By Liz Nass
Gongwer News Service
The investigation into Fay Beydoun’s Global Link International grant and any possible criminal activity behind it does not lie in the actual legislative language that created the grant, but instead in Beydoun’s intention when using that money, according to law experts.
In interviews with Gongwer News Service, three law experts broke down possible charges surrounding the issue of the $20 million grant the Department of the Attorney General is investigating. As part of the investigation, Nessel’s office has executed two search warrants, one on a home in Farmington Hills, where Beydoun is from, and one on the Michigan Economic Development Corporation headquarters.
The MEDC continuously points to the Legislature that placed the grant in the budget in 2022, saying the corporation is only doing what is directed of them. However, the budget language does not include clear parameters on the use of this grant money.
Instead, the investigation looking into pre-existing laws, chiefly embezzlement, would interact with the language and any grant agreements between Beydoun and the MEDC, according to Adam Wright, an assistant professor of law at University of Detroit Mercy.
But the initial grant agreement doesn’t have much stronger language or insight on what is inherently criminal in the handling of this grant money.
David Porter, an attorney and partner at Kienbaum Hardy Viviano Pelton and Forrest Law in employment and commercial litigation and former assistant attorney general in Michigan, said the language in the budget is very broad.
He said it would be tough to show the money was not used for the stated purpose in the line-item language that states the $20 million for the international business accelerator would be used for “establishment of the accelerator and operating support.”
The Detroit News first reported Beydoun used some of the funds to purchase first class airfare and a $4,500 coffee pot.
“I think Fay is going to be able to point to this and say, ‘No, these were operating expenses,” Porter said.
In this language, Porter said, there is nothing that says she broke the law.
There have been other grant appropriations that were more specific, Porter said, but the language cannot get much more specific in the early appropriations process. Instead, officials usually try to police it at the back end with reports and audits to the department’s satisfaction.
Dale Thomson, professor of political science at University of Michigan-Dearborn, who also worked in policy analysis and development, said language is usually intentionally vague.
Vagueness is a tool to avoid creating “obstacles to success,” Thomson said.
There can be some issues in the process of creating intentionally vague language down the line, Thomson said, including violations during the execution of a grant even if it does not seem to violate a specific component of a grant agreement.
Usually there is a very specific proposal for an earmark, but there really is no teeth to sticking by that proposal until there is a grant agreement, Thomson said.
It would come down to this agreement within the program overseeing the earmark to police these efforts, but there is broad flexibility in some of these as well in the interpretation of the language.
In Beydoun’s grant agreement with the MEDC, one of the first specifications on patrolling what the money is for under the payment schedule information section just says that the MEDC needs billing statements “stating that the work for which payment is requested has been appropriately performed,” instead of specific work needing to be done.
These billing statements are subject to a final audit before the final payment out of the grant and all access to records during the agreement term until 2026 and the following seven years.
The nature of services in the agreement calls it “an accelerator with the purpose of attracting top international entrepreneurs to establish their companies in Michigan, with a focus on next-generation medical services and equipment; agriculture; engineering, design, and development; and other technology-focused industries.”
Another part of the grant agreement says the “grantee will provide the services and achieve the results specified in this agreement free from the direction or control of the MEDC as to means and methods of performance,” without further information on what those services are outside that nature of services in the grant agreement.
With this lack of control, it states the MEDC does not control any decisions when it comes to employees or staffing decisions. Under the agreement, only $4 million of the $20 million was allocated to the salaries, accounting and legal section.
Looking at termination, the grantee gets a 30-day notice after the MEDC CEO decides the continuation of disbursing would “reflect unfavorably” on the state.
Most stipulations relate to an “event of default,” but does not specify what would constitute an act of criminal behavior. These defaults include meeting reporting requirements. Reimbursement plans are also clearly stated in the agreement.
But the agreement also ties the grantee to compliance with all laws and regulations of the state.
What is in that initial grant language in the budget, Wright said, is the claw back stipulations which could lead to the state suing for misuse of money, but that is a civil matter. He said it would take “several steps before it would ever become criminal.”
