FOIA Verifies Federal Investigation Of Detroit Land Bank Authority, MSHDA, MHA

In the spirit of fuchsia...

State letter notes firing, reassignment in Detroit demo probe

Please, keep in mind, the Federal Bureau of Investigation only investigates criminal matters, not civil, criminal, like they are pretty darn sure indictments will ensue from their work on a criminal investigation.

Not an audit.

Not an administrative review.

Not even an examination.

The FBI does criminal investigations, that have gone through its administrative structures, via federal law, or even international, depending on the criminal matter, which is not civil, so the likelihood of a successfully communicating the findings of the investigation to the U.S. Attorney's Office is quite significant.

NOTE TO SELF: Find out annual stats on how many FBI investigations were rejected by the U.S. Attorney General.

Detroit — A former high-ranking member of the Detroit Building Authority was terminated and a land bank staffer who oversaw Detroit's blight elimination was reassigned over problematic bid awards for the city's federally funded demolition program, according to a document released amid a 2016 state audit that found evidence of possible "bid rigging" and "collusion."

No, really?

The previously redacted Sept. 30, 2016, letter, sent by the homeownership director of the Michigan Homeowner Assistance Nonprofit Housing Corp. to the U.S. Treasury, identifies former Detroit Building Authority deputy director Jim Wright as a "key staff person" terminated from the program over the issues, and a second Detroit Land Bank staffer, Marti Delgado, reassigned to another area "that does not have any roles and responsibilities with blight elimination or handling of any Hardest Hit blight funding."

Correct me if I am wrong, but is this the same Jim Wright from DMC and Wayne County? Oh, I remember this one.  This goes back to Hamtramck. This is going to get interesting.

The full letter — which also referenced an ongoing federal criminal investigation into the program — was made public Monday as part of a lawsuit filed last fall by activist Robert Davis over the release of audit and financial documents related to the state's investigation of the program.

The beauty of FOIA.  We have official confirmation that there is an ongoing investigation with grand juries. How do I know about the grand juries? This is Detroit.

The revelation comes after the audit, first made public this spring through the Freedom of Information Act, detailed admissions from Wright and Delgado regarding the manipulation of bid awards. The 2016 audit, at the time, also suspected "bid rigging" and "collusion" between the city's building authority, the Detroit Land Bank and program contractors.

They were doing that creative billing of cubic space, like air. Seriously.

Wright, according to the 2016 state audit released to The Detroit News, admitted to contract price manipulation that included hiding some demolition overages by spreading them over other properties so it appeared none of the work exceeded cost limits set by the state.

The practice — which kept each property under a $25,000 required cap — shifted costs "arbitrarily" to other properties, Delgado and Wright both admitted in a July 2016 interview with Tom Golden, who led the investigation for the state.

This was done to abide by a per property funding cap set by the MHA. The Michigan State Housing Development Authority, which distributes federal dollars for the program, was not aware of it, according to the audit. But Detroit's Building Authority Director David Manardo was, according to interviews conducted during the audit.

MSHDA is not absolved from anything at this point.

“He knew of this practice. That it was done. There was no malice intent," Wright told Golden of Manardo. "He wanted to remove the blighted homes at the same contract value. And I agreed to adjust the other properties upwards to make up for the reductions. If the contractors would agree to reduce the price on those properties over the cap then we’d agree to shift those amounts to other properties in the same package. Make up the difference. ... It should not have been done that way."

Wright, who oversaw the blight removal program, abruptly resigned in August 2016, according to city officials at the time. Delgado, a compliance manager for the land bank, left the blight elimination program in January 2017.

I swear, those quit claim deeds were jacked up.  That is why there were issues tearing down the wrong properties.

Wright hung up when reached by phone Monday. A relative for Delgado said she was not available.

Sometimes it is not wise to make public statements during a federal investigation.  Just saying.

The city's demolition program has been the subject of federal, state and local reviews since it came under scrutiny in the fall of 2015 in the wake of bidding concerns and soaring costs.

