A Bloomfield Hills businessman delivered emotional testimony during the City Hall corruption trial Thursday while describing allegedly being extorted by Bobby Ferguson.
Avinash Rachmale, chief executive of Lakeshore Engineering Services, said his firm lost city deals worth $15 million after rebuffing demands from the close friend of ex-Mayor Kwame Kilpatrick.
“I was devastated,” Rachmale said. “I had stomach aches and couldn’t come to the office for a while.”
By 2004, Rachmale agreed to hire Ferguson, sometimes for no-show work.
Hiring Ferguson reversed Lakeshore’s fortunes.
During Kilpatrick’s tenure, the small firm grew dramatically and won water department deals totaling more than $145 million.
Testimony resumes Friday in federal court.
Live Updates EndedPlease read below for an archived view of this event.
A Detroit businessman scrambled to collect $25,000 for Bobby Ferguson after the contractor demanded the first piece of a $1 million no-work deal in September 2005.
Lakeshore Engineering Services CEO Avinash Rachmale described the frantic hours after Ferguson asked for the cash, one in a series of alleged extortion demands made by the close friend of ex-Mayor Kwame Kilpatrick.
“Was it difficult to get that amount together?” Assistant U.S. Attorney Mark Chutkow asked.
“Yes,” Rachmale said.
Rachmale’s former partner first described the cash demand earlier in the trial.
The money was the first installment on a $1 million payment to get Ferguson to back off a Detroit water department project, Rachmale testified.
“Why not wait and get it to him when you could?” Chutkow asked.
“My partner came to me and said Mr. Ferguson needs it so we did it,” Rachmale said. “And we didn’t want to upset him.”
Ferguson allegedly hid the payments, in part, by drawing up dummy invoices from a consulting company headed by Ferguson’s wife Marilyn, according to testimony.
One invoice indicated Lakeshore paid for environmental and air equipment.
“Did Mr. Ferguson’s wife’s company ever provide such equipment?” the prosecutor asked.
“No,” Rachmale said.
“What about Mr. Ferguson?” Chutkow asked.
“No,” the businessman said.
“So the invoice is false?” the prosecutor asked.
“Yes,” Rachmale said.
Two years after rebuffing Bobby Ferguson’s attempt to muscle in on city deals worth $15 million, and then losing the work, Lakeshore Engineering Services partnered with ex-Mayor Kwame Kilpatrick’s pal in 2004.
Lakeshore Engineering Services CEO Avinash Rachmale hired Ferguson to do excavation work on a lining project along Jefferson. Ferguson got a 36 percent piece of the deal — an outsize stake for an excavator, Rachmale said.
The Bloomfield Hills businessman, born in India, concluded he didn’t need the black businessman’s expertise or to qualify under affirmative action rules favoring minority firms.
Rachmale hired Ferguson anyway.
“He had political ties,” Rachmale said, referring to his friendship with Kilpatrick and access to former Detroit Water boss Victor Mercado. “We didn’t want to upset him.”
“You didn’t want to lose the job, that’s why you gave him 36 percent?” Assistant U.S. Attorney Mark Chutkow asked.
“Yes,” Rachmale said.
Rachmale is the second businessman to testify about allegedly being extorted by Ferguson and is explaining in emotional terms his reaction to alleged extortion demands.
He also is corroborating earlier testimony from his former partner, Detroit businessman Tom Hardiman of A&H Contractors.
Ferguson and Kilpatrick are accused of extorting both companies out of more than $12.9 million, according to the indictment.
The lining deal analyzed in court Thursday led to disagreements between Ferguson and a second subcontractor, Lanzo Lining.
Ferguson wanted to do work assigned to Lanzo, Rachmale testified.
Lanzo later agreed to pay Ferguson $1 million to go away.
“Did you believe $1 million was appropriate?” Chutkow asked.
“No,” Rachmale said.
“Why do it then?” the prosecutor asked.