The major gray area, Thomson said, is whether a violation of a grant agreement just breaks the agreement or if it violates the law.
Wright said in a civil suit, there would be, at worst, a claim that the company was unauthorized to spend money. But when a search warrant is included in the mix, like the ones handed over by the attorney general, that is when a criminal case begins.
The possible embezzlement all comes down to trust and intention, according to Wright.
“Beydoun would have been in some position of trust,” Wright said. “She would have obtained money because of that. She signed this agreement. She agreed to promote international business, or whatever the purpose was defined as being, and then converted that money to her own use through a coffee maker or salary or the first-class travel. The question, though, in that kind of case, would be, did she intend to deceive the government about those expenditures, or was this some form of good faith mistake? Because criminal cases oftentimes will just turn on state of mind.”
White collar cases often do not involve disputes about what happened, Wright said, but instead about what the state of mind was when the defendant did what they did.
He compared it to the classic example of the bank teller: the teller has a clear job, which is to process the money that comes over the counter, and if that money gets to the teller and they put that money in their pocket, then that can be considered embezzlement. Embezzlement is a violation of a clear duty for self-enrichment.
“It’s very difficult to prove that to a jury, somebody’s subjective state of mind, especially when the defendant will always be able to sort of explain, ‘Hey, I didn’t think I was doing anything wrong. This was, I thought this was part of the purpose of the nonprofit,’” Porter said.
Porter said one way to prove state of mind is by finding emails and text messages that “say dumb things,” which often happens with search warrants like this.
In his experience in watching nonprofits spend money from a public entity, Thomson said Beydoun’s investments seem “excessive at face value.” He also said there is a way to measure how excessive: “if it’s so extravagant that it’s depriving the programs and resources that it that could be used to benefit the public or to compensate other people in the organization.”
Nessel filed embezzlement charges earlier this year against David Coker of Clare, who also received funds through an enhancement grant. The state alleges Coker was the director and sole member of the non-profit Complete Health Park, which received the funds, and the only employee for the consulting firm, which signed a contract with Complete Health Park for consulting and project management.
More than $9 million went to the non-profit from the state and immediately following the deposit, the state alleges, Coker deposited more than $800,000 to the consulting firm. Then, the allegations say, he deposited hundreds of thousands of dollars to his own personal bank account and used the funds to purchase cars, firearm accessories and more.
Wright said embezzlement is a common charge for governmental funds, and the investigation will also probably be looking for false statement charges as well.
When it comes to the MEDC’s responsibility in making sure that expenditures were in the scope of the project, Wright said this could only serve as a good argument for Beydoun if the corporation approved that use of money.
“The defendant says, ‘I told them I was taking this trip and would be flying first class, and they said it was OK,’” Wright said. “That would go again to that question, the Latin term is mens rea, but that question of state of mind, what did the defendant intend when she spent the state’s money in the way she did?”
In March, the MEDC told Beydoun’s counsel that they were canceling her grant because of misuse of funds with what they called an “unreasonable” $550,000 salary and a failure to comply with nonprofit law, according to The Detroit News. Other possible violations include Beydoun’s failure to file a 990-tax return and operating a nonprofit without three board members, according to the letter.
However, Porter said MEDC does have responsibility in this, being “stewards of our taxpayer money.” While they are partially protected by this language that creates gray areas, but there are things that are “black and white” in the case for Porter like the $4,500 coffee maker.
He said it makes the connection between Beydoun and the MEDC more interesting to analyze, like if the MEDC was “willing to look the other way.”
In the grant agreement, there is a whole section on conflicts of interest, including that the grantee cannot attempt to influence any MEDC employee by direct or indirect offer. There has been some criticism already on conflicts because of Beydoun’s previous position on the executive committee for the MEDC and the email Messer sent out when Beydoun first received an earmark in the executive budget.
Ultimately, Wright said, the government speaks through investigative documents, and the key idea is that they had to show probable cause of a crime to get a search warrant for the MEDC, and he is assuming it would be the similar basis for Beydoun.
