Kilpatrick trial: Contractor makes claims of 'mixed messages'

Federal corruption trial continues against former Detroit mayor Kwame Kilpatrick

Published On: Dec 10 2012 09:51:41 AM EST   Updated On: Dec 10 2012 11:44:35 AM EST
DETROIT -

Local 4 is inside the courtroom for the federal corruption trial of former Detroit Mayor Kwame Kilpatrick, Kilpatrick's dad Bernard Kilpatrick and his childhood friend Bobby Ferguson. Each day we bring you information from inside federal court as it happens.

9:12AM And the late morning starts continue. New rules at the courthouse have media and the participants of the Kwame Kilpatrick standing in the long lines with people coming in for naturalization ceremonies on Mondays and Thursdays. Once upon a time we could get in through the back door with courthouse employees which would cut waiting time down substantially. As a result of the change, lawyers and defendants in the Kilpatrick trial are having trouble getting into the courthouse in time.

9:17AM Video just comes on. Someone neglected to turn on the video and the court session has already started. Former Soave Enterprises Vice-President Kathleen McCann is being cross-examined by Bobby Ferguson's lawyer Susan Van Dusen.

Van Dusen is talking about Ferguson being one of largest minority contractors thus it wouldn't be surprising for his name to come up. "Surprising because we hadn't chosen him," says McCann.

Van Dusen is talking about how Inland was prepared to give minority contractor Charlie Williams a 20% cut of water contract 1368. The defense lawyer says it wasn't until 2002 that Williams opened an office and took on an employee.

McCann says they were intending to help Williams build a large minority contracting firm through mentoring. It was going to be an evolutionary process where the company would be built up over time.

Van Dusen talking about a "pass through" relationship where one company takes from another. Van Duson describing Williams's company relationship to Inland. Van Dusen saying that pass through companies were being viewed in the industry as minority fronts. McCann acknowledges she knows what Van Dusen is talking about. "That's why we wanted nothing to do with that," says McCann. Van Dusen says it puts no income into the hands and pockets of Detroit families.

Van Dusen saying that employing residents of Detroit puts money back into the economy of Detroit. McCann agrees.

It seems the lawyer and the witnesses are at an impasse when it comes to pass through companies. McCann refusing to agree with Van Dusen on this point.

Van Dusen asking Inland had no intent of using its employees under Williams’s payroll. McCann says her answer is no. She says it is very possible to help build a company without it being the way that Van Dusen is describing it.

Van Duson now bringing up Ferguson who had his own equipment, more than 200 employees, the company had been in business for over 40 years. McCann agrees with all of this. McCann also agrees that Inland offer to mentor Ferguson and that he made it clear that he was not in need of mentoring.

Van Dusen saying he wanted to join this project "on his own 2 feet" and he made it clear to you? "I think there were mixed messages around that, honestly," says McCann. Van Dusen says he wasn't willing to be a pass through company. "I think those sort of comments are self-serving drama," says McCann about Ferguson. Van Dusen asking if McCann if she was taken aback by Ferguson's strength and energy. McCann says she was not. "He (Ferguson) didn't want our help," says McCann.

9:35AM Van Dusen stressing that Ferguson wanted no part of being mentored or a minority front. McCann says again there were mixed messages. 

McCann says they understood Williams was out and Ferguson was in and that he had employees and equipment. McCann says about Van Dusen characterizing a "revenue stream" as pejorative is not something she would agree with. 

Van Dusen saying that Inland wanted to use Williams to pass money through back to Inland. It's not true says McCann. "I know it today. I know it then," says McCann about not wanting to use Williams as a pass through. 

McCann acknowledges that they knew Ferguson had a lot of projects in his portfolio. 

Van Dusen hands McCann a document, a company pamphlet for Ferguson Enterprises, and asks if she remembers Ferguson giving it to her. "it's vaguely familiar," says McCann. 

Kwame and Ferguson are whispering throughout the cross-examination. 

Van Dusen talking about the various projects was involved in. Lists many multi-million dollar jobs including MGM temporary casino, Compuware. 

Judge Nancy Edmunds says it's not appropriate to just read this into the record if the witness has no recollection of it. 

Van Dusen reading from Ferguson's pamphlet about the different equipment his company owns. Van Dusen says he was fully stocked and didn't need to lease any equipment from Inland. McCann says there could have been more equipment that he needed but "this is an impressive list of equipment, no doubt." 

Van Dusen asks if witness aggrees that Ferguson's unwillingness to be a pass through as the source of continuing negotiations with Inland. McCann disagrees with the defense lawyer. 

Van Dusen saying that Ferguson determined to have his employees on the contract. Van Dusen saying negotiations involved employees, equipment, insurance and that it related to everything that had to be worked out between the parties. Through it all, what Ferguson wanted says Van Dusen, not to participate as revenue stream participant but to get profit. McCann says they had a very difficult time getting to contract resolution that had appropriate terms. 

These ladies are not getting each other at all. 

McCann says they wanted Ferguson to participate and earn a profit. Says he wanted 3% of $50 million contract not of work he performed. 

Van Dusen seemed to be done as she walked away from podium but comes back with different papers. 

Talking about Mackinaw conference in June 2002 where Ferguson and McCann discussed numbers. They wanted to get him at least 10% of dig up or $3.5 million. Van Dusen says hard numbers were discussed and you were trying to go forward in a meaningful way. McCann agrees. 

Van Dusen says not unreasonable for a businessman to want to make a profit. McCann agrees. 

9:55AM McCann says that Ferguson's target was 3% of 50 million which was completely fine as long as he actually did the work. 

