Day 26: Witness says he gave Bobby Ferguson work out of fear he'd kill his city contracts

DETROIT (WXYZ) - Earlier today, 7 Action News Investigator Ross Jones blogged from day 26 of the Kilpatrick corruption trial downtown.  Got a question?  E-mail him at rjones@wxyz.com or follow him on Twitter @RossJones7.  Follow along below:

1:00--Done: That's all the testimony we'll take today.  See you right back here tomorrow at 9AM. 

12:58--Big checks: The jury is being shown checks right now.  A $173,000 check from Lakeshore was made out to Johnson Controls, and a $155,700 check was made out from Sky Group Grand (a company owned by Rachmale) to A & F Environmental/Johnson Consulting.

He said he wrote the second check out of an account from his second company because he didn't want his employees to be asking questions about why he was paying Ferguson for work he wasn't performing.

Again, he said he was fearful that word woudl get back to Ferguson, who would get upset.

12:50--Strange invoice: Jurors are looking at an invoice (which they saw earlier) from "Johnson Consulant Services" (yes, they spelled "Consultant" wrong).  It's from Bobby Ferguson's wife's company, and it lists all sorts of labor, materials and other work that it's charging Lakeshore Engineering for.  The problem?  Rachmale says that he'd never heard of Johnson Consultant (or Consulant) Services before, and they did no work for him.

The government is suggesting that this invoice was doctored by Ferguson to hide the $1 million that he was being paid for performing no work.

"This is a false invoice," Chutkow said.

"Yes," Rachmale responded.

12:44--Bobby needs money: When Bobby Ferguson told Thomas Hardiman that he needed $25,000 (you'll recall that Hardiman testified about this earlier), Rachmale told Hardiman to cash personal checks quickly. Rachmale says he thought this was part of the $1 million that they agreed to pay Ferguson, so they rushed to get the cash together.

As it turns out, Ferguson didn't expect the money to be delivered in cash.

12:41--Agreement: Rachmale says he made an agreement with Ferguson that if he helped approved change orders (when the price of work goes up) for an asbestos contract that Lakeshore was working on, Ferguson would receive 5% of the value of those change orders.

Again, Rachmale says he was afraid Ferguson would kill the change orders if he wasn't paid.

12:34--Tug of war: Rachmale says that not long after the contract was awarded, Ferguson wanted to do some of the work that was assigned to another contractor on the team.  Rachmale tried to resolve this dispute, and ultimately he says they agreed to pay Ferguson $1 million for doing no work at all.

"We did not want to upset Ferguson, and if he falls out of the team, the job can be canceled," Rachmale said.

"That was what my fear was."

12:30--Shot at defense: Chutkow just asked Rachmale what sort of services Ferguson provided in the bid proposal process.  Rachmale said he offered the resumes of some of his most experienced employees.  Earlier, Ferguson's lawyers had said that Lakeshore took advantage of Ferguson's savvy staff to be awarded the city contract.

But when Chutkow asked Rachmale whether he thought having Ferguson's staff on the bid would help Lakeshore get the contract, Rachmale responded: "No."

12:19--Even more: Actually, Ferguson's cut was larger than a third; he received 36%.

"I wanted to accommodate him," Rachmale said, adding that he was afraid he would lose the job if Ferguson wasn't happy.

12:15--Ferguson's in: Rachmale is talking about he and Hardiman decided to bring Ferguson in on their future work.  Lakeshore, Lonzo Constructino and Ferguson enterprises would each get a third of their next project.

Rachmale said that Ferguson's piece of the pie was larger than it would normally be for doing excavation.

"It's kind of high," Rachmale said, adding that excavation work usually ranges from 10 to 20%.

11:53--Short break: See? I told you it'd get more interesting.  We're taking a short break here, and I've got to run outside to update our 7 Action News at Noon viewers.  Feel free to switch it over to 7 (but stay here at WXYZ.com, too!).

11:50--Contract went to Inland: A competitor of Lakeshore's, Inland Waters, received the work that Rachmale says was taken away from him.  He said Bobby Ferguson was on Inland's team.

"We concluded we did not have the right team members on our team," Rachmale said.

"We concluded Ferguson should be on our team."

11:46--Another contract canceled: The hits kept coming for Lakeshore, as another major contract of theirs was later canceled as well.  Rachmale said he was a wreck afterwards, having stomach aches, not going into work and worrying about how these cancelations would effect his company and employees.

11:42--Go to Victor: Rachmale said he tried to arrange meetings with then Water Department Chief Victor Mercado to ask why his contract had been canceled.  The meetings didn't happen.

11:32--$2,500...for what? Rachmale says he and Hardiman decided to hire Bernard Kilpatrick as a consultant

after their contract was canceled.  They met with him at his apartment and hired him for $2,500.  Kilpatrick said he would do his best to find out what happened.  But other than that one meeting, Rachmale says, Bernard Kilpatrick didn't do anything else for their company.

11:26--Contract canceled: Rachmale is talking about how that contract was later and unexpectedly canceled.  He asked Hardiman to reach out to everyone (from the Mayor's office to Kilpatrick's dad and mother), but couldn't get any straight answers.

11:19--Ferguson wants in: Rachmale is telling the jury some information that Hardiman testified to earlier: that after Lakeshore Engineering received a contract from the City of Detroit, Ferguson reached out to Hardiman and wanted 25% of Lakeshore's contract with the city.

Ferguson had not been part of the planning for this contract, and Rachmale said his initial reaction was to give him nothing, but later offered 10%.  Ferguson was apparently not interested in that amount, though.