“There was a dispute between two subcontractors and we did not want to upset Ferguson,” Rachmale said. “If he falls out of the team, the job could be canceled. That’s what my feel was.”
“Was it anticipated that Mr. Ferguson would do any work for this $1 million?” Chutkow asked.
“No,” Rachmale said.
A Detroit businessman said he hired Kwame Kilpatrick’s father in 2003 to find out why the city was killing $15 million worth of water department deals.
Lakeshore Engineering Services CEO Avinash Rachmale testified his company’s deals floundered after he rebuffed Bobby Ferguson’s attempt to muscle in on the deals.
The testimony so far is corroborating earlier testimony from Rachmale’s friend and former partner, Tom Hardiman, who spent parts of five days on the witness stand talking about how his firms were extorted by the ex-mayor’s pal, contractor Bobby Ferguson.
After rebuffing Ferguson, Lakeshore’s phone calls went unanswered by the Kilpatrick administration even though the company gave money to the mayor’s campaign.
Desperate, Rachmale paid $2,500 to Bernard Kilpatrick. The money bought a meeting with the political maestro at his Detroit apartment.
“He talked to my partner and said “you need to reach out to Ferguson,” Rachmale testified.
“What was your reaction?” Assistant U.S. Attorney Mark Chutkow asked.
“I was not understanding why,” Rachmale said.
By July, the city had killed Lakeshore’s $5 million contract.
The move was devastating for Lakeshore, at the time a small firm.
“When you lose a $5 million contract, you’re shaken up,” Rachmale testified. “I was devastated. I had stomach aches and couldn’t come to the office for a while.”
“Did you consider leaving Detroit,” Chutkow asked.
“The thought came to mind,” Rachmale said.
One of the canceled contracts went to a rival, Inland Waters, a firm linked to Grosse Pointe Farms businessman Tony Soave.
“Do you know if Mr. Ferguson was working on that?” Chutkow asked.
“Yes,” Rachmale said.
Two Bobby Ferguson girlfriends have made cameos in the City Hall corruption case so far, outpacing the number of Kwame Kilpatrick’s mistresses referenced during the trial.
Today, Ferguson’s lawyer showed jurors an email from a woman named LaCresha Ware. She was a Ferguson employee and the email referenced a Detroit construction project.
Fergusons lawyer never mentioned Ware also allegedly was Ferguson’s girlfriend.
The FBI wasn’t as bashful in November 2011, when an agent applied for a search warrant to seize cash and equipment belonging to Ferguson.
The warrant, unsealed in March, alleged Ferguson obtained more than $58.5 million by extorting contractors and through other illegal conduct.
He allegedly spent a fraction of the money on his kids’ college education, his girlfriend and construction equipment.
The Detroit News broke the story about the seizures in March and alleged extortion of Lakeshore Engineering Services.
According to an FBI search warrant affidavit obtained by The News:
Some of the money Ferguson got from Lakeshore was used to buy a $60,000 cashier’s check in January 2011. That’s one month after Ferguson and Kilpatrick were indicted in federal court.
The $60,000 check was payable to a Ferguson employee who doubled as his girlfriend, according to the affidavit.
The girlfriend was LaCresha Ware, also known as LaCresha Borgus.
“How’s that relevant?” Ferguson lawyer Gerald Evelyn told The News in March. “This thing’s really gotten ridiculous. The government says that’s his girlfriend? That’s the government’s allegation.”
Last month, Ferguson’s former girlfriend Renee Newsome testified she helped Ferguson pour thousands of dollars into Kilpatrick’s campaign coffers through illegal straw donors and was asked to lie about it to federal investigators.
Jurors, meanwhile, have heard several references to Kilpatrick’s mistress and former Chief of Staff Christine Beatty.
No indicate yet, whether jurors will hear about another Kilpatrick fling with fired police department monitor Sheryl Robinson Wood which the former mayor famously described as “”an intimate session one night in a hotel.”