Gongwer News Service
The investigation into Fay Beydoun’s Global Link International grant and any possible criminal activity behind it does not lie in the actual legislative language that created the grant, but instead in Beydoun’s intention when using that money, according to law experts.
In interviews with Gongwer News Service, three law experts broke down possible charges surrounding the issue of the $20 million grant the Department of the Attorney General is investigating. As part of the investigation, Nessel’s office has executed two search warrants, one on a home in Farmington Hills, where Beydoun is from, and one on the Michigan Economic Development Corporation headquarters.
The MEDC continuously points to the Legislature that placed the grant in the budget in 2022, saying the corporation is only doing what is directed of them. However, the budget language does not include clear parameters on the use of this grant money.
Instead, the investigation looking into pre-existing laws, chiefly embezzlement, would interact with the language and any grant agreements between Beydoun and the MEDC, according to Adam Wright, an assistant professor of law at University of Detroit Mercy.
But the initial grant agreement doesn’t have much stronger language or insight on what is inherently criminal in the handling of this grant money.
David Porter, an attorney and partner at Kienbaum Hardy Viviano Pelton and Forrest Law in employment and commercial litigation and former assistant attorney general in Michigan, said the language in the budget is very broad.
He said it would be tough to show the money was not used for the stated purpose in the line-item language that states the $20 million for the international business accelerator would be used for “establishment of the accelerator and operating support.”
The Detroit News first reported Beydoun used some of the funds to purchase first class airfare and a $4,500 coffee pot.
“I think Fay is going to be able to point to this and say, ‘No, these were operating expenses,” Porter said.
In this language, Porter said, there is nothing that says she broke the law.
There have been other grant appropriations that were more specific, Porter said, but the language cannot get much more specific in the early appropriations process. Instead, officials usually try to police it at the back end with reports and audits to the department’s satisfaction.
Dale Thomson, professor of political science at University of Michigan-Dearborn, who also worked in policy analysis and development, said language is usually intentionally vague.
Vagueness is a tool to avoid creating “obstacles to success,” Thomson said.
There can be some issues in the process of creating intentionally vague language down the line, Thomson said, including violations during the execution of a grant even if it does not seem to violate a specific component of a grant agreement.
Usually there is a very specific proposal for an earmark, but there really is no teeth to sticking by that proposal until there is a grant agreement, Thomson said.
It would come down to this agreement within the program overseeing the earmark to police these efforts, but there is broad flexibility in some of these as well in the interpretation of the language.
In Beydoun’s grant agreement with the MEDC, one of the first specifications on patrolling what the money is for under the payment schedule information section just says that the MEDC needs billing statements “stating that the work for which payment is requested has been appropriately performed,” instead of specific work needing to be done.
These billing statements are subject to a final audit before the final payment out of the grant and all access to records during the agreement term until 2026 and the following seven years.
The nature of services in the agreement calls it “an accelerator with the purpose of attracting top international entrepreneurs to establish their companies in Michigan, with a focus on next-generation medical services and equipment; agriculture; engineering, design, and development; and other technology-focused industries.”
Another part of the grant agreement says the “grantee will provide the services and achieve the results specified in this agreement free from the direction or control of the MEDC as to means and methods of performance,” without further information on what those services are outside that nature of services in the grant agreement.
With this lack of control, it states the MEDC does not control any decisions when it comes to employees or staffing decisions. Under the agreement, only $4 million of the $20 million was allocated to the salaries, accounting and legal section.
Looking at termination, the grantee gets a 30-day notice after the MEDC CEO decides the continuation of disbursing would “reflect unfavorably” on the state.
Most stipulations relate to an “event of default,” but does not specify what would constitute an act of criminal behavior. These defaults include meeting reporting requirements. Reimbursement plans are also clearly stated in the agreement.
But the agreement also ties the grantee to compliance with all laws and regulations of the state.
What is in that initial grant language in the budget, Wright said, is the claw back stipulations which could lead to the state suing for misuse of money, but that is a civil matter. He said it would take “several steps before it would ever become criminal.”
