Day 27: Second contractor says his company was extorted by Bobby Ferguson

DETROIT (WXYZ) - Earlier today, 7 Action News Investigator Ross Jones blogged from day 27 of the Kwame Kilpatrick corruption case. Follow along below:

10:57--The end: Ending a little early today folks.  This is it for the week...and the next, too. The trial is off all of next week for Thanksgiving, so we'll all have another chance to recharge our batteries.  For the defendants, I'd imagine they have to wonder if this could be their last Thanksgiving as free men.

10:54--Paid...for work! For the first time today, we've been shown a check that Rachmale says was paid to Ferguson for work that was actually performed (before, it was all no-work jobs).  A $252,000 check was made out to Ferguson Enterprises in November 2007 for sewer repair. 

10:52--Silent partner: Rachmale says that Ferguson kept his name off a proposal submitted by Lakeshore for a city gig, because he didn't want the city to know he was involved in the project.  That's because he was already seeking work for a "companion job" in the city that prohibited him from being on both projects. 

10:40--Ferguson fuming: Rachmale recalls how Ferguson threatened to kill his city jobs if he wasn't given a larger piece of a contract that Rachmale's company had received for water mains under city streets. 

"He wanted to do some work, we wanted to give him some, but he wanted all the streets," Rachmale said.

"He said numerous times, 'I will shut down your job,' " Rachmale recalls, saying that Ferguson would use the f-word.  

10:38--Body language: It's interesting to watch Ferguson lawyer Mike Rataj during Rachmale's testimony.  For those that don't know, Rataj is a bit of a bulldog and his mood often ranges from furious to exceptionally furious.  

As Rachmale testifies, Rataj can be seen shaking his head in disagreement and looking rather, uh, ticked off. 

10:36--Total: All told, Ferguson's company was paid close to $800,000 for management fees. 

"Did you get any meaningful work for that $700,000 to $800,000?" Chutkow asked.

"No," Rachmale asked.

But, Rachmale added, his contracts were never canceled. 

10:32--Management fees: Chutkow is showing the jury a $200,000 check written in August 2008 (while Kwame Kilpatrick's resignation seemed imminent) from Lakeshore to Xcel Construction Services, a Ferguson company.  What was it for?

"Management fees I did not receive any management for," Rachmale says.

10:26--Ferguson complains: At a lunch meeting, Rachmale says Ferguson told him that his colleague Thomas Hardiman "wasn't being fair," and that it would "hurt his company."

"Every time they would come asking for their fees, Hardiman would get upset, he would call them parasites," Rachmale says.

"Bobby Ferguson did not like that, and he wanted to talk to me about that." 

10:23--Heartburn: Rachmale says that on days when Ferguson would send a representative to pick up some of the management fees, his colleague Thomas Hardiman became physically upset, even having heartburn.

"I told him to pay the management fees, move on," Rachmale said.  

10:20--Our team is ready: Rachmale says he pushed back, telling Ferguson that "our team is ready" and he did not need any additional management services, but he ultimately relented and gave him a piece of the management fees.

10:14--Management company: After Rachmale's team won the bid, he says Ferguson told him that he wanted Excel Construction (a company he owned) to do the management services for the contract. 

"He told me, 'You need some help on the management side,' " Rachmale recalls.

He said he didn't think he needed any help, and saw no benefit in Ferguson overseeing the work and splitting the management fee with Ferguson.

He says Ferguson suggested that Rachmale shoudl cut back on the number of engineers on the project so that he could pay Ferguson management fees. 

10:08--Ferguson on both: When it came time to submit a bid for a water main job, Rachmale says he was sure to include one of Bobby Ferguson's companies on his team.  But here was the catch: the job was so big, it was split into two different projects, and companies were told they couldn't be on both.  

Rachmale decided it was in his company's interest to have Ferguson on his team, but had a complication: Ferguson was also seeking a job for the second-half of the water main job.  So, Ferguson's other company E&T Trucking submitted the bid for Rachmale's team, to conceal his involvement in the second company. 

This is a bit confusing, but essentially Rachmale is saying that Ferguson tried to hide his involvement in E&T so that he could have a piece of both water main contracts. 

9:57--Happy days: Things are getting pretty chummy in the courtroom as everyone enjoys the break. Kwame Kilpatrick, his father Bernard and Bobby Ferguson are standing at the end of the defense table, laughing and smiling from ear to ear.  Their lawyers, on the other side of the table, seem much more subdued. 

And our five minute break?  It seems to have grown. 

9:48--Short break:

Looks like the former mayor has asked for a short break, which Judge Edmunds has granted.  Stay with us, folks.  Back in five. 

9:38--Fear of Ferguson: We've heard it countless times already from Rachmale and Hardiman, but Chutkow continues to ask why both men felt compelled to keep paying Ferguson for work he never did.

"We didn't want our contracts to be stopped for unfair reasons," Rachmale said. 

"We didn't want to create any issue with Ferguson."

9:33--More payments: Earlier in this trial, Rachmale and his colleague Thomas Hardiman testified that they agreed to pay Ferguson 5% of a change order they were asking the city to approve if Ferguson promised not to block its approval.  The jury just saw an e-mail from Hardiman to Rachmale, calculating 5% of their $1.5 million change order to be $75,000.

The e-mail seems to back up the testimony we heard from both men. 

9:24--7 figures: Rachmale's companies paid A&F Environmental/Johnson Controls approximately $1.7 million over the course of several years. Rachmale says Ferguson and his companies performed no work for the money.

"Have you ever paid another contractor more than a million dollars for no work?" Chutkow asked.

"No," Rachmale responded. 

9:16--Big money: Chutkow is showing more big checks that came from Rachmale's companies.  They were made out not to Ferguson Enterprises, though, but to a company called A & F Environmental/Johnson Controls.  That company was owned by Ferguson's wife.  The big checks (Some larger than $200,000) were deposited in Ferguson Enterprises' accounts. 

In each case, Rachmale said A & F Environmental/Johnson Controls did no work for him or his company. Chutkow is suggesting that Ferguson asked him to write checks out to A & F to conceal the payments being made to him. 

9:12--Lots of checks: Assistant U.S. Attorney Mark Chutkow is showing Rachmale a number of checks made out various Ferguson-related companies.  The checks are for $120,000 and $200,000. The memo lines say "paid for building improvement," but Ferguson and his companies didn't provide any building improvements for Rachmale or his companies.  

9:00--Rachmale still up: Avinash Rachmale is still up on the witness stand right now. He's the president of Lakeshore TolTest, formerly Lakeshore Engineering, a company that received a lot of city business while Kilpatrick was mayor, but it allegedly came at a cost: Rachmale says he was forced to pay Ferguson millions. 

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