in time for Super Bowl XL in 2006.

DLZ, a project manager, had just used Bobby Ferguson's Ferguson's Enterprises Inc. on a pilot program for the city. But after soliciting competitive bids on the new project, DLZ selected three other companies.

COO Pratap Rajadhyaksha testified that then-water department Director Victor Mercado had advised him that Ferguson should be awarded some of the work, even though Ferguson's bid was substantially higher. DLZ complied.

Rajadhyaksha said Ferguson became the most difficult project contractor to work with, seeking to be paid for several change orders that Rajadhyaksha thought were unjustified.

Ferguson's company ultimately received more than $4 million on the downtown water main project.

In 2006, DLZ was competing on a follow-up contract to service the city's east side water mains but, Rajadhyaksha testified, it lost that job after its certification as a Detroit-based business was revoked by the Detroit Human Rights Department.


Why his testimony is important: Prosecutors contended DLZ actually had a more competitive bid on the east side mains project than Lakeshore Engineering Services, which had teamed with Ferguson. But Kilpatrick had directed Human Rights to revoke DLZ's certification. The government also contends Kilpatrick benefited financially from his efforts to steer the project toward Ferguson.

'WE'LL TALK' WORKS FOR SYNAGRO

James Rosendall Jr.

Former vice president of business development, Synagro Technologies Inc., Houston

Testified Jan. 17-22, regarding count 1, racketeering, Kwame Kilpatrick and Bernard Kilpatrick; count 15, extortion, Bernard Kilpatrick; counts 18-30, mail and wire fraud, Kwame Kilpatrick. No verdict on count 1 and not guilty on count 15 for Bernard Kilpatrick; Kwame Kilpatrick not guilty on counts 27 and 29.

James Rosendall, a vice president of Houston-based Synagro Technologies since it had acquired his own company in 1999, first met Kwame Kilpatrick in 2001 during Kilpatrick's campaign for mayor.

Synagro was interested in buying out a contract that Detroit had with Minergy Detroit LLC. Rosendall arranged for three contributions of $3,400 each to Kilpatrick's campaign and said Kilpatrick told him "we'll talk" if he won.

Kilpatrick told Rosendall to "work with" his father, Bernard Kilpatrick, as a consultant, Rosendall testified. Over the next five years, Rosendall would pay more than $30,000 to Bernard Kilpatrick, the nonprofit Kilpatrick Civic Fund, the Kilpatrick political action committee Generations PAC and the Kilpatrick Inaugural Committee.

In November 2007, the Detroit City Council voted to approve a 25-year contract worth more than $1.1 billion, or $47 million a year, for Synagro to convert city sewage sludge into fertilizer and other uses. Rosendall later met with Bernard Kilpatrick at a Royal Oak restaurant, at a table the FBI had reserved, and the conversation was recorded.

Later, after being confronted by the FBI, Rosendall said he wore a wire to another meeting with Bernard Kilpatrick in early 2008. He was also recorded giving Bernard a case of Cristal champagne.

Why his testimony is important: Its relevance may have been undercut by Rosendall's criminal involvement. In 2009, he entered into a plea agreement to conspiracy to commit bribery for paying an intermediary for ex-City Council President Pro Tem Monica Conyers to support the controversial Synagro contract in 2007. Bernard Kilpatrick was acquitted on the attempted--extortion charge involving Synagro.

Since then: Rosendall served 11 months in federal prison and now works at Waste Control of Grand Rapids Inc., owned by his brother, Henry Rosendall.

MEET THE CAR DEALER

Doug Dalgleish Jr.

Former general manager, Dalgleish Cadillac Inc., Detroit

Testified Jan. 22, regarding counts 18-30, mail and wire fraud, Kwame Kilpatrick. Kilpatrick was found not guilty on counts 27 and 29.

General Manager Doug Dalgleish Jr. of Dalgleish Cadillac told jurors the now-shuttered Detroit dealership received $2,000 from the Kilpatrick Civic Fund in 2000 as part of a 36-month lease on a 2000 Cadillac DeVille.

Kilpatrick also made a series of pre-payments in early 2009 totaling about $35,500 for a 24-month lease on a red 2009 Cadillac Escalade -- including $13,000 in cash and a cashier's check that Dalgleish received personally -- several months after he'd been ordered by a judge to pay $1 million restitution to Detroit in an obstruction-of-justice case.

Why his testimony is important: The mail and wire fraud portion of the indictment references use of funds from the Kilpatrick Civic Fund to go toward a Cadillac DeVille and rental cars, but is not more specific. Prosecutors also tried to support the claim in several tax evasion and false tax return charges that Kilpatrick's income was significantly greater than what he was declaring in federal returns over the later years of his administration. Kilpatrick's ability to put together $35,000 cash quickly was one of many pieces of evidence the prosecution used to show Kilpatrick's income was higher than what it was on his taxes.

Since then: Dalgleish Cadillac, ranked the fifth-lowest volume local dealership for General Motors Corp. in 2008 at just 313 units, was among hundreds nationwide to have their new car franchise agreements terminated during GM's bankruptcy reorganization in 2009. The site is soon to undergo a $93 million renovation to become the Multidisciplinary Biomedical Research Building for Wayne State University.

3D INVOICES

Christopher Boettcher

President, AirTec Corp., Detroit

Testified Oct. 1, 2012, regarding count 1, racketeering, Bobby Ferguson and Kwame Kilpatrick.

Boettcher was a vice president handling sales and project management in 2001 at AirTec, a Detroit company that furnished doors, frames and hardware in a renovation of Ferguson's Enterprises Inc.'s headquarters on Wyoming Street.

Boettcher testified that falsified invoices were sent to the state of Michigan, and that money purported to be from a state grant and to be used for a nonprofit construction project was instead used to pay for the Ferguson headquarters renovation.

Boettcher testified that invoices submitted by Ferguson nonprofit Detroit Three Dimensional Community Development Corp. (Detroit Three D) to the state -- for purported construction services, including a training facility, dormitory housing and more -- were not legitimate. Ferguson needed to submit invoices to the state to verify that the grant money had been for a shelter.

In October 2000, Detroit Three D received the first half of an Arts, Cultural and Quality of Life grant for $500,000 from the State Budget Office to help teens and seniors, after then-state Rep. Kwame Kilpatrick, as Democratic floor leader, made the grant a condition for putting his support and influence behind a state budget bill.

