The Kilpatrick conviction sends 'powerful message'

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A federal jury returned guilty verdicts Monday against Kwame M. Kilpatrick and Bobby W. Ferguson on charges that they used Kilpatrick's positions as mayor of Detroit and Michigan state house representative to execute a racketeering conspiracy involving extortion, bribery and fraud.

''Although this investigation spanned many years, this case is not about the past," said United States Attorney Barbara L. McQuade. "It is about the future. This verdict has sent a powerful message that corruption will not be tolerated in this community. The people of Detroit deserve better and expect better. Candidates should seek public office to make a difference, not to make money for themselves.''

Kilpatrick, 42, was convicted of 24 counts extortion, mail fraud, tax violations and racketeering, Bobby Ferguson, 44, was convicted of 9 counts of extortion and racketeering, and Kilpatrick's father, Bernard Kilpatrick, 70, was convicted of one count of filing a false tax return.

Co-defendants Victor Mercado, former director of the City of Detroit Water and Sewerage Department and Derrick Miller, former chief administrative officer of the city of Detroit, were also indicted as being part of the conspiracy and both pleaded guilty to their roles and are waiting sentencing.

The jury deliberated for about 14 days before returning the verdicts, concluding a five-month long trial before United States District Judge Nancy G. Edmunds.

The evidence presented at trial established that Kilpatrick and Ferguson participated in a racketeering conspiracy to financially enrich themselves, their associates and their families by using the power and authority of Kilpatrick's position as mayor of Detroit, as well as his position as a member of the Michigan House of Representatives, to commit extortion, bribery and fraud, as well as by defrauding donors to nonprofit entities under the control of Kilpatrick and his associates, including the Kilpatrick Civic Fund, Kilpatrick for Mayor, and the Kilpatrick Inaugural Committee.

At the heart of the conspiracy was a scheme to use the power and authority of Kilpatrick's office as mayor to extort municipal contractors by coercing them to include Ferguson in public contracts, and to rig the award of public contracts to ensure Ferguson obtained a portion of the revenue from those contracts. Ferguson obtained at least $83 million in revenues from municipal contracts through this scheme, a portion of which he shared with his co-conspirators.

At trial, the government presented evidence regarding multiple instances of attempted or actual extortion and contract rigging, including the following:

* Kilpatrick held up a $50 million sewer lining contract until Inland Waters, the winning bidder, agreed to pay Ferguson, who ultimately received $24.7 million in contract revenue when the contract was increased to $138 million.

* Kilpatrick held up a $12 million amendment to a sewer lining contract until Inland Waters agreed to pay Ferguson $350,000 for work Ferguson wanted at a large sewer collapse at 15 Mile Road in Sterling Heights, although Ferguson did no work in exchange for the payments.

* Ferguson extorted Lakeshore Engineering Services to give Ferguson $1.7 million from a $28 million sewer outfalls contract although Ferguson did no work for the payments.

* Ferguson extorted Walbridge Aldinger Company for $5 million in work for Ferguson on a contract to construct the Baby Creek combined sewer overflow facility and the Patton Park recreational facility.

Evidence showed that during Kilpatrick's tenure as a representative of the Michigan House and as the mayor of Detroit, Kilpatrick, Ferguson, and Bernard Kilpatrick obtained more than half a million dollars from the state of Michigan and donors to nonprofit entities they controlled, including the Kilpatrick Civic Fund, Kilpatrick for Mayor, and the Kilpatrick Inaugural Committee, under the false pretense that the money would be used to better the community or for campaign expenses when, in reality, the money was used for personal or other impermissible expenses.

This included the following:

* Kilpatrick, while a member of the State House of Representatives and with the assistance of Ferguson, defrauded the state of Michigan by directing over $280,000 in grant money from the state to nonprofit entities controlled by Ferguson and Kilpatrick's wife. The state grant money, which was supposed to help children and seniors in the Detroit area, was spent in large part by Kilpatrick on personal expenses and by Ferguson to refurbish the offices of his company.

* Kilpatrick defrauded donors to Kilpatrick for Mayor, the Kilpatrick Inaugural Committee and the Kilpatrick Civic Fund by taking cash kickbacks of over $250,000 from his fundraising director.

* Kilpatrick defrauded donors to the Kilpatrick Civic Fund by using at least $200,000 in Civic Fund money for personal expenses, $200,000 for friends and family, and $150,000 in improper campaign expenses.

Further evidence showed that during Kilpatrick's tenure as mayor, he and his father, Bernard Kilpatrick, solicited and accepted payments and property valued at more than $1 million from persons seeking business with the city or its General Retirement System or police and fire pension funds.

Further evidence was presented that during his tenure as mayor, Kilpatrick used over $840,000 cash, derived from the extortion/bribery/fraud conspiracy, to make deposits into his bank accounts, pay his credit card bills, purchase cashier's checks, and clothing, and to repay loans.

During his son's tenure as Mayor, Bernard Kilpatrick deposited over $840,000 in cash into his personal bank accounts.

As a result of the lengthy and wide-ranging investigation into corruption in the city of Detroit, the government has obtained convictions from 32 other individuals.

Published: Thu, Mar 14, 2013

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