DETROIT - 8:38AM
We're set for another day of testimony in the federal corruption trial of former Detroit mayor Kwame Kilpatrick, his father Bernard Kilpatrick and contractor Bobby Ferguson.
Glad we're in early this morning.
The judge has pulled all attorneys into chambers to handle a motion. If she addresses this in open court, I'll let you know what it's about.
Meantime, Kwame Kilpatrick again is making news via Twitter.
Wednesday night, he wrote that he thwarted a break-in on this mother's street where he is staying.
Here's what Kilpatrick posted and his response when he was asked if he called Detroit police:
KwameKilpatrick : No Way! The police would book me for sure.
So, if the story is true and Kilpatrick did not call the police, you'll know who to thank if your home in that area is burglarized this morning.
Kilpatrick made news on Twitter about a month ago where he basically testified on his own behalf with a "tweet" during the "Kilpatrick defense fund" phase of the trial.
Kilpatrick "tweeted" that the fund "was never a political fund" and wasn't subject to the laws being talked about that week in court.
He also sent out a tweet two weeks ago after a break, calling the trial "bull excrement."
There are no cameras allowed in Federal Court, and in this case, that's a shame.
This trial has been fascinating from day one and it's too bad the public can't see it unless they come down to the courthouse to watch.
A few people mentioned to me yesterday how "dry" Wednesday's testimony was and I had to disagree.
It was pretty clear that Kilpatrick and Ferguson's defense team had a big day pushing back on earlier testimony from one of the government's key witnesses.
For days the jury heard from the head of Lakeshore Toltest here in Detroit.
Avinash Rachmale is the head of that company and his start-up has exploded into a multi-million dollar enterprise and he owes so much of his company's growth to the city of Detroit and all of the water works contracts his company won.
However, Rachmale was called to testify because he admits he played along with Bobby Ferguson, saying he gave Ferguson no-work jobs and added him to high paying contracts to Lakeshore won to Lakeshore would continue getting multi-million dollar contracts. This made Lakeshore incredibly successful.
Yet, yesterday we heard from the deputy director of Detroit Water and Sewerage who was in charge of contracts when Ferguson and Kilpatrick were allegedly running their enterprise.
Defense attorneys asked Darryl Latimer if Lakeshore had a few "friends" in the department who were trying to steer contracts to Lakeshore, and Latimer said they most certainly did, indicating that for some contractors with engineers as friends, the fix was in.
This doesn't mean that Ferguson and Kilpatrick are not guilty of crimes, but it does show that even though Detroit was winning "clean water awards," the culture of DWS was rather dirty.
Also, before we start there is a flyer hanging in the hallway here reporting sad news.
You get to know the security guards who check you into the courthouse each day and one of those guards suddenly passed away Thanksgiving day.
His name is Mike Jastremski. He apparently had Thanksgiving dinner, said he didn't feel well, went to go lay down and never woke up. The security guards here are meeting at the Anchor bar to share stories about their co-worker and friend.
The three defendants are seated together in the courtroom alone - as the lawyers are meeting on a motion in another room, so we wait patiently.
The lawyers enter the courtroom - quick check of pacer shows no new motions filed this morning. Ferguson attorney Mike Rataj is at the podium but no witness as of yet. Rataj should continue his cross of Daryl Latimore.
Darryl Latimer, Deputy director at Detroit Water and Sewerage is back on the witness stand.
Ferguson defense attorney Mike Rataj is again questioning him.
Rataj is showing a 2005 letter from Latimer to Inland Waters.
It's regarding that massive sinkhole at 15 Mile and Hayes roads. Remember that?
The letter lists invoice amounts for "tasks" related to that job totaling: $186,081.3.
Rataj says Inland was trying to get paid and wasn't entitled to the pay. Latimer says that is correct.
Another letter is now being shown, again DWSD to Inland Waters and again the topic is charges to fix the big sinkhole at 15 Mile and Hayes.
DWS is letting Inland know that the amount listed for overhead and profit exceeds the "allowable amount."
Latimer says Inland was asking for money before works was complete and Inland was improperly add mark-ups to the job and was asking for money it wasn't entitled to.
Another letter from DWSD to Inland Waters alerting Dennis Oszust of Inland Waters that Inland added "disallowed" items in an invoice and was asking for $148,000 over what was approved.