Why the testimony was important: Detroit Three D used about $100,000 of an initial $250,000 grant to renovate the Ferguson's Enterprises headquarters, and gave another $100,000 to Using Non-Violence to Influence Total Education Inc., a nonprofit headed by Kwame Kilpatrick's wife, Carlita, according to an indictment. Much of that funding went toward Carlita's $91,000 salary. Marilyn Johnson, Bobby Ferguson's wife and president of Detroit Three D, informed the state by letter in 2001 that the money was used to renovate a home for displaced seniors and runaways, according to prosecutors. Boettcher said he did process other invoices for more than $19,000 of renovations completed at Ferguson's corporate headquarters, but said the state-submitted invoices had the wrong letterhead and format to be from AirTec, and that he never worked on a shelter project.

Since then: Boettcher is president of AirTec since 2003.

Ryan Felton contributed to this report.
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untanglingwebs
El Supremo

CBS Detroit



Kwame Kilpatrick Federal Corruption Trial Week In Review
December 3 December 7, 2012
December 9, 2012 3:20 PM By Vickie Thomas
Filed Under: blog, city beat, detroit, Ex-Mayor On Trial, Kilpatrick Trial, kwame kilpatrick, Vickie Thomas

(Bill Pugliano/Getty Images, File)
Ex-Detroit Mayor Kwame Kilpatrick is charged with fraud, bribery, tax crimes and racketeering conspiracy. His father, Bernard Kilpatrick and Detroit contractor Bobby Ferguson are also on trial in Detroit federal court.

Trial Update By Vickie Thomas



Former Cobo Hall contractor Karl Kado kicked off the week of testimony. A few months after Kwame Kilpatrick took office, Kado says the mayor called and said, Karl, give me $10,000. Kado told Kilpatrick it would take a couple of days. He came up with the cash. Derrick Miller, an executive in the administration, went to pick it up at Cobo. Kado said it was in a brown paper bag. Under cross examination it was revealed that the money was in an envelope.

Kado said he went to the mayors office three or four times and handed Kilpatrick $5,000 or $10,000 on each occasion. Kado testified that the mayor even picked up the money at Cobo. They were mostly large bills, 100s and 50s. Kado says he made several cash payments to Bernard Kilpatrick and gave Derrick Miller $10,000 for a trip to Europe. He says he had no choice if he wanted to keep his contracts at Cobo.

Kado also owned a building at 547 East Jefferson. Bernard Kilpatrick had his office there and paid rent for the first month or so. Then he never paid and moved out in 2010 when Kwame left office. On cross examination, several rent checks paid by Bernard Kilpatrick were introduced into evidence.

In June of 2005 Kado said he made a final, unrequested payment to Bernard Kilpatrick of $100,000. Kado said, Take it for Kwames reelection and Im done. You will never see me again in your life. After receiving a letter from the FBI informing Kado that he was the target of an investigation, the contractor began cooperating with agents and wore recording devices. In one recording, Kilpatrick acknowledges receipt of the $100,000.

Under cross examination by Bernard Kilpatricks attorney John Shay, Kado admits there were never any threats of not getting or canceling contracts if he didnt make payments. And Kwame Kilpatricks attorney Jim Thomas quizzed Kado about his own statements to federal agents expressing concern that he may have dementia.

The government called FBI Agent Robert Beckman to the stand. Through a series of text messages, he shows that Bernard Kilpatrick worked behind the scenes to steer a contract to Kado. The agent also acknowledged that Kado expressed concern about suffering from dementia in two of their meetings.

Another federal agent about $605,000 in cash Bernard Kilpatrick deposited in his bank account over a seven year period. Checks totaling $134,000 were deposited from Archie Clarks company. He partnered with Kado on one of the Cobo contracts and was a close friend of Bernard Kilpatrick.

Business Mogul Anthony Soave was next to take the stand. He owned Inland Waters which did business with the citys water department. Soave provided sometimes colorful testimony over the course of three days on the stand.

Soave says when a $50-million-dollar contract had been awarded to Inland but was being held up he went to see Mayor Kwame Kilpatrick. He told Soave he had the wrong (minority) subcontractor on the job. Soave asked him who was the right one and he said it was Bobby Ferguson. Tony didnt know him and he told Kilpatrick he would make the change.

Soave says he had Charlie Williams as the minority contractor because he was mentoring his company. But, Soave agreed to make the change because he wanted the job. It was a big deal for Inland. He was worried about losing the contract. A lot of people would have been out of work. Tony says Williams was disappointed so he gave Charlie $200,000. I was feeling bad for him and wanted to help him out.

Soave also testified about providing $400,000 in flights to Kwame Kilpatrick and company on one of three private jets owned by business tycoon. On cross examination, Soave admitted that he invited Kilpatrick on some trips, like a shopping spree in New York and to visit Naples to see one of Soaves housing developments. The two talked about such housing on Detroits east riverfront.

Kathleen McCann followed her former boss on the witness stand. She worked for Soave Enterprises for over 20 years. She provided more detail about interactions with Bobby Ferguson who was described as, A handful. In meetings, McCann says Ferguson demanded more money on the contract and reminded everyone that he was the only reason Inland was awarded the contract. Concerned about want was going on, she told employees to document their conversations with Ferguson.

UP NEXT: McCann resumes her testimony.

QUOTES OF THE WEEK:

Im like a hostage in IranIm a hostage at Cobo. Former Cobo Hall contractor Karl Kado on allegedly paying cash bribes.

This seat is warm. Business Tycoon Anthony Soave as he took the witness stand.
Vickie Thomas
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Vickie Thomas is the City Beat Reporter for WWJ Newsradio 950. She was raised in Highland Park, The City of Trees that was before the July 2, 1997 storm blew through the area. She covered the storm for WWJ that evening and the clean up over the...
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untanglingwebs
El Supremo

Government Rebuttal | Government Information | Social Institutions
https://www.scribd.com/document/125710874/Government-Rebuttal
the testimony of Tom Hardiman, that Bobby Ferguson asked them to put E&T Trucking onto his ... He held it up until Mr. Soave and Inland Waters dumped ... you've heard that Charlie Williams was the long-time director of the Detroit Water and ...
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untanglingwebs
El Supremo

021113_Kilpatrick Govts Closing | Bribery | Government - Scribd
https://www.scribd.com/document/125316857/021113-Kilpatrick-Govts-Closing
Detroit, Michigan Monday, February 11, 2013 12:31 p.m. MR. .... Williams. They had to hire You heard from Donna. She testified that Vanguard did pay ...... Tony Soave came to find out that Kwame Kilpatrick was actually holding onto this ... my job, I didn't take out Charlie Williams," the contractor that he already had lined up, ...
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El Supremo

