DETROIT - 8:12AM Audio turned on briefly and then shut off again. Getting an early start this morning as Judge Nancy Edmunds called for session to begin at 8:30AM in order to discuss some legal matters before the jurors arrive.
Looked like the only people in the courtroom were Susan Van Dusen, one of Bobby Ferguson's defense lawyers, and the court reporter.
Yesterday we finished the Kilpatrick Civic Fund chapter of the trial. We saw countless checks and hotel invoices, heard from yoga instructors, golf club salesman, surveillance equipment operator, investment managers, realtor, preschool director and federal agents.
Now we will be moving on to extortion and we should be hearing from many contractors. One of the witnesses we might also be hearing from shortly is Jon Rutherford, a homeless shelter owner, who is expected to testify about a trip for Bernard and Kwame Kilpatrick to Las Vegas. Rutherford was sentenced in January 2011 on tax charges for 21 months. He could get leniency for his testimony in this trial.
8:29AM And we're on. Victor Mercado is back! He and Bernard Kilpatrick are the only defendants seated at the table. Despite the fact there is only an empty seat between them, they don't even glance each other's way.
Here comes Bobby Ferguson in another natty velvety suit and poufy silk pocket handkerchief. He entered the courthouse wearing a newsboy hat. Quite the look.
Bobby is laughing away as he talks to Bernard.
8:38AM Still no Kwame and no prosecution. Not sure what happened to our early start.
8:48AM Kwame Kilpatrick rolls in with his lawyers Jim Thomas and Michael Naughton. Guess we can start now.
Kwame walks over to Bernard and starts gesticulating wildly with his hands as he talks to him.
8:51AM Judge Nancy Edmunds enters the courtroom.
Thomas is joking with the judge about the baseball game. She is a crazy Tigers fan.
Apparently US Attorney Michael Bullotta is with a witness elsewhere.
Judge says she saw the trial briefs from yesterday. Invites defense counsel to speak to "climate of fear" and "hearsay".
8:53AM Thomas says that Jon Rutherford won't be discussing what they had talked about.
8:54AM So we haven't quite finished with the Kilpatrick Civic Fund. The government has come up with one last out-of town witness they have dredged up.
8:56AM Jurors file in.
Judge informs their jurors about the surprise final witness.
8:57AM Michael Bullotta for the government. Max Berger is the witness. He is an attorney for security fraud cases. Work includes litigation for the Police and Fire pension funds and general retirement funds for Detroit. Bernstein Litowitz Berger & Grossmann LLP is his firm. In NYC. approximately 60 employees.
Has worked with pension funds for at least 7 or 8 years if not longer.
In May 2006, solicited by Kilpatrick Civic Fund for a donation. Witness looks at document dated May 22nd 2006. It's the solicitation letter. third page is a letter from the firm and 4th page is check to KCF.
Exhibit KCF 90- a check for $10,000 from BLB & G (the law firm).
Berger part of the discussions whether to donate to the Civic Fund.
Witness says they were specifically told that the Civic Fun was for the benefit for the citizens of Detroit and to be used for civic and educational purposes.
June 22nd 2006- letter addressed to Ron Zajac. Enclosed please find contribution for $10,000. Check sent by FedEx.
Witness contacted by FBI to get info about his donation.
Witness looking at check stub. Asked controller to give it to the FBI. Check to Civic Fund for $10,000 dated June 21st 2006.
KCF 90A- following year. Another check for $10,000 from law firm to the Civic Fund. Dated July 18th 2007.
Witness says check would not have been issued without his authorization.
A third donation: KCF 91- Letter dated June 4th 2008, enclosing another contribution of $10,000 to the Civic Fund and "the city of Detroit" because that was their understanding what the donation was for.
Letter sent to Ron Zajac stating "pleased to participate in donation."
Kept check stub for donation on June 4th 2008.
Bullotta says 3 checks totaling $30,000, did you believe they would be used for personal expenses? No to the contrary.
Witness says he believed the contributions were being made to benefit the citizens of Detroit and would be used for both civic and educational purposes.
Witness says he absolutely believed contribution would not be used for personal puposes.
9:13AM Jim Thomas cross examines.
You firm engaged in working with city of Detroit? Correct.
Who solicited the money? The letter I read was from Mr. Pappas but we were in contact with Ron Zajac.
Do you know Mr. Zajac? I do.
Have you worked with him in relation to Detroit pension systems? That is correct.
How are you asked to donate money? We represent pension systems all over the country and all over the world and are frequently asked to make donations. We were asked to make contribution at a time that Detroit was having fiscal issues so we were happy to do that.
