Derrick Miller flashed his first signs of emotion Thursday while being questioned by Kwame Kilpatrick’s lawyer and describing a bathroom payoff to the former Detroit mayor.
The government’s star witness refused to concede minor points, angrily spit out answers to one question, quarreled with the attorney over historic events and quibbled over the meaning of the word “principled.”
Miller will face more defense questions during a fourth day of testimony at 9 a.m. Friday in federal court.
Live Updates EndedPlease read below for an archived view of this event.
Kwame Kilpatrick’s lawyer paid star witness a back-handed compliment near the end of testimony Thursday in federal court.
The “compliment” came while Kilpatrick lawyer James C. Thomas asked Derrick Miller about early 2002 — the first few months of the Kilpatrick administration.
The administration was searching for a new police chief, replacing dozens of appointees and coping with other challenges, the lawyer said.
“It was a tough job. You were a highly principled person — at that time,” Thomas said.
Miller, a former Kilpatrick aide who struck a plea deal in the City Hall corruption case and is facing 10 years in prison, was stumped.
“What do you mean by principled?” Miller said.
“You don’t know what principled means?” the lawyer asked.
“I want to know what you mean,” Miller said. “You want me to grab a dictionary?”
Kwame Kilpatrick’s lawyer stumbled Thursday while trying to justify an allegedly illegal expense by the ex-mayor’s nonprofit group, which prosecutors have labeled a slush fund.
Defense lawyer James C. Thomas said almost $19,000 paid to a polling firm in early 2001 helped the Kilpatrick Civic Fund learn the public’s mood on community issues — an allowed expense.
That information could be valuable for Kilpatrick while he considered running for mayor when the polling firm was paid in April 2001, the lawyer said.
It is illegal for nonprofit funds to benefit a specific candidate. Thomas has insisted Kilpatrick wasn’t a candidate in April 2001 and that he committed to a mayoral run later.
“It was not clear whether Mr. Kilpatrick was going to run, correct?” the lawyer asked.
“I would not agree,” Miller said.
Kilpatrick had already decided to run, and eventually would win the 2001 general election.
Thomas suggested Kilpatrick was undecided and was a candidate to run as lieutenant governor alongside future Gov. Jennifer Granholm.
Star witness Derrick Miller isn’t budging under a so-far gentle cross examination and balked at conceding Detroit’s image problems.
Miller has deflected several questions from Kwame Kilpatrick’s lawyer, including one about the ex-mayor’s nonprofit group, which prosecutors allege was treated like a personal piggy bank.
Defense lawyer James C. Thomas tried to get Miller to agree the nonprofit Kilpatrick Civic Fund’s mission helped promote a positive image of Detroit.
“In 1999 was the city suffering from an image problem?” Thomas asked the government’s star witness.
“1999?,” Miller said. “Hmmmm, maybe.”
Minutes later, Miller flashed rare emotion when Thomas tried to justify the Kilpatrick Civic Fund paying PR guru Bob Berg.
Berg helped with Civic Fund fallout in summer 2001 surrounding a $50,000 donation from Jon Rutherford, a Highland Park homeles shelter operator later convicted during a years-long FBI probe of City Hall.
“Are you telling me Bob Berg was not working for the Civic Fund?” Thomas asked.
“I’m telling you I’m not sure,” Miller said.
Thomas pressed Miller to answer definitively.
Miller leaned into the microphone on the witness stand.
“I…don’t…remember,” Miller said, pointedly punctuating each word.
Kwame Kilpatrick’s attorney mildly castigated his client this morning during the opening moments of his cross examination of Derrick Miller.
James C. Thomas, opening a line of questioning about state grants awarded to two nonprofits, began asking Miller about Carlita Kilpatrick’s work at the Sherrard School.
Kwame Kilpatrick attempted to correct him, saying “Sherrill.” Apparently his wife worked at both schools, and Thomas let him know it.
“I’m doing Sherrard first, I hope you don’t mind,” Thomas said before returning to Miller.
It wasn’t the first time the two men have sparred. Thomas earlier told Kilpatrick to be quiet after he finished a cross examination.
Kwame Kilpatrick’s wife, former First Lady Carlita Kilpatrick, is an intelligent woman whose interest in helping children was important work in Detroit, star witness Derrick Miller agreed Thursday.
The admission came during cross examination by defense lawyer James C. Thomas about more than $100,000 in state grant money allegedly steered to Carlita Kilpatrick’s company U.N.I.T.E. by her husband.
“Her work was important work, would you agree?” Thomas asked Miller.
“Did I feel like it was important work? Yes,” Miller said.
Prosecutors say there was little work performed for the money.
The money was steered to Carlita Kilpatrick’s company by her husband in 2000, when Kwame Kilpatrick was a state lawmaker, according to testimony.
The money was supposed to be for teaching peer mediation to children. Instead, Carlita Kilpatrick received $91,000 in salary, prosecutors allege.