Blog replay: Closing arguments in Kwame Kilpatrick public ...
live.freep.com/.../Live_blog_9_am_Closing_arguments_in_Kwame_Kilpatrick_public_c...
He had Charlie Williams, the former director of the water department, working as ... Soave testified he'd never had a mayor tell him he had the wrong .... Kwame Kilpatrick, through Christine Beatty, also controlled the Detroit Building Authority.
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untanglingwebs
El Supremo

Crain's June 6-12 2016


water pipe replacement?
Replacing pipes due to the
lead-tainted water crisis in Flint could
be at least twice the price of previous
estimates, according to a report obtained
by the Detroit Free Press.
Engineering company Rowe Professional
Services told the state the
average cost for replacing a service
water line through a completed pilot
project was $7,500. The Michigan
Department of Environmental Quality
previously estimated it would cost
$4,000, the Free Press reported.
The companys report said costs
could be higher if average permit fees
of $2,400 per site are factored in. The
largest share of that is $2,200, which
includes replacing the pavement. A
spokesman for Gov. Rick Snyder said
Flint is charging very large fees,
while Flint Mayor Karen Weaver has
said Flint needs more money from
the state for replacing pipes.
In other news, the water in Flint
has improved significantly and is
safe for bathing and showering, although
people should continue filtering
it before drinking it, scientists
said last week. Marc Edwards, a Virginia
Tech engineering professor
whose testing last summer con-
firmed lead contamination of the
citys water, said sampling in recent
months has found that lead levels
are steadily declining, AP reported.
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untanglingwebs
El Supremo

Crains June 6-12, 2016
There was a undercurrent to the Detroit Regional
Chambers annual Mackinac Policy Conference:
How politically wounded is Gov. Rick Snyder and
how will the next two-and-a-half years of his tenure play
out? As serious as the Flint water crisis is, the state cant
afford a permanent state of policy paralysis for the rest of
his term.
Detroits bankruptcy was the catalyst to get a region to
rally around initiatives to make the city more sustainable
and successful. Now, though, that urgency has dissipated,
and more wrangling ensues.
Lacking a single, definable crisis, how can Michigans
disparate political agendas particularly in the state
House pull cohesively together?
The relentless positive action mantra Snyder built his
first term upon hasnt sounded the same since Flint. The
governor should use the executive power he has to butt a
few heads or play more of a hardball game, particularly
with members of his own party.
Theres one issue that most everyone could agree on:
the need to invest in more infrastructure. As Lindsay VanHulle
reports on Page M3, our state ranks dead last among
50 states for infrastructure investments.
We have too many needs and not enough money. So if
there ever was a time for a nerd with a finance background
to think creatively about how to pay for big-ticket
infrastructure investments, its now. Flints water problems
are the tip of the iceberg.
Infrastructure used to be an eye-glaze kind of topic,
but a Michigan State University survey that tracks the subject
says Michiganders now rank it as a top public policy
priority beating jobs and the economy. Thats a first. Its
also the top of a list in a survey of Crains readers.
That kind of public recognition is a great opportunity to
build support for creative financing approaches but
first the infrastructure needs should be prioritized. And
solutions are likely regional.
Solving Flint is important, but the governor also needs
to focus on another legacy: Fixing Detroit schools, supporting
a regional approach that helps Detroit remain
sustainable and figuring out how Michigan can invest in
itself to grow again.
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untanglingwebs
El Supremo

"Solving Flint is important, but the governor also needs
to focus on another legacy: Fixing Detroit schools, supporting
a regional approach that helps Detroit remain
sustainable and figuring out how Michigan can invest in
itself to grow again."

One again Flint is on the "back burner" when it comes to fixing Detroit. Flint's future will be secondary.
Post Sun Nov 19, 2017 10:24 am 
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untanglingwebs
El Supremo

The recall against Mayor Karen Weaver was based on the Rizzo Trash deal, a deal touted as saving Flint two million over the term of the contact. Since the Rizzo bribery case and the ensuing FBI investigation of Rizzo Services Inc., there have been 18 indictments and 10 convictions so far. It doesn't seem to end. Where did Rizzo come from? It appears the FBI have been watching him or a long time.

In 1991 there was a media frenzy over an alleged mob organized "firebombing" of the Oakland Disposal Company to benefit trash rival Anthony Soave of city Management. It was only one week after the firebombing that then Mayor Ronald Bonkowski awarded a $16 million contract to a Soave subsidiary that had only recently been established by Quarino D'Allesandro, a Bonkowski Friend. Bonkowski was also said to be a close friend of Jack Tocco, a reputed mob boss of the Detroit Partnership.

Arrested in the firebombing was a minor mob associate, John Pree, who was the accomplice of Carlo Bommarito and Bommarito's father. Pree entered into the Witness Protection Program and he two Bommaritos were charged with Arson and Conspiracy. Pree testified he was hired on the order of Vito Giacalone to firebomb the Oakland Disposal Station in order to benefit Soave. Soave was never indicted.

In 1992, shortly after Woodrow Stanley was elected Mayor, council and Stanley became embroiled over a proposed contract to pay City Management nearly a $ million in a no bid contract to remove a "stinking" compost heap that had the community riled up, After council demanded bids, the compost was removed for less than $100,000.


Last edited by untanglingwebs on Sun Nov 19, 2017 11:28 am; edited 1 time in total
Post Sun Nov 19, 2017 10:47 am 
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untanglingwebs
El Supremo

The Cheboygan Daily Tribune printed 'The Offensive, Odoris Underbelly of Trash" on July 27, 1993 that discussed both the firebombing and former Flint Mayor James Sharp.

D'Alessandro was said to be fronting for Soave. However not long after getting the contract from Warren, D'Allesandro was indicted on federal charges as part of an investigation into illegal gambling and money laundering. The Secret Service also seized his $1.5 million home.

It was also reported that former Speaker of the State House of Representatives, Gary Owen (D) Ypsilanti recommended the hiring of James Sharp, ex-mayor of Flint, to handle the political affairs of Soave's City management. Own reportedly said Sharp was a "minority who could work in local government in the Detroit area. "

FBI documents in the Makokha, Flint Governmental affairs, bribery case with Harold Hampton relate conversations of how to convince Sharp and City Management to provide money for different projects of the Mayor's.
Post Sun Nov 19, 2017 11:25 am 
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untanglingwebs
El Supremo

Warren local government swore they would never have a scandal and an FBI investigation like the firebombing issue again, but that was short lived.During the summer of 1996 trash bids again were in the news. I found the Detroit Journal news story, "Who will take out the trash" by Robin Fornoff on July 21, 1996 to be both detailed and humorous.

