8:52AM Video turns on. Lawyers and defendants are broken down in little clusters. Bobby Ferguson defense lawyers Mike Rataj and Susan Van Dusen are in deep conversation with Bernard Kilpatrick's lawyer John Shea. Jim Thomas, Kwame Kilpatrick's lawyer, and Gerald Evelyn, another lawyer for Bobby, are talking with U.S Attorney Michael Bullotta. No idea where the defendants are.
8:58AM Kwame, Bobby and Bernard all enter the courtroom together. Stop at the doorway and engage in an animated chat. Dark suits still prevail with Bobby a stand out again in a nicely tailored light grey suit. Gerald Evelyn comes over to join the group.
9:07AM Judge enters courtroom and everyone takes a seat. Not sure where Victor Mercado is hiding out.
9:08AM Judge mentions that Martin Crandall and Victor Mercado are excused from the courtroom. they are in the building but reviewing documents.
9:09AM Michael Bullotta for government calls IRS agent Ron Sauer.
KCF 47- check to Maiyen Consulting March 12th 2008 for $50,0000. It cleared on March 18th 2008.
KCF 47B- check from Ferguson Enterprises to Kilpatrick Civic Fund for $75,000 on March 19th 2008. Signed by Bobby Ferguson. Civic Fund is in the memo line. This occurs between two checks to Christine Beatty's company.
KCF 47- second check on March 26th 2008 to Maiyen consulting for $60,000.
KCF 105- check that went to A Step Ahead preschool. For $5,000 dated June 6th 2002. signed by Christine Beatty and Kwame. Memo says 2002 Graduation Week.
KCF 105A- check out of Kwame's personal account. Dated June 3rd 2002 for $156 to A Step Ahead. From Bank One- became JP Morgan Chase. Memo line says Jelani and Jalil Grad/Cedar Pt.
Bullotta about Linda Byrd. Sauer says she is the kids' preschool teacher.
9:16AM Gerlad Evelyn for Bobby Ferguson cross examines.
What was balance of Civic fund at time of Bobby's check? I don't know.
Beatty's check cleared before? Yes the day before.
Who is Pete Karmanos? CEO of Compuware.
Witness says Compuware wrote check for $50,000 in March as well.
Evelyn says you can't say that Bobby's check covered Beatty's? No.
Evelyn says you can't say what balance was in the account then? No I can't.
9:18AM Jim Thomas cross examines.
Thomas talking about Kwame's personal check to the preschool. Sauer agrees it's his personal account.
Only check to A Step Ahead from Civic Fund the one for $5,000? Yes says Sauer.
Thomas says Linda Byrd will be testifying today. Have you been to the preschool? No.
Do you know what the graduation was about? No.
You weren't investigating in 2002? Correct.
Did you interview Mss Byrd? I did not but she was interviewed.
Did you review Carlita Kilpatrick's account? I did.
Did you see A Step Ahead checks there? I did.
9:21AM Bullotta calls Linda Byrd. Judge swears her in.
Bullotta waits til jurors have their pictures. Bullotta says Byrd wants to get out for field trip
Currently ASI Higher Learning Prepatory.
In 1995, Byrd was co-owner of A step Ahead.
Kwame's twins attended from the age of 2 1/2 until graduation in June 2002 according to witness. The school does a "Kinder Prom" with a formal dance, a pajama party, a graduate breakfast, a graduate trip and a ceremony.
Unbelievable. Guess Thomas was wrong about twins graduating in 2001.
Looking at the check for $5,000 from the Civic Fund to A Step Ahead. Witness says check went towards Graduation week and that Kwame's kids took party in the celebrations.
Now looking at personal check from Kwame to A Step Ahead for $156. Memo says Jelani and Jalil.
Back to graduation week, kids have speeches and performances. A tent is rented for this.
Unusual to receive $5,000 check from parent? I would not consider that unusual.
Do parents contribute large checks? I can't recall one.
Witness says the check was hand delivered by mom Carlita Kilpatrick.
Youngest Kilpatrick son never attended. In 2003, the school was shut down.
Witness says never received any money after Kilpatrick twins graduated.
9:30AM Thomas cross examines.
