8:58AM Just getting started this morning.
Bernard Kilpatrick is the only defendant seated at the table right now as he reclines in his seat in a light beige suit. Jim Thomas, Kwame Kilpatrick's defense lawyer, is going over notes likely preparing to continue his cross-examination of EPA special agent Carol Paszkiewicz.
Paszkiewicz's testimony yesterday included a series of text exchanges, mostly between Kwame and his friend and co-defendant Bobby Ferguson, about contract 1368 with the DWSD. The government looked to demonstrate that there were behind the scenes orchestrations to secure contract work despite the defense's contention that the former mayor did not hold that sort of sway over water contracts.
Bernard and his lawyer John Shea are huddled together, in deep conversation as court proceedings get set to start.
9:10AM Still no sign of Kwame and Bobby. It was a long day for Kwame yesterday who left the federal courthouse at 1pm to make his way to a hearing at Wayne County Circuit Court in Judge Groner's courtroom at 2pm. A date of March 12th 2013 was set for him to go back to Groner's court to testify about his book proceeds and where they were going. That should presumably be after this trial concludes but the way things are going you never know. After yesterday's hearing the former mayor tweeted "All that fuss for absolutely nothing! Wow!"
9:15AM There's Kwame in a bright yellow tie but still no sign of Bobby.
9:19AM And finally there's Bobby. Bet he got caught in the long immigration lines that occur on Mondays and Thursdays at the courthouse.
Nancy Judge Edmunds enters the courtroom and asks to talk to counsel before the jury arrives. She is probably not happy about the considerably late start this morning.
Admonishments are over and the jury is called in.
The judge apologizes to the jury for the late start and is explaining the logistics about long lines on days with naturalization hearings. The judge says the defendants had to wait outside for over an hour before getting into the courthouse.
9:25AM Thomas continues his cross of Paszkiewicz. They are discussing the sinkhole in sterling Heights that occurred just before August 23rd 2004. The witness agrees that the situation was an urgent matter that required immediate attention.
The witness talking about the process to write up special administrator orders to send to the mayor for signature.
Thomas saying that the special administrator order on December 23rd 2005 for amendment #4 on 1368 is one of only 2 times that Kwame ever used the order to approve contracts. The other time was for contract 2012.
Thomas bringing up Kathleen McCann's testimony about conversations with Bernard Parker who was brought on to help with water contracts.
Thomas and the witness are butting heads. "We are going to agree to not agree on a lot of things," he tells the EPA agent. She politely concurs.
Thomas addressing the comprehensive financial report for the city of Detroit for 2002 and the organizational chart for the city for 2005.
The special administrator procedure allows the mayor with just a signature to enter into a water contract. This is one thing Thomas and the witness both seem to agree on.
Looking at a new email that Thomas is introducing into evidence from an Insituform employee, Paul Mechino, to other Insituform employees- the company was also involved on contract 1368. The email is dated December 19th 2005, around the time of the approval of amendment #4 to 1368. Thomas says there is speculation that the mayor is holding up the amendment. US Attorney Mark Chutkow objects to term "speculation" and Thomas agrees not to use it.
The witness reads the email. Talking about expectation of amendment to move through in a timely manner. Says that the mayor refuses to sign it because there is not a resolution between Inland Waters and FEI (Ferguson enterprises). Not confident that amendment will be funded.
9:50AM Thomas says he wants to talk about the email conclusion that mayor is holding up amendment because lack of resolution between Inland Waters and FEI. Thomas says December 2005 is just before Judge Feikens ended the special administrator-ship of the mayor for water contracts.
Thomas brings back transmittal letter for the amendment order #4 on contract 1368. Mercado has signed the document. It was prepared on August 12th 2005.
Thomas asks witness what was going on in Detroit in August 2005. Witness says she doesn't know. Thomas says Kwame was running for mayor again and engaged in a primary- he lost.
9:55AM Thomas says city budget and law offices don't sign off until Kilpatrick does.
Thomas saying it was unclear between August and the primary election if Kwame would be mayor in 2006. Thomas says city council was also in turmoil.
