Kilpatrick on Trial: Testimony focuses on misuse of state funds

Published On: Sep 27 2012 09:07:19 AM EDT
Updated On: Sep 27 2012 03:12:47 PM EDT
DETROIT -

RECAP: Three witnesses testified this morning to the potential misuse of state funds on two grants requested in 2000 by then Michigan state representative Kwame Kilpatrick.

Dan DeGrow, former Michigan state senator and majority leader for the Republican Party, and Mary Lannoye, former State Budget Director, were both asked to stretch their memories back 12 years to their time interacting with a young Kwame Kilpatrick when he was minority floor leader for the Michigan Democratic Party.

Both witnesses were questioned about the funding of 2 grants requested by Mr. Kilpatrick- one for the Detroit 3 Dimensional Community Development Corporation and the other for Vanguard Community Development corporation.

Several hundreds of thousands, close to half a million, were granted to the organizations.

During DeGrow's testimony on how Mr. Kilpatrick made pitches for funding of the grants for the 2 Detroit organizations, jurors heard that some of that money may have gone towards the refurbishment of contractor Bobby Ferguson's offices.

Lannoye, visibly irritated when cross-examined by Kwame defense lawyer Jim Thomas, revealed that she was angry when she found out Kwame's wife Carlita Kilpatrick's conflict resolution organization U.N.I.T.E. had received some of the grant money.

Jurors were on the edge of their seats as they listened to witness Donna Williams, former Executive Director at Vanguard, testify how Carlita Kilpatrick was paid $37,500- half of an invoiced $75,000- for services ultimately not rendered. Upon returning from her honeymoon in 2000, Williams was informed by now Bishop Edgar Vann of the Second Ebeneezer Church that they would be employing Carlita's U.N.I.T.E. Though she liked Carlita as a person, Williams felt she fell short on performing services promised.

Williams also told how an angry Kwame called to tell her she had "messed up" in submitting Carlita's invoice to the State Budget Office. The Budget Office initially cancelled a second installment of $150,000 to Vanguard for alleged misuse of funds. The funding was then re-instated but with the stipulation that there would be no more architect and U.N.I.T.E fees.

Witness testimony continues tomorrow at 9AM.

12:53PM Bullotta ends

Williams says she doesn't know what Carlita was thinking when they spoke about additional work.

Thomas asks if Williams knows that Carlita did free work during Kwame's administration.

Thomas then asks "Ms Williams as you sit there today are you clairvoyant?"

Judge Edmunds interrupts "Really Mr. Thomas?"

Thomas ends.

Judge reminds jurors not to read anything to do with the case.

Court reconvenes at 9AM tomorrow.

12:44PM Bullotta redirects for government

He asks Williams if not Carlita's fault, then whose.

Thomas objects. The judge overrules.

Williams says that she feels there were aspects of the contract Carlita could have fulfilled better. But there were also some difficulties in working with the Sherrard School.

Williams doesn't think Carlita could have had access to kids during school hours as a result. But could have accessed them after school.

Vanguard didn't make second payment to Carlita because it had been several months since they had last worked with her and because of stipulation on the re-instatement of the grant funding.

Exhibit D SG 6- the handout Carlita gave on her program. Bullotta says it does not mention the Sherrard School specifically.

Bullotta asks Williams if she thinks a single child in the school was helped by Carlita. Williams says no.

Williams concedes that Carlita may have met more than 5 to 10 times. The meetings and the pamphlets is the work Carlita provided.

Bullotta asks Williams about her salary at the time.

Thomas objects. Judge sustains.

Bullotta asks if Williams feels Carlita deserved the $37,500. No says Williams.

11:58AM Jim Thomas cross-examines.

Williams met Kwame before she started at Vanguard in December 1999.

Williams remembers traveling with Kwame to New York.

Knew Kwame from Reverend Vann's church. There was a mutual feeling of support between the 2 says Thomas. Yes answers Williams.

Williams had applied for other grants for Vanguard which had been given.

Williams looking at Exhibit SG 1.

Thomas says doesn't conflict resolution and peer mediation fit in the spectrum of description. Yes says Williams.

Williams says constructive family activities involved whole families not peer to peer mediation.

But Thomas says these are broad terms that could encompass this. Yes agrees Williams.

Carlita met with principal of Sherrard and staff of Vanguard only. Williams knows that she didn't meet other staff at the Sherrard School because she was with Carlita on all her visits to the school.