The bids "raised a stink" when the Mayor, Mark Steenbergh, did not like the low bidder and renegotiated second round of sealed bids. The contract then went to Steenberghs close friend and big campaign contributor which angered council. Council then tried to give the contract to their favorite contractor and also their campaign contributor.

No one got the contract and the owners o the two firms were said to storm out of the meeting, roll up their sleeves and "slugged it out on the city lawn".

City councilman and attorney commented "By the way this is Warren where "politics is a contact sport".
Post Sun Nov 19, 2017 11:45 am 
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untanglingwebs
El Supremo

The company favored by Steenbergh was Pine Tree Acres, then a landfill in Northern Macomb County. The pal that Steenbergh attempted to steer the contract to was Anthony Volpe, a business associate of Anthony Soave.

City council complained they barely survived the previous scandal and they found this selection intolerable. Already warren was paying double the trash fees that had been negotiated for other communities in the county.

The council's choice wasn't much better. Their choice, Standard Disposal, which was not only an unlicensed trash transfer site close to Thompson Elementary School, but it also had angry parents complaining to council that the smell made their children get sick and even vomit in school.

While the City and the state had tried to shut the facility down four times they failed. It seems the owner Gus Campo had an Appeals Court decision that allowed him to remain in business.


Last edited by untanglingwebs on Tue Nov 21, 2017 3:43 pm; edited 1 time in total
Post Sun Nov 19, 2017 12:02 pm 
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untanglingwebs
El Supremo

Campo got six council votes after he promised to cut operations near the school by 80% to 90% if he was given the contract. He also had to live up to an agreement of recording all garbage intake. Mayor Steenburgh went on vacation before the vote.

The good side of the wheeling and dealing was that the cost dropped by half. Bids were now $7 million over 5 years down from the $14 million under the previous Mayor Bonkowski.

In 2000, the FBI requested the sealed bids. Investigation number 2.

You would think that with all of the scandals, Warren would exercise a little more care.

This is where Rizzo enters.
Post Sun Nov 19, 2017 4:38 pm 
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untanglingwebs
El Supremo

On June 7, 2001 Kim North Shine of the Detroit Free Press wrote how Rizzo Services, with no trash hauling experience got the contract to operate the Warren Trash Depot and deliver trash to to the landfill.

Rizzo Services was an assumed name for C & R Maintenance, a company whose sole contract was to plow snow for the City of Hamtramck. There is no mention of how the newly formed company of Chuck Rizzo got the trucks and workers to implement the contract. The contract was a 7 year $11.7 million that invoked the ire of councilman Jim Fouts.

Instead of going through the administration for information, Fouts wrote threatening letters to department heads demanding details on the contract. Steenburgh threatened Fouts with fines and jail for violating the Charter.
"This is a seek and hide administration", said Fouts. "I seek the answers and they hide the answers.

Rivals complained that for the next 15 years Rizzo seemed to get every contract he went after.. He eventually had 55 contract/s.
Post Sun Nov 19, 2017 5:10 pm 
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untanglingwebs
El Supremo

KWAME KILPATRICK
Kilpatrick trial: Making payments to ease the pain
Federal corruption trial continues against former Detroit mayor Kwame Kilpatrick

By Alexandra Harland
Posted: 1:08 PM, December 07, 2012
Updated: 1:08 PM, December 07, 2012

DETROIT - Local 4 is inside the courtroom for the federal corruption trial of former Detroit Mayor Kwame Kilpatrick, Kilpatrick's dad Bernard Kilpatrick and his childhood friend Bobby Ferguson. Each day we bring you information from inside federal court as it happens.

9:00AM Courtroom is full. Judge is entering the court. Everyone looks a little tired this morning- it's been a long week. Kwame Kilpatrick has good reason to feel a little somber today. Even though it's Friday, he has been prohibited from going home to Texas this weekend by his parole officer for falling behind on his restitution payments.

Watch: Billionaire businessman continues testimony in Kilpatrick trial

9:03AM Harold Gurewitz, lawyer for Kwame, is continuing his cross-examination of Tony Soave.

Soave confirms that MPS, a company he is involved in, generates somewhere between $35 to $50 million.

Gurewitz asking about an MPS executive who might have had access to the company jet. Soave saying it wouldn't be free, likely he would be charged for it. Soave saying that if he gave this Mr. Rickman the plane he could fill the plane any way he wanted to. Gurewitz asks if Kwame Kilpatrick was one of the first people that Rickman invited on the plane.

Looking at chart summary of flights. Soave saying that he can't tell from the log which flights were taken for personal purposes.

Gurewitz saying that city aviation tracked the flights and gave exact names at one point and that changed. Asks Soave if he knows when change occurred. Soave says he doesn't know.

Asking about a flight on February 25th 2004 to DC. Saying that Kilpatrick went to DC to give testimony about blackout and asking if Soave knows about it. Soave says he doesn't know.

Gurewitz asks about March 11th 2004 trip to Leesburg, VA, a suburb of DC, that Kilpatrick was on. Soave owns business interests there.

Gurewitz admits a page into evidence from the Soave Enterprises website about Brambleton.

Soave says Brambleton is a community of homes and a town center. Gurewitz reads that it is a 2,200 acre community 32 miles from DC.

Soave remembers flying with Kwame to show him that development. Gurewitz says that Soave wanted to show him the development as an example of what could be done. Soave agrees. Gurewitz puts up a document that is a request for company plane for trip to Brambleton with passenger listed as Mayor Kilpatrick. Soave doesn't recognize it or know who would have submitted it. Soave saying that he remembers Kwame really liking one of the condo layouts at Brambleton. Gurewitz says that was in March 2004. Gurewitz says these trips follow blackout 2003.

Gurewitz asks if he remembers Mackinaw conference in June 2004, the 4th and 5th. Soave says he knows it and used to go. "I don't know why I used to go. I know why I don't go now. Too many politicians."

Soave says he went 3 or 4 times. Occasionally he took politicians with him including Brooks Patterson.

9:15AM in July 2004 there is a record of a flight from Detroit to East Hampton to Boston. July 24th was the date. Indicates the passengers as Kwame Kilpatrick, Dedans Milton and Sergeant Dwayne Love. Love testified earlier in the trial. He was part of the Executive Protection Unit for the former mayor and testified to travelling with him on private jets. At the bottom of the page it indicates Democratic Convention in Boston.