Thomas asks the witness if she has ever heard the term lame duck. "Of course," she laughs, "I work for the federal government." "I have other terms for that," says Thomas.
Judge asks Thomas to move it along please.
The amendment document wasn't fully approved by all departments until April 19th 2006, 4 months after Kilpatrick signed it. Thomas says there was a lot of chatter about the document being on the mayor's desk.
Chutkow objects. Judge tells Thomas to rephrase the question.
Judge asks Thomas to move along and that a lot of these questions have been asked and answered. Please don't ask the same questions again. Says Thomas's characterization of something as "chatter" not appropriate for foundation.
About to look at another document but Kwame calls Thomas over to the table and after discussion, Thomas decides to let the exhibit drop.
Instead we are looking at a DLZ third party construction contract from October 16th 2003. Thomas says witness believed it was signed by mayor but having reviewed it she changed her mind. Witness agrees.
10:06AM John Shea for Bernard cross-examines.
Looking at text from July 2nd, 2002 between Bernard, Kwame and Derrick Miller
Bernard: The real problem with the DWSD is the evaluation committee. Warren has some ideas how you can proceed. Cn we meet with him tomorrow evening?
Kwame: I will meet with him and Victir Mercado. I'm nOt just mtg with him.
Miller: Don't want to meet with this guy. He needs to talk to the new guy.
Shea is saying it looks like Kwame is saying he is not just going to meet with Warren Evans, Water Commissioner. Mercado had just been hired at this point. Mercado reported to the Board of Water Commissioners and mayor.
Shea saying mayor wanted to bring Mercado into meeting. Witness agrees.
Miller also doesn't seem to want to meet Warren Evans says Shea. Passing off the meeting to Mercado.
Shea says it looks like though Bernard requests to have a meeting with all of them, it looks like the mayor's office is not wishing to include him in the meeting. Witness agrees that Kwame uses term "I" referencing meeting.
10:12AM Mike Rataj cross-examines the witness. this should be interesting. These two have seriously butted heads in the past.
Rataj asking about Inland exec Dennis Oszust. Saying that Oszust appears on many Inland documents for water contracts. And he was an operations guy. Witness agrees that he was an operations guy not mainly in the field. Both agree that Oszust was intimately involved with details of DWSD contracts and the negotiations process between Inland and sub-contractors.
Rataj and Paszkiewicz are being unnaturally pleasant and polite with each other. Prefer it when they get feisty.
Talking about a Mr. Raziky (unclear on spelling) who was the field guy who would report to Oszust who would report in turn to Kathleen McCann. Rataj says McCann was more of a liaison between soave Enterprises and Inland Waters. Rataj says she was not an employee of Inland Waters. Correct says witness though later she became a board member after Soave sold 80% of ownership in Inland.
Bottom line says Rataj is that Soave had different portfolios of companies with different individuals responsible for them. McCann responsible for the Industrial Services portfolio which Inland was part of. Witness agrees with all this.
Rataj says but McCann did not have day to day contact with contractors and sub-contractors. Witness agrees.
Judge interrupts and asks for sidebar with lawyers.
In terms of chain of command says Rataj, Soave is at the very top and he would be the least person with day to day knowledge of contracts. Witness says she could agree with that.
Looking at the stop order from August 19th 2004. "Avoid Verbal Order" is the technical name. Addressed to Oszust from a Ronald Holloway at DWSD. Says: "Be advised that spot sewer repair work performed by Ferguson Construction co contracted by Inland Waters Pollution Control be stopped until the issues of restoration for the attached job work sites be resolved."
Judge asks witness to avoid giving hearsay testimony. This unleashes some discussion as to what is appropriate and what is not in terms of hearsay testimony.
Rataj says the stop order relates to restoration work that is done by sub-contractor after underlying work they have been contracted for has already been performed.
The are 7 work job sites listed on the order. Rataj says this has to do with putting sites back together. Asks the witness if this is not a pain for contractors. Paszkiwiecz says she wouldn't know.
Rataj asks if FEI would sub-contract restoration work. Witness says that she believes that sometimes they would.
