Day 31: Kwame Kilpatrick "tampered with" bid process, city official testifies

DETROIT (WXYZ) - Earlier today, 7 Action News Investigator Ross Jones ( rjones@wxyz.com) blogged all the news to come from day 31 of the Kwame Kilpatrick corruption trial.  Follow along below:

12:55--End: How's that for a finish?  We're done for the day, folks.  But it's a nice set-up for tomorrow.  We'll be back at 9AM, as will Mr. Harris. 

12:47--Boom: Harris says he felt uncomfortable decertifying DLZ as a Detroit headquartered business. 

"I felt the contracting process was being tampered with," Harris said.

12:44--Decertify: Harris says that his boss Gerard Grant Phillips (a Kilpatrick appointee) told him to decertify DLZ as a Detroit-headquartered company.  Harris said he couldn't do that; there weren't any changes to the company's structure, he said.  He also mentioned the legal opinion from the city's Law Department, which had already signed-off on it.

What was Phillips' response?

"The mayor wants it done," Harris says.

Harris says he advised Phillips that other companies did the same kind of restructuring that DLZ had  performed.  Harris said not to decertify them: just DLZ.

12:41--Victor calls: Harris says that he received a call from Victor Mercado back when DLZ's bid was being considered (this was in May 2006).  Mercado asked if DLZ met the city's requirements for a Detroit-based business.  Harris said yes. 

Later on, he received a call from Darryl Latimer who asked the same question, adding that DLZ was in line for a large water contract. Again, Harris said he advised him that they met the requirements.

12:38--Others like DLZ: Harris says that DLZ restructured had recently restructured its company to make sure it fit the city's requirements to be considered Detroit-based.  About 10 other companies did the same kind of thing, Harris say.

12:31--DLZ met requirements: As expected, Harris is being asked about DLZ, the company originally ranked the #1 bidder in a project that would ultimately go to Bobby Ferguson. 

There was concern that DLZ was based in Columbus, Ohio and not Detroit. Harris says he consulted with a lawyer from the city's law department, who determined that DLZ did, in fact, meet the requirements as a Detroit-based business (there are certain thresholds, like whether most of their employees work in Detroit, where most of their revenue was generated from, etc.).

12:25--Next witness: An employee of the City of Detroit's Human Rights Department is up on the stand now: Kim Harris (a male) says his department verifies that companies who compete for city bids really do have, for example, the number of minorities they claim, and where they're headquartered.

He's being questioned by Asst. U.S. Attorney Michael Bullotta, who's taking over for Mark Chutkow.

12:22--End: That's all for Latimer.  His testimony is done.

12:18--Rataj up: Mike Rataj is finishing up questions with Latimer, who we suspect will be done after today.

12:15--Friend for the clink: While I was outside doing a quick live shot for our 7 Action News at Noon viewers, I ran into a man who said he was an inmate of Kwame Kilpatrick's while he was in prison and was coming by to support him.  He said the two shared breakfast and workout sessions together, and that Kilpatrick was a great guy.

Why's he visiting his friend?

"He hasn't seen my face in a while," said the gentleman.

11:30--Chutkow done: Kilpatrick lawyer Jim Thomas is back up to re-cross the witness.

11:25--Detroit-based: In perhaps a preview of a future witness's testimony, Chutkow is asking about a company (DLZ) who had its #1 ranked bid tossed after it was supposedly learned that it wasn't based in Detroit.  Chutkow just asked Latimer if he trusted the work of the City's Human Rights Department, which determines whether a company is eligible to be considered Detroit-based.  Latimer said he does. 

Perhaps he'll be calling a witness that will breathe new life into their argument that DLZ was tossed inappropriately.  As a reminder, DLZ being tossed helped Ferguson's joint venture be selected for work. 

11:03--Funny feeling: A lot of today's testimony has been about facts and figures, but perhaps equally as important is a witness's feelings.  That's what Chutkow just asked Latimer about, inquiring if he felt strange when Mercado asked him to send him an e-mail outlining reasons (that Mercado came up with) to cancel Lakeshore's contract.