11:07--Here we go: Chutkow is now switching the questioning over to contracts awarded while Kilpatrick was mayor. Previously, he'd been talking about work that Lakeshore did under the Dennis Archer administration.

11:00--Can't we all just get along? In the middle of our break, I saw Thomas Hardiman bump into the defendants downstairs in the court's snack shop.  Everyone was polite and jovial for the most part.  I saw lots of handshakes and back slaps. 

10:40--Break: And with that, time for our morning break.  Been a little slow so far this morning, folks, but I expect things to pick up shortly with some testimony related to a few folks at the defense table.  Stay with us.  In the meantime, keep your great questions coming.  Rjones@wxyz.com is the e-mail. I try to respond to all of them.

10:30--Yikes: For the last 15 minutes, jurors have been shown pictures of pipes caked with sludge and sewage (which have the added bonus of being carcinogens).  Exactly the kind of stuff that jurors want to see about 90 minutes before lunch!

The good news, I suppose, is that Lakeshore cleared virtually all the sludge out of the pipes, and I must say they appear clean enough to eat off of.

10:24--City work: Rachmale is discussing pictures shown to the jury of an outfall (large pipes) in the city that Lakeshore did work to help clean up.  We'll have to wait and see what this has to do with Ferguson.

10:13--Civic Fund: Hey, remember the Kilpatrick Civic Fund?  It was a huge part of the trial for a couple weeks, but it feels like it's been ages since it was mentioned.  Jurors were just shown a check from March 19, 2008 from Lakeshore Engineering to the Civic Fund for $25,000.

Rachmale says he's not sure what the Civic Fund does, but knows it was supposed to help the City of Detroit and that it was associated with Kwame Kilpatrick.

10:12--Rachmale meets Kilpatrick: Now Assistant U.S. Attorney Mark Chutkow is asking Rachmale about his support for Kwame Kilpatrick's first campaign for mayor in 2001.  Rachmale says he was a part of the mayor's transition team for the Detroit Water and Sewerage Department.

10:10--His companies: Rachmale has spent the last ten minutes or so talking about the many companies owned by the Lakeshore Group.  He's more or less just giving jurors a history of his time in Detroit and the businesses he's grown.

9:58--President Obama: Lakeshore grew so much, and was such a success story, that the Small Business Association (SBA) honored it recently with an award.  Rachmale recalls how he was called to Washington, D.C. and met President Barack Obama.

9:54--History: Right now, Rachmale is talking about his his education, time here in the U.S. (he was born in India) and how he started his company.  Interestingly, when he founded it in 1994, he was Lakeshore's only employee.  Now, he says, there are up to 4,000 around the world. 

9:50--Rachmale up: Hardiman's old boss, Avinash Rachmale of Lakeshore Engineering, is now up.  He's the company's president. 

9:47--Hardiman done: After five days of testimony, Hardiman is now off the stand.

9:46--Still working together: In April of 2010, according to e-mails just shown, Lakeshore still wanted to work with Ferguson Enterprises.  This is significant, Evelyn suggests, because it was sent after Hardiman was talking to the feds.

But the feds counterpoint?  The Lakeshore employee who sent the letter wasn't aware of Ferguson's alleged extortion. 

9:38--Insurance: Continuing his argument that Ferguson went above and beyond to help out Lakeshore (not extort them), Evelyn is showing the jury a document that shows Ferguson Enterprises paid for insurance for Lakeshore for a city job. 

9:30-- Move on: Judge Nancy Edmunds seems to be losing patience with Evelyn's continued cross-examination of Hardiman (this is the fourth day defense lawyers have been questioning him), and has asked him to move along at a quicker pace. 

9:25--Bobby Ferguson, Mentor: Evelyn asked Hardiman if his

son Johnny saw Bobby Ferguson as something of a mentor. Again, this is Evelyn trying to paint Ferguson not as the boogie man that the feds and some witnesses have suggested.

9:21--No mention: Ferguson's lead attorney Gerald Evelyn is pointing out to Hardiman that, when he testified to a grand jury in 2006, he never mentioned being extorted by Ferguson.  If this was such a serious issue, Evelyn is suggesting, why not tell the grand jury?

Later, he did. 

9:15--Bow tie's back: Just when we thought he'd stop wearing them, Kwame Kilpatrick surprises us all with another bow tie around his neck. I've noticed that the former mayor, though, does not have much of a selection of them; less than a half dozen.  So, for those of you struggling to find a Christmas gift for Detroit's former mayor, I'd suggest a bow tie.

Mr. Kilpatrick likes pastels. 

9:11--Delayed again: We're a little late getting started again this morning, so I'll take this chance to remind everyone what stage of the trial we're in right now.  The feds are calling it the "climate of fear," saying city contractors understood that, if they wanted to be cut in on business in the Kilpatrick administration, they had to make sure the mayor's friend Bobby Ferguson was in on the deal too.

So far we've heard from witnesses who have described Ferguson as a bully who threatened to kill contracts if he wasn't included on them, and we've seen text messages that highlight his close relationship with Kwame Kilpatrick.

The defense doesn't deny a close friendship between the two, but says any money that went to either Kilpatrick or Ferguson wasn't extorted.  It was given voluntarily. 

8:55--Day 26: Welcome back for what we expect will be the last day of testimony for city contractor Thomas Hardiman, the former Lakeshore Engineering executive who says he was extorted by Bobby Ferguson, who allegedly threatened to kill his city contracts. 

We expect Hardiman will finish up relatively quickly, and the next government witness expected to take the stand will be his old boss, Avinash Rachmale. 

Print this article Back to Top

Comments