How many kids were there at a given time? On average, maybe somewhere around 95 to 130 maybe.
Not just a preschool? Had kindergarten as well.
Witness says lots of parental involvement through PTO.
Thomas asks in 2002 Jelani and Jalil graduated? Yes.
Thomas says "help me out I'm a white kid from the east side." when trying to figure out preschool location.
Witness says the preschool was located in 8 Mile and Greenfield.
Witness says Kilpatricks were involved parents but Carlita mostly because she was on the PTO. Mayor was present for teacher conferences and other events.
Not just education but sense of community in the school? Absolutely says Byrd.
What was tuition back then? Witness can't remember precisely. Maybe $90 to $135 a week.
The graduation week took planning? Yes.
You had sponsors in previous years? Yes we had people give things.
You had people give money to the school? No I won't say things were monetary. Lots of different contributions.
Byrd says school never discussed what was needed ahead of time for school. That came out of planning meetings.
Byrd says she never had a conversation with Carlita about money. But she did discuss what they might have to do if the weather wasn't good.
Witness says that event was open to everyone.
So it was a community function says Thomas. Absolutely says Byrd.
So you cashed the check and put it to good use? Absolutely.
9:39AM New witness sworn in. Gwendolyn Buttler.
Jennifer Blackwell for government.
Witness works for Capri Capital Partners. another investment Management firm. Based in Chicago with office in L.A.. Retained business with City of Detroit Pension Fund.
Initiated relationship in mid-1990s and that is ongoing.
KCF 93- Capri Capital Partners received a letter from KCF to invited participation in a fund-raising event. Dated May 23rd 2008.
Witness says she never talked to anyone before receiving the letter.
Witness reads the purposes listed in the letter for the Civic Fund. Again, about the betterment of the lives of residents and children.
Some examples of uses of funds, sponsoring "Get Out to Vote" rallies, sponsoring westside Cubs.
Last paragraph reads "No funds of the Civic Fund donated to any political campaign."
Witness spoke with partners about the solicitation. Decided to donate to the Civic Fund. Donated $5,000.
Witness says they like to support philanthropic funds in communities they work in.
Witness looking at a check addressed to the Kilpatrick Civic fund from Capri Capital Partners for $5,000. Dated July 2008.
Blackwell asks about more donations? Witness doesn't know of any.
Would you have donated if you knew that the funds would be used for mayor's personal or campaign expenses? No we would not.
9:46AM Thomas cross examines.
Do you know who Dennis Archer was? Yes.
Did you contribute to his campaign? I don't know.
Did you support Archer? I'm not a resident of Detroit.
Did you support Freeman Hendrix? I don't know if anyone in my firm did.
Witness says her firm has made commercial real estate investments in Detroit.
Might you have donated previously? I joined in 2007 so don't know what firm did previously.
Solicitation for an event on June 26th- did anyone from firm attend? No.
Do you know who Christopher Jackson is? Yes.
Who is he? Related to your business in any way asks Thomas? Not related to business. Witness says she met him in early or mid-90s when he worked for Gil Hill.
You don't know that Kwame used your donation for personal purposes? I do not.
What if you found out that $5,000 had gone to a school for a graduation party for 5 year olds, would that be consistent? Witness says that would be up to individuals who manage the Civic Fund to determine the parameters.
You are not going to second guess unless someone told you what happened? No says witness.
Witness steps down.
9:55AM Eric Doeh for government. New witness sworn in. Aaliyah Salaam.
A realtor for 21 years. In 2008, witness was doing real estate work and had a conversation with former realtor about Kwame. The gist of it was that the realtor wanted to show property that witness had in downtown Detroit. Other realtor didn't say who it was only that it was a high profile client.
Witness met Kwame and Carlita in the lobby of 300 River Front. Kwame introduced himself to her and she showed him the property.
Kilpatrick family looking for a 2 bedroom and 2 bathroom condo/apartment in a high rise on the water – a gated community.
Witness says property didn't work for the Kilpatrick family.
Also showed them a condo at 15 Kirby. It was similar to the previous property, private and gated. 2 bedrooms and 2 full bathrooms.
Former mayor was looking for a 6 month lease.
Witness said the former mayor was interested in the property so they did the paperwork.