10:30AM Rataj says that Ferguson was sued because anderjon did not do restoration work.
Chutkow objects and says this is not in scope. Judge agrees.
Rataj says restoration work is expensive. Witness says she doesn't know if it is or not but "it costs money."
Rataj introducing document on sinkhole project sent to "Bob Ferguson". Witness doesn't recognize the document from April 14th 2005. There are 9 different items of restoration work connected to the sinkhole that Ferguson was working on. Total for work is $482,585. Witness says this does look like it specific to the 15 mile sinkhole.
Rataj says this is an agreement with another company to do the work. Rataj says this comes out of Ferguson's money. Witness says she doesn't know.
Rataj asks if $482,000 is a lot of money. Witness says she doesn't know, compared to her salary it is.
Ferguson made $3.1 million on this sinkhole project
Now looking at invoice from R&R for work on 15 mile and Hayes. It is an invoice for $6,165.
Purchase order for JT & Sons for 15 mile from Keith Merrit who worked for Ferguson. Again related to restoration work. Invoice amount is for $27,890.
Another purchase order from Merrit for company O'Laughlin for sinkhole repair. Total amount is $33,680.
Last one, another purchase order from Merrit of FEI to Dubay Landscaping Services relating to 15 mile sinkhole. Total amount is $43,010.
Rataj's point seems to be that Ferguson did not pocket the full $3.1 million but paid some of that out to sub-contractors on restoration. Not including the contract agreement for more than $482,000, which presumably FEI ended up paying out, that's about $110,000 on purchase orders that FEI paid out.
10:45AM Judge calls for 20 minute break.
11:00AM It's pizza day at the courthouse. The first floor snack shop sells Papa Romano's pizza on Thursday. Apparently Kwame bought 3 hard boiled eggs and he's snacking away on them before going back into the courtroom. He also got 2 bottles of water to wash down that egg aftertaste.
Apparently, earlier this morning when court was late getting started, Jim Thomas was explaining that Ferguson was having problems getting into the courthouse to US Attorney Michael Bullotta.
To which Bullotta replied "I can't control karma."
Long morning of cross. Jurors were yawning away.
11:07AM Rataj ends his cross of EPA agent Paszkiewicz.
Rataj introduces a series of documents into evidence. Looking at DWSD contract between Inland Waters and Ferguson Enterprises. Executed on November 12th 2002. Ferguson enterprises began working on 1368 prior to the contract says Rataj. Witness says she doesn't know that.
Rataj shows an invoice for 1368 from Inland for showing a request for payment of $291,000. That's the amount that Inland looked to be paid by the DWSD in 2002 before 1368 was formally approved. Inland billing DWSD for FEI for more than $59,000.
Rataj showing field record prepared by FEI on the sinkhole at 15 mile and Hayes Rd. Date of document is August 23rd, 2004. Lists people who worked in the field and the number of hours they worked.
Paszkiewicz points out that there is a question from the jurors.
Looking at email chain on September 15th 2005 between McCann and Oszust on amendment #4. Subject line: "What are outstanding issues with Bobby?" Rataj says that no one is asking Victor Mercado what is going. Making the point that none of the recipients in the email chain are with DWSD.
Rataj says isn't it true that there are no documents from DWSD saying that amendment #4 is being held up. Witness says that is true and then changes her mind and says there is an email from Daryl Latimer in October 2005 stating the amendment has not been approved yet.
11:30AM July 27 2005 agenda for meeting of Water board. Lists original price of 1368 as $50 million. then list successive amendments: 1. for $10 million 2. $35 million 3. $23 million (for work on the sinkhole) 4. for $12 million.
Video screen is frozen but we still get audio.
Rataj introduces a document the witness is completely unfamiliar with the document. From the DWSD- lists all the revenues made by Inland on water contracts. From August 2004 until October 2006 highlighted by the defense.
Rataj zeroes in on date of July 15th 2005. Says it doesn't look like Inland was ever put on hold or stopped work. Witness says she can't answer based on a document she is not familiar with.
