The Kwame Kilpatrick corruption trial stretched into its fourth week Tuesday as prosecutors continued probing the ex-mayor’s nonprofit Civic Fund — don’t call it a charity! After all, the feds don’t. They call it a slush fund.
Questions about the Kilpatrick Civic Fund have now spanned several days and could continue through Friday as prosecutors try to convince jurors Kilpatrick defrauded donors by spending money on personal expenses and committed mail and wire fraud.
At center stage on Tuesday were federal wiretaps that captured Bernard Kilpatrick asking for $5,000 from a pension fund businessman who later killed himself amid a soured city pension deal. During the call, Kilpatrick asked the businessman to give $5,000 to the Kilpatrick Civic Fund.
Another highlight included a golf club salesman who testified he sold Nike golf clubs to Kwame Kilpatrick and was paid by the mayor’s nonprofit group.
The $3,050 set of golf clubs, purchased in September 2006 with money from the Kilpatrick Civic Fund, included an embroidered bag with the words “The Mayor.”
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Bernard Kilpatrick
Federal wiretaps captured Bernard Kilpatrick asking for $5,000 from a pension fund businessman who later killed himself amid a soured city pension deal.
Prosecutors played a phone call Tuesday between Kilpatrick and Detroit businessman Abner McWhorter.
During the call, Kilpatrick asked the businessman to give $5,000 to the Kilpatrick Civic Fund.
Abner McWhorter
Kilpatrick tells the businessman the mayor’s close friend Jeff Beasley wants him to donate the money to the Civic Fund.
“He wants you to step up,” Bernard Kilpatrick says during the phone call. “If you can do five, that would be real cool.”
McWhorter was featured in a series of stories in The News earlier this year about the Detroit Police and Fire Pension fund.
In early 2008, he obtained a $10 million loan from the Detroit Police and Fire Pension fund to buy and rehabilitate foreclosed homes.
The deal with McWhorter’s company, Paramount Land Holdings, later unraveled and was followed by McWhorter’s suicide last year, an ongoing legal battle and a search for $5 million in missing pension fund money.
George Kastanes
Before the loan was issued, McWhorter hired Bernard Kilpatrick’s consulting firm, Maestro Associates, to work on the pension deal.
McWhorter allegedly told his partner, George Kastanes, he paid a $100,000 bribe to Bernard Kilpatrick in order to receive the pension fund loan.
The News reported in May that federal agents were investigating whether money for the $100,000 alleged bribe came from an accused international heroin dealer, Macomb County resident Carlos Powell.
The FBI has spent years investigating the city’s pension funds. Beasley was indicted earlier this year and is awaiting trial while the pension fund probe continues.
Bernard Kilpatrick
The FBI tapped Bernard Kilpatrick’s cell phone in June 2007 and listened to his phone calls for almost one year, an FBI agent testified.
FBI Special Agent Robert Beeckman said the wiretap captured calls between the mayor’s father and several others, including Kwame Kilpatrick and daughter Ayanna Kilpatrick Ferguson.
Beeckman also said the bureau obtained taped phone calls Kwame Kilpatrick made while serving time in the Wayne County Jail in late 2008 and early 2009.
During one phone call, Kwame Kilpatrick and his sister planned a 90th birthday party for their grandfather, Marvel Cheeks.
“We got to do something real nice for grandaddy’s birthday?” Kwame Kilpatrick says on one phone call recorded from the jail.
“Definitely,” his sister said.
“Get a big band to play old tunes,” Kwame Kilpatrick says. “Have people get up and give him an award.”
Kilpatrick suggested having people from the community attend the party and give his grandfather gifts, including a suit from the mayor’s Southfield haberdasher and a hat from Henry the Hatter, a well-known Detroit shop.
The party was held in May 2009 at the Atheneum Suite Hotel and partially paid for with a $2,500 check from the Kilpatrick Civic Fund. Another $3,800 cashier’s check paid for the rest of the party.
