DETROIT – Local 4 is inside the courtroom for the federal corruption trial of former Detroit Mayor Kwame Kilpatrick, Kilpatrick's dad Bernard Kilpatrick and his childhood friend Bobby Ferguson. Each day we bring you information from inside federal court as it happens.
And we are back at the Theodore Levin courthouse for the Kwame Kilpatrick federal corruption trial. We had a day off yesterday for reasons that are still unknown to me.
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Derrick "Zeke" Miller, former Kwame BFF and government star witness, will be continuing his direct testimony today and hopefully we will finally get to some cross-examination. All 3 defendants' lawyers will have cause to question the witness.
After trial today, Kwame will be meeting his parole officer to discuss the little matter of an undisclosed $2,000 gift from Chicago pastor Corey Brooks. Kilpatrick was caught on a Wal-Mart video camera counting out the funds on December 11th. It's a clear violation of his parole that could very well land him back in jail.
9:04AM Nancy Judge Edmunds enters the courtroom. US Attorney Mark Chutkow will continue with "Zeke" Miller. Chutkow discussing a transcription error to the jury. Specifically a text exchange on July 21 2004 between Ferguson and Kwame. Erroneous text introduced had Ferguson replying to himself when in fact it was the former mayor who responded "Cool!" Talking about Inheritance Capital Group run by Robert Shumake. Shumake is a Detroit businessman known to Miller. Miller was appointed to Riverfront Conservancy and was co-chair with Matt Cullen. Established to develop east and west side of the riverfront for public recreational purposes. Cullen was the head of real estate for General Motors. Now he is COO for one of Dan Gilbert's entities. Miller introduced Shumake to Cullen because of an opportunity for Shumake to buy a manufacturing facility from GM. Shumake was interested in putting together a portfolio of these assets. So Shumake bought the manufacturing/warehouse facilities and leased it back to GM. Miller entered financially agreement with Shumake- for facilitating the transactions, Miller would get a commission. Shumake wanted to get both pension boards to help provide financing to purchase between 10 to 13 properties. Miller put in a good word for Shumake with Dedan Milton, Jeff Beasley, Walter Moore who also sat on the pension boards.
Miller says he talked to John Johnson, the counsel for city of Detroit. Around the time Miller was leaving city government, he asked if he could continue arrangement with Shumake. Miller says Johnson said he could. Miller says that after he left city government, Shumake paid him $568,000 that went into Miller's Patriot Financial account. Wanted to have an arm's length relationship with the transaction, didn't want anyone in the pension board to know that he was involved in that transaction. Didn't know if his relationship with the mayor might cause that relationship not to go through. Received part of the consulting fee in 2007 and possibly some in 2008. Miller didn't not declare this commission originally. Then he later amended his tax returns when he was being investigated. Miller says he has started paying off some of the undeclared taxes. Miller says he pleaded guilty to not disclosing the commission in his taxes. Miller says he is currently cooperating with the IRS on the subject.
9:20AM Talking about Andrew Park, Asian Village and Scan. Asian Village was a restaurant banquet facility adjacent to the Ren Cen.
Miller says he became aware of it through his association with the riverfront Conservancy. Thought it might revitalize the area. The concept was to be an Asian-themed entertainment venue. Dominic Pangborn and Park were the principals behind the development.
Miller learned about some other investments by Pangborn and Park including Digital 10- contract with Department of Transportation and Secretary of State Offices to enable video display messages that would be subsidized by advertising. Could also do Amber Alerts.
At this time, Miller was Chief Information Officer. Miller says one of his responsibilities was to secure funding for the government, Homeland Security. A Homeland Security grant, UASI, would be great to get the Digital 10 technology and connect to downtown Detroit systems. So expand Digital 10 outside of Secretary of State system. The rights would be owned by the city and create a new source of revenue stream. Would include 2-way security cameras linked to a central center that would be fed to local, federal authorities. Panhborn and Park tried to obtain the federal grants through SCAN, Security Communications Alert Network. Miller assisted them in getting funds from the federal government. Miller used a pass-through to get money to them. There were 3 or 4 phases of money payments to Pangborn and Park. After Miller left, SCAN received a 3rd payment.
9:30AM Miller says the project ran into complications and got out of hand; the screens were installed and later taken down due to complaints at Campus Marshes and city ordinances. There were regulatory hurdles that hadn't been cleared. The general complaint was that they blocked view and could be a traffic hazard. Ultimately, the project was a failure. There are still some cameras up around Cobo Center but not screens.