The request form shows approval signature of ALS- Anthony L. Soave. Soave agreeing that he thought the Democratic National Convention was an important event for Kwame to participate in. Gurewitz asks if he remembers promising to fly Kwame to political events. Soave says he doesn't remember but must have. Soave says he remembers Kwame being very involved in democratic politics. Now looking at chart log for May 19th 2006. Gurewitz asks about Dan Gilbert. Soave says he owns Quick and Loans and the Cleveland Cavaliers. Soave says he thinks he had a conversation with Kwame about talking to Gilbert about moving some of Quick and Loans back to Detroit. Vaguely recalls them going to a basketball together. Gurewitz says since that time some of Quack and Loans moved back to Detroit. Soave agrees: "Yes in a pretty significant way." Gurewitz asks if that trip was instrumental in the move happening. Soave says "I believe it was and I was happy to help."

Gurewitz now moves on to Naples, Florida. Asks about a condo and other properties owned by Soave there.

Gurewitz mentions Towers of Moraya Bay. Soave says it's a high rise, 72 units. Soave says there is also The Dunes there with 7 buildings and 600 units. also owns Regatta at Vanderbilt Beach. Bullotta objects. Judge says we've already been over this but Gurewitz says he is going somewhere different. Back to the flight log. Looking at a flight entry on round-trip from Detroit to Naples on December 27th 2006. Gurewitz asks if he remembers inviting Kwame on the trip. Soave says he remembers inviting him but not when.

Gurewitz asks if he wanted to show him the developments as something to emulate in Detroit. Soave says he remember showing him a few times.

Soave says he remembers talking to Kwame about how some similar condos could work in downtown Detroit between Ren Cen and Stroh's.

9:31AM Soave using his hands a whole lot to gesture emphatically when answering Gurewitz questions. Soave saying that his financial people handled 1099s on the flights.

Gurewitz asking if the flights could have been a deduction for the company. Soave says he doesn't know. Soave does say that the financial people didn't want flights to be a political contribution.

So there was a concern that this could be viewed as a political contribution? Soave says they decided to handle it the way it was.

Soave agrees that an outside lawyer was hired to see if the flights could be viewed as a political contribution.

Gurewitz says that the company went on providing the use of the plane to Kilpatrick. Soave says he believes so.

Gurewitz asks if that's because the issue was resolved with his people. Soave says he doesn't know but they acted as they thought they should.

Soave says he didn't know at the time that logs of flights after 2006 were no longer being done.

Gurewitz asking about 2 NYC trips with Kwame. Asks if Soave went himself at any time on similar trips. Soave said that he did it more than once and agrees it was something he liked to do. "It was something I did often."

Soave agrees he told Kwame about the trips and took him willingly.

Now talking about those $10,000 floor seat NBA tickets he gave Kwame. Soave said someone contacted a broker for him for the tickets. He doesn't remember exactly how it happened. Soave says it was a big game that was nationally televised. "I wanted the mayor to be in the right seats. didn't want him in the 5th row."

Soave says "I liked Mayor Kilpatrick." He agrees he was generous with him. Soave says the former mayor had a lot to say about the things he was doing in the city.

Gurewitz says maybe that's not a good question. Soave agrees "yeah, that's not too good."

Soave still embarrassed about how much he paid for the basketball tickets.

Gurewitz pressing that the relationship he had with Kilpatrick included more than just friendship. Soave says Kilpatrick was a very likeable guy. "I liked the mayor." Soave says he wanted to keep him happy.

Gurewitz asks if because of the age difference Kwame respected his opinion. You'd have to ask him says Soave.

9:41AM US Attorney Michael Bullotta gets up to redirect. No cross from Ferguson lawyers.

Bullotta says "This will be over for you soon." Soave answers "I hope soon."

Bullotta going over memo from March 2002 from in-house attorney for Soave Susan Johnson.

Soave reads "Basically need to know what are the issues and what do we need to do to get the contracts through City Council."

Soave says he understands that people he needs to get through is Kilpatrick or purchasing.

Bullotta says you understood the contract was stopped somewhere. Yes that was the indication says Soave.

So you believed contract was being held? Yes says Soave that was the information I was getting.

Soave testified that he went to meeting with mayor by himself to ask what the hold up was.

Gurewitz objects. Judge overrules.

Soave says he doesn't remember the exact words but remembers Kwame saying he had the wrong sub-contractor.

Bullotta asks if Kwame appeared aware the contract was being held?

Defense objects.

Soave says Kwame didn't appear confused about the hold up. Soave says he told him he had wrong sub-contractor and that he needed Ferguson.

Soave says he knows that the contract was being held up. "He was the boss. It was in his hands."

Looking at the contract approval document. Bullotta points out signatures and says Kwame was boss. soave agrees.

Bullotta asks if he remembers another mayor having held up a contract. "No I did not."

Soave says he was very concerned about the Inland job. "It was a $50 million job."

Soave agrees there were many people concerned about their jobs on that contract. Soave agrees that he was concerned about his employees.

Bullotta asks about Charlie Williams being a minority front. Soave says he told Mike Rataj it was absolutely not true.

Bullotta asks about mentoring relationship if mentee usually has an established business. Soave says Charlie definitely had some skills.

Soave says that sometimes mentees have an established business and sometimes they don't.

Soave says that Williams had a lot of experience. He had run the DWSD twice.

Soave says he thought Williams "had a lot on the ball and I still do."

Williams went on to become Soave's partner at MPS. Williams is in charge of it. Soave says it is more than 100. "It's a nice company" says Soave.

Soave being asked about Bobby Ferguson's "you're only here because of me." Soave says at one point he did talk to Kilpatrick about Bobby when he asked if Bobby was still his guy and Kwame affirmed he was.

Soave says if the answer would have been different they probably would have taken action and worsened his work load. Soave says that ultimately they probably wouldn't have done any more work with him.

9:54AM Defense attorney Mike Rataj cross-examines for Bobby Ferguson.

Judge tells him she thinks this is last go round of questions.

Rataj says he wouldn't have asked any questions if Bullotta didn't. "I didn't have any control over him" says Soave

Rataj says he didn't know for sure that it was purchasing or the mayor holding up the contract. That's what I said says Soave.

Now looking at Johnson's March 2002 memo again. Rataj says if he knew if law department or finance had signed off on contract 1368. Soave says he does not know that.

On the approval document from June 2002. Signed off by law department at that point and not earlier.

On the memo it says that DWSD was telling Inland Waters to ask minority suppliers. That's what it says answers Soave.

Soave agrees he doesn't remember exactly what words were used in meeting with Kwame.

