Witness: Stack of checks were made out to Ferguson

Author: Shawn Ley, Local 4 Reporter, @ShawnLeyLive, sley@wdiv.com
Published On: Nov 16 2012 09:39:28 AM EST   Updated On: Nov 16 2012 12:00:36 PM EST
kilpatrick-on-trial pretape image
DETROIT -

9:05 AM

Federal corruption trial of Kwame Kilpatrick, Bernard Kilpatrick and Bobby Ferguson. 

Today is a two hour court session from 9 a.m. to 11 a.m. this morning.

You’re welcome to follow our blog and also watch a my concise update on Local 4 News at noon today and everyday. 

Court is now in session.

Big money checks are being shown on the overhead projector. 

On the witness stand:

Avinash Rachmale has returned to the witness stand to continue his testimony for the government, but then to also be cross-examined by defense attorneys. 

Rachmale built up his company into a world-wide powerhouse and he did it by securing hundreds of millions of dollars in city of Detroit Water Department Contracts.

That’s tax money and water payments. Public money. Kwame Kilpatrick was in control of the water department and Rachmale’s testimony is that he was shaken when the city canceled two contracts worth $15 million when Kilpatrick was the mayor.

He says he couldn’t get an answer from the city why their contracts were canceled.

He says something led him to Kwame Kilpatrick’s father, Bernard. Rachmale says he paid Bernard Kilpatrick $2500 to “consult.” Kilpatrick indicated that Rachmale should talk to Bobby Ferguson.

Rachmale is saying that Lakeshore did not include Ferguson on contract work and two contracts were canceled. When he included Ferguson, the contracts flowed in from the city and his company took off to a multi-million dollar enterprise. Lakeshore became so successful, President Obama met Rachmale to highlight Lakeshore as an example of small business success. 

The details from Rachmale are that he then began paying Bobby Ferguson to keep him happy and to keep his work with the city going. 

The jury is now being shown check after check made out to entities of Bobby Ferguson, paid by an entity of Lakeshore.

The checks are rubber stamped signed by the man on the stand, Lakeshore founder Avinash Rachmale. 

Here are just SOME of the checks paid to Ferguson from Rachmale that are presented in the form of extorted shake downs: 

The checks are from 2007

Checks written from

SKY GROUP LLC (Subsidiary of Lakeshore) 

A&F Environmental (Ferguson) $102,000

A&F Environmental $150,000

A&F Environmental $120,000

Johnson Consultants $200,000

A&F Environmental $147,000

A&F Environmental $203,800

A&F Environmental $150,000

The checks memo states: “Paid for building improvement.”  

But Rachmale says no improvements were made. These are checks likely paid to Bobby Ferguson to “no work” jobs to allegedly keep Ferguson happy, which kept water department contracts flowing to Rachmale and Lakeshore. 

Now shown is a spreadsheet from an accounting group reflecting all of the payments made by Rachmale’s group to Ferguson’s group.

Get ready for the total paid to Ferguson: $1,585,450.09

9:48AM

Now we’re seeing an email : 

Oct.6, 2005 

From: Ayanna Mitchell

To: Bobby Ferguson

5% of $1,500,00 million should be jobs profit, abatement work = $75,000

This has to do with a “change order” for an asbestos contract Lakeshore had from the city of Detroit.

What was the amount your company was willing to pay Ferguson for this change order on this contract? The prosecution asks Rachmale.

Rachmale:

“Hardiman came to Rachmale to tell me that there was a 5% fee on that contract.”

Hardiman was a key executive with Lakeshore and has already testified that Ferguson “shook down” he and Lakeshore.

Email:

From: Tom Hardiman

To: Avinash Rachmale

Feb 2 2007

Avinash,

These are the invoices from Johnson Consultants.

Tom H.

Invoices, the prosecution is suggesting were paid to Ferguson to NOT remove any asbestos from buildings.

Did you pay that money, the prosecution asks.

Rachamale: “Yes.” 

Ferguson got a $75,000 fee for a simple asbestos job Lakeshore won from the city of Detroit. Money for not working on the job. 

Prosecution: “When you received payments from the city, that’s when you’d pay Mr. Ferguson?”

Rachmale: “Yes.’ 

Rachmales says Ferguson never alerted him that payments were “due.”

Prosecution: “Why did you pay him $75,000?”

Rachmale: “We did not want any of our work to be stopped. We did not want any of our contracts to be stopped.”

Prosecution: “Why did you think he could stop contracts?”

Rachmale: “We had lost two contracts. We did not want to create any issue with Ferguson.”

