Day 14: Kilpatrick's non-profit Civic Fund under fire from feds

DETROIT (WXYZ) - Earlier today,  7 Action News Investigator Ross Jones blogged from federal court downtown. Follow along below:

12:57--Done for the day: Beeckman will be the last witness for today.  Thanks for joining us. 

12:53--FBI not at party: "The FBI was not at the party, correct?" Kilpatrick lawyer Jim Thomas asked FBI agent Bob Beeckman.

"No," he said, "we were not invited."

12:51--Party for Granddaddy: The Civic Fund paid $2,500 for a portion of Kilpatrick's grandfather (Marvell Cheeks) birthday party.  Another check for $3,800 paid for the rest of the party, which rented out the 8th floor of the posh Atheneum Hotel in Detroit, and included hors d'ourvers, dinner at $28 per person and cocktails.

12:40--Bernard paid for some: Showing Beeckman copies of Bernard Kilpatrick's credit card receipts, defense lawyer John Shea is pointing out that his client paid for many of his own personal expenses (like a rental car) himself. 

12:28--$5,000 would be good: A call from Bernard Kilpatrick to one of his client's asked for $5,000 for the Kilpatrick Civic Fund.  The client, Abner McWhorter, had business with the city pension fund. The request, he said, was being made by Jeff Beasley, a friend of Kilpatrick's and an appointee to the pension board.

12:24--Orlando trip: Bernard Kilpatrick traveled to a ballgame in Orlando in January 2008, and the Kilpatrick kids went to SeaWorld.  His hotel in Orlando was paid for with Civic Fund money. FBI agent Bob Beeckman is explaining wiretapped phone calls he has listened to from Bernard Kilpatrick during his Orlando trip.

"Did you ever hear Bernard Kilpatrick talk about fundraising for the Civic Fund," Assistant. U.S. Attorney Michael Bullotta asked FBI agent Bob Beeckman, currently on the witness stand.

"No," Beeckman said.

12:15--Wiretaps played: The feds are playing wiretapped conversations from Bernard Kilpatrick's phone. In one of the conversations, Kwame Kilpatrick asks his father Bernard whether he could "get in touch with Chris," referencing Christine Beatty, to authorize a check.  Beatty was a signatory for the Kilpatrick Civic Fund, and the conversations appears to be in reference to paying for a hotel in Orlando, FL.

Sorry for the delay in blogging.  Ran out to update our 7 Action News at Noon viewers on today's happenings at court.

11:40--Given a check: Scott says he was given a check by Butch Rhodes, Kwame Kilpatrick's golf instructor, who said the $3,050 check was for golf clubs and a golf bag for the mayor.  The check came from the Kilpatrick Civic Fund.  Kilpatrick had the golf bag embroidered with "The Mayor."

11:36--Golf, anyone? William Scott is the government's next witness, a golf club salesman from a store in Flushing, Michigan.  This should get interesting, eh?

11:31--Who was her client? Assistant U.S. Attorney Michael Bullotta is trying to drive home his point that Kilpatrick--and no one else--was Smith's client.  She acknowledged that helping the city of Detroit was not a reason she was paid, and that her only client was "the mayor."

11:15--Managing the crisis: Smith disagreed with lawyer Jim Thomas's suggestion that she was hired to give Kilpatrick a positive image.  She said she was brought in to help steer a a consistent message to come from Kilpatrick and others in anticipation of being charged with a crime.

11:10--Paid cash: Kilpatrick paid Smith $11,000 in cash in March 2008, she said. 

11:09--Still owed: Smith says she's still owed about $60,000 from Kilpatrick, but it sounds like she wrote it off.  Her lodging, meals and travel were covered by her client. 

11:06--Paid well: How much was Judy Smith paid to handle the Kilpatrick crisis?  Approximately $180,000, according to the government.  And all of it came from the Kilpatrick Civic Fund, who Smith acknowledged she did "no work for." Not bad for about 8 months of work.

11:03--Quite a client list: Monica Lewinsky.  Michael Vick. Kwame Kilpatrick. They're just some of Smith's past clients.  In fact, her life is apparently so interesting that it's the basis of a network television show about handling crises. 

11:00--A familiar face: Judy Smith has taken the stand.  She's a crisis-management expert from Washington, D.C., and came to the rescue (or at least tried) of Kwame Kilpatrick after the text-message scandal broke.  We'll see if she can rescue Kilpatrick from this larger crisis.

10:33--Short break: Stay with us, we'll be back shortly.

10:19--Why the re-hash? You're probably wondering why the government seems to keep making the same points with different witnesses.  It can feel like re-hash, but there is a strategy here.  If the feds call only one or two donors who feel they were deceived by the fund, Kilpatrick's team could argue that their testimony wasn't representative of most donors.  So the government is trying to drive home the point, with lots of donors, that they felt the Civic Fund pulled a bait-and-switch. Sort of a "strength in numbers" argument.  

