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.”