John Roach, a spokesman for Detroit Mayor Mike Duggan, said the city does not comment on personnel matters. But he added that Detroit "has been completely transparent with its demolition program and has fully cooperated with every state and federal inquiry into the program."

https://webinquiry.courts.michigan.gov/WISearchResults/ViewPage1?commoncaseid=489431&fbclid=IwAR3R9GpAj98Bxx6YYF8c_aXS2fVwhxTYNASLPEaPmMX-vwlNX_6_8F2-HYw

What about transparency with the other programs associated with properties, like...uhm...property taxes and the Detroit Land Bank Authority?  Tell us the story how the Detroit Land Bank Authority levies taxes, what they do with the taxes they levy, and how come they are levying taxes.  Oh, and tell us the tale of how a city fee becomes a county foreclosure tax!  And I really want to hear to story on how the Detroit Land Bank Authority is operating with the city when it never incorporated, and do not forget the one on how the Detroit Land Bank Authority was representing you, Uncle Duggan, in a court of law.

Oh, boy! I am so excited.  Better get more popcorn.

"All of the issues raised in the MHA audit were addressed and resolved a year ago and detailed in two press conferences conducted by Mayor Duggan," Roach wrote in an email.

"The land bank and the state agreed on a financial settlement over disputed billings to the state, and there was no finding of wrongdoing on the part of the city or the land bank. Since these issues were settled, the U.S. Treasury Department has released another $132 million to Detroit’s demolition program to allow it to continue its work."

Roach said initial concerns raised by the auditor involving Manardo were not substantiated after a full investigation of land bank and building authority computers and documents.

"In the preliminary stages of the investigation, the auditors raised the possibility that Dave Manardo may have had some responsibility for the ineligible billing practices," Roach said. "We cannot speak to the statements made by Jim Wright during his interview with the auditors."

Were they demolishing properties they never filed quiet titles on? Hmmmm......

State officials on Monday deferred comment on the audit and Davis' claims to the state Attorney General's Office, which is handling the litigation Davis filed against MHA and the state treasury. A spokesperson reached late Monday declined comment, citing the pending litigation.

Oh, I gotta pull this case.  It will be worth the bottle returns.  Or, I guess I could just email the attorney.

MHA Homeownership Director Mary Townley, during a February deposition in Davis' lawsuit, said there had been concerns of "possible bid-rigging" but the investigation, at the time, was "still ongoing with no final determinations being made."

I believe MHA Homeownership may have a few other issues they are currently dealing with pertaining to SIGTARP.

Katie Bach, a spokeswoman for MSHDA, noted Monday that "it wasn't MHA's role to conclude if there was bid-rigging, as that is a law enforcement determination."

Hold your horses, there, little buckaroo, a judicial determination is coming, too.

MHA, while pursuing its investigation and seeking payback of any funds inappropriately spent by the land bank, also prepared a presentation to update law enforcement on irregularities in the land bank's use of the federal dollars for demolition, she said.

Ladies and gentlemen, it seems we have ourselves whistleblowers, fully cooperating with the federal investigation.  Congratulations MHA, for doing the right thing and help me stop these people from stealin'!!!

"MHA is not aware of the status of any law enforcement investigations that may have resulted from that disclosure," she said.

MHA hired Golden in spring 2016 as well as the firm Ernst & Young to conduct a forensic audit of Detroit's Hardest Hit Fund program expenditures. In August, the state informed the city of the early issues uncovered.

NOTE TO SELF: I need to request a copy of that audit.

The federally funded program shut down for two months in August 2016 after the MHA review, in conjunction with MSHDA, turned up "mistakes" and "errors."

Ah! That is what we call "false claim" in the layman vernacular.  See, you can learn something new every day.

Since then, several controls have been strengthened. Among them, state housing authority employees are now embedded at the land bank and building authority to provide compliance support. Treasury accepted the new procedures Oct. 14, 2016, and work resumed.

Hmmm...are they really MSHDA employees or, oh, how shall I phrase this, "intelligence experts" who are not "Legal Geniuses" (trademark pending). I just love to speculate, but hey, what do I know?

There's no place like Motown!

Duggan first revealed in February 2017 that the state's review of the program's billing practices had turned up a total of $7.3 million in what MSHDA argued were "inappropriate" or "inaccurate" costs.

Early last year, the land bank repaid $1.37 million to address improper expenses identified by auditors for the state.

I am still trying to figure out how the Detroit Land Bank Authority wrote a bogus check considering the fact that I had the bank accounts.

Last June, the city's land bank also reached a settlement with state housing officials to pay $5 million to resolve a dispute over invoices the state said were improperly submitted for repayment in the demolition program. At the same time, the state agreed to make another $5 million available to the city for tearing down houses.

Sshhh...that is what we, who are not "Legal Geniuses" (trademark pending), call kickbacks, money laundering, and racketeering.  Sshhhh....

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Cocktails & Popcorn: Brenda Jones & The Detroit Land Bank Authority Campaign Finance Depositions?