Miller says he was an advocated for Asian Village with the pension boards. Miller says he mentioned it in conversation with board members- looking for a loan to Asian Village. Asian village was struggling- they had some funding from GM and other private equity but they needed more. Miller spoke specifically to Beasley, then city Treasurer, and Milton, who reported to Kilpatrick. Miller says he received cash from Park. Started as a friendly relationship but he accepted cash from Park on a few occasions. Total was about $10,000. Miller says he doesn't think it was appropriate he took money from them. After he left city government, miller formed Cityvest to help companies obtain funding. Park also gave him $10,000 to give to Kilpatrick. The former mayor asked Miller if he could get the cash for him. "Could you get it from your Asian Village guys," says Kilpatrick asked him. Miller says he picked up the cash at Asian village. Miller believes Park gave it to him in an envelope of hundreds. Miller says he passed it on to Kilpatrick. They went to the bathroom at Asian Village and Miller handed it to Kilpatrick. Miller says it was just the 2 of them in the bathroom. Miller says Kilpatrick said, "cool" when he handed him the money. Kwame looks bewildered and indignant.
Direct testimony done.
9:38AM John Shea for Bernard Kilpatrick cross-examines. Miller says he knew Bernard from his high school days and knew of his professional background. Miller says he knew that he was experienced in electoral politics and that he was pretty well connected. Shea asks if Kilpatrick family is close. Yes says the witness. Witness agrees that he would have been surprised if Bernard did not get involved in Kwame's campaign and political career. Shea saying that smart politicians use other politicians who know more. Miller agrees. Shea saying Bernard also helped his children with their non-profits- Next Vision for daughter Ayanna and Kilpatrick Civic Fund for Kwame. Saying Bernard would speak at fund-raisers. Miller agreeing with all of this. Shea says he didn't pay for the non-profits or the political campaigns. Miller agrees. Miller says it would not be uncommon to see Bernard come to the 11th floor to see his son. Shea says that as a consultant, Bernard had clients had interest in doing business with the city and the state. Bernard taking notes as his lawyer questions the witness. Wearing a multi-colored tie that looks like an optical illusion. Shea saying that important contacts with city government is what made consultants valuable to their clients. Miller agrees.
Shea talking about Conrad Mallett who served in Kilpatrick's administration for a brief time but then left to become a consultant. Jim Stapleton was another consultant who represented clients with interests in doing business with the city. Shea also mentions Curtis Hertel and Edna Bell, former county commissioner like Bernard. Shea says sometimes the consultants moved in house sometimes- like Bernard Parker who sometimes worked independently and at times exclusively with one company. Shea says these consultants would advocate for their clients.
Shea says that sometimes clients didn't get what they wanted. In Bernard's clients' case, Jon Rutherford never got his waterfront casino and Karl Kado didn't get contracts renewed. Shea says so Bernard had to take his lumps when his clients' wishes weren't achieved with the city of Detroit. Shea asks if consultants often vie against each other. Yes says Miller. Shea says that if there is a complaint from a client not getting city business, this might count against them the next time the try to get business. Shea discussing "make-up calls" on the basketball court occurring in business as well. Shea is done.
9:59AM Jim Thomas for Kwame Kilpatrick. Thomas going over Miller's background with Kwame. Talking about meeting in high school, knowing each other's families and being friends with Christine Beatty as well. Thomas talking about a day where Miller went to Kwame's house and things got out of hand and a window got broken. Christine Beatty followed him all the way home to make sure he was alright.
Thomas driving home the closeness of Miller's friendship with Kilpatrick and Beatty. Miller agrees that they all stayed in touch after leaving for college. Thomas says Miller wasn't happy with massage therapy and teaching kids. Miller says he was. "I was equally as happy," says Miller about going to work with Carolyn Cheeks Kilpatrick. Miller says he worked on both Cheeks Kilpatrick and Kwame's campaigns.
Thomas says Cheeks Kilpatrick gave you a job and you went to DC. Miller says yes and admits it was a good job. Miller was in DC for a few years. Thomas says so Miller was engaged in being employed by the Kilpatricks for a significant time. Miller agrees with this statement.
Miller says that Kwame and Carlita were married before he returned from working in DC. Miller agrees that Kwame stood up in his wedding.