Witness looks at document- the leasing contract- exhibit KCF 81.
The name of the company on document is Regality Management Services. It's the invoice. Security deposit: $2,350, $14,100 for 6 month lease, $1,050 for property management for 6 months.
KCF 81- witness looks over document. First check is for $4,700 written on Kwame Kilpatrick's personal account on September 19th 2008 to Regality.
Another check for $9,400 to Regality Management Services. This amount drawn on Kilpatrick Civic fund. Memo says 4 month lease. Dated September 19th 2008.
Third check to Regality Management for $1,050 drawn on KCF account. Also dated September 19th 2008.
Security deposit of $2,350 dated September 19th 2008. Drawn on the Kilpatrick Civic Fund to Regality Management Services.
Did you have any idea what the Civic Fund was? No.
So we looked at 1 check drawn from personal account and 3 on KCF account.
10:07AM Thomas cross examines.
How did Kwame come to? A fellow realtor contacted me.
Did you meet with Mr. and Mrs. Kilpatrick? Yes.
Why did they need a place to stay? They needed interim housing because he was going away and he wanted them close by.
Was it known as the Park Shelton? Yes.
Was the University Preparatory close by? Yes.
Witness said location would accommodate children's schooling.
Was it nice? Did you go in? Yes.
It's safe and has security? Yes.
When you say Kwame "was going away" that's a euphemism for jail? I guess.
This is a lease that was for 6 months, short term. What was reason for this? Don't know for exact but this was covering time he was away.
Witness says lease on property began September 19th.
Thomas pulls up the lease and looks at terms. Thomas says you get commission on that? Yes.
Document sets forth lease from September 17th 2008 to March 17th 2009.
Thomas asks about check of $9,400 that says 4 month lease- why? Witness says she doesn't know originally lease for 6 months.
Thomas says KCF paying for security deposit, 4 month lease and incidentals.
Now looking at Kwame's personal check for $4,700. Thomas asks what the monthly rent is. Trying to establish if this amount is for 2 months’ rent.
Exhibit 81, the lease again. Total amount due is $17,500.
So it's $2,350 a month? Ok says witness.
Now going back to $4,700 personal check. So it looks like Kwame paid for 2 months?
Did the Park Shelton require all money upfront? Yes.
He was going to jail is that why they wanted all the money upfront? Yes.
So you do know that he took money out of his personal pocket to pay for 2 months? Ok.
10:18AM Doeh for government. New witness called. Fred Prime. Currently employed as investment banker with Loop Capital Markets. An investment bank headquartered in Chicago. Prime manages the Detroit office. He is the sole employee in Detroit.
Loop Capital works with city of Detroit providing financial services. Started in 1997 and continues today.
Doeh hands witness a document. Exhibit KCF 92. Letter from the Civic Fund outlining its purposes and thanking for their contribution.
Letter was delivered to the Chicago office. Thanked for prior contribution of $10,000.
What did Loop do? Witness says they contributed to Civic fund over the years. This was for a 2007 contribution. Did not contribute in 2008.
Witness says when they get these kinds of correspondences, they are submitted to compliance officer to be reviewed and a decision is made. Did that for KCF.
Witness suggested this would be a good contribution.
Reading last paragraph of Civic Funds. "No funds of Civic Funds donated to a political campaign."
Loop contributed to KCF 4 times for $10,000.
Exhibit 92A- 1. check to the Civic Fund from Loop Capital Markets in the amount of $10,000. June 20th 2006.
2. check to KCF from Loop Capital Markets for $10,000 on September 21st 2006.
3. check to KCF from loop Capital Partners for $10,000 on September 7th 2007.
All checks originate from the Chicago office.
In 2008, Loop did not contribute to KCF? That's right.
You talked to compliance folks at Loop? Yes.
You had heard about news reports concerning the Civic Fund? Yes.
Thomas objects. Judge overrules.
Based on that, witness talked to compliance folks and decided to not contribute in 2008.
Was there an event in 2008 that you met Jeff Beasley? Yes.
Who is he? At the time he was Treasurer for the city of Detroit.
Did you know he was affiliated with the Civic Fund? No.