Witness says he recollects from conversation, can't remember the year or specific words, Ron basically saying the Civic Fund for the benefit of citizens of Detroit and educational purposes. They were raising funds and would we consider making a contribution.
Witness says people generally don't like check for these purposes without being asked.
Not just for the Civic Fund but other charities asks Thomas? Yes.
$10,000 maybe large for us and the jury but not uncommon for your firm? No. Not an insignificant amount of money but make donations like that all the time.
Not improper? We wouldn't do it if it was.
Not only for civic purpose but gives your firm exposure to people working in city of Detroit? I don't know what you mean by exposure. We benefit from relations with pension funds in Detroit. We give back to charities. in this case, a particular need was signaled to us because of fiscal issues the city was facing.
You were giving to KCF and not the city of Detroit? Yes. Let me clarify we didn't distinguish. We thought this would be the vehicle through which the city would benefit.
Do you know the difference between a 501c and 501c4? No.
Thomas wants to talk about one of the exhibits. The 2006 contribution. On letterhead from Jim Pappas. do you know him? I don't believe so.
Did you attend Athenaeum event? No.
Did you send it to Mr. Pappas or Mr. Zajac? I believe Mr. Zajac.
This solicitation letter is what you relied on for contribution? Combination of that and conversation with Zajac.
You were told that contribution could be corporate or personal and 3 checks were corporate? Well they were business checks.
Thomas talking about notations on letter. Are they yours? No.
Thomas takes witness over list of organization's purposes. And to the bottom where no funds would be donated to a political campaign.
Witness says partners and firm make political contributions from time to time but this was not supposed to be for political purposes.
Did you contemplate that legislative issues might have a political implication? Witness says he doesn't recall seeing sheet listing purposes. He recalls generally what was told to them.
Could legislative issues involve political issues? Certainly that is the case in general but our understanding about these contributions was that they were not for political purposes but for civc and educational reasons.
Thomas talks about educating residents about the importance of voting. that has political implications well? Who you vote for is political as well.
Witness says "I'm sorry I forgot your name." "Jim Thomas." replies the defense lawyer.
Thomas distinguishing between donations to political issues versus a campaign. Witness says he doesn't disagree with that.
Everyone at the defense table looking a little bored by this testimony.
Thomas looking at letter in 2008 from law firm to Zajac with that year's $10,000 contribution.
Had you ever seen the aricles of incorporation of the Civic Fund? No I have not.
Did you talk to federal agents before today? I talked to FBI agent David Hunt earlier and just today with Mr. Bullotta.
Did you talk to agent Hunt about what you thought was objectionable about the spending of the money? I don't believe we did. Interview notes referred to 2 checks and I called to say there were 3 and not 2.
Would you have expected Civic fund to be run by a board of directors? I have no idea.
Officers might make decisions? Yes.
These officers might make decisions on what to spend on? Yes.
Would you expect Civic Fund to have employees? Yes.
They might be paid for what they do? Yes.
That's entirely proper for fund-raising? Yes.
The might have to travel for fund-raising? Yes.
As it relates to people who don't have relationships, they might have to travel to solicit funds? Yes.
Travel expenditures might be reimbursed? At my firm if it was consistent with purposes and standards that are set, certainly.
Political contributions to a political campaign is usually made to crisis set up for those funds? Yes.
You recognize the distinction I have made.
"Go Tigers" says Thomas.
Yankees are going to lose anyways says witness. Off the record.
9:38AM Bullotta redirects.
How was third check sent? By Federal Express.
Both 2006 and 2008 checks by Federal Express? Yes.
Would you have donated in June 2008 if you believed some of it would have gone towards crisis manager? That wouldn't have been consistent.
9:40AM Thomas redirects.
You knew who Kwame was and hadn't met him? Yes.
You knew he was figurehead for the fund? Yes.
Did you know he was under siege personally and professionally? I don't remember if I knew it then.
Would you have expected that his ability to raise funds for Civic Fund would have been impacted in a negative way? Don't mean to be evasive but you are asking a hypothetical. Thought we were making the same kind of donation as previous years.
What if you knew he was under siege politically and personally? It seemed to be that this would be using the money for specific personal purposes, If that was part of the by-laws of the Civic Fund then I'm sure that would be appropriate. But it seems to me that hiring someone for purposes unrelated to Civic Fund seems inconsistent to me to the purposes we thought.
Do you think his fund-raising abilities might have been affected? Yes.
Do you think he might want to address issues? I supposes so. Yes.