Now, we’re moving to a new water department contract from the city of Detroit valued at $15 million.

Lakeshore sent in bids to get the contracts.

The contract was for various “water system improvements” throughout the city of Detroit.

Lakeshore’s bid included subcontractors:

Willie McCormick & Associates

D’Agostini & Sons

A&H Contracting

Sigma

Spalding Decker

Soma Engineering

E&T Trucking

The kind of work we’re talking about is what we see in Detroit every day:

A crew digging up a street to reach the water main and replace or repair the water main, pipes and equipment and then put the street back together.

All of these companies are minority owned in Detroit.

Rachmale says it’s a voluntary, not mandatory goal of his to hire minority contractors.

They’re taking a five minute break.

10:29AM

Back in session.

Ferguson then approached Rachmale to join this contract.

“We did not the job unfairly taken away, so I asked my partner to reach out to Ferguson.” Rachmale said.

Rachmale says Ferguson has another company called “E&T Trucking” and this was part of our team.

It was his understanding Ferguson “controlled” this trucking company.

Rachmale is being asked about this “E&T Trucking.”

Lakeshore listed how wonderful this trucking company was and how many decades of experience the company had.

It’s painting a picture that perhaps Rachmale padded contract bid proposals to not only win the contract, but to include Ferguson in the contract?

In fact, Ferguson was listed on a COMPETITOR’S contract bid, so he couldn’t be included in the Lakeshore bid.

This is showing how far Lakeshore went in it’s business practices to keep Ferguson happy. Ferguson is technically listed on two contract proposals.

He can’t lose.

Ferguson’s Xcel Construction was on the winning bid for the water main job.

He then wanted Xcel construction to be the head of the contract Lakeshore won.

He had never provided “construction management” services to Lakeshore before.

Ferguson got 15% of the contract through this trucking company.

He’s coming back for more by telling Rachmale that he’ll also oversee the entire project as manager.

Rachmale: “He came to our offices to talk about this. He had come to the meeting and said, I will do this part, I will do this part. He was trying to justify this management.”

Prosecution: “He was telling you to cut back on engineers on this job so he could be paid fees to management the job?”

Rachmale: “Yes.”

Ferguson provided NO effort to put the bid together.

What percentage of the fees did he want to take?

Rachmale: “He wanted half. 50-50.”

Would Rachmale make any money from this? “Very little.” Rachmale.

Rachmale told Ferguson that he had his team ready and that he didn’t need him on his management team.”

Why not tell him to forget about it?

“Again, I did not want to upset him, piss him off. We did not need him. I did not want my contracts unfairly canceled.”

Prosecution suggests: That’s why Lakeshore was willing to let Ferguson take half of Lakeshore’s management fee.

Ferguson was upset about the fees.

Hardiman would have a lot of “heartburn” when Ferguson came to collect the fees or when representatives of Mr. Ferguson would come collect the fees.

“I told him, we don’t want to upset him. Continue paying the fees and move on.”

Rachmale says they paid Ferguson and did not receive any services for it.

“I had a call from Ferguson once and wanted to have a meeting.”

Ferguson complained that Hardiman was not being fair and was going to help his company. He wasn’t doing “the right job.”

Fair? “Every time they came to collect payments, Hardiman would get upset and call them

parasites.”

Prosecution: “Did you tell Ferguson that you weren’t getting any work for it?”

Rachmale said he never told Ferguson that he wasn’t going to pay him not to upset him and start losing contracts again.

10:54AM

After the lunch meeting with Ferguson, Rachmale told Hardiman to continue paying the fees because he did not want to lose the contracts.  Remember the lost contracts ($5million $10million) 

Next we see a check from LES to Xcel Construction for $200,000 for "management fees" 8/28/08 

Rachmale says he did not receive any management services from Xcel. 

A&H Vendor report shows $572,221.22 paid to Xcel from 1/2007 to 11/2011 

Ferguson wanted work from change orders and again Rachmale was compelled to provide the money because he did not want to lose his contracts.  

Ferguson threatened to "shut down your projects" using "animated" and "F" language.  

Rachmale felt the threats were aimed at his employee's jobs. 

Ferguson confronted Rachmale in a parking lot yelling: "If you take my work away I will shut you down!!"

11AM:

It was decided by LES that Ferguson would get a part of CM-865, but Ferguson was not on the proposal because Ferguson was on another contract CM-864.  

LES won the bid for CM-865 - FEI got a check for $252,060 and, was paid over $5.2 million on this project. 

Chutkow calls this a "natural stopping point." 

They call it for today - back after Thanksgiving.