The major gray area, Thomson said, is whether a violation of a grant agreement just breaks the agreement or if it violates the law.
Wright said in a civil suit, there would be, at worst, a claim that the company was unauthorized to spend money. But when a search warrant is included in the mix, like the ones handed over by the attorney general, that is when a criminal case begins.
The possible embezzlement all comes down to trust and intention, according to Wright.
“Beydoun would have been in some position of trust,” Wright said. “She would have obtained money because of that. She signed this agreement. She agreed to promote international business, or whatever the purpose was defined as being, and then converted that money to her own use through a coffee maker or salary or the first-class travel. The question, though, in that kind of case, would be, did she intend to deceive the government about those expenditures, or was this some form of good faith mistake? Because criminal cases oftentimes will just turn on state of mind.”
White collar cases often do not involve disputes about what happened, Wright said, but instead about what the state of mind was when the defendant did what they did.
He compared it to the classic example of the bank teller: the teller has a clear job, which is to process the money that comes over the counter, and if that money gets to the teller and they put that money in their pocket, then that can be considered embezzlement. Embezzlement is a violation of a clear duty for self-enrichment.
“It’s very difficult to prove that to a jury, somebody’s subjective state of mind, especially when the defendant will always be able to sort of explain, ‘Hey, I didn’t think I was doing anything wrong. This was, I thought this was part of the purpose of the nonprofit,’” Porter said.
Porter said one way to prove state of mind is by finding emails and text messages that “say dumb things,” which often happens with search warrants like this.
In his experience in watching nonprofits spend money from a public entity, Thomson said Beydoun’s investments seem “excessive at face value.” He also said there is a way to measure how excessive: “if it’s so extravagant that it’s depriving the programs and resources that it that could be used to benefit the public or to compensate other people in the organization.”
Nessel filed embezzlement charges earlier this year against David Coker of Clare, who also received funds through an enhancement grant. The state alleges Coker was the director and sole member of the non-profit Complete Health Park, which received the funds, and the only employee for the consulting firm, which signed a contract with Complete Health Park for consulting and project management.
More than $9 million went to the non-profit from the state and immediately following the deposit, the state alleges, Coker deposited more than $800,000 to the consulting firm. Then, the allegations say, he deposited hundreds of thousands of dollars to his own personal bank account and used the funds to purchase cars, firearm accessories and more.
Wright said embezzlement is a common charge for governmental funds, and the investigation will also probably be looking for false statement charges as well.
When it comes to the MEDC’s responsibility in making sure that expenditures were in the scope of the project, Wright said this could only serve as a good argument for Beydoun if the corporation approved that use of money.
“The defendant says, ‘I told them I was taking this trip and would be flying first class, and they said it was OK,’” Wright said. “That would go again to that question, the Latin term is mens rea, but that question of state of mind, what did the defendant intend when she spent the state’s money in the way she did?”
In March, the MEDC told Beydoun’s counsel that they were canceling her grant because of misuse of funds with what they called an “unreasonable” $550,000 salary and a failure to comply with nonprofit law, according to The Detroit News. Other possible violations include Beydoun’s failure to file a 990-tax return and operating a nonprofit without three board members, according to the letter.
However, Porter said MEDC does have responsibility in this, being “stewards of our taxpayer money.” While they are partially protected by this language that creates gray areas, but there are things that are “black and white” in the case for Porter like the $4,500 coffee maker.
He said it makes the connection between Beydoun and the MEDC more interesting to analyze, like if the MEDC was “willing to look the other way.”
In the grant agreement, there is a whole section on conflicts of interest, including that the grantee cannot attempt to influence any MEDC employee by direct or indirect offer. There has been some criticism already on conflicts because of Beydoun’s previous position on the executive committee for the MEDC and the email Messer sent out when Beydoun first received an earmark in the executive budget.
Ultimately, Wright said, the government speaks through investigative documents, and the key idea is that they had to show probable cause of a crime to get a search warrant for the MEDC, and he is assuming it would be the similar basis for Beydoun.
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