Tragedy of Detroit. In A City Where 33,000 Lined Streets For Federal Aid, 4 Billionaires Gave Ex Mayor A $240k Loan, Concerned About His Welfare

October 29, 2009

Reading from the Freep live Blog on the former mayor of Detroits restiution hearings:

Prosecutor asks about gifts from Moroun; court adjourned

5:18 p.m. | Another well-known and powerful Detroiter’s name just came up as a benefactor of the Kilpatrick family.

Prosecutor Siringas asked Kilpatrick: "Did Matty Moroun give checks totaling $50,000 to your wife and your three children"

Kilpatrick said he believed Moroun, the owner of the Ambassador Bridge and an international trucking company, gave his wife and children money while he was in jail.

He said he didn’t know how much Moroun gave them.

Siringas asked if others had given the Kilpatrick’s financial gifts.

"Because of the incredible work of your office, madame prosecutor, there are a lot of people who have continued to give help to my wife and my children," Kilpatrick said, adding, "I don’t know why people do what they do."

When Kilpatrick was mayor, he proposed buying the abandoned Michigan Central Depot from Moroun. Kilpatrick wanted to turn it into a state of the art police headquarters. The deal eventually fell apart.

Court is now adjourned.

Kilpatrick: Penske, Nicholson, Gilbert, Karmanos gave me loan

2:52 p.m. | Kilpatrick just testified that he took out a loan for $240,000 from an individual on Feb. 4. Payment is not scheduled to begin until 2010. Upon further questioning, he said four individuals made the loan.

"Who are the individuals?" Groner said.

Kilpatrick answered: Roger Penske, Jim Nicholson, Dan Gilbert and Pete Karmanos.

"Roger Penske just issued a statement following the testimony of Kilpatrick this afternoon that he was one of four Detroit-area business leaders who contributed to a $240,000 loan for the ex-mayor:

Together with several other business leaders, I made a personal loan to former Mayor Kilpatrick last year in response to his concern for the welfare of his family following the disclosures which led to his resignation. To date, the full amount of the loan remains outstanding.”

Once Groner completed his questioning, Assistant Prosecutor Robert Spada sought to question the ex-mayor about his and his wife’s bank records. Statements from five bank accounts show as much as $1,160,374.09 deposited, and as much as $1,140,498.56 withdrawn from October 2008 through earlier this month.

Via Detnews

October 29, 2009

DetroitEx-Detroit Mayor Kwame Kilpatrick testified in court today he received a $240,000 loan the day after he left jail in February from four high-profile individuals: Roger Penske, Jim Nicholson, Dan Gilbert and Pete Karmanos. –

Kilpatrick made that statement while under oath at his restitution hearing before Wayne County Circuit Judge David Groner. The judge was asking Kilpatrick questions about the ex-mayor’s household finances: who pays the rent at his home in Southlake, Texas; how many cars his family has; how many bank accounts exist; and his wife’s, Carlita Kilpatrick, employment status.

When asked about his liabilities, Kilpatrick said that he owed $914,000 in restitution.

In questioning, Kilpatrick said he signed a loan agreement on Feb. 4 in Karmanos’ home or office agreeing to receive a loan amount of $240,000.

"Whenever there’s a liability, there’s an asset," Wayne County Assistant Prosecutor Athina Siringas said. "This defendant had assets of over $240,000 that were payable to him. The defendant failed to disclose any of those assets to the court in violation of all orders of the court."

Nicholson is president and CEO of PVS Chemicals. Karmanos is CEO of the Compuware Corp. and owner of the Carolina Hurricanes, Plymouth Whalers and Florida Everglades hockey franchises. Penske is owner of Penske Racing, the Penske Corp. and is one of the corporate directors at General Electric. Gilbert is chairman and founder of Rock Financial and Quicken Loans and is owner of the NBA franchise Cleveland Cavaliers.

Wayne County Prosecutor Kym Worthy has alleged Kilpatrick has "willfully" failed to meet the terms of his criminal probation stemming from guilty pleas in the infamous text message scandal, prompting the court to hold today’s hearing.

As part of a sentence agreement last year, Kilpatrick pleaded guilty to three felony counts related to the text message scandal. He spent 99 days in jail and agreed to pay the city $1 million in restitution during five years of probation.

Groner’s questioning of Kilpatrick came after Siringas told the courtroom that the prosecution also suspects that Kilpatrick may have committed perjury when he sought reconsideration of his restitution payment earlier this year.

Siringas said Kilpatrick filed a motion via his attorney, Michael Alan Schwartz, for reassessment of his restitution payment through a sworn affidavit. Kilpatrick signed the document on March 24, alluding to having just $6 remaining for restitution after he paid his other living expenses.