From the indictment:
Carlita Kilpatrick was not charged in the indictment.
Kwame Kilpatrick’s lawyer started cross examining star witness Derrick Miller by suggesting the mayor’s family rescued him from a low-wattage career as a massage therapist and tutor.
Miller was a high-school friend of Kilpatrick’s and later was hired to work for the future mayor’s mother Congresswoman Carolyn Cheeks Kilpatrick in Washington D.C. Before that, Miller was a massage therapist and tutor.
“You were happy with that?” lawyer James C. Thomas asked.
“I’m happy with whatever I’m doing,” Miller said.
Miller showed the first signs of emotion Thursday after more than two days of testimony. He appeared nervous, blinking frequently as Thomas started a much-anticipated cross examination.
Star witness Derrick Miller described handing Kwame Kilpatrick $10,000 cash inside the Asian Village restaurant bathroom in fall 2007.
The money came from restaurant owner Andrew Park, who was seeking loans from city pension funds.
The allegation, one of the most colorful and unseemly in the 100-page indictment, served as the kicker to Miller’s three-day stint on the witness stand.
“Cool,” Kilpatrick allegedly said when Miller handed him an envelope stuffed with $100 bills.
Miller described the payment and being ordered by Kilpatrick to find money for him in 2007.
“Did he say specifically from whom?” Assistant U.S. Attorney Mark Chutkow asked.
“He said get it from the Asian Village guys,” Miller testified. “I talked to Mr. Park about getting that for him, and he did.”
“How much?” the prosecutor asked.
“$10,000,” Miller said.
Kilpatrick looked stunned Thursday, leaning back in his chair at the defense table.
Miller said he called Kilpatrick, who came to the restaurant along the Detroit River.
“We went into the bathroom,” Miller said.
“Then what,” Chutkow asked.
“I gave him the money,” Miller said.
Derrick Miller said he also pocketed about $10,000 from Park while helping the businessman seek loans from a city pension fund.
Park was sentenced earlier this year to one year and a day in prison on a tax-evasion charge.
He had faced up to 30 months, but Assistant U.S. Attorney David Gardey recommended a 16-month sentence because of the substantial cooperation Park gave City Hall corruption investigators. Park was ordered to pay $301,988 in restitution and serve two years’ supervised release.
Park was sentenced on Halloween during an emotional hearing in federal court.
A solemn Park admitted paying a bribe to Miller in hopes of securing city business.
“Yes, I paid to play,” Park told U.S. District Judge Patrick Duggan. “I am very remorseful. I made a horrible, horrible decision.”
Federal prosecutors broached a controversial $117 million pension deal Thursday that benefited star witness Derrick Miller and could be exploited by defense lawyers during cross examination.
The News broke the story in September 2011 about how Miller’s company received $568,000 in connection with a deal financed by the city’s pension funds.
The deal involved leasing General Motors Co. parts warehouses and a Bloomfield Hills businessman named Robert Shumake, who has been linked to WDIV (Channel 4) TV anchor Rhonda Walker.
Miller said he hid his involvement from a Detroit pension fund because he worried trustees wouldn’t approve the deal if they knew he had a financial interest.
“I didn’t want anyone on the pension board to have an idea that I was involved in that transaction in any way,” Miller said Thursday. “I wasn’t sure that my relationship with the mayor…was cause for the transaction to not go through.”
Miller said he didn’t initially disclose the payments on his taxes, a crime that factored into his plea deal with federal prosecutors. Miller faces up to 10 years in prison but is cooperating in hopes of receiving a lighter sentence.
Here is the full story about the pension deal. From the archives:
Kilpatrick aide got pension deal cash
By Robert Snell and Christine MacDonald
The Detroit News
Detroit — Convicted former city official Derrick Miller’s company received $568,000 in connection with a $117 million deal financed by the city’s pension funds, The Detroit News has learned.
The payment, company and timeframe matches details provided by federal prosecutors when Miller pleaded guilty Monday to bribery and tax crimes and agreed to testify against his longtime friend, former Mayor Kwame Kilpatrick.
Miller is facing up to 10 years in prison, in part, for failing to report $568,000 on a tax return.
The U.S. Attorney’s Office has refused to identify the source of the money.
But The News learned through public records and interviews that $568,000 was paid to Miller’s company, Atrium Financial LLC, by Bloomfield Hills businessman Robert Shumake’s real estate firm ICG Leaseback Fund 1 LLC, in 2007.
The revelation puts a name to a mysterious company federal prosecutors left unidentified in the Miller plea deal on Monday.
Miller, 41, and the city’s two pension funds are main figures in separate federal investigations, one into City Hall corruption and one probing city pension fund investments.
“I’m glad this deal came to light. This was a crooked deal … and I’m glad the feds are doing their job,” said George Orzech, a trustee on the city police and fire pension board.