Williams says she asked Carlita to submit documentation for her work.

Thomas asks if Williams thought she was well-intended. Yes says Williams.

Thomas hands Williams documents. Admits Exhibit D SG 6 into evidence.

Exhibit is a hand-out on Carlita's program listing goals and desired outcomes.

Thomas asks if Williams agrees that at some point in time it was pretty well documented.

Williams flips through pages. "It's a good start," she says.

Thomas asks if she remembers grand jury testimony on Spetember 22nd 2010. When juror asked time frame, if it was a year. No Williams told juror, at first Carlita came a couple of times a week. Over about 3 months.

Williams then added that her memory was faulty and that it could have been over longer than 6 months. It was so long ago, Williams says she can't give exact time frames.

Thomas asks if she knew that Carlita had worked with other schools. Yes says Williams but can't remember what those schools were. Williams believed Carlita an expert when she brought her.

"She was thoughtful and intelligent and I had no reason to believe she wouldn't do good work."

Thomas hands Williams documents about a meeting on September 28th 2000.

Thomas admits Exhibit D SG 7- a parent teacher community organization document that shows an agenda where Williams was a speaker.

Thomas hands Williams 5 or 6 more documents on U.N.I.T.E work.

Williams says 2 of the documents are 2 internal operations within Vanguard that wouldn't have involved Carlita. There is a document on a group activity form which Williams is not sure she has seen. Then there is another purple document she doesn't recognize.

Thomas admits D SG 8 A, B and C- first is desired student outcome, B is Aspire after school and C is operation of a program.

Documents show that there was a plan. Williams says "I think she had the beginnings of a plan and in my assessment...."

Thomas interrupts "I didn't ask you for that."

Williams concedes that she does believe Carlita was well-intended.

Thomas asks for Exhibit SG 5 to go back up on screen. Vanguard document from July 25th, 2001 detailing grant funds expenditure from first installment.

Thomas has technical difficulties with projector.

Williams had been in conversation with Philip Alderfer. Alderfer wanted to suspend grant for working with Carlita Kilpatrick and for buying buildings.

Williams became aware of problem with funding when Kwame Kilpatrick called to say she had messed up.

Carlita Kilpatrick told Williams she was taking classes at a community college.

Thomas says did Carlita offer to work for free. I don't recall that says William.

Thomas directs her to her grand jury testimony where she talks about Carlita's offer for work when the second installment came through. Williams says Carlita didn't make an offer to do more work until the second part of funding came through.

Williams says that when Carlita made the offer to work, her expectation was that she wanted more money.

Thomas presses the witness to admit that she said in grand jury that Carlita offered to work for free.

Williams says that until Vanguard got more money, Carlita did not offer to work.

Exhibit D SG 9 admitted into evidence. Transcript from Williams grand jury testimony which thomas states is inconsistent with her current testimony.

Thomas brings up the fact that Williams's sister is in the U.S. Attorney's office. Williams says her sister was transferred a year ago and still working primarily on old cases.

Williams talked to her sister about the case. Talked to family, friends. The Detroit Free Press showed up on her doorstep in 2008.

Williams indicated in that conversation that she met and liked Carlita, that she did some work, that she worked under difficult circumstances like the principal of Sherrard School being difficult to work with.

Williams had a problem with how Carlita was hired, Also with the fact that she didn't do all the work.

Told the Free Press that she didn't think it was Carlita's fault the contract wasn't fulfilled.

Carlita and Williams never came into an agreement. "So in terms of fault, in terms of blame, no I don't blame her" says Williams.

1:17AM Government calls Donna Williams. She is sworn in. Bullotta questions. She is Executive Director of Brightmoor Community Center. Ovesees board and community relations. Went to University of Michigan in 1991 and graduated in 1997. Also did Harvard summer Leadership. In late 1990s, worked for Detroit Big Brothers and Sisters. Worked for VanGuard Community Development Corp in 1999. It is part of Ebeneezer church, engaged in youth development in number projects, family and housing projects. She was founding Executive Director. Maintained bookkeeping, hitred staff, secured grant funding.

Bullotta asks is she is nervous. "I am" she laughs. VanGuard is a not-for-profit.

