Lawyers in the Kwame Kilpatrick corruption trial spent the entire session Friday questioning a state budget official about a $250,000 state grant steered to contractor Bobby Ferguson’s nonprofit group.
Ferguson’s Detroit 3D received $250,000 in grant money. Here’s how he spent it, according to the indictment:
“In or about the Summer of2001, FERGUSON used about $100,000 of Detroit 3D’s State grant money to renovate his company offices and to repair his company’s rooftop air conditioning units, which, as FERGUSON knew at the time, was contrary to the purpose of the grant.”
Prosecutors elicited testimony that showed the money, given after
Kwame Kilpatrick intervened, was misspent. The money was spent hiring Kilpatrick’s wife, renovating Ferguson’s offices and buying a Detroit home.
Testimony resumes at 9 a.m. Monday in federal court in Detroit.
Live Updates Ended
Please read below for an archived view of this event.
Bobby Ferguson’s lawyer, Susan Van Dusen, cross-examines State of Michigan budget analyst Lisa Shoemaker on Friday. (Raymond Stanczak / The Detroit News)
Bobby Ferguson’s lawyer pressed a state budget official on her decision not to force the Detroit contractor’s nonprofit group to repay $250,000 in misspent grant money.
Ferguson was not charged with fraud or any other crime after the state concluded his group Detroit 3D misspent money steered to it by Kwame Kilpatrick.
“As as responsible state official, you wouldn’t just walk away like you did here if there were serious concerns” about criminal wrongdoing, Susan Van Dusen asked Lisa Shoemaker.
Shoemaker said at the time, in December 2002, the state “didn’t know what we had.”
Instead, the state refused to give Ferguson’s group another $250,000.
A state probe showed Ferguson’s group used the $250,000 in state grant money to hire Kwame Kilpatrick’s wife, renovate his company’s offices and buy a Detroit house.
Besides using $250,000 from a state grant to hire Kwame Kilpatrick’s wife and spending the cash renovating his offices, contractor Bobby Ferguson’s nonprofit group also paid a Troy tax firm accused of being involved in a Ponzi scheme.
Financial records shown Friday during the Kilpatrick corruption trial indicate Ferguson’s nonprofit group spent almost $6,000 hiring accounting firm Doeren Mayhew.
The expense prompted one of the funnier moments in court today.
“Aren’t nonprofits tax exempt?” Assistant U.S. Attorney Michael Bullotta asked state budget official Lisa Shoemaker.
The firm was sued two years ago and accused of being involved in a Ponzi scheme. The firm and two directors reached a confidential settlement with plaintiffs last year.
A state budget official conceded Friday that Bobby Ferguson’s nonprofit group was not restricted from spending a $250,000 grant renovating his office or limited in how the money was spent.
“The only stipulation is the funds be fully spent within three years, isn’t that correct?” Ferguson lawyer Susan Van Dusen asked.
“Correct,” state budget official Lisa Shoemaker testified.
Shoemaker earlier testified the state was concerned about how Ferguson’s group, Detroit 3D, spent a $250,000 grant steered to it by Kwame Kilpatrick, who was a state representative at the time.
The group paid Kilpatrick’s wife $100,000, according to testimony.
Shoemaker conceded under cross examination that Detroit 3D had sole responsibility for how the money was managed.
“It doesn’t say anything about renovating or providing a training facility is prohibited, does it?” Van Dusen asked.
“No,” Shoemaker said.
“It doesn’t give any guidance to the recipient of the grant that they can’t do that, correct?” Van Dusen asked.
Shoemaker said state officials expected the grant money would be spent on economic development and aiding youths and seniors .
The state eventually yanked a second $250,000 grant payment after becoming concerned about how Ferguson’s group spent the money, including the $100,000 payment to Carlita Kilpatrick.
Even though a state probe concluded Bobby Ferguson’s nonprofit group misspent money steered to it by Kwame Kilpatrick, officials never tried to recoup the cash, according to testimony Friday.
The probe surrounded the use of $250,000 in state grant money given to Ferguson’s group, Detroit 3D in 2000.
State budget official Lisa Shoemaker testified she recommended the state not try to make Ferguson cough up the cash, which was spent paying Kilpatrick’s wife Carlita $100,000, renovating the contractor’s office, and buying this Detroit house.
“I thought trying to seek recovery (of the money) would have been a long and protracted process and the likelihood of recovery would be minimal,” Shoemaker testified.
Ferguson had plenty of money, however. Prosecutors allege during Kilpatrick’s tenure as mayor, Ferguson got $60 million in city-related business — sometimes for doing no work at all.
Instead of pursuing repayment, the state refused to give Ferguson’s group another $250,000.
The state probe also questioned the $100,000 payment to a mysterious company, U.N.I.T.E.
