Longtime friend and business associate to ex-Detroit Mayor Kwame Kilpatrick, Bobby Ferguson, was arraigned Monday on charges of fraud, money laundering and obstruction of justice.
Ferguson stood mute as a judge entered a not-guilty plea on his behalf on eight criminal counts.
The indictment alleges that Ferguson obtained millions of dollars in public works contracts through fraud, false statements and bid collusion.
Ferguson is accused of making false statements in a proposal as part of the Garden View Estates project, a public housing development in Detroit.
According to a search warrant obtained by Local 4, federal agents raided Ferguson's office inside the Guardian Building in January 2009 and found $261,000 in cash stuff inside a safe -- along with checks totaling more than half a million dollars.
Ferguson was released on a $10,000 bond under the following conditions: he is not allowed to have any firearms, he must undergo drug testing, he is allowed limited travel and must surrender his passport.
He left the courthouse without saying anything to reporters.
His next court date has not been scheduled yet.
Also named in the indictment were Shakib Deria, age 42, of Troy, Mich.; Michael Woodhouse, age 52, of West Bloomfield, Mich.; Calvin L. Hall, age 42, of Detroit.
There are also corporate entities named as defendants: Ferguson Enterprises, Inc., also known as Ferguson's Enterprises Inc., XCEL Construction Services Inc. and A & F Environmental/Johnson Construction Services all located in Detroit.
U.S. Attorney Barbara McQuade said Ferguson and the others named in the indictment used the proposal to land XCEL Construction Services Inc. the contract, and that once they had the contract, hired Ferguson's company -- Ferguson Enterprises Inc. -- to do more than $9 million in demolition and other work on the project.
The selection of Ferguson Enterprises Inc. by XCEL Construction Services was falsely represented to have been the result of a "competitive" bidding process when, in fact, both companies were controlled by Ferguson, McQuade said.
McQuade said Ferguson recruited and directed the owners of two other Michigan companies to submit false and fraudulently inflated bids to ensure that the bid submitted by Ferguson Enterprises Inc., which was itself inflated, would appear to be the low bid for the demolition, earthwork and utilities work at the Garden View Estates project.
Ferguson is also accused of illegal disposal practices during the Garden View Estates project.
McQuade said to avoid hundreds of thousands of dollars in disposal fees, Ferguson left multiple truckloads of excavated soil, construction debris at the project's site.
McQuade said preliminary estimates indicate that it will cost the Department of Housing and Urban Development more than $1.2 million to remove and properly dispose of the thousand of yards of soil and debris and to clean up sections of the Garden View Estate site, which are now contaminated.
The indictment also said Ferguson and the others conspired to launder millions of dollars through XCEL Construction bank accounts.
McQuade said Ferguson and Deria made withdrawals in the amount of $9,500 in order to avoid leaving a paper trail through the Bank Secrecy Act, which requires banks to file a transaction report anytime a customer takes out more than $10,000 in cash.
McQuade said the withdrawals totaled $171,000.
The indictment also charges Ferguson with being a felon in possession of firearms. Those charges arise from two semiautomatic pistols that were found during a search conducted by federal agents of the private office at Ferguson Enterprises Inc., which is located at 14385 Wyoming St. in Detroit.
Ferguson faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of more than $2.5 million.
Michael Woodhouse faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of more than $2.5 million.
Calvin L. Hall faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of more than $2.5 million.
The subject charges returned against Deria carry total penalties of up to 10 years in prison and fines of more than $500,000.
Defendants Ferguson Enterprises, Inc., XCEL Construction Services, Inc. and A & F Environmental/Johnson Construction Services each face corporate fines that could range between $1 million and more than $10 million.