Kilpatrick’s debt to Detroit should be cut, feds say
Disgraced former Detroit Mayor Kwame Kilpatrick should pay only about a third of the multi-million dollar restitution he owes to the city water department victimized by his racketeering conspiracy, federal officials recommended Wednesday.
Kilpatrick’s attorney, Harold Gurewitz, had asked the U.S. Sixth Circuit Court of Appeals to reconsider $4,584,423 in restitution as part of his 2013 criminal sentence. Kilpatrick, now serving one of the longest prison terms ever handed down in a corruption case, was ordered to pay that amount to the Detroit Water and Sewerage Department and more than $195,000 to the IRS.
The Appeals Court affirmed Kilpatrick’s conviction for using his position as mayor of Detroit and state House representative to execute a wide-ranging racketeering conspiracy involving extortion, bribery and fraud. But the court also held “that the restitution calculation was erroneous and should have been based more specifically on the water department’s loss, rather than on Kilpatrick’s gain,” according to a response filed Wednesday in U.S. District Court.
Since the government “cannot, with sufficient precision, correlate the former mayor’s $4.5 million in illicit gain to the actual loss to DWSD in this case,” Kilpatrick’s restitution must be based on a large water main contract known as CM-2014, the U.S. Attorney’s Office wrote in the filing.
The construction management contract for water main replacement pacts throughout the city was to have gone to the top two scored bidders: the team of DLZ and Superior Engineering, according to the document.
During the extortion phase of Kilpatrick’s public corruption trial in 2012, Kim Harris, a former compliance officer with the city Human Rights Department, testified that his boss, Gerard Grant Phillips, told him to decertify DLZ of Michigan as a Detroit-based business.
That meant DLZ lost key points in the bid process and its team fell from first in scoring to third, allowing one that included Kilpatrick’s friend, contractor Bobby Ferguson, to move up and obtain the contract, investigators said.
A memorandum to the Board of Water Commissioners that awarded the contract to the Ferguson team showed the cost difference between that and DLZ/Superior was about $1,637,087. That is the amount Kilpatrick’s restitution should be reduced to, officials wrote.
Gurewitz said he has until Nov. 22 to file a response.
“I will do so to determine what is appropriate — whether there should be any restitution at all,” he said Wednesday night, declining further comment.
In December 2012, months before he was convicted of racketeering and other charges, Kilpatrick said he was $1.8 million in debt. The debt included $240,000 in loans from Compuware co-founder Peter Karmanos Jr. and businessmen Roger Penske, Dan Gilbert and James Nicholson.
It is unclear how much, if any, restitution Kilpatrick has paid so far in this case since he’s been behind bars, his attorney said.
After a five-month trial, Kilpatrick and Ferguson were found guilty of running a criminal enterprise out of the mayoral office.
In June, the U.S. Supreme Court rejected Kilpatrick’s appeal of his public corruption conviction, putting a final end to his bid to overturn his 28-year prison sentence.
Kilpatrick is serving his time at a federal prison in El Reno, Oklahoma, and will be eligible for release in 2037.