Thomas asks if Miller got to know Carlita. Yes says Miller. Asks if he knew her to be good in her job in conflict resolution and peer mediation. Yes says Miller. Miller agrees that their families are close. Miles, Miller's son, is close to Kilpatrick's son. Miller says he felt that Carlita's job in peer mediation and conflict resolution was important. "Seemed like it made sense and was important," says Miller. Miller says he visited the Sherrill school that Carlita worked with. Miller agrees that Carlita was concerned about children in Detroit and volunteered her time for basketball for girls. Miller says he was a volunteer coordinator when Kwame ran for the state house of representatives. Beatty worked with them then too and Miller agrees that she was hard-working and knowledgeable. Miller agrees that he believed at the time in Kilpatrick and his message. Kwame passing notes to defense lawyer Michael Naughton who in turn passes them on to Thomas. Miller says he went to a Gladwin pig roast to promote Kilpatrick in his run for floor leadership. Thomas talking about state arts and quality of life grant when Miller was Deputy chief of Staff for state rep Kilpatrick. Thomas talking about politics being like sausage in that it's messy. Heard this one before.
Thomas asks if Miller is aware that Kilpatrick had sponsored organizations for the receipt of grants. Miller says those grants happened before he got there. We are discussing Detroit 3D, Ferguson's wife's non-profit, and Vanguard. Thomas asks if Kilpatrick advocated for other grants. Yes says Miller. Miller thinking hard about what the other grants could be. Can't come up with any off the top of his head. Thomas lists some grants: New Detroit, $100,000, Trillium Performing Arts Center, $407,000, Detroit Historical Society, $1 million, Center for Creative Studies, $200, 0000 amongst them. Miller recognizes Kilpatrick advocating for some of the grants but not all of them. Thomas asks to sidebar when Judge resists him showing Miller documentation.
10:30AM Sidebar over and Judge Edmunds calls for 20 minute break.
10:55AM Thomas continues his cross of Derrick Miller.
Thomas saying that Kilpatrick supported grants worth hundreds of thousands or millions of dollars even while he was state rep. Miller agrees.
Discussing quadrant meeting- meetings between senate minority and senate majority leaders and the Governor. Miller agrees that they had budget meetings relating to the budget.
Miller says he occasionally attended those meetings. Talking about Mary Lannoye, an earlier witness at the trial, who was director of the State Budget Office.
Thomas says Kilpatrick obviously concerned with Vangurad and Detroit 3D grants. Yes says Miller.
Miller says he doesn't recall when the Detroit 3D and Vanguard grants were awarded. Thomas hands the witness documents to refresh his memory.
Looking at fax from Kelly Bartlett regarding 3D on June 30th 2000.
"Ask me a question I can give an answet to," says Miller about Thomas's questions about 3D and Vanguard.
Miller says he first became aware of the 3D and Vanguard requests in 2001. Miller says that before that, he worked "with" Kilpatrick and not "for" him.
So Thomas says before that, in 2000, you didn't know about the grants or what Mrs. Kilpatrick was going to be a sub-contract. Correct says Miller.
Thomas asks is that why you hesitated in direct testimony when asked about Mrs. Kilpatrick being a sub-contractor for the grants.
"I didn't hesitate," says Miller.
Miller says the fax cover sheet from Kelly Bartlett we are looking at now is different from what we testified to.
Thomas asks if he remembers June 30th 2000.
"Do I remember June 30th 2000? Nope," says a smirking Miller.
Miller says he is not aware of the state of Michigan asking for any money back from 3D or Vanguard.
Miller agrees that the Kelly Bartlett letter had nothing to do with Carlita Kilpatrick being a sub-contractor for Vanguard.
Thomas says Carlita's name came up and Kwame expressed to Miller he didn't know why. Yes says witness.
Thomas says publicity about one's wife is something that would be avoided. Miller's wife worked with Next Vision.
11:15AM Talking about the Kilpatrick Civic Fund. Miller worked on the Civic Fund with other Kilpatrick friends or family members.
Bernard was not on it but Christine Beatty was.
Talking about William Phillips, who Thomas describes as Miller's friend, being involved with the Civic Fund.
Looking at an internal IRS document from July 8th 1999. This is application for tax exempt status for the Kilpatrick Civic Fund. It is signed by Christine Beatty.
Miller says a 501c4 is a non-profit corporation that can accept donations and make charitable donations within specific guidelines.