Asks about December 1999, if she went on a trip to New York with Kwame Kilpatrick. It was a fact finding trip, talk to a congressman and former minister, Reverend Flake, whose church is in Queens. Received grant from Kellogg Foundation. Learned about state grant in 2000 for $300,000 from Bishop Edgar Vann. Bishop Van asked her to complete application.

Bullotta shows witness hard copy. Exhibit SG 1 moved into evidence. It's a Arts, Cultural and Quality of Life Grant. The name on document is Donna Givens Johnson, name with first husband. The document seeks to "involve low income residents of Detroit's northend Community in Arts and Cultural activities. Second Ebeneezer Church and local elementary school would welcome artists to improve the community quality of life.

The grant was for $300,000.

In August 2000, Williams was married. In September, she met with Carlita Kilpatrick. Introduced by Bishop Vann. Told that while she was on honeymoon, Kwame had gone to the bishop and asked him to hire Carlita for $75,000.

So Williams met with Carlita. She felt that it was an introduction and that the decision had been made by Bishop Vann.

U.N.I.T.E. was about conflict resolution for students. There was Sherrad school  on Cameron one block west of I-75. The school was pre-K through 8th grade. Very low income families.

Exhibit SG 2- check for $150,000 from the state of Michigan. First installment of grant money.

The check was made out to VanGuard on October 3rd, 2000. Funds were deposited to VanGuard. then check was written to Carlita Kilpatrick.

Exhibit SG 3- check written to U.N.I.T.E. for $37,500- half the agreed $75,000. The balance would come after the second grant installment.

There are 2 signatures on the check. Hired staff and artists. Those people invoiced as they provided services.

U.N.I.T.E paid differently. Carlita submitted contract and they prepaid her for half the amount.

Williams says there were times they did that with other professionals, like an architect, but not usually for the type of services she provided. Usually that type of work would be invoiced bi-weekly and paid by payroll.

Vanguard requested documentation of what she would be doing.

Exhibit SG 4- is an invoice for Carlita's services to Vanguard. admitted into evidence.

Exhibit put up on screen. Materials section blown up- character education curriculum, student handbooks as well as miscellaneous materials for giveaways. Materials total is $23,000.

Services total is $52,000 including staff training and character education program.

Carlita met frequently with VanGuard and principal of Sherrard. Met between 5 and 10 times. Carlita talked about her experience, their visions and the challenge of working with Sherrard school.

Carlita may have provided hand-outs with information about services.

Williams can't recall Carlita doing anything else.

Williams doesn't recall Carlita doing any Character Education Development, Student Handbook Development or Student Handbooks.

Doesn't recall Carlita doing Sherrard Character Education. Met with Vanguard on staff training ($10,000) and technical assistance in those 5 to 10 meetings.

Carlita stopped going to meeting after a few months. Told Williams she was taking some classes. Williams doesn't recall enforcing contract. Vanguard never refunded the money. Williams did not ask for refund.

When Williams first heard about Carlita being hired, she was upset. But when she met her, she liked Carlita.

Williams conferred with Philip Alderfer.

Exhibit SG 5- letter from Vanguard on June 20th 2001 to Philip Alderfer.

The letter explained how grant money was spent. There were 3 activities that took place at SherrardCommunity School, Aspire Community Art Fair, Hoodstock 2001, and a portion of salaries for Vanguard employees, artists and architects.

Attached invoices to the letter. Included was Carlita Kilpatrick's invoice for U.N.I.T.E. which she signed.

Shortly after sending that, Williams spoke to Kwame. Kwame told her she messed up, that Williams was not supposed to include Carlita's invoice along with the others. He told her he would call her back and never did..

Vanguard subsequently wrote a letter saying they would not give a second installment over misuse of the funds. Williams invited Alderfer to come and see what they were doing. Alderfer re-instituted grant with 2 stipulations- no more architect fees or U.N.I.T.E. fees. Vanguard had to pay back the U.N.I.T.E. fee of $37,500.

Exhibit SG 6- check for $150,000 in January 2002. Second installment of state funds to Vanguard.

Williams met with Carlita and told her that the state had released funds. Carlita said let me know if I can come back and do anything else for you.

Williams's sister works for the state U.S. Attorney's office and she is now in public corruption.

Bullotta asks if the fact that her sister is with the government if that affects her testimony. Williams says no.

11:17AM Thomas redirects. Thomas asks if the state ever asked for its money back from Kilpatrick. Lannoye said she left 3 weeks later but she did not. Lannoye excused.