10:14--Donor #4:  Sense a pattern here?  The feds have spent all morning calling donors to the Civic Fund, and this next one is Ken Hudson, whose company Northpointe Capital also advised Detroit's pension boards. It wrote two $5,000 checks to the CIvic Fund. 

Would he have written those checks if he knew some of the money would go to personal or political expenses?  No, Hudson said. 

10:11--Rub downs: When in doubt, bring up the rub downs.  At least that seems to be the feds' strategy when it comes to the Civic Fund.  On the heels of Thomas's argument that fundraising costs are legitimate Civic Fund expenses, Assistant U.S. Attorney Jennifer Blackwell asked Degel whether massages and facials for the mayor and his family members would fall into that category.

No, Degel said, they would not.  And yet, according to receipts shown in court, the Civic Fund played for plenty. 

10:05--Organizational expenses: Jim Thomas is reminding Degel of all of the "organizational expenses" associated with running a non-profit like the Civic Fund.  Fundraisers, salaries, overhead costs, etc. are all being listed.  Speaking of fundraisers, that family trip to the La Costa Resort in California is billed by Thomas as a Kilpatrick fundraising mission, in addition to some fun in the sun.

Degel acknowledged that organizational costs are legitimate.

10:01--$1,000 check: Churchill Financial gave a grand to the Kilpatrick Civic Fund, under the impression that it was giving back to the City of Detroit.

Like other donors questioned so far, Degel said he would not have donated to the fund if he knew that donations would be used for personal or political expenses.

9:56--Another donor: Bring on donor number 3.  Nicholas Degel is on the stand, a consultant for Churchill Financial, which advised Detroit's pension funds.  Degel said he was told about a Kilpatrick Civic Fund fundraiser by the mayor's friend, and a pension board member, Jeff Beasley. 

Beasley was charged in a civil suit by the SEC for accepting $125,000 in gifts while on the pension board.

9:48--Oh really? Asked if he would have donated to the Kilpatrick Civic Fund if he knew it would pay for more than $8,000 for a family vacation to the La Costa Resort in California, Nairne responded, "No, I would not."

9:44--What if?  "What if you found out that hundreds of thousands of dollars went for education, went to churches, went  to the NAACP?" Would Nairne have donated to the Civic Fund?

Yes, Nairne said.

9:35--Emma Bell & Jim Papas: Two familiar names have come up in testimony so far.  Emma Bell, the mayor's former chief fundraiser who testified earlier in this trial, is the author of the solicitation letter that Nairne received.  Nairne has also mentioned Jim Papas, whose name was written on a check his company wrote to the Civic Fund.  

Papas is a major Detroit Greektown investor. 

9:29--Another $10,000: Chicago Equity Fund wrote another check, Nairne said, for $10,000 to the Civic Fund. The feds are trying to show the jurors how donors to the fund were, in their view, deceived in how their donations would be used. 

9:27--Generous donation: In 2007, Nairne's company wrote a $2,500 check and, later on, a $7,500 check to the Civic Fund. 

9:25--No funds for politics: Nairne testified that a letter he received asking for donations to the Civic Fund indicated that it would not donate any funds to political campaigns.  The feds have said time and time again that Kilpatrick used the fund for political gain. 

9:21--Another donor: The feds have called another donor to testify this morning.  Michael Nairne is the next witness. He's an employee of Chicago Equity Partners, which also managed pension funds for the Detroit Police and Fire pension fund. 

9:17--Charity v. Non-profit: Jim Thomas is drawing a distinction between a charity and a non-profit, and is suggesting that the Kilpatrick Civic Fund was more of a political fund than anything else.

9:13--Donated to Civic Fund: After being solicited by the Civic Fund through a letter in 2007, Pugh Capital decided to donate $500 to the non-profit in 2007 and $1,500 in 2008.  She thought the funds would be used for "civic activities, particularly those focused on kids and voter registration kinds of things."

She would not have donated, she said, if she knew the money would be used for Kilpatrick's personal use.

9:11--First witness: The government has called Mary Pugh, the president of Pugh Capital Management based out of Seattle, Washington, which managed money for the Detroit Police and Fire pension fund during Kilpatrick's time as mayor.

9:05--Tie tally: Sporting a conservatively striped necktie, Kwame Kilpatrick is running up the score.  Through 14 days of testimony (and one day of opening statements), the score is Neckties: 11, bow ties: 4.

9:00--Good morning: Welcome back to Detroit's most gripping soap opera this side of Comerica Park. We expect to get started here shortly, with more testimony on Kwame Kilpatrick's Civic Fund. 

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