Interesting line of questioning.

I wonder if this has anything to do with the Detroit Land Bank Authority and campaign finance?

Why Detroit city council president's deposition was abruptly halted

A lawyer for the City of Detroit abruptly ended a deposition of City Council President Brenda Jones on Wednesday after Jones was asked repeatedly whether she had been contacted by the FBI in the last year.

Jones responded "I do not wish to answer" three times during the line of questioning in the deposition, which is part of a civil lawsuit unrelated to the FBI.

A city lawyer later said the deposition was ended because the questions were part of a "fishing expedition" and a plan to embarrass Jones, who is not a defendant in the lawsuit in which she was slated to give the deposition. Jones also has not been named in connection with two ongoing, unrelated FBI investigations involving city officials: a probe of the city's demolition program and separate scrutiny of towing magnate Gasper Fiore.

The council president's sworn deposition was being taken as part of a lawsuit that two downtown bar owners filed in November 2016 against Mayor Mike Duggan and other city officials based on claims of police harassment and alleged favorable treatment that Dennis Archer Jr., former mayor Dennis Archer's son, received while buying the building their bar occupies. The plaintiffs allege that Jones is one of the council members the bar owners had contacted about their situation.

Although Jones has not been implicated in the separate federal investigations, her colleague, Councilman Gabe Leland, was described in January in FBI wiretap recordsas willing to keep the Fiore family updated with information that might help their towing businesses.

Drew Paterson, the bar owners' lawyer, asked Jones during the deposition whether any FBI agents had contacted her in the last year. Paterson's fifth question honed in on Leland.

It came after she repeatedly said she did not want to answer such questions.

Jones told the Free Press on Thursday she didn't answer the questions about the FBI because the deposition was supposed to be about the bar involved in the lawsuit, the Centre Park Bar. "You want to do a deposition about the Centre Bar and what I know about the Centre Bar, I don't have a problem," she said.

Jones said she has not been in touch with the FBI. "The FBI has not contacted me for anything," she said.

READ MORE: Detroit Councilman Gabe Leland targeted in FBI investigation of towing titan Gaspar Fiore

READ MORE: Downtown bar: Paradise Valley land deal is tainted

During the deposition, city attorney James Noseda appeared fed up with the FBI questions, according to a transcript of the deposition.

Noseda already had objected to previous questions about Jones' political fund-raisers, use of her city-owned vehicle and how she hires staff.

"Counsel, if you want to continue with this line of questioning and all the similar lines of questioning that has nothing to do with this case, I am adjourning this deposition and I'm going to seek a protective order. Are you going to — then fine, we're adjourned. I'm seeking a protective order," Noseda said, according to the transcript.

Jones was escorted out by counsel, the transcript reads.

Hours later, Noseda followed through, filing a motion to prohibit the depositions of Jones and two other council members who were scheduled to give testimony out of court — Mary Sheffield and Leland — because, the document alleges, the depositions are being taken in bad faith and seek to embarrass council members.

The filing also claimed the questions asked during Jones' deposition were the work of community activist and political agitator Robert Davis, who has been represented by Paterson in scores of lawsuits filed against various municipalities in recent years, often alleging violations of the state's Open Meetings Act and Freedom of Information Act.

"The questions were undoubtedly drafted by Robert Davis and are nothing more than a fishing expedition by a non-party intended to harass and annoy high-ranking city officials," the filing reads.

Davis, who is working as Paterson's law clerk on this case, said the assertion is absurd.

Paterson responded Thursday, asking the court to continue with the council members' depositions. The city's objections to questions about the FBI do not fall within the legal framework for withholding an answer during a deposition, Paterson wrote in his court filing.

"Brenda Jones is an 'elected' official. If she was contacted and/or interviewed by the FBI concerning certain activities in her official capacity as a duly elected official of the defendant City of Detroit, that is certainly public information," Paterson wrote.

Detroit Corporation Counsel Lawrence Garcia, the top lawyer for the city, said in a statement that Paterson and Davis clearly are trying to harass the council members with matters irrelevant to the case. "In our latest filing, we are seeking sanctions against Mr. Paterson, as we have been successful obtaining in past cases involving Mr. Paterson and Mr. Davis," the statement read.

Depositions of the council members were sought to shed light on their knowledge of the dispute between the Centre Park Bar owners and city officials. One of the owners, Christopher Williams, talked with the council members about his problems with the deal to sell the building his bar occupies to Archer Jr., according to court records.