11:12AM Eric Doeh redirects. Doeh asks if there was ever any transparent disclosure about Carlita Kilpatrick's involvement in the fund. No says Lannoye. If there had been transparency, asks Doeh, would that have changed things. Yes says Lannoye. "If I had known, I would not have approved those contracts." Lannoye says she did not know that U.N.I.T.E. was for profit. Doeh: The ending of violence is certainly important and the provision of supplies is important. But isn't it important that the person actually does the work? Yes says Lannoye.

11:09AM Susan Van Dusen for Bobby Ferguson cross-examines. Van Dusen says it's common for legislator to back community grants. Yes says Lannoye.The agreement on boiler plate sets forth agreements between recipients and funders. Whatever is in agreement controls whether party is fulfilling the agreement. Lannoye agrees with Van Dusen.

11:03AM Judge Edmunds calls court back to session. Defendants Exhibit D SG 5 is introduced is letter from Alderfer to Lannoye dated July 25th, 2001. The previous exhibit for VanGuard application is D SG 4. Jim Thomas says the exhibits are being re-labeled. Exhibit D SG 3 is the boiler plate agreement. Government says they call their exhibits SG. So Judge Edmunds says to add a D in front of the SG to distinguish them.

9:44AM Next witness still not available so government calls Mary Lannoye. Lannoye is sworn in.Eric Doeh for government questions. Currently she is Ingham County Controller. Responsible for all fiscal service functions. In 2000, Lannoye was State Budget Director. As such, she was responsible for running the Budget Office- presented budget to Legislature, implemented it and monitored it. Once Legislature passed budget, they reviewed it and made many recommendations to the Governor. In 2000, Lannoye became familiar with legislator Kwame Kilpatrick. Trying to finalize budget negotiations, they were trying to make sure of democratic support and talked about putting money aside for community grants. Kwame approached Lannoye and made pitch for his grants. She didn't see it as unusual because legislators make such pitches. She just listened- there were 2 types of community grants. One of them involved a competitive process and had to submit an application. They had to be a non-profit. Proposed Exhibit SG 7 put up on screen. It is a letter addressed to Lannoye from Kwame Kilpatrick thanking her for her consideration of 3Dimensional and VanGuard. Lannoye doesn't remember it specifically. Lannoye doesn't remember much of the organizations but that VanGuard was related to his church. At that point, found out that Carlita was affiliated with the organization. A year later, Kwame's office asked for second half of the grant. Lannoye asked for more documentation on how first half had been spent. They had trouble getting that documentation. Previous to that, they had not received satisfactory documentation. Finally got documentation that money had been spent on U.N.I.T.E. One of the women in the Budget office, Lisa Schumacher, recognized the company as being affiliated with Mrs. Kilpatrick. Lannoye contacted Louise Alderson and met with Kwame Kilpatrick. Lannoye thought this was a problem as she thought this was supposed to be for community and not for relative's personal gain. Doeh asks if Lannoye had known it would go to Carilta would she have allocated that money? No says Lannoye, I would not have authorized that contract. "It gives the appearance of impropriety going to a legislator's wife." Alderson and Lannoye met with Kwame and he said he did nothing wrong. "He was nonchalant." Lannoye was angry with Kwame because grants were meant to help local community and not meant to go to a legislator. Lannoye worked for Governors Engler and Grantholm. Doeh ends questioning.

9:42AM Van Dusen redirects. Sir would you think the money went towards providing employment skills would that benefit community. DeGrow answers yes. Steps down.

9:39AM Bullotta redirects. Asks DeGrow if he could think of the refurbishment of an office of a contractor would fall in the criteria.

DeGrow says he couldn't think of why it would would. The refurbishment of McMorran Arena benefited the community and none of DeGrow's family members involved. DeGrow says on the surface having a family member is not inappropriate. But he could see why it would be appropriate for a wife who works for children groups to get involved. Bullotta asks if it would be appropriate for grant money to go to spouse for work not done. No says DeGrow.

9:33AM Susan Van Dusen for Bobby Ferguson cross-examines. Defendants' Exhibit 2 introduced into evidence. DeGrow says it looks familiar. Van Dusen asks if the language is broad in terms of criteria for selection. Yes says DeGrow. Priority consideration given to projects for children and school groups and/or serving senior citizen. Yes says DeGrow. Van Dusen says this goes beyond arts and culture but economic development of community being addressed. Yes says DeGrow. Total figure for all grants somewhere between $15 to $20 million.

