'Extorted' Detroit contractor feared upsetting Kilpatrick pal

Detroit Mayor Kwame Kilpatrick, left, walks with Bobby Ferguson as abandoned homes are torn down in Detroit in 2002.

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.

Kwame Kilpatrick

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.

Robert Snell
Robert Snell is the Detroit News federal courts reporter. He can be reached at rsnell@detnews.com or (313) 222-2028.