Latimer said he felt funny about it.  It didn't make sense to him, he said, to send Victor Mercado an e-mail suggesting that a contract be nixed when it was always Mercado's decision to make.

10:50--Welcome to America! Folks here to be sworn in as new citizens (happens every Monday and Thursday here at federal court) received a special welcome today from Kwame Kilpatrick.  During the break, the former mayor was said to have congratulated some of America's newest citizens. 

Great ambassador, right?

10:33--Short break: Stay with us, folks.  It's time for the morning break.

10:30--What savings? Yesterday, the defense said that one of the reasons that Lakeshore's contract was killed and it was rolled into another contract given to Inland Waters (which later hired Ferguson) was that it saved the city money by having only one company manage the contract.  But Chutkow is pointing out that the $10 million Lakeshore contract was just moved over to Inland's contract.  So, where was the savings exactly?

10:23--No reason: "Can yo u think of any reason the mayor would be discussing a contract with a subcontractor?" Chutkow asked.

"No," Latimer responded.

10:21--Bobby, Kwame talking: After Lakeshore had been selected as the most responsive bidder on a city contract, Bobby Ferguson was sending text-messages to Kwame Kilpatrick about that very contract: # 1361.

"1361 is the same contract, 1361 prices maybe less than the other one, but hey you know the rest."

Ultimately, 1361 would be awarded to Inland Waters, who would hire Ferguson.

We've seen this text message before, but the prosecution is trying to put it more in context today.

10:19--Not Mercado-like: Latimer says canceling a contract at the last minute was out of character for Victor Mercado.  Latimer described Mercado as "decisive" and "direct."

10:13--More competition: Chutkow is asking Latimer about the contract that was initially awarded to Lakeshore Engineering for emergency sewer repairs, but was later pulled at the last minute and given to Inland Waters.  Latimer says it was his opinion that the city needed more competition in a contract like this, which is why he supported the bid process and the result of it being awarded to Lakeshore. 

But at the last minute, it was handed off to Inland Waters, since they had a similar contract already. Latimer says he would not want this practice to be the norm. 

9:57--Inland contract: Chutkow asked Rataj if overcharges were common in the water department, and he responded that they were.  With regard to Inland's overcharges, Latimer says he did not believe there was any fraud involved and that the city continued to work with Inland afterwards.

9:54--Feds back: Rataj's done with his cross-examination, and now the U.S. Attorney gets a second crack at Latimer. Assistant U.S. Attorney Mark Chutkow is back up now.

9:53--Didn't get all: Maybe Rataj's best point?  He reminds the jury that, for one city job that was so big it was split into two projects, Ferguson could have been awarded both contracts for it.  But he only received one. 

In the Dennis Archer administration, sometimes companies received both contracts, he says.

9:45--Cost not all: Rataj is showing Latimer a sheet that shows how each company submitting bids (Inland and Ferguson included) was scored by the city, as well as the projected cost of their bids. Some companies with higher bids were rated better than those with lower ones, and Rataj says that's important because it shows cost wasn't the only factor here. 

9:31--Cashing in: Latimer is talking about how, for one city contract, Inland Waters improperly marked-up the price of some of its work for the city.  The water department found out about this, and determined that Inland overcharged for $748,162.

"They're trying to get paid for money they're not entitled to, isn't that right?" Rataj asks.

"Correct," Latimer responded.

Remember: Inland is a competitor of Ferguson Enterprises, and its owner Tony Soave will be testifying against Kilpatrick later.

9:26--Finally: And here we go. It looks like some slow traffic also played a role in court getting started a little late today.  I can attest to that: I-75 was brutal this morning!

Latimer is on the stand, being cross-examined by Ferguson's lawyer MIke Rataj. 

9:15--Out of chambers: The attorneys have emerged.  Now just waiting for the judge and jury.

9:00--In Chambers: Good morning, everyone.  Lawyers in the case are behind closed doors in Judge Nancy Edmunds' chambers hashing out some legal issue that we're not privy to.  We expect to get going shortly, with Detroit Water Department manager Darryl Latimer still on the stand.

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