Van Dusen says you were trying back and forth to get the terms of Ferguson's contract. McCann says not just me but yes. 

Van Dusen says there were ongoing negotiations with Insitu Form. McCann agrees. 

Looks like an email from an Insitu Form employee, John Marich, to McCann advising her "I was hoping to make our labor lease agreement with Ferguson a pure pass thorugh but our insurance company has interjected." McCann says you need to read the email through and that in this case it is talking specifically about insurance. McCann says that Ferguson's own insurance rates would have to be used on Ferguson employees and not Insitu Form insurance. 

McCann says that the phrase pass through is being misinterpreted in this situation and that it is not a pass through as described by Van Dusen. 

Van Dusen says what was being contemplated was to put some of their employees on Ferguson's payroll. McCann says once they are Ferguson employees they are no longer Insitu employees and it is a multi-year contract. 

Van Dusen says but then they go back to their mother company. 

Now looking at an email from Dennis Oszust of Inland to McCann from November 14th 2002. He is forwarding an email from Marich of Insitu Form. The email talks about hiring issues with Ferguson. Insitu Form wanted to transfer a crew to Ferguson's payroll. McCann says he was helping Ferguson build capacity in lining crews. 

Van Dusen says Ferguson was pushing back on Insitu Form on this issue. McCann says she is unaware if this is true.

10:06AM Van Dusen says negotiations continue with Ferguson until spring of 2003. McCann agrees with that. Van Dusen says that these negotiations did not hold up Inland's work on the contract. McCann says it did not hold up work but did put inland at a disadvantage and risk. The witness says that Ferguson could not start work until the contracts were in place. Van Dusen says but FEI was working already. "A small amount," says McCann. Van Dusen says Inland and Ferguson were not close. "That's fair to say," agrees McCann. McCann says that Ferguson insisted to things outside the normal scope so it was hard to acquiesce. Van Dusen says you were used to more compliant minority contractors. McCann disagrees and says they weren't used to that kind of push back from any contractors. There were basic conditions that ultimately ended up on them that they couldn't get Ferguson to agree on. Van Dusen saying that in February 2003, Dennis Oszust wrote a letter. McCann recognizes the document. As of January 31st, 2003, FEI had invoiced for 1.9% of total of more than $7 million, about $92,000. Oszust indicates he will meet with FEI to push forward on outstanding issues that were preventing FEI from sub-contracting to its committed goal.

Van Dusen going back to Ferguson resisting because he didn't want to be a pass through. "Absolutely not," says McCann. They felt that he was intentionally trying to cripple the company and they started a paper trail to keep track of the relationship. "The reason he wasn't at the table was because he didn't want to be," says McCann. The witness's voice is becoming increasingly strained and she grows more heated in describing the risk her company was exposed to with Ferguson being unwilling to sign a contract.

"Again, I think the reality speaks for itself," says McCann. But that's in your mind says Van Dusen. McCann agrees.

Van Dusen says you're a note taker and you take notes when you are uncomfortable with people. McCann agrees. "Usually when there are circumstances that make you uncomfortable, you are going to remember detail."

Van Dusen says maybe you were worried Ferguson was going to sue you.

Government objects and the judge sustains.

McCann says she has explained why she took notes and asked others to document meetings with Ferguson. "I thought it was prudent at the time," says McCann.

Van Dusen bringing up McCann's notes from December 2nd, 2002. The government had these but opted not to bring them up during cross examination. McCann says this from a phone call with Oszust and these are her notes. "Ferguson is difficult to work with" says the note. McCann says Ferguson was actually pretty polite in person. Van Dusen says he was fighting for employees to get work. "No, says McCann. “He was fighting for himself."

McCann says that negotiations were incredibly difficult and in most instances unreasonable. McCann says they were not asking unreasonable things of him. Van Dusen states that is your opinion.

10:26AM Note says March is supposed to meet Ferguson the following day to get negotiations going. McCann says that Ferguson stood him up. Van Dusen says that the meeting did take place on December 20th.

Another email from March of Insitu Form to McCann on December 20th 2002. Basically says that he met with Ferguson and another FEI employee. It says that Bobby seemed eager to get working with them but that he had some issues with legal terms on labor lease agreement. Email: "He seemed more open to a material management agreement but was concerned that it not be a pass through."

"It's self-serving theatre," says McCann about Ferguson expressing concern about not being pass through. McCann says he wanted money for doing no work.

Van Dusen says that Ferguson was nothing other than he appeared to be, a proud man. McCann says she can't agree with that. "He often said things that he never really intended," says McCann. McCann says no one had ever asked them for 1% of $35 million sinkhole, no one had delayed work before. "This was a very unusual situation." Van Dusen says this is a good spot to take a break. Judge says we'll take a 20 minute break.

10:48AM More health drama at the courthouse. Seems one of the female attorneys fell over right outside the courtroom door and might have bumped her head. Nursing staff is being called to check her out. Might have broken her nose.

11:10AM And the monitor is back on. Everyone seems back except for Susan Van Dusen. The judge enters the courtroom and they turn the monitors off again! 

Jury is back in the courtroom. Judge tells them that Van Dusen had a fall during the break and that she had to go to the hospital. She is likely ok but can't continue cross-examination. They will adjourn for the day and take it up tomorrow. Even if Van Dusen can't continue, judge says she expects someone else will take up the cross-examination for Bobby Ferguson's defense. Judge Edmunds says the court wishes Van Dusen well. 

This is the second of Ferguson's defense lawyers to be struck with a health issue. Gerald Evelyn took ill in court in late October, had to be rushed to hospital and court adjourned for two weeks. Now Van Dusen. Hopefully this is nothing more serious than a broken nose.