Miller says he supposes it could be a social welfare organization.
Looking at the articles of incorporation:
1. Promote community activities that enhance the neighborhoods
2. To provide information to the citizens of Detroit about legislative issues affecting their lives.
3. Participate in activities that contribute to the redevelopment of the positive image of the city of Detroit.
Thomas showing the incumbency certificate of who participated: Kwame Kilpatrick, Chairman, Derrick miller, Vice-chairman, Erik Rayford, Christine Beatty and Ayanna Kilpatrick. Certificate dated June 1st 1999.
So based on that, says Thomas, you were affiliated with the Kilpatrick Civic Fund as of June 1st 1999.
Thomas says that he was shown this under direct and that he had said that the Civic Fund was prohibited from donating to political causes. Miller says not candidate-specific.
Thomas says that doesn't mean they can't be involved in political activity as far as the law is concerned. Thomas says the law doesn't prohibit getting into political purposes as long as it is not candidate-specific.
Miller questioning definition of political purposes.
The get out and vote campaign says Thomas as an example of something political but not candidate-specific.
Thomas asking if Miller is aware of the articles of incorporation being changed at some point.
Thomas asking about reasons why Miller might have pre-signed Civic Fund checks.
Talking about political consultant Bob Berg who was engaged in working on the controversy surrounding Jon Rutherford and the Kilpatrick Civic Fund. Thomas asking if Bob Berg worked on the Civic Fund.
Miller hesitates about whether he was working with the Civic Fund at the time the Rutherford scandal occurred. miller doesn't remember if Berg was working for the Civic Fund or the campaign at that time.
11:35AM Thomas says when the issue arose, it had to do with both the Civic Fund and the campaign. Thomas says that you can't say what Berg did relating to either the campaign or the Civic Fund.
All this back and forth has to do with the fact that Berg was paid out of the Civic Fund for his work on helping countering the media firestorm surrounding the scandal.
Going back the purposes of the articles of incorporation.
(D)"To operate and act exclusively for charitable and educational purposes."
The article goes on to say that "the corporation shall not participation in or intervene in any political campaign on behalf or against any candidate."
Thomas says that the articles of incorporation were restated on July 26th 2001. Thomas shows a document signed by Miller for the restated articles.
Miller says he remembers being asked to sign that document. Doesn't know if he was a check signer at that time.
Thomas says these articles were changed around the time that Kwame was running for mayor.
The prohibition of getting involved in political activities from the first set of articles has been removed.
New articles talk about:
(b)Provide information to Michigan residents about legislative issues affecting their lives.
(c) Educate Detroit residents on the importance of voting.
Thomas says so can get involved as long as it's not candidate-specific.
Mark Chutkow asks for sidebar.
11:50AM Thomas brings up the Lake Snell Perry invoice from July 17th 2001. Thomas says this is around the same time of the restated articles of incorporation. Total is $18,750. This is for 75% of $25,000 for 4 focus groups.
Looking at the check from Civic Fund to Lake Snell Perry. It's for $14,000 dated on July 30th 2001, 4 days after the articles were changed. The memo line reads focus groups.
Thomas says this is an allocation that has been deemed appropriate after the articles of incorporation have been changed.
"I don't know," says Miller.
Thomas says that the articles of incorporation allow for non-candidate specific work to be done.
Chutkow objects this is misleading. Judge sustains.
Thomas says that Kilpatrick as a person wouldn't he be figurehead of Civic Fund. Yes says Miller.
So his presence in the media, giving lectures throughout the state would be important for him and the Civic Fund. Yes agrees Miller.
In April 2001, Thomas says Kilpatrick had not yet announced he was running for mayor.
Miller says that he announced he was running for mayor of the city in April 2001 from his mother's porch.
Thomas asks if he remembers Kilpatrick exploring being Lt-Governor. Miller says he traveled throughout the state with Kwame regarding legislative issues. Miller acknowledges that Kwame was considering running for Lt-Governor and that the focus changed when he began to consider running for the mayor of Detroit.
Thomas says there may be overlap between polling information gathered, purposes of the Civic Fund and Kwame running for mayor.
Miller says that the Civic Fund polling was done for running for mayor.
Judge says it's inappropriate for Thomas to keep pointing out increments of time it takes for Miller to respond or his hesitating before answering.
"I'll save it for arguments," says Thomas.