Rataj asks if Soave ever directly asked mayor at that April 2002 meeting if he was holding up contract 1368 and if so, why? "I never used those words, no" says Soave.

Rataj refers back to question from yesterday of it was usual in other cities for them to have preferred contractors. Soave agrees that it's normal.

Rataj says that at no point did Kwame says "Mr. soave if you do not use Bobby Ferguson you will not get any more work in Detroit." Soave says "No he did not use those words."

Soave saying about Williams not having employees or equipment, "In his case he was his company" says Soave about Williams.

Rataj says Williams did not have experience to get boots on the ground to get muddy on the ground. soave disagrees that he did not have any experience. "He ran DWSD."

Rataj says that's a different animal than going out in the field. Soave says that's your opinion. I thought he would be a good company to mentor and hopefully at the end it was going to be fruitful.

Rataj presses he didn't have any work experience to carry out provisions of 1368 for pipe rehabilitation. Ferguson says Rataj was the one who had the company to do the grunt work. Soave agrees that he was equipped to do that.

Rataj says Williams did not bring to the table what Ferguson could. Soave says he did not choose him.

Soave says Williams did have experience but not the equipment and the people.

10:07AM Soave see Gurewitz get up to cross-examine again so he shakes his head and goes "Oh-oh".

Gurewitz going back over meeting with Kwame and contract approval. Soave says he was told there was hold up in the mayor's office.

Soave says about mayor "maybe he had no control over anything. But I believed he did."

In April 2002, Gurewitz says that the mayor did not control the purchase department.

Bullotta objects. Judge sustains.

Gurewitz says he is done.

Judge thanks Soave. Soave says "Thank you folks" and he is gone.

10:11AM Next on the witness stand is Kathleen B. McCann. McCann was a VP at soave Enterprises. She ran contract 1368 and was the one who dealt directly with Bobby Ferguson and frequently complained about him to Soave. US Attorney Mark Chutkow questions McCann. We have a nice shot of McCann who looks composed but nervous in her blazer, green sweater and string of pearls. Bet she hoped never to have to be in the same room as Ferguson again. Sidebar is called. McCann waits patiently for questioning to begin. McCann says she currently works as CEO for United Road Services Inc. She says they move cars throughout the nation. Revenues of $300 million with a thousand employees. Joined United Road Services in January 2011. Before that she was a SVP with Soave Enterprises. Responsible there for beer distribution and was on the Board of Directors. Was responsible atone point for car dealerships and industrial services, including Inland Waters and MPS.

McCann says she was a member of 5, including Mike Piesco, Mike Hollaback and Yale Levin. Worked with Soave Enterprises with 21 years. Before that was with Coopers and Lybrand as a CPA. McCann says that Inland Waters submitted bid for 1368 in 2001. McCann was executive liaison for Soave to Inland Waters. Witness says that there were 2 initial bids and Inland was low bidder on both. She was not typically responsible for putting together bids. Denis Ozust was primarily responsible for putting together bids. He was SVP at Inland. Witness says Insitu Form was a nationally known company that they had done work with for many years that they bid with. also bid with CJ Williams. Kathleen Levy at the time director DWSD put forward recommendation for contract approval. "Then it got stuck" says McCann. McCann says at time went on there was more urgency and they would ask when the contract would come. She says they had a lot of employees depending on revenue stream, equipment that had been invested in and employees would have been laid off without the contract. McCann says Inland chose Williams to be primary sub-contractor and there was a lot of excitement. He didn't have a lot of practical experience but he had been CEO of DWSD. There was a lot of potential for something of national scope. McCann says clearly someone who has skills in the public sector could be successful in private. They had not doubt he could be a successful leader. McCann says they trusted him and his judgment. McCann says they used Insitu Form for portion of contract involving specialized lining. McCann says that they knew eventually they would evolve operations so that the minority company established would become capable of doing the work. The expectation was that Williams would build up company, Inland would help him build crews and over time a company would be established to do it all. McCann says once contract got stuck it became clear there was a reason why. McCann says Soave met with the former mayor and was instructed to use Ferguson. McCann says it was envisioned that Williams would establish business in Detroit. McCann says the opportunity was significant, Williams had a great resume and had established credibility with his name. There were lots of contracts that required minority content. Would have been in a position to take advantage of these opportunities.

McCann says Williams was disappointed but they made a payment to him to ease the pain. McCann says they had continuing business with Williams. Soave was an investor in MPS Group, a minority business Enterprise. GM had come to them to invest and help mentor this company in the industrial space. Williams became an owner and is now CEO if MPS. Controlling owner with 52%. Before automotive meltdown, MPS made $55 million (up from an initial $6 million) according to witness. McCann says revenues now are more like $40 million.

10:35AM Judge says this is a good point to take a 20 minute break.

10:41AM For someone who was desperate to be done with testifying, Tony Soave isn't rushing out of the courthouse building. He is sitting up front in the courtroom between his 2 lawyers listening to the testimony of his former employee Kathleen McCann.

Jurors seemed to love Soave. When Judge Edmunds told him he was done, he replied "You sure?" to laughter from the jurors. He nodded in acknowledgement to the jury as he got off the stand and several nodded back in return.

10:55AM Best part of the day bar none is the first floor snack shop during break. Ferguson's defense lawyer Rataj was holding court with a bunch of reporters expressing his displeasure at williams being painted as a viable contractor. "He had no equipment and no employees!" bellowed Rataj.

But better than that is Rataj telling us how he gets his agression out every morning by wrestling with his 70 pound bulldog. Awesome visual.

10:58AM Chutkow continues with McCann.

McCann says she started to have concerns with hold up in spring of 2002 within months of contract decision being made. McCann said she was assigned executives for industrial services portfolio for a few years. Doesn't remember any other contract being held up. Recalls 1368 being held up by the mayor's office.

Susan Van Dusen, lawyer for Fergusonj, objects about hearsay when Chutkow asks what happened in mayor's meeting with Soave. Sidebar disband.

McCann says "essential message was Williams was out and Ferguson was in" from Soave meeting with Mayor.

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McCann says folks at Inland said they were familiar with Ferguson Enterprises.

McCann says Williams was very disappointed about getting ousted.

McCann says later in the spring 2002 she met Ferguson with Yale Levin, anothe EVP with Soave. they went to his offices on wyoming. It was an initial introduction. Ferguson told them about his family history and types of work he had done. Soave execs talked about the scope of their company and mentoring programs.

McCann says Ferguson clearly had a company with yellow iron. He made clear he had contracting expertise. One of the focuses was how much money would make on the contract. He seemed to want 3%. Not clear what he met. Levin thought he meant 3% of profits.