Did you have conversations with Beasley about Civic Fund? Yes. Told him that we would not contribute this year because it did not pass our compliance process.
Witness says the decision made by the compliance officer.
Did you provide recommendations to the compliance officer?
Thomas objects. Judge overrules.
Was it just the 2 of you who decided not to contribute to the Civic Fund? Yes.
Judge calls for 20 minute break. Cross examination will continue after the break.
Judge asks to see counsel at sidebar.
Courtroom clears. Kwame and Bobby are huddled in an intense, heated discussion at the defendants' table as Bernard looks on from a few feet away.
10:53AM People slowly filtering back into the courtroom Defendants back at the table. Victor Mercado still absent. His absence had the rumor mill swirling that he was possibly cutting a deal in the case. But that apparently is not the case. He is reviewing some papers on water contracts under Judge Fikens that have just come available.
10:56AM Judge says one of the jurors in the back is not feeling very well but that she can persevere. Apparently it's the lady in the back row with the short blond hair. Judge Edmunds also asks lawyers to get witnesses to spell out the companies they are from.
10:58AM Jim Thomas cross examines Fred Prime from Loop Capital.
Prime says they are banking and brokerage. He has been with them for 13 years.
How did you meet Kwame? Through his mother.
The congresswoman? Yes.
You went to Cass Tech in Detroit? Yes.
Witness went to college in South Carolina and Florida A & M for grad school.
Thomas says tell jurors about doing business on the golf course. Do you do it? Yes.
Witness says that a lot of the golfing they do now is for golf outings. Invite clients to talk business.
Thomas says you might ask a client to come to the golf course to talk to you? Yes.
When you do that you expense it to the business? No says Prime. Say you're participating in a golf outing, you might invite people you want to do business with.
KCF 92- letter from February 13th 2007. In the bottom of the second paragraph, says that the Civic Fund is a nonprofit. Says "Governed by its board of officers." What did you take that to mean? Just what it says states the witness.
Did you assume when you read that that decision would be made by board of directors and officers? Yes.
Thomas reading through purposes of the Civic Fund. What did you think Thomas asks? I thought that is what they did.
Did you think that was an exhaustive list? I had no opinion other than this is what they did.
You contributed $10,000 on 4 occasions. Do you have any knowledge of how the other contributions were requested? Yes.
Was it by letter? Yes.
How did the funds get to Detroit? Witness says he got the request letter which is submitted to compliance officer. If approved, the check is generated in Chicago and goes by mail to the Civic Fund.
Would you expect that the Civic fund would reimburse persons to solicit funds their expenses? Yes.
Travel, properly reimbursable? Yes says Prime.
Sometimes when you travel you have to stay overnight and eat? Yes.
Is that reimbursable? I would expect that.
You met Jeff Beasley? Yes.
At a civic fund event? Yes.
How many Civic fund events did you attend? Maybe 4.
Did Beasley tell you about things that Civic Fund did? Yes.
Is that part of why you contributed? Yes.
Witness says they contribute to communities they work in.
11:11AM Doeh redirects.
Di Loop Capital purchase your golf clubs? No says witness.
Thomas actually smiles at that.
11:11AM Doeh calls new witness.
Doeh says someone has just called time out. We wait.
David Upmeyer. Works part time Tetra Tech, retired from full time work in May. Tetra Tech is a consulting engineering firm. Has done work for over 20 years with the Detroit Water and Sewerage Department.
In 2008, he was senior project manager and manager of Detroit office. Managed projects for Detroit and other clients.
Became familiar with Kilpatrick Civic Fund.
KCF 95- witness looks at it. A fax soliciting money for the Kilpatrick Civic Fund. Date on fax is May 33rd 2008- but fax transmission says June 16th.
To the attention of Christopher Jackson. Witness says he may have called the office prior to sending the fax.
Document discussed in house and concluded it would be good thing to contribute to.
Witness says note indicates $2000 but ultimately they contributed $4,000.
Witness reads the bit about "no funs of civic fund being donated to any political campaign."
Do you know how the check would have been received?
Witness says check originated from office in California.
Now looking at payment request form for the KCF for the amount of $4,000. Date is June 27th 2008. Received by Tetro Tech office in Detroit. At some point check was then delivered to the civic Fund.
