Cynical Synapse

Sun, 01 Nov 2009

Kwamegate: Loans, Unknowns, and More Bribes

Filed under: Detroit, Justice, Kwamegate, Legal, Paradoxes, Politics — cynicalsynapse @ 7:02 pm

Kwame Kilpatrick on the stand

Appearing in Wayne County Circuit Court, former Detroit Mayor Kwame Kilpatrick was ordered to take the stand during a hearing on October 29th. The hearing, set when prosecutors filed a petition alleging Kilpatrick violated terms of his probation, followed his unilateral reduction of restitution payments to $3,000 monthly from the agreed-upon $6,000.

First, Judge David Groner told Kilpatrick’s lawyer, Michael Alan Schwartz, the 5th Ammendment—the right to not self-incriminate—couldn’t be invoked in a civil case. Then the judge asked a number of questions about Kilpatrick’s finances and ability to pay his restitution. Prosecuters, who claim they have documentation showing Kilpatrick and his wife shuffled money between accounts, also got their chance to question the former mayor.

Peter Karmanos Roger S. Penske
James Nicholson Dan Gilbert

Questioning brought out two significant revelations. First, four prominent Detroit businessmen gave Kilpatrick $240,000, allegedly a personal loan. Compuware CEO Peter Karmanos is the front man for the group, and also employs Kilpatrick at subsidiary Covisint. The others are racing and truck rental magnate Roger Penske, chemical tycoon James Nicholson, and Dan Gilbert, founder of Rock Financial. On top of this, Ambassador Bridge owner Marty Maroun gave $50,0000 to Carlita Kilpatrick and the kids, apparently whyile Kwame was in jail.

When I first heard Karmanos was giving Kilpatrick a job in Texas, I wondered why. The answer is simple: the Detroit businessmen bribed Kwame to step down because they knew he wouldn’t do it on his own. Rightly or wrongly, the businessmen did what they thought best for the city and region. They provided a means for supporting Kilpatrick’s family.

The other revelation was Kilpatrick doesn’t know much about his finances. He knows his base salary at Covisint is $10,000 per month, but not how much he makes with commissions. He doesn’t know the lease cost of his million-dollar mansion; he assumes Carlita pays the rent. How would that be, since he says Carlita doesn’t have a job now? But, he doesn’t know if she had a job while he was in jail.

Detroit skyline along the riverfront

News also broke Chicago businessman John Orecchio bribed Kilpatrick with a $10,000 donation to the Kilpatrick Civic Fund. In return, Kilpatrick intervened with the Detroit Pension Board, obtaining board approval for a $20 million deal with AA Capital Partners, Orecchio’s company. Fortunately, the board didn’t make the investment. Of course, Kilpatrick attorney Jim Thomas said Wednesday his client “flatly and unequivocally” denies any wrongdoing. On a side note, Orecchio also gave money to then councilwoman Sharon McPhail to keep her from opposing a strip club deal he was working. McPhail was also a trustee of the police and fire pension funds. Here’s a surprise: Kilpatrick and McPhail both deny Orecchio’s allegations.

Stay tuned for the next installment of Kwamegate on November 17th, if not before. Kilpatrick is due back in court then, perhaps with more answers.

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