Defense objects to hearsay. Judge overrules.

McCann says the 3% was confusing to her. It was unusual. there was not a lot of "diving into detail in this conversation."

McCann says most contractors focus on top line and efforts they would provide. Not her recollection that was what Ferguson did.

3% of $50 million contract is $1.5 million.

McCann says there were a number of different ways that Ferguson's companies could contribute to contract. It took them a long time to get to how the contract would be executed. There were lots of discussions between Inland and Ferguson about how 20% minority target would be met.

McCann describes interactions with Ferguson as "difficult."

McCann did not understand the 3%. It was a nonsensical focus says the witness. Ultimately there was work that they could have Ferguson do.

McCann says normally when sub-contractor could do $10 million of work, they will be aggressive about getting it done. Not that way with Ferguson. McCann perceived Ferguson as difficult, "substance over form." It happened repeatedly that the actual movement of getting contract to actual place would take a long time.

McCann says "we were essentially in a forced marriage". She says they did their best to get the contractual arrangements to satisfy their arrangement with the city of Detroit.

McCann says the forced marriage was with Ferguson who had been selected for them by the former mayor.

Chutkow asks for sidebar for upcoming topic.

Kwame is sitting back in his navy velvet jacket and red and white plaid tie. Very Christmasy. Bobby is in a camel colored suit.

11:14AM Chutkow asking about Mackinaw policy conference in June 2002. McCann went to conference as did Ferguson. They spoke about the breakdown of the contract. It was general conversation about what it would be- they identified percentage of dig up work for Ferguson to do. The target that had originally been allocated to Williams.

Looking at memo from Inland to DWSD on December 4th 2001. Lists IWPC (Inland Waters) 35% of contract, Insitu Form for 30%, CJ Williams for 20%, Superior Engineering 5%. Willie McCormick, L. D'Agostini and Superior Contraction listed for a shared 10% of the contract.

At the policy conference on Mackinaw, she ran into people from the mayor's office including Derrick Miller. Ran into him at an event at one of the island's hotels. The mayor was there as well as was Ferguson. Miller asked how negotiations with Ferguson were going. Miller brought it up. McCann says it made her uncomfortable. It was a very public setting. They were concerned that Williams had been replaced and that competitors may use this to get contract rebid. Conversation did not seem appropriate to her. Mccann says it was the first time she experienced this type of conversation.

McCann says it was well know that Inland bid was 15 to 40% less than next bidder. Inland was very nervous about losing this contract to other bidders based on the delay.

McCann says she took notes about conference. Once meeting was done, she called Soave and Levin and voiced her concerns from conference.

McCann says their pricing info on the bid publicly published. If the contract were rebid, Inland would have been at a distinct disadvantage. McCann says it's not uncommon from municipalities to ask people to submit sealed bids. They are then ranked.

McCann says that her concern was that the contract was not yet done and a mayoral cabinet member asking about it let her know again that the negotiations had to be done before conference concluded.

McCann says mayor is very friendly. Saw him at the conference and he told her "Bobby is a good guy." She said they were working on it meaning working to get Bobby his $10 million worth of work.

Witness says she met with Insitu Form to see how they could fit Ferguson in the project. McCann says she met with regional executives at Insitu form about Ferguson. The Inland folks worked it out with Insitu Form- the ultimate goal was to get Ferguson Enterprises work and then revenues for that work.

Witness says she talked to Ferguson about work he had to do to get paid. "Actions speak louder than words," says McCann. They wondered how serious he was about actually doing work.

McCann says they had a concern they would be unable to meet minority requirement as promised to city of Detroit. they still did not have meaningful work from FEI because basic contracts had not been signed.

Most interactions were between Ozust from Inland and Ferguson. McCann says that sometimes she inserted herself.

McCann says there was more difficulty with Ferguson than with other contractors. She says many of the normal clauses were hard to get over with Ferguson. Ferguson resisted insurance clauses. Finally, in early 2003, a contract with Ferguson was signed. McCann says problem was that they couldn't give him revenue without signed contracts.

11:34AM McCann says they offered to mentor him but Ferguson was not interested in being mentored. Williams, however, had been enthusiastic to come into opportunity to work with Soave companies. To learn the business from the other side was appealing to him.

On Ferguson's work performance, McCann says there were a number of challenges. One incident they received something from the city of Detroit stating not to give the sub-contractor more work until he got caught up. Also some of the billings by Ferguson were faulty.

Looking at an Avoid Verbal Order from the city of Detroit on August 19th 2004 to Dennis Oszust of Inland. Advises Inland to have Ferguson work stopped until issues for restoration are resolved.

Document has a deficiency list of at least 7 different locations.

McCann says Ferguson was upset that he was unfairly blamed for the activity. McCann says not uncommon for people to have complaints. "He felt he was being a scapegoat."

Witness says Ferguson took credit for Inland contract 1368 despite not being on the bid. McCann says his theme was disrespected and did not get the credit he deserved. That he could have picked anyone and he picked Inland. it was a recurring theme.

Ferguson told them that at the sinkhole at 15 mile in Sterling Heights Inland was only there because of him.

McCann says she took notes of their conversation. "We had a sense that some day we would be telling the story and we had to have documentation."

"We knew the risk of losing work was hanging over our heads," says McCann.

McCann was wondering if they were being crippled intentionally because they were not working on Ferguson's threat. "There was a constant threat."

McCann says that her company was instructed make sure Ferguson works for anything payment. Inland employees told "To stay within the handrails" and not pay for no show work.

McCann says she stayed closer to this contract than she would have otherwise. this particular circumstance rose to another level so she was more meticulous about note taking.

Witness says Soave met with mayor because he was concerned about stop work order. "He was worried there was another message there." Soave told McCann after the meeting that Ferguson was still their sub-contractor.

McCann says she knows some Insitu form employees talked to the mayor about Ferguson. One such employee was a Paul Jorgensen. Jorgense indicated to McCann that the mayor told him that "Bobby was the guy."

Ferguson wanted a portion of profits from 15 mile of sinkhole- 20% of revenues and associated profit. McCann says it was an emergency, a huge chasm in the ground, and specialized crews were brought in. Ferguson ultimately disappointed in the revenues that came in for the job- the whole job was worth $50 million.

Chutkow submits some documents into evidence.

11:51AM Looking at email from Dennis Oszust on September 17th 2005 to McCann. There is a hold up to an amendment to the sinkhole project because it's waiting for executive approval. Oszust says he will settle outstanding issues with Bobby. McCann believes the issues had to do with how much profit Ferguson was going to earn on that job.