"He was required to disclose it ($240,000 in loans) back when he said he had only $6 to live on," Siringas said in court today. "He had $240,000 in assets. He lied about it in an affidavit. He came to the court saying, ‘Oh, look at me, I can’t live the way I want to live.’"

Siringas said Kilpatrick’s statement in the affidavit may have constituted perjury, a criminal offense.

"I wanted to put Mr. Kilpatrick on notice. Mr. Schwartz on notice," she told the court.

Schwartz requested a 10-minute recess to discuss the matter with his client.

"Obviously, this is something that has just been brought to my attention," Schwartz said.

Kilpatrick ultimately took the stand following an argument between Schwartz and Groner regarding whether Kilpatrick was required to take the stand. Schwartz argued Kilpatrick was entitled to exercise his Fifth Amendment right in light of the prosecutor’s revelation of possible criminal charges.

Once Groner completed his questioning, Assistant Prosecutor Robert Spada sought to question the ex-mayor about his and his wife’s bank records. Statements from five bank accounts show as much as $1,160,374.09 deposited, and as much as $1,140,498.56 withdrawn from October 2008 through earlier this month.

Further, an account in Carlita Kilpatrick’s name showed deposits in the amount of $132,515.53 around March.

"I think these are very important," Spada said.

Schwartz objected to the relevance of the documents, saying Kilpatrick’s wife has nothing to do with his conviction.

"That’s not his bank record, that’s the back record of his wife. He has nothing to do with that," Schwartz said.

Prosecutors tried to bring to light additional assets that Kilpatrick failed to report after he was released from jail, in particular $150,000 in personal loans he received in February. Kilpatrick didn’t say who wrote him the checks, nor was he asked.

Documents show the $240,000 loan by the four lenders was paid to Kilpatrick in two parts: first $150,000 in February and then $90,000 was sent to him in June. Upon questioning, Kilpatrick said he couldn’t remember what he did with the $90,000.

In the process of questioning by Siringas, Kilpatrick stated that when he received multiple checks on Feb. 4, totaling $150,000, he endorsed them and gave to Carlita Kilpatrick.

"I just assume that she went ahead and deposited the checks," Kilpatrick said.

Kilpatrick, dressed in a gray suit with a black-and-white-checkered tie, and Schwartz took their seats at the defense table in the hushed courtroom before the hearing started shortly after 1:30 p.m.

But as soon as Groner took the bench, he informed the room that he was late because minutes earlier, he received documents from the Wayne County Prosecutor’s Office that prosecutors planned on displaying in the courtroom.

He expressed "concern" that private information, such as attorney names and other details, would be revealed in court before they could be reviewed. Schwartz requested they look over the documents in privately first. The judge led attorneys into the jury room to review the documents before proceeding. .

The prosecution wants to present the documents because they include a key witness that has not yet been publicly disclosed.

After six minutes of closed discussion, Groner and the lawyers emerged. The judge said he was assured by the prosecution that any private information would be properly redacted. The hearing resumed with Kilpatrick raising his right hand, giving the oath, and being asked to take the witness stand.

Kilpatrick’s lawyers earlier this month delivered to the judge more than 100 pages of documents. Prosecutors also got authorization for investigative subpoenas for financial records of people alleged to have loaned Kilpatrick money after his release from jail. The investigative targets included Kilpatrick’s new employer, Compuware, and his wife.

Groner noted in his first remarks that he has signed a protection order on the 100 pages that were turned in earlier this month, recognizing there would be confidential and privileged information in there that shouldn’t be disclosed publicly in this hearing.

Ray Page, an attorney and acquaintance of Kilpatrick, hugged the ex-mayor when he walked in. Adolph Mongo, who describes himself as a political consultant and supporter of the former mayor, was also sitting nearby.

"Never in the history of the county of Wayne have they held this kind of hearing, not for rapists or murderers," Mongo said. "You’d think he was a serial killer."

The burden is on prosecutors to show the evidence behind her claims that Kilpatrick failed to disclose complete information about his financial worth, failed to turn over promised assets including a pension from his years as a member of the Michigan House of Representatives, and improperly cut his monthly $6,000 restitution payments in half. She has implied that Kilpatrick may be misleading authorities about his true financial worth.

Probation workers from the Michigan Department of Corrections compiled an assessment of Kilpatrick’s ability to pay restitution based on details Kilpatrick provided. Groner had ordered Kilpatrick to disclose additional finances, including holdings in his wife’s name and the values of political trusts and foundations. Much of this remains confidential.

Worthy also has a huge cache of text messages sent and received by Kilpatrick and his associates that may have information on financial dealings while Kilpatrick was mayor. Although thousands of the messages have been made public, Worthy’s complete collection includes more than 600,000 texts.