9:16AM Jim Thomas cross-examines. DeGrow knows Kwame since 1998 when he was a minority leader in the House. Thomas asks DeGrow to explain quadrant meetings. DeGrow concedes meetings were to get budget passed. Concedes all had their own interests. There were hundreds of the quadrant meetings over the summer. Thomas says would you agree there is some horse trading at these meetings. Sure, says DeGrow, there is horse trading but make sure it is fairly distributed. Kwame does represent others in these quadrant meetings. DeGrow says that Detroit certainly entitled to get grants, that is norm for minority leader to come and ask for that.

If someone wanted an arts and culture grant, that would be brought to the table. Yes says DeGrow. One of the years DeGrow had a grant for McMorran Arena in Port Huron. There was a $2 million grant at one point for the arena. Kwame did bring a certain number of grants to the table. There were some for the state- Muskegan County Museum, Michigan Pine and Girl Scout Council, Michigan Visitors Bureau. Thomas approaches DeGrow with document listing tyops of grants given in supplemental budget in 2000. DeGrow's memory not really refreshed but yes these are the types of grants. List Thomas showed for only 2 counties. Thomas asks about arts and culture grants being around for many years. But, asks Thomas, wasn't this arts and culture grant only around for 2 years?

In 2000, they were funding arts and culture grants. DeGrow doesn't remember if they were listed line by line or if they said if you apply you will get it. If agreed with governor and legislators, commitment was kept. Applications have to be filled out and there is a process for the grants. DeGrow has no specific knowledge of Detroit 3D or Vanguard. Thomas asks about ethical rules on management of grants? DeGrow thinks there are rules and guidelines but he never handled that part of it. Amount of $500,000 not unusual figure for grants says Thomas. Correct says DeGrow. Thomas asks if you discussed that Carilta Kilpatrick's U.N.I.T.E provided services for both those grants? DeGrow says it was never discussed, to best of recollection. Thomas asks if unusual to have a relative work with a grant? DeGrow says yes unusual. There was only one other instance he can remember after he left. Nothing inappropriate on the surface.

9:05AM Michael Bullotta for the government calls Daniel Lewis DeGrow. Superintendent of Schools at St Clair County. In 2000, was a state senator for Michigan. Served for 20 years. School superintendent pays more than senate majority leader. Left in 2002. Involved in the supplemental budget. DeGrow was majority leader as elected by the caucus- elected by Republicans. Elected by his peers. There were more Republicans than Democrats at the time in the Senate. Knew Kwame Kilpatrick- at the time he was House minority leader. He dealt with Kwame on occasion. It was a long time ago and they didn't fight as much as they do now. Kwame and DeGrow talked about the supplemental budget. Going back 12 years, they were going to pass supplemental and some items. Including the arts and cultural grants, money and grants given to community non-profits to promote arts and culture. There were more than just the 2 of them. Kwame asked if they could put 2 grants in for Detroit. One of them was the Detroit 3 Dimensional Community Development Corporation. It is normal for minority to ask for some things- not out of the norm to ask for several grants. It was nothing out of the ordinary. DeGrow and others- Department of Management Budget- agreed to them. The grants were possibly in the 100s of thousands each. Bullotta asks did Kwame Kilpatrick tell you the money went to refurbishing Bobby Ferguson's offices? Defense interjects. Edmunds sustained. There was no discussion as to what the money was going to.DeGrow didn't do due diligence on money's whereabouts. DeGrow did not administer the grants. Bullotta ends.

9:04AM Judge Nancy Edmunds enters courtroom. Assume the jurors are filing in as we can't see them from the media streaming rooms outside the courtroom. Jurors are seated.

8:48AM Bernard Kilpatrick is first of the co-defendants to arrive this morning. Sits at the table taking some notes.

Bernard is closely followed by Bobby Ferguson who arrives after his lawyers Susan Van Dusen and Mike Rataj.

Last to arrive in the courtroom this morning is former Detroit mayor Kwame Kilpatrick who ambles in 10 minutes before court is due to start, wearing a charcoal suit and yellow tie.

Testimony starts in Kilpatrick trial

Former water boss Victor Mercado exhibits his usual self-isolating body language, eyes cast away from his co-defendants and hands crossed in front of his face.

Just awaiting Jugde Nancy Edmunds' arrival.

 

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.

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