You know corporations ruled by board of directors? Yes.
Witness says that whatever is reimbursable is articulated in a document. If not, whatever they deemed to be appropriate.
As long as expenditures related to Civic Fund? Yes. Certainly could be the case.
Judge says" you can be excused, got back to New York and weep about the Yankees."
9:45AM Jon Rutherford takes the stand. Judge Edmunds tells jurors this marks the beginning of a new chapter in the trial
US Attorney Mark Chutkow says Thomas requested sidebar on this witness. Go to sidebar.
Jon Rutherford is the much anticipated witness of the week. A homeless shelter operator, he was sentenced to 21 months in jail on tax charges. Despite the fact that he was sentenced in January 2011, he has still not gone to jail. Thomas asked for a hearing Tuesday to ascertain why he was still out. It is believed that Rutherford could get leniency on his sentence for his testimony in this trial.
9:51AM Sidebar ends.
Mark Chutkow for the government. Rutherford sworn in.
Are you currently employed? No.
Was a high school coach and teacher, coached college basketball for 11 years. Then went into business, the management of housing. Created Metro Emergency Services that provided social services to homeless women and children and adult men. Started this business in late 80s or early 90s. Built that business from nothing and financed from own money and in period of 10 years built it to company that was provided not only to homeless women and children but also to mentally ill adults. Company stopped doing business after article appeared about donation to the Civic Fund. After that, no one would donate money. Built from nothing to $38 million a year. Was at 224 Highland.
Services to the mentally ill, witness was responsible for their mental care and services located in Wayne County.
Series of contracts from Detroit Wayne County Community Health- an agency that provides services to the mentally ill in Wayne county. From federal government to state government to agency.
EMS was a 501c3 non-profit.
Also had for profits Rutherford and Associates, a company that managed things outside of EMS. Bought and sold houses. Wasn't a full time venture.
Also had DPR, management company. Originally had houses and sold them Became management company for EMS. DPR named after his kids.
Relationship between the companies, was modeled after DMC St-Johns of the Henry Ford Hospitals. "Figured if it was good enough for Henry Ford, or St Johns, it was good enough for Jon Rutherford."
Charged rent by the profit company of the not-for-profit. How he made his money.
Introduced to Kwame by Curtis Hertel, who was speaker of the house. at the time Kwame was a state rep.
Witness says he was very impressed by Kwame's intelligence, drive, ability to interact with people. "I thought the world of him."
Witness looking at checks from DPR Management to 21st century. Rutherford authorized the checks.
Thomas objects subject to what was discussed at sidebar.
Exhibit RUTH- check DPR Management LLC, for profit, to the 21st Century Fund, September 19th 2000 for $50,000.
21st Century Fund- political pact for the democratic party.
Purpose of the donation was to fund democratic candidates who were running for the democratic party in the house for elections of that year.
Witness says he didn't know how it would be distributed and who would get the money. Understood that when Hertel introduced him to the group...
Thomas objects. Judge sustains.
Who decided how money would be distributed? Kwame Kilpatrick.
Judge says this was what was discussed yesterday. I think we need to take a break and address it now before Mr. Rutherford continues his testimony says the judge.
Judge asks Rutherford to step out as well.
Chutkow says that Rutherford will testify to conversations with Curtis Hertel and that they wanted Kwame to be next leader of the house when Hertel left. The means to do this would be through the contributions. Kwame would use the money to curry favor when Hertel left. Rutherford had specific reason for this. he cultivated a relationship with Kwame. Wanted to develop east Riverfront for his own purposes. Rutherford needs to explain so jury can understand his motivations.
He will say later that it impacted his ability, there needs to be some background understanding.
10:11AM Thomas says it's pretty clear this is Hearsay. Hertel is not a defendant. This is a guise to bring in information of what Hertel said.
Kwame is shaking his head violently and writing a note. He is completely at odds with what is being said.
Thomas says that Hertel wasn't engaged except to raise money.
10:12AM Judge says there are a number of cases that the context of Hobbs Act that says what usually is hearsay may be admissible if it goes towards "climate of fear."
10:13AM Chutkow says state of mind applies. Want to make clear that purpose is not to say he is extortion victim.
10:14AM Judge says state of mind here as long as she explains to jury this not being offered as truth but only what was going through Rutherford's head at the time.
Judge leaves the courtroom. so basically it sounds like this is a hearsay exception. the government will continue its course of questioning but with clear directions from the judge to the jury about what they will hear.
Break is for 15 minutes.
