Of course, she will not reach out to me.
I am not just a primary stakeholder of the Detroit Land Bank Authority, I am also the former Principal Agent!
Just ask Bill Schuette.
*Smooches*
Feds probe Detroit Land Bank contractor that tore down homes, hid debris in holes
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| The Chicago-based McDonagh Demolition was ordered to excavate a demolition site in the 13000 block of Maiden St. on Detroit's east side on Friday, Feb. 22, 2019. The order came after it was discovered the company filled several demolition holes across the city before fully removing all of the demolition debris, which is a major violation of the federally-funded program. |
Federal agents are now investigating who was involved in an alleged scheme where a Chicago-based company tore down homes in Detroit and hid the debris under layers of dirt, sources familiar with the probe told the Free Press.
Agents questioned some McDonagh Demolition Inc. workers about whether they'd ever seen "payoffs" or shoddy work happening under the Detroit demolition program, during visits earlier this month at their homes, sources told the newspaper.
One former employee told the Free Press he never witnessed any sort of bribery but that he was directed by a McDonagh supervisor to place demolition debris in multiple holes.
When asked about the federal probe and allegations raised by a former employee, McDonagh Demolition said late Friday when it became aware of "alleged issues related to a limited number of McDonagh work sites within the Detroit program," it launched an internal investigation with the help of outside legal counsel.
"The findings uncovered evidence that individuals acted on their own, without the knowledge, authorization or consent of McDonagh ownership or management," the company said in a prepared statement. "The evidence uncovered in no way reflects the integrity, values and operating practices of our company."
Agents also visited City Hall to interview at least one city employee about the ongoing federal probe of the demolition program, which has taken several turns within the past few years.
Officials earlier this month said the alleged scheme would cost McDonagh Demolition more than $15 million in awarded Detroit Land Bank Authority work and that it was the "most egregious" incident to ever occur in the federally-funded program.
Officials confirmed the City Hall visit but declined to discuss the nature of it. Sources spoke with the newspaper on the condition of anonymity because they aren't authorized to speak publicly.
Separately, a series of recent highly publicized incidents have sparked new questions about the city's demolition procedures. Congresswoman Rashida Tlaib told the Free Press last week she plans to inquire about "standards of environmental quality" used in the federal Hardest Hit Fund program, not just in Detroit, but across the nation, in other states that have received such federal funding.
Detroit's demolition program has been fueled by more than $250 million in Hardest Hit Fund dollars from the U.S. Department of the Treasury since 2014.
Tlaib also said that she met with officials in mid-March from the Office of the Special Inspector General for the Troubled Asset Relief Program.
“We focused on the need for more oversight and protections regarding environmental issues with demolition that could have a detrimental impact on our public health," Tlaib said in a statement.
The move comes after the Free Press published investigations this year outlining concerns raised about the city's quality controls in place within the program, which is currently overseen by the Detroit Land Bank Authority and Detroit Building Authority.
A former McDonagh employee told the Free Press two federal agents with SIGTARP visited his home unexpectedly late on March 7.
The employee said he was "startled" by the hour-long visit, which touched on a variety of topics related to the McDonagh incident, including whether he witnessed "any monies being exchanged between people" or any "payoffs being done to officials."
The employee also said he conducted an interview detailing the initial incident with the city's ombudsman, which is an independent position appointed by the council to investigate complaints against city government departments and agencies.
Ombudsman Bruce Simspon declined comment, citing the ongoing investigation.
Agents visited City Hall the next day.
City officials said federal agents were in City Hall on March 8 but characterized it as a "scheduled agent visit" with a Buildings, Safety, Engineering and Environmental employee.
"As is our practice, the employee cooperated fully and voluntarily," BSEED Director Dave Bell said in a statement.
When asked whether the agents specifically inquired about the McDonagh incident, mayoral spokesperson John Roach declined to answer the question, saying "we don't comment on ongoing investigations" and any further information would have to come from SIGTARP.
A SIGTARP spokesperson declined comment.
The Free Press first reported in late February that McDonagh Demolition was set to lose more than $15 million in contracted work with the Detroit Land Bank. Officials alleged the company "cut corners" in an attempt to save $1,000 in costs per house by burying the debris, instead of removing it properly. The incident surfaced after a whistleblower ex-employee directed city employees to the sites where the materials were buried.
The company previously said it was confident that the incident was an "isolated issue.”
McDonagh, which began performing demolitions in the city in early December, was under contract to tear down 682 properties in neighborhoods across Detroit. The company was placed on a stop work order while the city reviewed all of its completed demolition sites.
Officials told the Free Press and the Detroit City Council that they were in the process of moving to permanently ban the out-of-state demolition company from any future work in Detroit.
When asked whether the process had been started to revoke and rebid the company's work, as officials alluded to earlier, Land Bank spokesperson Alyssa Strickland declined comment.
Strickland also wouldn't answer whether the revocation was still occurring, saying both questions were "related to ongoing negotiations, therefore I cannot comment further."
Strickland later added that negotiations are ongoing between the Land Bank and McDonagh.
The city did not respond to questions Friday regarding the status of the company's wrecking license and whether a review had yet been completed of the work performed by McDonagh. Detroit Building Authority Special Projects Director Brian Farkas previously said the company's license would be revoked.
"This attempted scheme will cost McDonagh $17 million in awarded work," Farkas said at a Feb. 28 Detroit City Council committee meeting. "McDonagh is not going to do work in the city of Detroit.
This attempted scheme is the most egregious I've seen in the city."
This attempted scheme is the most egregious I've seen in the city."
The city, including Mayor Mike Duggan, has defended its demolition process in recent weeks, in response to concerns raised regarding proper abatement and backfill practices within the program.
Duggan announced two weeks ago that the Land Bank will no longer oversee the city's demolition program by the end of this year. Demolitions are expected to be fully administered by the city.
A timeline of the transition period wasn't immediately clear.
"The Land Bank will be out of the demolition business," Duggan said, while addressing the City Council on March 7. "At this point ... we're done."
A separate Free Press investigation revealed last month that federal authorities were probing whether contaminated and unverified dirt was potentially used to fill demolition sites across Detroit.
SIGTARP is also investigating whether some companies used free dirt obtained from a variety of unverified sources and then passed it off as an approved residential dirt source before billing the demolition program for materials they never actually paid for.
In response, City Council President Pro Tem Mary Sheffield called for congressional hearings to be held on the city's federally funded demolition program. State Rep. LaTanya Garrett also called for state-level hearings.
Tlaib said she plans to reach out to "stakeholders," including the Michigan State Housing Development Authority, to inquire about "standards of environmental quality." MSHDA's Michigan Homeowner Assistance Nonprofit Housing Corporation manages the state's HHF dollars.
"My hope is that we do our due diligence to protect the public from any irreparable harm especially when it comes to exposure to harmful material," Tlaib said.
Kat Stafford writes enterprise and investigative stories about Detroit. Contact her: kstafford@freepress.com or 313-223-4759.
To read previous stories regarding the federal probe and other demolition issues go to www.freep.com/news/investigations.
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