12:05PM Judge calls for 5 minute break.
12:15PM Thomas moves on to new chapter. Talking about Jon Rutherford.
Thomas saying Jon Rutherford never got a casino deal. Miller says that not that he is aware.
Thomas says that even Coleman Young wanted casinos in Detroit than Mayor Archer came into office and said he would fight against casinos.
Thomas says there was a giant sucking sound when a casino was built in Windsor and the money went flowing to Canada.
Originally, during the Archer administration, the casinos were going to be built on the riverfront.
This is the riverfront everyone was talking about when they were talking about casinos says Thomas.
Miller lists casinos: MGM, Greektown and what eventually became Motor City. Prior to Kilpatrick taking office, they were going to be located south of Jefferson.
Miller says he remembers most of the deals for the casinos. Thomas says there was going to be money loaned for the acquisition of casinos. Miller says he believes it was $150 million.
Miller says when Kilpatrick came into office, $125 million was spent.
Thomas asks what was the most expensive piece of real estate in the US at that time. Was it that piece south of Jefferson? Miller says he doesn't know.
Thomas asks if Miller remembers "big box" retail being targeted for that area: big retail outlets like Home Depot.
Apparently rutherford wanted big box stores down there before he decided on casinos.
Miller said he helped renegotiate the deal with Ruth Carter. Miller said they wanted to get permanent casinos for hotel rooms and the retail space would increase tax revenues for the city.
Kilpatrick had said that there would be no casinos to be built on the riverfront when he was running for mayor.
Thomas says that once Miller cut his deals with the casinos, there weren't going to be any casinos on the riverfront.
Miller he says when he met with Paul Steelman, a Vegas-based casino architect, and Rutherford it was always specific to the casino project.
Steelman worked for Sheldon Adelson of the Sands. Thomas asks if Adelson is someone with a reputation for being able to make money from convention centers. Miller replies yes.
On August 3rd 2002, a casino deal was finally cut.
12:35PM Thomas says once deal was done, you were back to the business of running the city of Detroit. Yes says Miller.
Around that time, 36 department heads in the city were asked to resign. 48 contracts were being negotiated and had to be done in a 90 day period. Thomas says the city was in disarray, buses weren't running on time, snow was being shoveled and grass wasn't being cut.
Thomas says the Detroit PD was under a consent decree about its treatment of the people. So the city had to hire a police chief and at the same time, was running a search for a new head of the Setroit Water and Sewerage Department (DWSD). Thomas saying that mayor let Kathleen Leavey go as head of the DWSD when he came in. Thomas saying you had your hands full in the first 90 days working for the city. Correct says Miller. Thomas says didn't the stress give you physical and emotional problems. "Did you gain weight? Did you lose your hair," asks Thomas. Miller laughs and says he doesn't recall his anxiety. Thomas says Miller, Kilpatrick and Beatty were hard workers. The deal with the casinos was good for the city says Thomas. Miller agrees. Thomas asking about status of Cobo Hall in 2004, specifically talk about the suburbs taking over at that time. Brooks Paterson was saying he wanted outside management and that Cobo Hall was having difficulty with financing.
Miller says he talked to Curtis Hertel of Port Authority about needed expansion of Cobo. Thomas says that it was at this point that there was discussion about slots at Cobo. Miller says there was never discussion of slots at Cobo. Thomas says Rutherford never got passed square one on that issue. Miller agrees. Thomas moving to new area. Talking about Rutherford and the Free Press Civic Fund article. Doesn't sound like a new area to me. This is the article that exposed that Rutherford's homeless shelter gave $50,000 to the Civic Fund on August 29th 2001. This story triggered the IRS investigation that spanned the federal probe into Kilpatrick. Looking at check from DPR Management, Rutherford's company, to the Kilpatrick Civic Fund on July 2nd 2001 $30,000. Article wasn't until August 29th. Looks like the check was deposited July 10th 2001. Miller agrees that he said in direct testimony that he, Kilpatrick and other leadership members felt that they didn't have to disclose donors or money to the Civic Fund. Miller appears to change his mind and says "Wait a minute now I remember." Miller says now they did disclose the donors before August 29th. Someone at the Civic Fund accidentally filed it with the Secretary of State. 12:50PM Chutkow asks for a sidebar. Don't know what happened at sidebar but we are done for the day. Back tomorrow at 9AM.
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.