The phone call was another attempt by prosecutors to convince jurors Kilpatrick misspent Civic Fund money donated by people who thought the cash would aid Detroit children and the community.
Kwame Kilpatrick’s lawyer James C. Thomas suggested the Civic Fund paid for a portion of the party because senior citizens and other community members attended the gala.
“No one from the FBI was at the party?” Thomas asked Beeckman.
“We weren’t invited,” Beeckman said.
A golf club salesman testified Tuesday he sold Nike golf clubs to Kwame Kilpatrick and was paid by the mayor’s nonprofit group.
The $3,050 set of golf clubs, purchased in September 2006 with money from the Kilpatrick Civic Fund, included an embroidered bag with the words “The Mayor.”
“How would you characterize the quality?” Assistant U.S. Attorney Michael Bullotta asked salesman William Scott.
“Oh, good stuff,” Scott said.
The golf clubs are the latest in a series of purchases prosecutors allege were improper. Prosecutors say Kilpatrick Civic Fund donors were defrauded because Kilpatrick spent donations on personal expenses.
Scott, who in 2006 worked at a Howell driving range, said the clubs were ordered by Kilpatrick’s golf instructor.
“Did you know whether any business would be conducted while somebody was using those golf clubs?” defense lawyer James C. Thomas asked.
“No,” Scott said.
“Do you know whether there would be fundraising with those golf clubs?” Thomas asked.
“No,” Scott said.
Judy Smith, the crisis manager hired to help Kwame Kilpatrick weather the text-message scandal, testified today she was paid about $180,000, including money from his nonprofit group.
But Kilpatrick stiffed her for about $60,000, a debt her firm wrote off.
Prosecutors showed jurors a series of checks from the Kilpatrick Civic Fund, which was set up to benefit kids and the Detroit community. Instead, Kilpatrick treated the nonprofit group like a slush fund, prosecutors allege.
“Did you do any work for the Civic Fund?” Assistant U.S. Attorney Michael Bullotta asked her.
“No,” Smith said.
“Was your goal to help the city of Detroit?” Bullotta asked.
“No,” she said.
Smith added some star power to an otherwise dull day in federal court. Smith, whose life and career inspired the ABC television show “Scandal,” worked in the White House and has represented a stable of high-profile clients.
A sampling, from her website:
….Monica Lewinsky, Senator Craig from Idaho, actor Wesley Snipes, NFL quarterback Michael Vick, and the family of Chandra Levy.
Christine Beatty
For Kilpatrick, Smith handled a media barrage after steamy text messages surfaced in 2008 showing Kilpatrick had an affair with his chief of staff Christine Beatty.
It all started with a phone call from Kilpatrick in 2008.
“He said that he needed some assistance with a crisis involving text messages,” Smith testified.
While Smith was paid via Civic Fund checks, Kilpatrick also paid her in cash.
Smith testified that Kilpatrick gave her $11,000 cash on one occasion.
The Civic Fund also gave $25,000 to Smith’s philanthropic group.
Smith said she didn’t solicit the donation.
Smith said she never talked to Kilpatrick about the Civic Fund and didn’t know why she was paid by the nonprofit group.
Defense lawyer James C. Thomas suggested someone else authorized payments from the Civic Fund.
“You can’t say what the decision-making process was?” Thomas asked.
“No, I can’t,” Smith said.
In one case, a Civic Fund check was signed by Beatty’s sister April Edgar and Kandia Milton.
Bullotta, the prosecutor, tried to refocus Smith’s testimony.
“Who was the client?” Bullotta asked.
“The mayor,” Smith said.
Kwame Kilpatrick’s nonprofit group solicited deep-pocketed donors by promising donations would not be spent on political campaigns.
Ken Hudson
Financial adviser Ken Hudson testified his firm NorthPointe Capital donated $10,000 to the Kilpatrick Civic Fund in 2007 and 2008 after being approached by a fundraiser.
In a letter, the Kilpatrick Civic Fund wrote “no funds of the Civic Fund are donated to any political campaign.”