10:28AM Still on break but playing an old media clip of Local 4's Guy Gordon that will obviously be played when we resume again. He was with Channel 7 at the time.
Chutkow has been chit chatting with Rutherford. May have misheard Rutherford but it sounded like he just told Chutkow he turned down playing with the Phillies to go to college.
10:30AM Everyone filters back in. Bobby has got a bag of nuts he is throwing into his mouth. Didn't think anyone was allowed to bring snacks into the courtroom.
10:36AM Judge Edmunds returns to the courtroom.
Jurors seated. Judge instructs them on evidentiary matter. Talking about allocation of 21st Century funs. Wants to make sure that Rutherford's testimony not being offered as the truth as that. Just offered as his state of mind, what he believed. What was in his mind not necessarily true but government wants to show his motivations. It's not a given that he was told anything about it. Not told except as what was in his mind.
Exhibit RUTH 3- a check from DPR LLC to 21st Century Fund dated September 27th 2000 for $50,000. signed by an employee of Rutherford's.
In 2 week period gave $100,000 to 21st Century Fund.
Curtis Hertel no longer Speaker of the house at time of donations. Money to fund house races in state of Michigan.
Witness says Kwame Kilpatrick responsible for allocations. Says he spoke to Kwame at a later date about contributions.
Rutherford says he wrote the 2 $50k checks only with conditions. One, that Kwame gets to distribute the funds. If the won, he'd get to be speaker of the House and if the louse, he'd be minority leader. It was clear those were my 2 conditions.
That was the understanding I had when I wrote the checks.
Was Kwame elected floor leader? He won his election and became floor leader of the democratic party.
After he was elected house minority leader, witness talked to him about it. but can't give specific date.
Exhibit RUTH 4: a check from DPR Management LLC to Tatum Eason on October 13th 2000 for $5,000.
Exhibit RUTH 5- another check from DPR to Tatum Easun on October 18th 2000 for $18,000.
Witness says Eason worked for him throughout the years. He worked in radio and had contacts in the media. a person "who comes out of the woodwork during election time." Hired him to do work on radio show. Eason also close to ministers in Detroit.
Rutherford hired him for democratic house race. I don't even know if Kwame had any competition in that race.
In election cycle of 2000, Kwame was re-elected as state rep. Then democratic house caucus voted him as leader.
Witness saying he doesn't know exact procedure that takes place.
Shortly after his election did you talk about his other aspirations? Yes. about being mayor. Ran against Gil Hill.
In period up to August 2001, did you provide support to Kwame? Yes.
Exhibit RUTH 7: check from Rutherford and Associates to Kilpatrick Civic Fund. Dated April 25th 2001 for $20,000.
Who asked for this contribution? Well it would have been Kwame Kilpatrick.
Did you have discussions about civic fund? I had a lot of discussions with Kwame around this time about being elected in the city of Detroit.
Witness says they were general conversations about running and the money it takes.
What was he asking you for? Money says money.
Why not write check to his campaign? I don't have answers for that.
Witness says he couldn't have written a check to his campaign. Couldn't give $20.000 to campaign because it was aginst by-laws. Rutherford said it was an understanding between he and Kwame that this money would be for his campaign.
It didn't have a social welfare purpose? No.
Exhibit RUTH 8- check from DPR LLC to Next Generation Detroit on June 6th 2001 for $34,000.
Next Generation Detroit is Kwame's Political Action Fund.
Witness says $34,000 is the maximum he could give to a PAC in an election cycle.
Exhibit 9: check from DPR LLC to Kilpatrick Civic fund. Dated July 2nd 2001 for $30,000. A month before primaries.
Why did you write check? "Kwame Kilpatrick needed it. He needed it for his campaign."
Exhibit RUTH 47- witness recognizes an article in the Free Press. August 29th 2001. Headline "Kilpatrick took donation, now questions propriety." "President of homeless shelter gave $50,000 to voter fund" is secondary heading.
What was your reaction when you saw article? "I wasn't very pleased."
Was it your homeless shelter being referenced? Yes it was. there were several inaccuracies in the article. I didn't like that. Bordered on trying to be sensational. I wasn't very happy.
This created a scandal? Yes looking back, i think it did.
After article came out, did you meet with any members of mayor's campaign? Maybe a day or 2 after, Christine Beatty came by my office and flipped a document on my desk. It was the mission statement of the Civic Fund.
Did you ever talk to Bernard Kilpatrick? Not too long after article, I passed him on a golf outing. and he made a comment that the Kilpatrick and Rutherford names would be forever link.