Now looking at purchase order for the $4,000 check.
Now looking at actual check for $4,000 made out to the Kilpatrick Civic Fund drawn on Tetra Tech account.
No further questions.
11:21AM Thomas cross examines.
Have you met Kwame? Probably shook his hand.
Have you been to any fund-raisers? Don't know.
Thomas asks to put the solicitation letter up. Kwame never called to ask for money? No.
You did it as result of letter from Christopher Jackson? Yes.
Thought it was good for city of Detroit? Yes.
You don't remember if you went to the fund-raising event? Yes.
Do you know what a civic fund is? Would not claim to no classifications.
Your company gave $4,000? Yes.
We know check was negotiated? Yes.
You don't know where that money went? No.
You have corporate office in California? Yes.
Do you have to travel for your job? Yes.
Would you expect that they might have to travel for the civic fund? Possibly.
Did you go to any events sponsored by civic fund? No to my knowledge.
Might have been expenses for event at Athenaeum? Yes.
Hors d'oeuvres, drinks, maybe staff? Possibly.
11:26AM John Minock comes up for Victor Mercado.
What is size of Tetra Tech? 10,000 corporate wide.
In Detroit? 10 to 12 in the office.
What is estimate of gross billings annual with Detroit water and sewerage? Not off top of my head.
Expect those figures to be in the millions of dollars? Possibly
11:28AM Bullotta calls new witness. To be last witness on the day as legal issues need to be resolved.
Special agent with IRS Rowena Schuch. Has been with them for 11 years. Investigates financial crimes. Prior to being agent with IRS worked through college as bank teller and accounting clerk.
Looking at Sonnenalp resort bill. Cheuk says she never found something called National Conference of Mayors.
Looking at documents for US Conference of Mayors in 2002. It's a subpoena.
Looking at November 2002. there are no events in Colorado: California, Pennsylvania and D.C. is where they are.
In investigation found National Conference of Democratic Mayors. Subpoenaed their schedules. Notified that there were events in November 2009.
Also looked to see if there was a Conference of Black Mayors. Team subpoenaed that entity. KCF 110: document listing events for 2002 and 2003. events in Jackson MS, Nigeria, Florida but none in Denver, Colorado.
KCF 27 check: looking at document from Joan Anderson travel for Bernard Kilpatrick on February 1st and 5th 2002 to New Orleans. Also for Bobby Ferguson. Paid for KCF $1,026 check from KCF in January 2002.
Documentation on expenses for Bernard Kilpatrick in 2002. There was a Diner's Club card and 2 Citi cards: MasterCard and Visa.
BKF 20: Bernard Kilpatrick's diner Club statement for February 22nd 2002. Looked for payments in New Orleans. Found a transaction at a bistro and one for a hotel for $340 on February 5th.
BKF 20A: a Citi card MasterCard statement for Bernard. There is another Citi card Visa for Bernard in the February 2002 time period.
MasterCard statement: closing date February 6th 2002. Charge in New Orleans on February 3rd at jewelers for $400.
Visa statement: More at Currents Jewelers for $765 on same day.
Do you know credit line? According to statement, total credit line was $2,700 on visa. On the Mastercard it was $2,800.
11:43AM John Shea cross examines.
Shea is saying that he was skeptical in previous questioning of IRS agent Ron Sauer that Bernard was even in New Orleans in February 2002 so this investigation was subsequent to that? Yes.
You got a lot of financial information on my client? Yes.
There were other agents in investigation? Yes.
You prepared report at end of investigation? Yes.
You did not rely on conclusions on the credit card accounts? Not for this particular years.
Even the government didn't have these before a week ago? could be.
Shea said I just received that a couple of days ago? Yes.
So it appears that Bernard was in New Orleans on those date? Yes.
So he's paying for his own hotel, some meals and bought some personal items? Yes.
Looking at Diner's Club statement. Not unusual to have others on a primary signer's account? Yes.
Are you familiar with people who can be authorized signer on others account? Yes.
Do you know who was an authorized signer on Bernard's account? I can't remember.
Did you learn that there was a delegation from southeast Michigan that went to New Orleans in February 2002 for super Bowl planning? No.