Email from October 11th 2005 from Oszust to McCann. About amendment #4 being held up until Ferguson is satisfied. An Insitu executive had talked to Kwame about the hold up.

Ferguson called McCann and Oszust for a meeting after Kwame's re-election. Ferguson told them that he was dissatisfied with historical relationship. He was not going to go forward in the same circumstances. He had a litany of complaints including being disrespected, not being given credit for getting Inland work, having to sign a note for cash flow, upset by conversations of Levin and Soave with administration about Ferguson. McCann says it was a disturbing meeting for her. The fact that "Inland still had a sword hanging over their head" and Ferguson acting like he had full power over Inland getting work.

Ferguson was still upset about getting so little on 15 mile sinkhole. Inland had talked to Mercado about Ferguson on the sinkhole. And Mercado said don't worry about Bobby just do the work well. Inland reported back to Ferguson who told them it was just a smokescreen and "You act like Victor has ever made a single decision there, ever."

McCann agrees that she was concerned about the contracts and that is why she kept relationship.

12:01PM Judge calls for a 5 minute break.

12:15PM Susan Van Dusen for Bobby Ferguson cross-examines. It's been some time since we heard from Van Dusen.

Van Dusen asks if McCann was a CPA, an auditor for City Management and eventually rose to become part of Soave's executive team. Correct says McCann.

McCann agrees that she oversaw Industrial Services portfolio at Soave that included Inland.

McCann says that what makes Soave work so well is that there is a group of individuals with different expertise. General support for all the businesses in the portfolio.

Van Dusen congratulates McCann on rising through the corporate hierarchy. "I've been fortunate" says McCann.

Van Dusen asks if she was an overseer on the contract. McCann agrees that she was.

McCann also agrees that she had other duties at Soave.

Van Dusen says contract didn't take up majority of your time? McCann agrees.

Video angle just changed and we have the best shot yet of the courtroom as it's pulled out to reveal more of the witness stand.

Van Dusen asking about Dennis Oszust who was a SVP at Inland. McCann said he had a high level of responsibility on the contract.

Van Dusen says Oszust would bring you up to date on certain things? Correct says McCann.

McCann also agrees that Oszust gave her the majority of the "nitty gritty" on the contract.

Van Dusen making point that most of info on Ferguson interactions would come from Oszust and another Inland executive.

Van Dusen asking about McCann's interview in May 2010 by FBI special agent Bob Beeckman. Van Dusen says that McCann provided an unusually large number of documents related to 1368. McCann agrees that she provided the documents.

Van Dusen publishes a document from Kathleen Leavey of the DWSD from December 19th 2001. Says that the Board of Water Commissioners has authorized her to enter into contract with Inland Waters.

McCann says the document is from early in the process.

Van Dusen points to Project Management portion of document. Says it is "contnigent upon city council approval."

McCann agrees that city council ultimately needs to approve all these contracts.

12:28PM Van Dusen says so it was incorrect when you said that the mayor was responsible for the contract.

Chutkow objects and judge sustains.

Van Dusen says it's probably reasonable to say that your memory of events in 2010 with Beeckman about events 8 years earlier might be better today. McCann says she has the same documents so it may be similar.

Van Dusen asks if you wanted to be as thorough as possible with Beeckman. McCann says "I wanted to be as honest as possible."

Van Dusen hands document to McCann about interview with Beeckman. In the interview, McCann told the FBI that the mayor had to approve the contract.

Judge calls for a sidebar.

McCann agrees that she reviewed her statement to FBI recently.

McCann says she doesn't know if "nits and lice" were conveyed to the government. Not sure what she means by that but it sounds disgusting.

Van Dusen asks if she is familiar of fact that in February 2002 Oszust informed McCann that he had provided DWSD with some documents. McCann looks perplexed so Van Dusen hands the document to her.

Van Dusen says that in February Oszust was furnishing required documents to DWSD. McCann agrees.

Van Dusen says so it looks like approval process was in place? McCann says that she sees that he did it on that day.

Van Dusen says Inland even submitted invoice for payment in March 2002. McCann says she wasn't aware of that. She doesn't have any detail on it.

12:45PM For the billionth time, we are looking at signature page on the back of Inland's contract from June 26th 2002. Van Dusen states that the approval process culminated with this approval by city council. Van Dusen says this keeps with first document from December 2001 that stated city council approval.

So mayor has no authority on approval asks Van Dusen? McCann says it was our understanding that the contract had to go through the mayor before it got to city council.

Van Dusen says contract has to go through budget office? McCann says she is not intimate with every step of the process.

Had to go to law department? McCann says "sounds reasonable."

Van Dusen says not a single one of those departments is part of mayor's office? McCann says that is my understanding but i lack intimate familiarity.

McCann says there were people on her team did have familiarity and that after Soave met with team and things got moving it seemed to prove their conclusion.

McCann says that the Inland folks who have knowledge of the process. McCann mentions Dennis Oszust.

So its Dennis Oszust who told you that the contract was being held up? McCann says "it was obvious to everyone that we didn't have a contract. So we knew it wasn't done. And we didn't know why not so we concluded it was in the mayor's office."

McCann says ultimately decision was made to check with the mayor. She says there was enough concern that the contract wasn't let yet. "It seemed like a long process."

So Dennis was anxious? "Everyone was anxious," says McCann.

McCann says there was concern that the current contract was almost up and that they didn't have 1368 yet.

So Van Dusen says Oszust had to come up with reason for bosses why contract wasn't done?

Van Dusen basically saying that Oszust was getting pressure from higher ups as to why the contract wasn't happeneing so he just pointed at the mayor's office.

Van Dusen says she is moving on to a whole new chapter so this might be a good place to stop. Judge agrees and dismisses jury.

12:57AM Flurry of activity at defense table as Van Dusen returns. Bernard Kilpatrick seems somewhat agitated. He and Ferguson exchange some words. Kwame looks like he is talking to Van Dusen about that cross-examination.

Court resumes Monday morning at 9AM.

About the author

Alexandra Harland is a Princeton undergrad and has a masters degree in International affairs with Columbia. A Montreal native, she worked with the Daily Telegraph newspaper for a few years before transitioning to TV, when she worked at ABC News with Peter Jennings. Alexandra has also worked in newsrooms in both Detroit and Boston.


Last edited by untanglingwebs on Mon Dec 11, 2017 4:53 pm; edited 1 time in total
Post Mon Nov 20, 2017 11:43 am 
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