Hudson’s firm gave $10,000, he testified. He is the latest in a parade of Civic Fund donors testifying Tuesday who also worked as advisers to the city’s Police and Fire Pension fund.
Hudson, like the others, testified he thought the money would benefit the community, not Kilpatrick.
“We were happy to support the city of Detroit based on the information we had,” Hudson testified.
Prosecutors allege the Civic Fund served as the ex-mayor’s slush fund, bankrolling exotic trips, summer camp for his kids and other personal expenses.
Donors testified Tuesday Civic Fund checks were sent via the U.S. mail, which addresses a key charge in the Kilpatrick indictment. Along with racketeering, extortion, bribery and tax charges, Kilpatrick is facing 13 counts of mail and wire fraud — 20-year felonies.
Defense lawyer James C. Thomas said donors were told in writing beforehand that the Civic Fund was involved in providing residents information about legislative and political issues.
“And the education of Detroit residents on the importance of voting, do you agree that has a political connotation?” Thomas asked.
“Yes,” Hudson said.
He later testified he probably would not have recommended donating money if he had known the cash would be spent on yoga lessons and water-park vacations.
U.S. District Judge Nancy Edmunds
The federal judge in the Kwame Kilpatrick corruption case blocked the ex-mayor’s lawyer from making a key argument.
U.S. District Judge Nancy Edmunds intervened as Kilpatrick’s lawyer suggested more than $8,600 in nonprofit group donations Kilpatrick spent on his family at a California resort was appropriate.
“What if he met with,” a donor to the Kilpatrick Civic Fund while on the trip, Thomas asked witness Michael Nairne.
“There is no evidence in the record that that occurred,” the judge said. She blocked Nairne from answering the question.
Nairne is a money manager whose firm gave $30,000 to the ex-mayor’s nonprofit group. He thought the money would be used to benefit the community.
Instead, prosecutors allege Kilpatrick spent the money on personal expenses, including expensive vacations.
Thomas suggested donations from Nairne’s firm were used to aid area charities such as the NAACP and churches.
“You don’t know personally whether or not Mr. Kilpatrick had used money for personal expenses?” Kilpatrick lawyer James C. Thomas asked.
“No,” Nairne said.
“That’s what somebody told you, correct?” Thomas asked.
“I believe so,” Nairne said. “I was just told it was misused.”
Thomas asked if it would be appropriate to spend the donation on expenses, including buying vehicles.
No, Nairne said.
“Rent a car,” he said.
A Detroit pension fund money manager testified his firm gave $2,500 to Kwame Kilpatrick’s nonprofit group in 2007 — and immediately got hit up for more money.
Michael Nairne of Chicago Equity Partners, which managed money for the Detroit Police and Fire Pension fund, testified he gave $2,500 to the Kilpatrick Civic Fund at an event in 2007. He then spoke to Kilpatrick’s fraternity brother, Detroit Treasurer Jeff Beasley, and got marching orders.
“I went back to the firm to increase the donation,” Nairne testified.
His firm cut a $7,500 check.
Then $10,000 more.
Prosecutors allege Kilpatrick treated the Civic Fund like his personal piggy bank. The nonprofit group was set up to help the community and educate children.
“Would you have made the recommendation to make a donation if you knew it was being used for personal purposes?” Assistant U.S. Attorney Jennifer Blackwell asked.
“No,” Nairne said.
Earlier today, a Seattle financial adviser whose firm managed money for the Detroit Police and Fire pension fund testified today she was asked to donate cash to Kwame Kilpatrick’s nonprofit group.
Mary Pugh, chief executive of Pugh Capital Management, said her firm gave $2,000 to the Civic Fund in 2007 and 2008, believing the money would benefit kids and support voter registration.
Under cross examination, Pugh said she does not know how the Civic Fund spent the money.
Kilpatrick defense attorney James C. Thomas suggested the money benefited the Detroit Institute of Arts and Orchestra Hall.