“We did our own sleuthing to try and find out what U.N.I.T.E. was,” Shoemaker testified. “We discovered a relationship between U.N.I.T.E. and (then-state) Rep. Kilpatrick.”
The firm was headed by Kilpatrick’s wife, Carlita, Shoemaker testified.
Just stepped outside while parties took a break in the Kwame Kilpatrick corruption trial and got a shock.
There’s a rental truck parked near the corner of Washington and Lafayette in downtown Detroit — with Oklahoma plates. That’s an eerie reminder of Oklahoma City bomber and Michigan native Timothy McVeigh.
Only in this case, the truck didn’t belong to Ryder. It was a Budget rental truck.
Court security officers questioned the truck driver before giving the all clear.
Bobby Ferguson
Bobby Ferguson’s nonprofit group spent a $250,000 state grant hiring Kwame Kilpatrick’s wife and on a lavish office makeover and security system, prosecutors alleged Friday.
A government witness described a series of checks showing how Ferguson’s group Detroit 3D spent grant money steered to the contractor by his close friend Kwame Kilpatrick.
In 2001, Ferguson’s group spent more than $68,000 renovating his Detroit office building, buying a security system and on accounting services, according to state
Assistant U.S. Attorney Michael Bullotta
budget official Lisa Shoemaker. The money was supposed to be spent helping children and senior citizens.
Some of the receipts were incomprehensible, Shoemaker testified.
“We were struggling to determine what type of work was being done,” Shoemaker testified.
It’s unclear so far which office building was renovated, but Detroit 3D’s address was on Wyoming in Detroit. That’s the same building that houses offices of Ferguson’s construction company, Ferguson Enterprises Inc.
Inside, Ferguson’s two-story private office had a security system, two hidden safes and a spiral staircase — like the one from “Diff’rent Strokes.”
Assistant U.S. Attorney Michael Bullotta asked Shoemaker if refurbishing a private office was an appropriate expense.
“The grant was not intended to benefit a private entity,” Shoemaker testified.
Ferguson’s group suggested the money was spent, in part, buying a house for runaways and homeless seniors.
Ferguson’s group Detroit 3D, a purported nonprofit, also spent the money paying a tax professional, according to testimony Friday.
“Aren’t nonprofits tax exempt?” Bullotta said to Shoemaker.
Early testimony today focused on $250,000 in state funding given to a nonprofit group headed by Kwame Kilpatrick’s close friend and co-defendant, Bobby Ferguson.
The state money was part of a $500,000 state grant Kilpatrick is accused of steering to his pal. Ferguson gave $100,000 to Kilpatrick’s wife, Carlita Kilpatrick, and spent another $100,000 making over his Detroit offices, prosecutors allege.
In 2001, Ferguson tried to obtain the second $250,000.
Ferguson’s wife, Marilyn, wrote a letter claiming the initial $250,000 was spent organizing peer mediation and self-esteem workshops in elementary schools and buying a building for community housing.
The state balked, state budget official Lisa Shoemaker testified Friday. The state replied to Ferguson’s wife, saying the nonprofit group Detroit 3D spent the money improperly and failed to document the expenses.
“We were concerned,” Shoemaker testified. “We had difficulty discerning why a dwelling was purchased and exactly how that would help seniors.”
It’s not clear which building was purchased. Here’s what Ferguson’s house looks like.
Second Ebenezer Church Bishop Edgar Vann, who is expected to testify this morning in the Kwame Kilpatrick corruption case, is no stranger to the hot seat.
He testified before a federal grand jury probing City Hall corruption in September 2010. He told The News that day he was not a target of the probe, but declined to say why he was there.
Based on testimony Thursday, we know prosecutors learned Kilpatrick told the bishop to hire his wife, Carlita Kilpatrick, after supporting a request to give the church’s nonprofit group a $150,000 state grant.
Ayanna Ferguson leaves federal court July 13 after her brother Kwame Kilpatrick was arraigned on fraud and income tax counts.
The same day Vann testified, Kilpatrick’s sister Ayanna Ferguson also met with the grand jury.
She ran her brother’s charity, the Kilpatrick Civic Fund, which prosecutors allege the mayor treated like his personal piggy bank, spending donations on yoga classes, golf clubs, summer camp for his kids, counter-surveillance and anti-bugging equipment and more.
Tax records show Ayanna Ferguson collected $43,115 renting out her house as headquarters of the Kilpatrick Civic Fund.
Join the Conversation
The Detroit News aims to provide a forum that fosters smart, civil discussions on the news and events that we cover. The News will not condone personal attacks, off topic posts or brutish language on our site. If you find a comment that you believe violates these standards, please click the "X" in the upper right corner of the post to report it.