Mystery company revealed
Atrium Financial was somewhat of a mystery company until this week.
Orzech didn’t know Miller was involved with Atrium until this week, when federal prosecutors identified it in court records as one of Miller’s companies.
The $568,000 payment stems from a high-dollar deal involving parts warehouses, General Motors Corp. and the city’s pension funds.
In 2007, Detroit’s pension funds agreed to lend about $40 million to ICG.
The $40 million, plus $76 million from another investor, was for Shumake’s company to acquire GM parts warehouses and lease them back to the Detroit automaker. Each pension fund charged 9.2 percent interest on the loans.
As part of the pension deal, ICG disclosed how it was spending the money. Shumake signed a document in November 2007 listing a $568,000 “consultant fee” paid to Atrium Financial LLC.
Shumake and ICG did not know about Miller’s relationship with Atrium, Shumake’s lawyer Douglas Hampton told The Detroit News.
The pension probe isn’t focusing on Shumake or ICG, Hampton added.
“Neither Mr. Shumake nor ICGï¿½or its affiliates have ever been the target of a criminal investigation involving the pension board,” he wrote in an email to The News.
“Mr. Shumake has always in the past, and will always in the future, fully cooperate with any form of governmental investigation.”
A grand jury has subpoenaed pension fund records related to ICG and a second company, Inheritance Capital Group Inc., according to general pension fund meeting minutes.
Shumake, 43, is manager of ICG, his lawyer said, and chief executive of Inheritance Capital, according to an Internet biography and a 2006 Detroit News article.
No one has been charged in connection with a federal investigation into the pension funds.
Orzech, who has testified before the grand jury on several occasions, and another source familiar with the probe have said the grand jury is asking questions about several current and former pension officials.
A target of the probe is former City Treasurer Jeff Beasley, according to another former Kilpatrick aide, DeDan Milton.
In a deposition, Milton, who is serving more than three years for taking bribes, said federal prosecutors told him Beasley is a target of the federal probe.
There are two city pension funds: one represents police and firefighters; the other represents general city employees.
The pension fund representing police and fire retirees never knew Miller was connected to Atrium Financial, Orzech said.
Miller is not listed on state business records for Atrium.
“We couldn’t find out who the owners of Atrium Financial were,” Orzech said.
Public records help.
Hampton provided The Detroit News with an affidavit signed Dec. 19, 2007, by a lawyer, Shikha Hamilton.
In the affidavit, Hamilton identified herself as Atrium’s sole manager and lawyer and said the firm was formed by a paralegal.
Hamilton said she is one of the company’s two members. Miller’s name is nowhere on the affidavit.
Hamilton didn’t return calls for comment.
Sheï¿½once worked for ex-Detroit City Councilwoman Sharon McPhail and was Ecorse’s city attorney. Atrium was formed Sept. 19, 2007. That’s two months before Miller left City Hall and two months before Shumake’s company reported the $568,000 consulting fee.
City Hall probe’s wide net
Derrick Miller was indicted in December along with Kilpatrick; the mayor’s father, Bernard Kilpatrick; city contractor Bobby Ferguson; and former Detroit Water and Sewerage Department Director Victor Mercado.
They are accused of a racketeering scheme involving a series of deals to extort millions of dollars through Detroit Water and Sewerage Department contracts funded with taxpayer dollars.
Under the plea deal, Miller has agreed to testify against Kilpatrick and the others. He faces up to 10 years in prison and a $200,000 fine, though he could spend less time in prison if he provides substantial help to prosecutors.
He is the latest former public official caught in a City Hall corruption probe that has netted at least 18 felony convictions.
In his recently released book, Kilpatrick talks about the integral role Derrick Miller — whose nickname is “Zeke” — played in his dramatic rise.
But toward the end of his first term, Kilpatrick says that changed.
“Other than my wife and (former Chief of Staff Christine Beatty), I trusted no one more than Zeke,” Kilpatrick wrote. “Unfortunately, that trust, and our friendship, waned after I became mayor.”
Walmart workers paraphrased a famous line from “Seinfeld” when Kwame Kilpatrick’s parole agent arrived unannounced to pick up surveillance footage showing the former mayor collecting a $2,000 wire transfer at the store.
“What took you so long.”
The Walmart workers were expecting a visit from someone with a white hat and a badge ever since Kilpatrick showed up Dec. 11 at the store in Chesterfield Township — of all places, a source told The News.
That someone was Kilpatrick’s parole agent Charles Wright, who collected a copy of surveillance footage showing the former mayor pocketing part of a $2,000 “Christmas gift” from Chicago Pastor Corey Brooks.
State parole officials are probing the gift, which Kilpatrick failed to disclose as part of strict parole conditions. Kilpatrick is set to meet with his parole agent today.
Depending on the probe’s outcome, Kilpatrick could go back to the slam for two years.