Rataj says will the jury can take a look at it.
Rataj moves onto another document from Corey Thomas, governmental analyst with DWSD in March 2012. Lists Inland Waters invoice for $291,250. It is for invoice period January 30th 2002.
Rataj says he is now moving onto another chapter. Mentioning the text messages and some questions he has.
Exchange over 2 days September 1st-2nd 2004.
Ferguson: We need to mee(T0 on how i move in, i got a great idea sir. holla in the am owe geno is n y answer service (lol) wants me to do some hauling.
Geno D'Agostini referenced. Rataj says he is good friends with the mayor of Sterling Heights.
Mayor: Aint that a bitch. Will call in a few minutes...
September 7th 2004 exchange
Mayor: What happened with Gino?
Ferguson: i am going to talk to him today, its the same. he wonts me to work for him, just let victor know i geno makes 2.00 fei needs to make 2.00 also you will look at invoices to make sure.
Rataj says that 2.00 could mean anything, not clear what it measures. Witness agrees.
Defense lawyer John Shea looks like he is falling asleep.
Exchange from June 21st 2002 between Bernard and Kwame
Bernard: Just met with Bobby Ferguson. The 3 of us need to meet at least twice a month for an hour for awhile....
Rataj says there is no proof the three of them met like that after this message. Witness says she doesn't know if they met with that regularity.
11:50AM Going back to text message from July 2, 2002 where Bernard says that the real problem with the DWSD is the evaluation committee. Rataj says that witnesses Daniel Edwards and Daryl Latimer that some within the DWSD were too close to contractors. Witness agrees. Rataj says that Latimer testified that DLZ had internal connections at DWSD that was steering work their way.
Chutkow objects and asks for sidebar. Judge sustains but Chutkow asks for sidebar anyways.
Rataj says in the course of your investigation it was not unusual to find that certain contractors had contact with Mercado. Witness agrees. Rataj says D'Agostini and DLZ approached Mercado directly as well as Inland Waters and Lakeshore.
Going back to sidebar.
What Rataj seems to be getting to in a long, convoluted way is that many contractors went outside of the normal, formal contract procedure and worked behind the scenes to secure water contracts with the DWSD.
Rataj says that Inland Waters employees would meet regularly with engineers of the DWSD. Witness says yes within the scope of their work together. Rataj asks if she knows what they talked about at lunch on mulitple occasions over 6 years. Witness agrees that unless she specifically asked that in an interview, she has no idea.
Chutkow objecting to Rataj's whole line of questioning.
Rataj says on December 22nd 2005, Oszust met with 2 DWSD employees.
Judge needs Rataj he needs to close up. He says he has only one more little chapter.
12:05PM This is the document from Kilpatrick to Judge Feikens requesting approval for contract amendments. Lists the 5 contracts. 4 of the 5 were for Ferguson. Amongst these was contract 623 Ferguson had won under Archer administration for $7.5 million. Witness agrees.
Now document from January 25th 2006 from Mercado to Board of Water Commissioners. References contract 623 that was awarded with start date of August 14th 2000. It was meant to be completed September 2005 but there is still work remaining to be done. Only $200,000 remaining in the contract. Needs an extension of time and additional funds of $7.5 million. Approved by the Board of Water Commissioners. The EPA agent agrees with this.
Rataj saying there are 7 Water board members, 4 are from the city of Detroit.
Looking at the contracts Kilpatrick sought approval for- WS 650 ($170,767), 657 (McCormick for $158,266) , 651 ($276,135). Rataj says those 3 all under the umbrella of CM 2012.Rataj asking witness if she knows what last of the contracts 812c for D'Agostini had to do with. The change order was for $3.95 million. Asking her if she knew it was a security contract
Rataj is trying to impeach the witness saying that she didn't mention in testimony yesterday that contract 812c was a security contract. Paszkiewicz is saying that she did.
Rataj approaching the judge with transcript of yesterday's testimony. Prosecutor Michael Bullotta approaches the bench as well.
12:24PM Audio suddenly cuts out. Not sure what is going on exactly but it seems that the judge has called for a 5 minute break.