Jeff Beasley
There is a long history of pension fund advisers being tapped for donations in Detroit — and an ongoing FBI probe of the city’s two pension funds.
Beasley was indicted earlier this year and is awaiting trial in federal court. One of the allegations is that lavish birthday parties were held for Beasley and two pension trustees at the Atheneum Suite Hotel in Detroit, co-owned by prominent businessman Jim Papas.
People, including those with pension fund business, were asked to donate large sums of cash for a birthday present for Beasley and others, according to the indictment.
A third adviser, Nicholas Degel of Churchill Financial, testified his firm gave $1,000 to the Civic Fund in 2008.
His firm sent the check via FedEx Corp. to Michigan, where Degel hand-delivered it to the Civic Fund at an event in Detroit.
Prosecutors allege Kilpatrick committed mail and wire fraud by using the U.S. mail to send Civic Fund checks across the country.
Judy Smith
A crisis PR guru who was paid more than $95,000 to handle fallout for Kwame Kilpatrick after the text-message scandal is expected to testify later this morning.
Spokeswoman Judy Smith was spotted in a first-floor hallway inside federal court.
Smith’s company and philanthropic group were paid more than $95,000 by the ex-mayor’s nonprofit group, the Kilpatrick Civic Fund, according to previous testimony.
Smith is reportedly the inspiration for the ABC television show Scandal.
Ms. Smith honed her skills through her experiences with some of the most historic and sensational events of our time, including the Iran Contra investigation, the prosecution of former Washington D.C. Mayor Marion Barry, the 1991 Gulf War, the Los Angeles riots, the Supreme Court confirmation hearings of Justice Clarence Thomas, the President Clinton scandal involving Monica Lewinsky, the congressional inquiry of Enron, and the United Nations Foundation and World Health Organization response to the SARS epidemic.
Kwame Kilpatrick and Jon Rutherford, right.
Not sure how soon we’ll see Jon Rutherford take the stand and talk about allegedly stuffing $10,000 into Kwame Kilpatrick’s pocket. Maybe today, maybe not.
The former homeless shelter operator — who is due in prison in January — is expected to testify about Kilpatrick demanding $10,000 in spending money for a 2002 trip to Dubai.
That’s a lot of coin. But not in Dubai.
So what does $10,000 buy in Dubai?
Ten Golden Phoenix Cupcakes from Bloomsbury’s Cafe.
One of the world’s most expensive cocktails. The “27.321″ cocktail is a mix of single-malt Scottish whiskey, passion fruit and dried fruit bitters and is served in an 18-carat glass. One round costs $7,400.
Burj al-Arab hotel
Two nights at the Burj al-Arab luxury hotel.
Now, a little back story.
The Dubai trip, five months into Kilpatrick’s first term, was planned in hopes of making Detroit a trade hub between the U.S. and Middle East.
Kilpatrick reportedly traveled with pal Derrick Miller, an original member of the so-called Kilpatrick Enterprise who later reached a plea deal and agreed to testify for the government.
The trip’s timing was controversial. Kilpatrick caught flak from critics for traveling amid debate over his plan for permanent casinos in Detroit.
The Dubai bankroll is merely one allegation in the indictment involving Rutherford.
The feds allege Rutherford paid Kilpatrick and his father, Bernard Kilpatrick, more than $500,000 in return for the former mayor’s support of a waterfront casino Rutherford was backing. The casino never materialized.
In November 2001, Rutherford gave Kilpatrick and his father tickets worth $2,400 to a heavyweight boxing match in Las Vegas, prosecutors allege. The date matches up with the Lennox Lewis-Hasim Rahman fight at Mandalay Bay Resort & Casino.
Vegas was a frequent destination for Kilpatrick.
From April 2002 through September 2003, Kilpatrick made multiple trips to Sin City and had taxpayers pick up the tab, according to records obtained by the News. During that span, Kilpatrick charged $26,831 on his city-issued credit card.
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