Exhibit RUTH 10- a personal check for Rutherford to Kilpatrick for Mayor. For $3,000 on October 15th, 2001.
About 3 weeks before election? Yes.
Did you give to other organizations leading up to election? Yes.
To who? Community Coalition.
Exhibit 11- a check from DPR LLC to Community Coalition on October 26th 2001 for $45,000.
Exhibit 12: a check from DPR LLC to Community Coalition on October 31sdt 2001 for $35,000
Exhibit 13: check from DPR LLC to Community Coalition on November 5th 2001 for $10,000.
Exhibit 14: check from DPR LLC to Community Coalition on November 6th 2001 for $7,275.
So in 2 week period before election, DPR gave $97000 to Community coalition? I'll take your word for it.
What was purpose? To get Kwame Kilpatrick elected mayor of Detroit.
How is money used? Some people door to door have different events. Get people to vote. Leave literature to back candidate.
On election date did you make further contributions? Yes. On election day i got a call. I was at a funeral. From Bernard. they needed money. i wrote a check.
Ballpark? In my mind it was $20,000. I can't tell you exact amount.
How was money cashed? I was at a funeral with my familty. took them home then met someone from Community Coalition. it was too late to got to a bank so I made an arrangement to go to a grocery store and get cash.
Do you believe you played a role in his election?
Witness says "I helped"
How? Those checks you saw on the screen.
Did you ever talk to Kwame about your role in his election? Yes.
What was his reaction to your contributions? Generally happy with the help.
Did you see him election day? for a short period of time. Was with son and daughter and were walking into his election day party at hotel in Renaissance Center. Just as I was walking in, he pulled up. i spoke with him and then he picked my son up. that was the extent of me seeing him election day.
What about Bernard, did you talk to him? I can't give a specific date but I had conversations with Bernard. He seemed appreciative.
Did you have something specific you wanted in exchange? Not at that particular time.
What were you interested in doing at time of election with business? Always had an interest in the east River Front. Land basically from Shain Park to Renaissance Center.
Witness says that as a younger man he set up Shain Park when Coleman Young was mayor. The property looked terrible and was useless. City didn't make money off it. No one made more off it. It had potential. I always had an interest in it.
What kind of ideas did you have? Retail, housing, restaurants, bars. Multi-use.
Do you need assistance of city officials to make that happen? Of course.
Why? That particular property Detroit owned.
April to November 2001 time period? Not really thinking about east River Front. I've always thought that piece of property was wasted. I can't tell you in April of 2001 i was thinking i need to use this property.
What specifically were you hoping to develop? hired some people and started to do Research and Development.
What did research show? That it would be hard to find people like Best Buy or home Depot. The anchors. They weren't interested.
Met some of the biggest shopping people in the world. they couldn't see their way through to be part of the plan.
Next witness says he thought about building a convention center and a casino.
Ambitious plan. Did you have a background? No but it didn't take me long to get together some people that did.
Serious technical issues. Feed completely off.
Any of his other staff? Yes. Derrick Miller. worked for Kwame. Witness met with him more than 25 times. More than 50 times with members of mayor's administrations.
Did you talk about your casino plans between election and talking office? no.
Did you go to Las Vegas with him? I've been to Las Vegas when he's been there more than once.
Did you go to a title fight in Las Vegas? Yes.
Did that occur before he took office as mayor? I think probably it was before.
Exhibit 15- witness's credit card statement that includes bill from Mandalay Bay in Las Vegas.
It's a MasterCard. Closing date 12/4/2001. Before the mayor takes office.
$7,214- date posted is 11/14 for 6 tickets to the championship fight with Lennox Lewis.
Was mayor with you in Las Vegas? He wasn't with me but he was in Las Vegas.
Did you talk about your casino plans? I don't thinks so.
Who were tickets for? 2 for himself and wife, 1 for Curtis Hertil, 1 for Bernard and 1 for Kwame. Tickets cost $1,200.
Where were you when you saw Bernard? Prior to going fight gave tickets to Bernard.
Did you tell him one of the tickets was for son?
Rutherford with Curtis Hertel, Art Blackwell, Bernard were at the bar at the Mandalay. Someone at the table got a call saying that the Detroit News had asked if Rutherford had paid for Kwame Las Vegas trip.
Darci McConnell called Rutherford in his hotel room. Could tell that it was going to miserable. Hadn't plane for his plane ticket or his hotel.
Witness says that it was the start of harassment and things that weren't true.
The reporter asked if witness had financed trip to Las Vegas. She didn't ask about fight.