Government witness Avinash Rachmale could help send Kwame Kilpatrick to prison, but four years ago the engineering executive tried to keep the ex-Detroit mayor out of the hoosegow.
The Bloomfield Hills businessman, who allegedly was extorted out of millions by Kilpatrick, is expected to deliver damaging testimony against the former mayor today.
But in 2008, he fawned over Kilpatrick, praised his work as mayor and begged a Wayne County judge to give the ex-mayor a lenient sentence amid the text-message scandal.
The Lakeshore Engineering Services chief executive was one of several business leaders who wrote personal pleas to Wayne County Circuit Judge David Groner in 2008.
“This letter is in support of Kwame M. Kilpatrick who I have had the pleasure of knowing for approximately eight years,” Rachmale wrote. “As a business and property owner in the city of Detroit for 13 years, I can see the progress that the city has made under Mr. Kilpatrick’s leadership. I have been inspired by his vision, intelligence and his ability to get the job done.
“He knows he made some serious mistakes and thoroughly regrets what has happened as a result of his actions.
“He has apologized to all of us, family, friends, supporters and citizens, who have been affected by this most unfortunate situation. I accept his apology and know that he is very remorseful.
“I implore you Judge Groner to assess all the wonderful contributions Kwame Kilpatrick has made to the city of Detroit, and ask you to consider a more lenient sentence for him. He and we are looking forward to him once again making a positive difference in the city.”
A new Detroit businessman allegedly extorted by Kwame Kilpatrick and Bobby Ferguson took the witness stand Thursday morning to corroborate a central aspect of the Detroit City Hall corruption case.
Bloomfield Hills businessman Avinash Rachmale, chief executive of Lakeshore Engineering Services, followed his former colleague Tom Hardiman, who spent parts of five days on the witness stand.
Rachmale is expected to tell jurors his firm, along with Hardiman’s company, were extorted out of more than $12.9 million by Kilpatrick and Ferguson as alleged in the indictment.
Lakeshore paid the money out of fear it would lose city deals or be blocked from winning future deals, according to the feds.
The indictment offers a snapshot of a once-small firm that has since grown into a global power with business endeavors in war zones.
The India native built his engineering firm from a small company in the early 1990s to a global behemoth. The firm and its approximately 300 companies, based in a building on Woodward in Detroit, specializes in federal work and has several defense contracts.
The firm built military housing in Alaska, a fuel depot in Afghanistan and other projects in global hot-spots such as Iraq.
Rachmale testified about how he also got involved in the nursing home business.
The health-care company’s president?
Pistol-packing Anthony Adams, who was Kwame Kilpatrick’s deputy mayor.
Lakeshore’s ties to Kilpatrick go much deeper.
In March 2008, the firm gave $25,000 to Kilpatrick’s nonprofit group, which prosecutors have labeled the ex-mayor’s personal piggy bank.
Rachmale also gave $9,000 to the ex-mayor’s mom, former Congresswoman Carolyn Cheeks Kilpatrick, according to the Center for Responsive Politics.
Lakeshore also leased office space to the Kilpatrick campaign. Rachmale supported Kilpatrick’s first run for mayor in 2001 and served on his transition team.
A key government witness allegedly extorted by Bobby Ferguson and ex-Mayor Kwame Kilpatrick never told federal agents he was shaken down when first questioned in March 2006.
Businessman Tom Hardiman, whose companies allegedly were extorted by ex-Detroit Mayor Kwame Kilpatrick and Ferguson, failed to tell agents about paying Ferguson for no-show work, or giving the contractor money to win city deals, according to testimony.
The allegations, however, later emerged and are a central part of the City Hall corruption trial.
Evelyn pointed out the inconsistency when testimony resumed Thursday.
“He never made those allegations,” Evelyn said.
Hardiman testified he gave money to Kilpatrick’s campaign early on for “business purposes.”
“I remember saying once he was mayor, I said to him that I would never ask for special consideration but if I ran into a problem I wanted to be able to come to him and address the problems,” Hardiman testified.
