Testimony in the Kwame Kilpatrick corruption case was often tedious Tuesday as a witness talked about city contracting rules.
Defense lawyers spent the day questioning a Detroit Water and Sewerage Department manager about preferences given to minority contractors.
Co-defendant Bobby Ferguson’s lawyer drew a distinction between his client’s firm and so-called “minority fronts” — sham companies set up to win deals set aside for Detroit-based and small contractors.
Jurors also heard, for the first time, about co-defendant Victor Mercado’s tenure heading the Detroit water department.
Testimony resumes at 9 a.m. Wednesday and should feature testimony from at least one executive from a Detroit firm allegedly extorted by Kwame Kilpatrick and Bobby Ferguson.
Live Updates EndedPlease read below for an archived view of this event.
U.S. District Judge Nancy Edmunds prompted a much-needed light moment after three hours of often-tedious testimony about city contracts and public bidding.
Edmunds sensed jurors were confused about the contracting policies and procedures and offered an apology, of sorts, after holding a sidebar with lawyers involved in the case.
“Everybody understands that this is a confusing area,” the judge told jurors. “It’s not sometimes crystal clear how this all fits together. We will all try to keep it as clear and simple as possible.
“If you’re totally lost, or even a little bit lost,” the judge continued, “just raise your hand.”
Instead, lawyers for co-defendants Bernard Kilpatrick and Bobby Ferguson raised their hands, drawing laughter from jurors and people spread throughout the courtroom.
Jurors learned about tricks Detroit Water and Sewerage Department contractors pulled to land city deals.
Some large firms based outside Detroit partnered with “minority fronts,” or sham companies headed by well-connected people, according to testimony Tuesday. The partnership was aimed at capitalizing on city rules giving preferential treatment to Detroit-based and minority-owned businesses.
Details on “minority fronts” emerged while Bobby Ferguson’s lawyer was questioning water department manager Daniel Edwards. Ferguson’s lawyer Michael Rataj brought up “minority fronts” to draw a distinction between the sham companies and his client’s construction firm.
Ferguson Enterprises Inc. was a real company and had a track record of working on city projects, Rataj said.
“The front doesn’t have any employees, any equipment and doesn’t have any expertise in any way, shape or form in matters of construction, correct?” Ferguson lawyer Michael Rataj said. “It’s just a person who may have some influence with DWSD, correct?”
“Yes, we have had folks using companies that are fronts,” Edwards said.
“Prior to the Kilpatrick administration, this was a major problem and one thing he tried to eliminate, correct?” Rataj asked.
“True,” Edwards said.
Bobby Ferguson’s construction company was not a sham firm and performed real work for the city before his pal Kwame Kilpatrick was elected mayor in 2002, a witness testified Tuesday.
Detroit Water and Sewerage Department manager Daniel Edwards said Ferguson’s company replaced water mains and worked on projects for other city departments prior to 2002.
Ferguson’s lawyer Michael Rataj countered allegations in the City Hall corruption indictment that the mayor’s close friend extorted contractors and reaped millions for no-show jobs.
“You would agree with me Mr. Edwards that Ferguson Enterprises Inc. was a real company, true?” Rataj asked.
“Yes,” Edwards said.
“He had a history of performing contracts for the city prior to the Kilpatrick administration?” Rataj asked
“That’s true,” Edwards said.
A 2008 investigation by The Detroit News found Ferguson and his firms had received at least $170 million in city contracts — $109 million from the Detroit Water and Sewerage Department alone — since the mayor took office in 2002.
In the indictment, prosecutors allege Ferguson and his companies got $60 million in city-related business because of the mayor — sometimes for doing no work at all.
He faces up to 20 years in prison if convicted of charges including racketeering conspiracy, extortion and bribery.
A federal judge yanked special powers used by Kwame Kilpatrick to steer no-bid water deals to friend Bobby Ferguson because the department was running smoothly, not because of wrongdoing, according to testimony in the former mayor’s trial today.
The late-U.S. District Judge John Feikens canceled the special power in January 2006 following progress made by the Detroit Water and Sewerage Department, testimony showed Tuesday.
A lawyer for indicted ex-Detroit Water boss Victor Mercado is focusing on his client’s performance running the nation’s third-largest water and sewerage system as a way to combat allegations he participated in a racketeering conspiracy with Kilpatrick and others involving water department deals.
The testimony was designed to counter allegations that Mercado steered work to Ferguson and played an essential role in a racketeering conspiracy.
There was alleged wrongdoing inside the water department long before Mercado arrived in 2002, according to testimony.
For example, former Detroit Water boss Charlie Beckham was indicted in the early 1980s amid a sludge-hauling scandal.
Beckham served two years in federal prison after he was found guilty of taking $16,000 from a sludge-hauling company named Vista.
Some contractors and water department employees were too close, water department manager Daniel Edwards testified. Some contractors had inside information before the department requested public bids.
“There should have been some distance between employees and contractors, right?” Mercado lawyer John Minock asked.
“True,” Edwards said.
Mercado fired workers for using drugs and alcohol and trimmed expenses and personnel costs through attrition, Minock said.
“He made people toe the line,” Minock said.
“Was he good to work for?” Minock asked.
“Absolutely,” Edwards said. “He was a very good director and a good boss to work with. I never had a problem with Victor.”
A water main replacement contract bypassed the public bidding process because the city wanted to rush repairs before the 2005 All-Star Game and 2006 Super Bowl, not to steer work to contractor Bobby Ferguson, according to testimony Tuesday.
A lawyer for former Detroit Water boss Victor Mercado said the work, a piece of which went to then-Mayor Kwame Kilpatrick’s pal Ferguson, was an emergency.