The Centre Park Bar was shuttered about a month ago, Paterson said.

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Families & Children's Justice: Herman Davis, Former Detroit Public Schools Superintendent

Debbie Williams, the host of Families & Children's Justice interviews former Detroit Public Schools Superintendent Herman Davis on the financial history of Detroit Public Schools, bonds, and contract fraud.

FamiliesChildrenJustice.com

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Robert Davis charged with stealing from Highland Park school district

A file photo of Robert Davis, 30 of Highland Park. / PATRICIA BECK/Detroit Free PressA Highland Park school board member, who has brought Open Meetings Act lawsuits against the state's financial review process for Detroit, was indicted today on charges he ran a phony invoice scheme that put thousands of dollars into his own pocket, according to the U.S. Attorneys office.

Robert Davis, who was indicted on charges of federal program theft, faces up to 10 years in prison if convicted.

According to the indictment, between 2004 and 2010, Davis pocketed more than $125,000 from the Highland Park School District through two schemes in which he used cover companies to submit fake invoices to the school district for payment.

One of the schemes involved submitting false invoices for more than $380,000 for advertising on behalf of the school district, the indictment said. The other scheme involved invoices in excess of $49,000 for services and expenses relating to a Saturday educational program for district students.

In both schemes, the indictment said, Davis hid his involvement with the companies, whose names appeared on the ionvoices. He also concealed the fact that he took a substantial portion of the payments for his own use, the indictment said.

Davis declined comment pending a press conference this evening.

Attorney Ben Gonek, who represented Highland Park school board member Debra Humphrey in suit against Davis, said the indictment "is long overdue."

"It's refreshing when the government goes after such alleged corruption," he said.

"Stealing from children is bad," Gonek said. "And it's especially so when it's from a school district that's almost bankrupt."

He also noted that Davis fought a state intervention that he said could have uncovered the irregularities.

Davis’s attorney Carl Marlinga said that his client “strongly asserts his innocence. And he looks forward to clearing his name.”

"It is a misfortune that individuals are comfortable with stealing from the children of this city. We, as citizens, must not become comfortable or tolerate this greedy behavior," said Erick Martinez, special agent in charge of the Internal Revenue Service.

U.S. Attorney Barbara McQuade warned that public corruption remains a high priority in her office.

"We are committed to uncovering all forms of public corruption, but stealing from the public is especially egregious when the victims are school children," McQuade said.

Added Detroit's FBI chief Andrew Arena, "Crimes against our children such as these are not only despicable but also a drain on the entire school system. This indictment should serve as a strong reminder we will vigorously pursue anyone who uses school funds as their personal ATM."

The case was investigated by the FBI-led Public Corruption Task Force and the IRS.

Today's indictment comes one year after the Free Press ran an in-depth article about Davis's ties to a controversial $400,000 radio ad campaign that was aimed at attracting students to the struggling Highland Park School district.

• Highland Park schools ad campaign probed (Adobe PDF)

The company that received the nearly $400,000 was Zenoco, a Macomb-County start-up company that was supposed to oversee the promotional advertising campaign.

But Zenoco, the Free Press reported, had no formal contract during its four-year run with Highland Park schools. And its services were never formally approved by the school board.

Yet under that setup, the distressed Highland Park Public Schools wrote nearly $400,000 in checks from 2007 to 2010 to Zenoco.

At the time, the district's attorney and other officials wondered what they got for their money.

Records reviewed by the Free Press showed that Davis – who at the time was a former school board president -- recommended Zenoco for the business, which was handled outside of normal contracting and review processes.

George Butler III, the district's lawyer, said school officials found no evidence that Zenoco developed the ad campaign as promised.

Butler ended up calling for a criminal investigation by the state attorney general. The FBI jumped in and raided Davis' home in search of financial records and information about Zenoco and its owner, court records show.

In August 2010, Davis agreed to repay $4,500 to the Highland Park School District as part of a settlement in Wayne County Circuit Court for submitting an inaccurate court judgment for legal fees. The settlement was announced before Wayne County Circuit Judge Robert Colombo Jr., who wanted to know how two conflicting court orders wound up on the record in a Freedom of Information lawsuit filed by Davis against the school board.

That case was dismissed in November 2009. One of the orders dismissed the case without providing fees; the other dismissed the case providing fees and costs of $4,500. Both documents were signed by Davis on behalf of his attorney and an attorney for the district, and had Colombo's stamped signature.

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