“You told the government you never got special consideration or asked for a favor,” Evelyn said.
Hardiman’s company even hired the mayor’s father Bernard Kilpatrick in hopes of saving deals that allegedly were yanked because Hardiman refused to give Ferguson a 25 percent share.
A Detroiter who won a $2.6 million jury verdict five years ago after being pistol whipped by Bobby Ferguson hasn’t pocketed a penny.
Kennedy Thomas has spent those years fighting Ferguson in court and struggling with a closed-head injury inflicted by a close friend of ex-Mayor Kwame Kilpatrick.
A prosecutor questioned Ferguson’s toughness Wednesday during the City Hall corruption trial, prompting The News to revisit a notorious incident from the contractor”s past. The review found an unpaid judgment, a prolonged appeal and a disabled victim coping with fresh legal woes.
“It was a serious, serious beating,” Thomas’ lawyer Mark Granzotto said Wednesday. “Judging by his speech, he really did get a closed-head injury.”
The 43-year-old man’s wait could be over soon.
On Tuesday, the Michigan Court of Appeals scheduled oral argument in the appeal for Dec. 11 following two years of inactivity.
The court could decide Thomas gets nothing, $2.6 million or something in between.
“He is obviously anxious about it,” Granzotto said.
Testimony in the City Hall corruption case Wednesday against Ferguson and Kilpatrick touched on Ferguson’s reputation as a tough businessman.
While questioning a Detroit businessman allegedly extorted by Ferguson, Assistant U.S. Attorney Mark Chutkow asked if Ferguson could be bullied.
Businessman Tom Hardiman appeared stunned by the question.
“Do I think Bobby Ferguson can be bullied?” Hardiman said. “I can’t picture Mr. Ferguson being bullied.”
Thomas’ lawsuit painted Ferguson as a jealous thug.
Thomas was a laborer for Ferguson’s demolition company who described a brutal meeting at his boss’ office in October 2004.
According to court docs:
“The plaintiff testified Mr. Ferguson asked him why he called his wife at 1:00 a.m. in the morning. Mr. Thomas denied he called the Fergusons at home. Mr. Ferguson then pulled out a gun and after more questioning, started hitting the plaintiff in the head with (a) gun, threatening to kill him. After escaping, Mr. Thomas immediately sought medical attention and reported the incident to the police.
As a result of the assault, plaintiff has a permanent disability.”
“I don’t think he’s worked since,” Granzotto said.
Thomas testified he suffers from seizures and dizziness and must walk with a cane as a result of the assault.
Ferguson avoided a possible 12-year prison sentence in August 2005 when he pleaded guilty to hitting Thomas.
The plea deal involved Ferguson spending 10 months in the county jail and five years of probation.
Two years after the guilty plea, Thomas won a $2.6 million jury verdict.
A Wayne County judge later reduced the amount of the judgment against Ferguson and his company to just over $860,000.
But the judge ordered Ferguson to post a $1 million bond to cover 125 percent of the judgment.
Thomas appealed the reduction and is hoping the court restores part of the original $2.6 million judgment.
If Thomas wins and is awarded more than $1 million, he could have difficulty collecting.
That’s because Ferguson’s company is broke, according to court records.
The FBI seized about $4 million and more than a dozen pieces of construction equipment during a series of raids tied to the City Hall corruption and bid-rigging cases.
“We would envision having difficulty collecting,” Granzotto said. “I don’t think we could get any money out of Ferguson.”
Ferguson attorney Avery Williams declined comment Wednesday.
The company’s finances were in stark contrast to a few years ago, when Kilpatrick was mayor.
A 2008 Detroit News investigation showed Ferguson and his companies had received at least $170 million in city contracts — $109 million from the Detroit Water and Sewerage Department alone — since 2002.
Thomas, meanwhile, ran into legal trouble this summer.
He was sentenced to two years’ probation in June following an arrest, according to state prison records.
The charge: brandishing a firearm in public .