11:50AM Thomas cross examines.
You looked up conferences of mayors as a result of my questioning of agent Sauer? Yes.
There was National Conference of Black Mayors and the U.S. Conference of Mayors. Did you find out if Kwame was a member of those conferences? No.
Who contacted them? I don't know.
You're testifying on what someone else did?
KCF 108- U.S. Conference of mayors. Agenda of events for 2002. Do you know who the President of US Conference of Mayors? No.
Do you know any of the protocols or rules for calling meetings? No.
Did you talk to staff to see if there were any other meetings that could have occurred other than this? I didn't have any contact with anyone from the U.S. conference of Mayors.
Witness says as far as she knows this is the official calendar.
Are you ruling out the possibility there could have been other meetings? I don't know.
And that's because you didn't talk to anyone at the US conference of Mayors? Correct.
Would you think supporting the preschool graduation ceremony, would you consider that a community activity to enhance neighborhhods? i don't know.
You understand that people from the community came, maybe as many as 180 additional people, would you consider that a community activity? I suppose so.
Were you aware in 2002 there was ongoing discussion on mass transit? No.
Did you talk to anyone in Mayor of Denver's office? no.
Did you do anything other than task a secretary with making calls? No.
Witness says she has no idea what Kwame did when he was in Denver.
Thomas implying that Kwame met with Denver mayor. Conference with mayor.
11:58AM Bullotta redirects.
Is this the first time you've heard about a conference with the mayor of Denver? Yes.
Bullotta says that these mayor conferences were subpoenaed for all of their locations in 2002? Yes.
Judge says we are done for the day. Hoping for a sweep tonight! See you tomorrow.
Now we take up other legal issues says the judge.
US Attorney Mark Chutkow happy to raise the issue now.
12:01PM Chutkow: Trial brief filed on contract extortion. Defendants got property using fear. To prove that, defendant need not create the fear but exploit it. No need to show some specific threat but reputational interest of suffering harm.
Need to not only show mental state of defendants but of victims'- "climate of fear." What we need to do to show reasonable belief is to show everything that went to them that made them feel they had to do business with Mr. Ferguson. Many contractor will come forward saying that if they didn't do business with Bobby chances for business was quite slim.
Even Derrick Miller conceded that point was made. There are text messages. We are going to introduce evidence in both directions. What victims knew in city of Detroit and what they said to other contractors.
Getting lost in all the legal minutiae.
Chutkow says we just wanted to give advance notice now that we are going into the extortion area.
12:06PM Judge says my suggestion is to take this up tomorrow morning at before jurors arrive.
12:06PM Gerald Evelyn says it would be giving them carte blanche to go ahead of this.
12:06PM Judge says even if I generally agree with this I would need more specifics...
We should plan to be here by 8:30AM or so to go over that day's witnesses.
12:08PM Evelyn is saying there should be a line at some point especially if they are introducing something.
12:08PM Judge says well my experience in 21 years as a judge is that things come up. If things come to your attention, get to them right away. I agree with evelyn on that.
12:09PM Mike Rataj gets up. Says they get emails at 8 am with several exhibits and this has been going on for several weeks. Have to put a stop to that,
12:10PM My experience of the government that they don't play that game. I'm asking them now to produce things. I'm aware that things come up as a result of cross examination.
12:10PM Rataj says that is a bold faced lie. (He's talking about government being timely with producing things for defense. not talking about the judge.
12:11PM Chutkow gets up and says we have produced things timely. most of things have been produced in advance and giving them. We are constantly dropping exhibits and producing them as they go. The vast bulk of exhibits they have been receiving has been giving to review. I take umbrage by what he said.
12:12PM I want things produced certainly by the end of the week. That is all I have to say at this time.
12:12PM Susan Van Dusen gets up. Doesn't know why defense was receiving grand jury testimony just last Friday.
12:13PM. Chutkow says transcript was just made. We are struggling with putting together a logical, coherent case. The moment it was transcribed it we sent them to it. we are not playing hide the ball.
12:14PM Judge says I have nothing further to say at the time.
12:16PM Rataj reads a list of witnesses coming up including Jon Rutherford.
12:16PM John Shea requests a sidebar.