12:30PM Gerald Evelyn telling judge about Susan Van Dusen. Apparently Van Dusen is getting headaches which are getting less frequent. She'll be meeting with a neurologist this afternoon.
Chutkow addressing impeachment issue of EPA agent Paszkiewicz and asks judge to make it clear to the jury. Judge Edmunds tells him it is something he can address in redirect.
Judge tells jury that Van Dusen continuing to recover but will likely not be here tomorrow. Judge determined at the break that it is not a proper impeachment of the witness after looking over transcript.
Looking at a change order for D'Agostini and sons for $3.9 million. Rataj asks if DFT features anywhere on the document Kilpatrick sent to Judge Feikens. Witness had been saying that D'Agostini was a pass through to Ferguson's company DFT. Witness reads the document and agrees DFT and Ferguson don't feature anywhere.
Rataj directing to the last page of Feikens order on May 18th 2006 "I do so because of the long delay in payment is due to this Court's discontinuance of the Special Administrator-ship." Feikens saying that he is choosing to act and approves the changes because he had cancelled the special administratorship. Goes on to say that contractors will be hesitant to work when payment is delayed.
And Rataj is finally done.
12:42PM Chutkow says the judge's order was because of a special request by Kilpatrick. Witness agrees.
Chutkow says that 3 of the 5 are Ferguson Enterprises. Yes says witness. Paszkiewicz says 812c was also being worked on by Ferguson whose DFT had been tasked more than $3.1 million of work on the contract.
DFT was a joint venture that included Ferguson. Witness referred to this as a pass through to fund Ferguson's company.
Chutkow asking about the text where Bernard proposed twice monthly meetings with Kwame and Bobby. Witness testifying that in their investigation they found evidence of after hours meetings.
Chutkow asking if Derrick Miller joined them in those meetings per her investigation. Witness replies that yes.
Now text from Bernard: "No problem I was just thinking short term on some stuff that was already out there. He has met with Mercado and feels he is on the right track. But it will take a lot of time
which I do not possess a whole lot of..." Chutkow asks if Bernard was part of the city administration. No says witness.
Chutkow asking about records Rataj showed about Ferguson sub-contracting out restoration work on sinkhole. Witness agrees that restoration work is less complicated than usual contracting work.
Looking at invoice for sub-contract to R & R. Witness agrees this is not a minority company and it is not Detroit-based (based in Northville). So Chutkow says Ferguson not helping out minority, Detroit-based business. No says witness.
O'Laughlin contractor based in Brighton so again Ferguson sub-contracted to a non-Detroit based business.
JT & sons sub-contractor based in Sterling Heights, again not in Detroit.
Dubay Landscapers sub-contractor based in Harrison, Michigan.
Six-S inc that had agreement for $482,000 based in Waterford, MI. None listed so far Detroit-based business.
Looking at text from March 2003
Ferguson: Hello Black you haven't released that contract right
Mayor: Right they know I'm holding it.
Chutkow asks if in her investigation the witness found other texts like this with other contractors. Witness says he didn't have texts like this with other contractors.
Chutkow shows another text between the 2 that lists prices and asks witness if former mayor texted other contractors about contract prices. Witness says no.
Chutkow showing text where Ferguson texts Kwame about meeting on how he should move in on the sinkhole project from September 01 2004. Witness says she doesn't recall other texts with other city contractors discussing how to move in on a business.
Rataj objects and judge sustains.
12:58PM Thomas re-crosses and asks if witness believes that text messaging was the only way the former mayor communicated during his administration. No says Paszkiewicz.
That's all Thomas had for her. Rataj says he has more but it's basically 1pm so he'll have to do it tomorrow.
Court resumes at 9am tomorrow morning.
About the author
Alexandra Harland is a Princeton undergrad and has a masters degree in International affairs with Columbia. A Montreal native, she worked with the Daily Telegraph newspaper for a few years before transitioning to TV, when she worked at ABC News with Peter Jennings. Alexandra has also worked in newsrooms in both Detroit and Boston.