When the call came, Art Blackwell got so excited he jumped up and knocked over a chair. "We all scattered."
Witness says he knows for a fact that there were other people on that weekend that McConnell called. November 2001.
Now after Kwame was in office, you had 20 or so meetings about casino plans? first there was the idea to get big box.
What was his reaction? Think he was excited. We had a good architect."
"Do you really think you could build something on the east River Front without talking to the mayor?" says Rutherford.
Rutherford says he was hoping that city would jump in and give property for free.
11:32AM Chutkow so you talked to mayor about it? Yes.
It would require work from the city? Yes.
Tax abatements? Never talked to him about that.
Witness says that he had studied some things that happened in Cleveland and NYC regarding Port Authority. Curtis Hertel was chair of Detroit Port Authority. The banks would join with Port authority. so could have had casino and convention in hotel without costing the taxpayers a dime. thought that was pretty good idea.
Had discussions about that with mayor.
Did he meet with financing people? I don't know. I know 5th third Bank were going into partnership with Port Authority.
Did he meet with Curtis Hertel and art Blackwell? Yes.
Any discussions about purchasing a license to operate casino? Yes. Motor City and MGM not interested. The research compiled indicated that the Greektown license was one to be purchased.
They had exclusive rights. One of these groups had to go one the riverfront.
Did you hire architects? Yes I did. I hired Paul Steelman based in Las Vegas but does casinos all over the world.
In May 2002, did you attend fund-raiser for mayor's mother? Yes.
What was it for? She was a United States congresswoman.
Where did it take place? Detroit Athletic Club..
Who invited you? Not sure.
Who did you meet there? There were a lot of people there. Kwame. Bernard. A lot of people there.
Tell us about conversations? Kwame was going on a trip the next day or day after. He asked that he wanted to buys some suits. So witness arranged for him to get $10,000 to get suits. Kwame was going to Dubai.
Did he ask for the money? He had the figure in mind. He knew how much he wanted.
Was Bernard there when he asked? Yes.
What was your response? That I would take care of it.
Witness says he had someone go to a bank, get some cash and deliver it to Kwame.
Exhibit 17: Check made out to Kilpatrick for Congress from Rutherford's personal account on April 29th 2002 for $1,000.
Exhibit 18: check made out to Friends of Kilpatrick from Rutherford personal account for $5,000 dated May 7th, 2002. Says "friends of CCK". that would be Carolyn cheeks Kilpatrick.
Were these 2 checks to do with fund-raiser for congresswoman? Yes.
Exhibit 19: check from DPR Management LLC for cash on May 7th 2002 for $9,000. This was at the time of Carolyn Cheeks Kilpatrick.
What was money used for? The person who endorse this check worked for me. He was the gentleman who delivered it to Kwame.
Why didn't you just write check to Kwame if he wanted to buy suits? I don't know.
Witness says Kwame was in a hurry.
Did you think it was proper to give money to mayor of city of Detroit? I didn't really think it was a bad thing to do.
You were looking for a casino? No I wasn't looking for a casino.
Do you think it's bad to give money for suits when he is going to Dubai? No.
Did Kwame ever repay you the $10,000? No.
Did he ever suggest he would repay you? No.
11:47AM In the spring/summer 2002 did you go to Las Vegas? Yes.
Witness says he went for shopping Center Convention and had meeting with architect Paul steelman.
So by this point casino plans underway? Trying. it's very hard.
Did you see Kwame while out there? Yes.
Witness says saw him at a meeting with Sig Rogich and then took family out to dinner. Rutherford says he organized with Rogich. (Rogich is an Icelandic-American businessman with Republican ties).
Did you discuss casino plans? Yes.
Where did you take mayor to dinner? At the casino resort, Green Valley Ranch, in Las Vegas.
Who owned it? Paul Steelman was partners with Wolfgang Puck.
Mayor's whole family at restaurant? Yes.
While in Vegas did mayor ask you for anything? Yes. Gave him some cash that night.
Why? Because he asked for it. somewhere in the neighborhood of $2,000 to $5,000.
Where were you when he asked for it? In the restaurant.
Where did you give it to him? Outside the restaurant.
Did you ever get repaid? No.
11:55AM Taking a 10 minute break here. Had serious technical issue for what about 5 to 10 minutes so missed some big numbers on projections for the casino.
12:06PM Everyone filters back into the courtroom.
12:08PM Judge re-enters courtroom.
12:09PM Jurors seated.
How long have you known Bernard Kilpatrick? Met him about mid 90s.