“That was important to do as an emergency contract because of timing, correct?” defense lawyer John Minock asked. “We had the Super Bowl and the All-Star Game.”
“Correct,” Edwards said.
The contracts were rushed through by Kilpatrick, who used special administrative powers to bypass City Council approval and public bids.
“That saves time, right?” Minock asked.
“It saves time,” Edwards said.
Kwame Kilpatrick and his former Water boss Victor Mercado aren’t the only ones allegedly padding public contracts by millions of dollars, according to testimony Tuesday.
Detroit Water and Sewerage Department employee Daniel Edwards testified about a water-main repair project in Detroit. Mercado’s successor, pistol-packing Anthony Adams, sought to increase the contract by $15 million and add a year to the completion date in October 2008, Edwards testified.
The change also required an additional 9 miles of water main work, as did another $15 million addition, Edwards said. Minock used the change orders to show that the additional spending was driven by a need to do substantially more work. He also showed memos that indicated it would be cheaper to extend the existing contracts than going out and bidding them anew, a process that could delay the work by up to a year.
The testimony comes one day after jurors heard testimony about how Kwame Kilpatrick authorized a flurry of change orders benefiting his friend and co-defendant Bobby Ferguson.
In all, prosecutors allege Ferguson and his companies got $60 million in city-related business because of the mayor — sometimes for doing no work at all.
The Detroit News probed Ferguson’s contracts in 2008 and found the Detroit contractor’s share of water department deals jumped more than 20-fold since Kilpatrick took office in 2002.
Half of the deals had doubled, tripled or almost quadrupled in price because of additional work — a cost that is spread among customers in 126 communities across southeast Michigan.
Today, Mercado lawyer John Minock showed Edwards a document listing $6 million in change orders for six contractors, including Ferguson.
“Several of those contractors are not just getting one change order, but two or three?” Minock asked.
“Correct,” Edwards said.
“So we’ve got five other contractors getting authorized change orders?” the lawyer asked.
“Correct,” Edwards said.
Bobby Ferguson’s wingman in the $12 million bid-rigging case that ended in a mistrial this summer is broke, unemployed, foreclosed upon and needs taxpayers to foot the bill for his legal defense in Round Two.
Calvin Hall’s lawyer moved to withdraw from the case Monday in a federal court filing that chronicles the personal toll paid by a defendant in a high-profile criminal case.
It’s unclear whether Hall’s financial condition will spark plea talks with the U.S. Attorney’s Office. Removing Hall from the retrial, set for April, could simplify the bid-rigging case against Ferguson and co-defendant Michael Woodhouse.
In a filing Monday, defense lawyer Jeffrey Edison brought the court up to speed on his client’s plight.
Hall’s company, Xcel Construction Services Inc. is out of business, its bank accounts and assets seized and construction contracts terminated, Edison wrote.
“Defendant Hall has been unemployed, and has exhausted his unemployment benefits,” the lawyer wrote. “…Hall lost his family home of 15 years, due to foreclosure proceedings.”
Hall received financial aid to study at Marygrove College.
“Defendant Hall is indigent and qualifies for court-appointed counsel,” Edison wrote.
The lawyer wants to withdraw from the case but asked U.S. District Judge David Lawson to appoint him at taxpayer expense for the April retrial.
Meet Audrey Young and Jeff Caponigro. Like the cigarette-industry lobbyist who defended Big Tobacco in “Thank You for Smoking,” they work to make controversial businessmen look good.
They are hovering in the shadows of the Kwame Kilpatrick corruption trial, bracing for potentially bruising days of testimony involving their client, Lakeshore TolTest Corp., a federal and municipal contracting firm based in Detroit.
It’s their job to protect the Detroit company’s reputation while current and former Lakeshore executives deliver potentially damaging testimony against Kilpatrick and Bobby Ferguson.
Lakeshore’s crisis guru is Audrey Young, a veteran communications adviser based in Washington, D.C.
From her firm’s website:
She concentrates in reputation protection for well-known individuals… She develops messaging for corporate leadership and individuals facing government investigations, accidents, mass disasters, product liability, significant deals and litigation, including class actions and mass torts.
Young is working locally with crisis counselor Jeff Caponigro, who has “managed more than 500 crisis situations throughout his nearly 30 years in public relations.”
They are on call to stanch sludge oozing from the case, which this week is focusing on Detroit Water and Sewerage contractors allegedly extorted by Ferguson and the former mayor.
Lakeshore has a prominent and recurring role in the City Hall corruption indictment. In fed shorthand, Lakeshore is referred to as “Company L” in the indictment.
Here’s a sampling:
“Ferguson Extorted Company L out of $1. 7 Million from a $27.9 Million Sewer Outfalls Contract.”
“FERGUSON obtained these payments, despite the fact that he and his companies would not do any work to earn the money, by exploiting Company L ‘s fear that if they did not pay him, FERGUSON would use his influence with KWAME KILPATRICK to harm Company L’s current and future City contracts, as he had done in the past.”
“Fearing that FERGUSON would use his influence to adversely impact Company L’s contracts, Company L employees collected $25,000 in cash which a Company L official hand delivered to FERGUSON…”
“Ferguson Extorted Company L out of $5 million in work on a sewer repair contract for east side of city.”
“In or about July 2007, FERGUSON had his crew bring their equipment to the job site and kick Subcontractor DC’s crew off…Company L permitted FERGUSON to take over Subcontractor DC’s work after FERGUSON threatened to shut the job down if Subcontractor DC did not leave the job site.”