Rataj says Inland was trying to "sneak in amounts" it wasn't entitled to.
The government objects to Rataj's use of "sneak" and he withdraws, but makes his point.
Another letter is being shown to the jury, this time the rejection of DWSD of $2661 to Inland Waters that it wasn't entitled to attorney and consulting fees.
"They should have known better, correct?" Rataj asks. Latimer says Inland "should have known what was billable in their contract and what was not."
By June of 2005, while sinkhole work was going on that summer, Inland came back to DWSD to ask for money to be paid to it for work done after DWSD said the company wasn't entitled to the money.
Close to $2 Million dollars were in dispute.
The jury has to be wondering what was going on with DWSD and it's contractors. The dollar amounts to maintain the water system in Detroit are astounding. You pay your bill and then the money gets fought over, paid out, used, misused.
Rataj is now showing a list of contractors who bid on a job. The bids are from $10 Million on the low-end up to $15 Million.
But the "score" the bid is given is the determining factor, not the job. The score is based on factors like if the contractors wanting the bid is a Detroit company or not.
Latimer is looking at his own letter that awarded Lakeshore with a huge contractor, even though it came in second to Detroit Program Mgt. Team. DCI and Ferguson's XCELL were actually the best scores for the bid.
Rataj points out that Ferguson didn't get the contract.
"Mr. Mercado decided to split it up and not give Mr. Ferguson the contract." Rataj. Latimer: "Right."
Rataj then says Inland got a pair of contracts after Kilpatrick left office.
Lakeshore filed a formal protest with DWSD over that contract and lost, Latimer agrees.
So, Ferguson's attorney is making a point that Ferguson didn't get a contract worth $80 million. Lakeshore didn't get it either, and they apparently had "friends" in the department.
Rataj ends with Latimer.
Now the prosecution is back to question Latimer.
Mark Chutkow is asking the questions for the government.
Chutkow is back with the DWSD letter to Inland to show they overbilled $186k on a $50 Million project to fix that 15 and Hayes sinkhole.
Chutkow is showing that Rataj just focused on a drop in the bucket involving a blip in a huge project, showing no fraud was perpetrated by Inland.
Chutkow is going back to yesterday, viewed as a "win" for the defense.
They're focusing on that $10m contract Lakeshore says it won, then was stripped of due to Ferguson.
Yesterday, Latimer testified that the contract wasn't officially awarded to Lakeshore in the first place.
Chutkow: "Did Mr. Mercado ever direct you to cancel this contract?"
Latimer: "Not at that time."
Latimer then says during this time to review bids and decide who gets the contract, DWSD asked it's board to move forward in negotiating with Lakeshore.
The process to award the $10m bid between 2002-2003 were moving forward with Lakeshore.
The contract with Lakeshore was presented to the board for approval.
Looks like Lakeshore won the $10m deal to repair sewers and water mains in Detroit.
2/26/2003 Victor Mercado signed the order to move forward to enter into a contract with Lakeshore Engineering.
"APPROVED" is stamped on the document being shown to the jury.
Months later the contract was cancelled and rolled into Inland's contract.
"Correct." Latimer said.
Questions from government to Latimer:
"If the department did this as a regular practice would you be concerned?" Latimer: " Yes."
"Would you be concerned about the contractors who put the bids together?" "Yes."
"Would you want a compelling reason to cancel a contract that had gotten to this stage?" (Objection)
Does this happen a lot?
Latimer: "It happens. Not a lot, but it happens."
Did Mercado ever explain his change of mind?
Latimer: "He talked about potential cost savings."
Would Mercado change course like this?
Latimer: "No. He was more decisive and direct."
Ferguson was on Inland's team.
Inland got the contract that seemed like it was headed right to Lakeshore.
Ferguson also then was added as subcontractor to another of Inland's contracts.
Ferguson was not on Inland's original bid. He then got 20% of Inland's contract.
TEXT MESSAGES BETWEEN FERGUSON AND THEN MAYOR KILPATRICK:
"1361 is the same contract
1361 prices maybe less than the other one, but hey you know the rest BOBBY FERGUSON"
THE MAYOR: COOL!