What context? "Detroit is not that big of a place" "Our paths just crossed." I believe Bernard was a Wayne County commissioner at the time.
Was he a personal friend of yours? No, an acquaintance.
After Kwame elected mayor, did you have conversations about his future? No.
You don't recall anything he hoped to do as a result of his son being elected? did you talk about former mayor Coleman young? No i don't remember.
Chutkow consults with Bullotta. A juror sneezes. "Bless you" says the judge.
Do you recall being interviewed by IRS and FBI? "Which of the 100 times?"
Do you recall telling agents about Bernard Kilpatrick?
Thomas objects. Judge sustains. Can't ask like that.
Shortly after Kwame elected Detroit mayor, did you have conversations with Bernard about hiring him as consultant? No.
Witness says there were conversations that happened before that. "He never came upo and asked me."
Witness says he got a phone call from a mutual friend, Cassandra Smith Grey, who asked if I'd be interested in hiring him as a consultant. She was an employee of Wayne County. Bernard was an employee of Wayne County at the time. she said they needed to get him out of there because his son was mayor of Detroit.
She said he wanted to be paid $10,000 a month.
Were you willing to do that? Absolutely. "I thought it was a good deal for me."
Did you talk to Bernard about his new business? Had conversations with Bernard and gave him things I thought were good tips businesswise. Needed an account and to file papers.
He was hired as consulting and you were helping him? I just gave him some direction.
Did it seem like he had a lot of business savvy in business sector? Bernard had extensive career in government that seals with private sector every day. "They are the people who get things done"- talking about the bureaucrats. And to have someone like Bernard who had ties with them was invaluable.
Health One Credit Union was where witness advised Bernard to open account. Witness had mortgage ownership with them. Witness suggested a limited liability corporation to Bernard. "It's pretty simple."
Did conversation take place before mayor took office? Don't know.
Chutkow wants to read for record what Rutherford said under oath. John shea objects.
Judge says let's take it up at the end of the day.
Exhibit RUTH 25- "What did you do with 23 and 24" says Rutherford. A check from DPR Management LLC to Maestro Associates on April 1st 2002 for $10,000. Rutherford says he wrote it because he entered agreement with Maestro & Associates.
Did this correlate with Bernard opening his bank account? It could have been. In short conversation I suggested where he could open account.
Exhibits 26 through 35- checks from DPR Management LLC to Maestro.
2. check from DPR to Maestro May 3rd 2002 for $10,000.
3. check from DPR to Maestro on June 4th 2002 for $10,000.
4. check from DPR to Maestro on July 2nd 2002 for $13,000.
5. check from DPR to Maestro on August 2002 for $10,000.
6. check from DPR to Maestro on September 9th 2002 for $10,000.
7. check from DPR to Maestro on October 8th 2002 for $10,0000.
8. check from DPR to Maestro on November 8th 2002 for $10,000.
9. check from DPR to Maestro on December 20th 2002 for $10,000.
10. check from DPR to Maestro on February 5th 2003 for $15,000. Why more? Can't recall says witness. Looks over document. My explanation is that last exhibit is on December 20th and the next one is February 2003 so there is a check missing. so the check is to make up for no January.
11. check from DPR to Maestro on March 7th 2003 for $5,000.
How did you decide how checks would be issued? Looks like the beginning of month.
You don't know if he asked for it? no Bernard wouldn't have had to ask for it. I had it ready.
Did you need Bernard's services? not particularly.
Why did you hire him? 1. Because he's mayor's son and 2. never know when you might need him
Did he come to homeless shelter? Never needed him for shelter of mentally ill people.
Did he have any experience with casinos? Probably a little bit.
Because he gambles? I don't know if he gambles.
12:32PM So the check for $5,000 in march 2003, is that the last check to Bernard? It looks like it.
Why did you stop paying it? Bernard alerted me he was going on the Wayne County Health Board. didn't want him as a consultant and have him on the board.
Well if he is on board of directors, at time I was with Gateway Community Health says Rutherford. I didn't think it was fair to partners because i thought it would come up.
In 11 month period you paid Bernard a total of $113,000? Yes.
Exhibit 21A check from DPR Management LLC to Next Vision foundation on October 22nd 2002 for $5,000.
Who ran foundation? Ayanna Kilpatrick.
Why did you give to the foundation? looking at the date. I believe this was a Halloween fund-raiser. witness didn't attend but bought tickets and sent employees.
Why did you buy tickets? Someone called me.
Was it family connection? Absolutely.
Did you meet with Kwame about Greektown Casino? Yes.
Witness says he brought 3 different entities to Detroit to buy Greektown Casino. Research indicated they had too much debt. They paid outrageous interest and they were having trouble servicing their debt. So we picked Greektown as one to buy. MGM and Motor city not interested. motor City in process of re-arranging partnership.
Met with people from Las Vegas to China. Never could get a price. A value put on a casino every month for what it's worth. A very precise mathematical formula. Some partners at Greektown thought it was worth more than potential buyers. So never came close to a price.
Witness says Kwame talked to the chief at one time.
12:39PM Did Kwame send Derrick miller to meetings? Absolutely.
Witness says he remembers one in particular. Miller accompanied him to Las Vegas. Was Harras, now Cesar's, largest gaming operation in the world. They were first up to the plate. Met with CEO and CFO an other high ranking employees and 2 member from Greektown. Miller reported to the mayor.
Did mayor meet with city council to discuss your proposals? I don't know.
Do you remember if mayor's chief administrative officer met with council about casino? He met with a few.
Witness says 2 representatives from Harras came to Detroit and he introduced them to the mayor.
The Sands Las Vegas was second to express interest. Mayor met with CEO Widner. They met in DC and witness was there.
Did they seem interested? "Everybody was interested."
Did mayor meet with Venetian? absolutely. He met with Adelson, at the time about the third richest person at the time says the witness. (Technically he is the world's 12th richest person) The meeting was just the 2 of them.
Did you set it up? Yes.
Because you wanted a casino? Yes.
Did you get a casino? No.
Plan didn't work out? No.
Where did money you gave Kwame come from? From me.
From particular company? We said DPR a hundred times.
How much money came into DPR? Doesn't know without looking at figures.
What was shelter operation salary? About $120,000. but had more businesses than just the shelter.
Total income from Metro Emergency Services was $275,000.
DPR charged MES $720,000 for rent.
Witness got about $650,000 a year from various sources.
90 day contracts he was providing services for in 93 homes for about 1,000 people. Each of those people, they have a price tag put next to them. Like $600 for one person and another may have $1,000 worth of care. It was roughly $2.8 million a year that came in and went right out to the homes.
There was the administrative fee that was 20% of that a month. So not just salary but some money out of that 20%.
You were investigated by IRS? Yes.
You were indicted by US attorney's office? Yes.
You were charged in the period between 2000 and 2003, the period checks were written? Yes.
You were charged with improperly taking money from entities? Yes.
You plead guilty? Yes.
With who? Judge Battani.
Plead to failure to report all income and tax evasion.
Is there a range of sentence? 24 to 30 months.
What did you get sentenced? 21 months.
You got a 3 month reduction? 21 months.
Witness says the new range was 15 to 21 months. So Battani gave him higer end of the range.
Reason for reduction? Believe it was for the grand jury testimony.
So you provided evidence to government in investigation of others. Yes.
So government suggested to reduce sentence? Yes.
You haven't reported to prison? Yes.
So Battani could reduce sentence? Yes.
Is your testimony today part of reason to get reduced sentenced? No. One of my good friend's who is attorney has done all that stuff (Steve Fishman is his attorney).
"Plan for the worst and hope for the best." says Rutherford.
Has anyone made any promises to you? No.
Has anyone said we'll give in the lower range if you testify? No.
Witness looking at more documents. Checks.
12:58PM Exhibit 1: Payment summary:
Chutkow says you testified to various payments in 2000. Total $123,000
Also testified to various checks given to Kwame Kilpatrick in his run for mayor. Total of $184,000 from April to November 2001
Total for 2002 of $20,000 checks after Kwame became mayor.
$327,000: total of checks between 2000 and 2002.
Total payments of DPR to Maestro: $113,000
$440,275: total of Maestro payments plus entities.
Chart doesn't include $10,000 for suits or the $2,000 to S5,000 in Las Vegas and $1,200 for championship fight tickets.
If Kwame wasn't mayor of Detroit would you have given Kwame this money? no.
Were you friends? No.
Were you paying this to get something in return? Yes. I guess.
Did Kwame Kilpatrick express appreciation? Yes.
Did he tell you he would do anything for you? No. He liked the project. He would have backed it.
Did you need the mayor? For the Riverfront asks witness?
Yes says Chutkow. "Couldn't have done it without him." says Rutherford
1:05PM Judge dismisses jury.
Taking up a legal issue in the morning so will be starting a little early at 8:45AM. Essentially, Rutherford is sometimes being reluctant with his memory so the government wants to read his grand jury testimony to refresh it. For obvious reasons, defense would like to prevent that.
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.
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