Chutkow: "Can you think of any reason why the mayor would be discussing a water contract with a subcontractor?"
Lakeshore declined to give Ferguson 25% of contract 1361
Kilpatrick attorney Jim Thomas is angry, objecting to this line of questioning saying it's "out of line." And that the questions are "improper."
Judge Edmunds: "Overruled, Mr. Thomas!"
During the break Kwame Kilpatrick was down in the main lobby of the of Courthouse as a large group of new flag waving American Citizens emerged from being sworn-in, Kilpatrick actually welcomed several of them. I'm not sure if they knew him.
Back in Session - A memo from Victor Mercado to Darryl Latimer states: "cancelling CM-1361 will not increase cost or time of the project." Latimer indicates was not the case.
We are now seeing score sheets from the DWSD which indicate LES was the recommended contractor for CM-1361 - a document signed by Mercado and several other DWSD Engineers. DWSD drafted a letter on April 28, 2003 indicating approval of LES as the contractor for CM-1361 which was not signed or sent to LES.
May 12, 2003 board of water commission document with the word "pulled" across the CM-1361.
Latimer states he prefers the standard cost method in evaluating bids, because it provides the best value for the people of the City of Detroit. That process was not used for CM-2014, ultimately this rise in cost was passed on through higher water rates. The cost of corruption - directly to the public. No more questions.
Re-cross: Thomas declares he sees a train, and its coming right at him!
In reference to CM-1361, Thomas argues there is a cost savings to have contractors who are already out in the field, stay on the project. There was a justification because it should have saved money - however, it ultimately did not. Thomas argues that is because of the nature of underground work, but the spirit was correct.
The cost of cancellation; the DWSD did not hire more people or have to work longer hours because of the contract cancellation. There was a cost to LES, but that is the "cost of doing business". LES had government work and is doing fine now.
As to the text message: there is nothing inappropriate about other people having conversations about that contract.
Many contracts get cancelled, Rachmale never complained or filed a lawsuit over the cancellation the contracts.
Kilpatrick has no control of City Council, we all no that.
DLZ was not a Detroit Headquartered Business - their headquartered in Columbus Ohio. They have offices in Michigan but that is not the same. It was a lie to get the contract. Pulling their certification was correct.
Judge calls for a side-bar
Victor Mercado was in a position of authority and everyone will not always agree with every decision. Ten years later we can try and second guess but, he (Mercado) was trying to save money for the City and bolster Detroit Headquartered Business.
Not exactly a question, but Thomas follows it up with "would you agree?"
Five minute break.
12:13PM Back in session - Rataj back for re-cross. There are still many steps in approving a contract, and the Mayors Office has nothing to do with approval of DWSD Contracts.
12:15PM Chutkow calls for a side-bar
12:17PM we're back, February 19, 2003 e-mail from Mercado to Latimer looking for contracts that could be cut. Suggesting 1387 was a result of "cost cutting measures." Although, history shows it still cost over $10 million.
No more questions.
Prosecution calls Kim Harris, worked in purchasing for the City of Detroit and the Human Right Department.
Michael Bullotta asks about the Human Right Department, they are the office that certifies contractors. In the past the City of Detroit had an equal rights ordinance that required 25% of construction work should be performed by minorities, and 5% by woman.
That ordinance was struck down, and it was changed to Detroit Based Business.
Harris was the person who certified DLZ as a Detroit Headquartered Business. There was an investigation and it was determined DLZ met the requirements as a Detroit Headquartered Business. The City of Detroit Law Department came to a legal conclusion that DLZ was a Detroit Headquartered Business.
The Detroit Law Department advised Harris that certified business should not get their certification revoked during the term of their certification. They should wait for that certification to expire.
Victor Mercado called Harris back in May of 2006 and asked if DLZ was a certified DHB. Harris advised DLZ was certified.
Gerard Grant Phillips - Director of the Human Right Department , told Harris to de-certify DLZ.
Phillips told Harris this was directed by Mayor Kilpatrick. "The mayor wants it done!"
Harris felt it undermine the whole process, never-the-less Harris drafted the de-certification letter and Phillips signed it.
Harris directed the person who runs the Certified Detroit Based Business Register to remove DLZ from the register.
Bullota says this is a good time to break.
Court in recess.
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