So this is why the hustler kwamster wants the power to handle grants ahead of City council - he's got a long history of diverting funds. Check out the Freep article.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080518/NEWS01/805180596
Kilpatrick helped friends get grants
Money also trickled down to his wife, records show
BY DAWSON BELL, JIM SCHAEFER and M.L. ELRICK • FREE PRESS STAFF WRITERS • May 18, 2008
The year before he was elected Detroit mayor in 2001, state Rep. Kwame Kilpatrick steered state grants to two Detroit nonprofit agencies that in turn agreed to pay $175,000 of the grant money to a company owned by Kilpatrick's wife, according to records obtained by the Free Press.
One grant was to a nonprofit formed by Kilpatrick's friend Bobby Ferguson and the other was to a group run by the Rev. Edgar Vann, who then was Kilpatrick's pastor.
The state eventually terminated half of Ferguson's $500,000 grant, citing inappropriate spending, including buying a house, and failure to document how the money was being spent.
By then, Ferguson's firm had paid $100,000 to a company called U.N.I.T.E. Co. Inc. that Carlita Kilpatrick, the mayor's wife, incorporated in July 2000. Carlita Kilpatrick is listed as the president of U.N.I.T.E. on the incorporation papers. No other names are listed. U.N.I.T.E.'s incorporation papers were filed three weeks after Ferguson's nonprofit faxed its grant application to state officials from Kwame Kilpatrick's office at the Capitol.
Vann's program had agreed to pay U.N.I.T.E. $75,000 from its grant, but paid only $37,500, said the then-executive director of the program, after state officials raised objections about the propriety of compensating Carlita Kilpatrick's company with a state grant her husband helped secure. Vann praised the work his nonprofit has done in Detroit.
The two grants were among 82 totaling $18 million that the Legislature and then-Gov. John Engler approved in June 2000 for a program to enhance the arts, culture and quality of life across Michigan. At the time, the economy was booming and the state was awash in tax revenues.
Steering grants to friends or even family is not illegal unless there's a kickback.
Mayor praises wife's work
Kilpatrick's office issued a statement to the Free Press late Friday afternoon praising work with the grants.
"The First Lady's U.N.I.T.E., which did excellent work in the schools by providing nonviolent education, mentoring young girls, and coaching basketball, provided all of its services with a high amount of dignity and respect," the statement said. "The teachers, principals and students who participated in the program can all attest to U.N.I.T.E.'s great work."
Bobby Ferguson was unavailable for comment this week, an aide said. Ferguson did not respond to voice mails or e-mails. Ferguson's wife, Marilyn, also could not be reached. Ferguson's attorney, Avery Williams, sent the Free Press an e-mail Saturday, saying: "We hope that good press would not be in the business of soliciting stories from regulatory officials on ancient matters and thereby creating controversy where there should be none!"
Dan DeGrow, the state Senate majority leader involved in the negotiations that created the grants, learned details of Kilpatrick's role this week from the Free Press. He said what Kwame Kilpatrick did was "flat-out wrong."
"We would never have gone along with it if we had known about it," said DeGrow, referring to Republicans who controlled state government at the time.
Judy Nadler, a professor of government ethics at Santa Clara University in California, agreed.
"The bottom line is that what you can do in a privately held company or family business you can't do in the public sector," Nadler said. "It's wrong. It undermines public trust. It's not fair to competitors. It's not fair to the public."
Kilpatrick's statement did not address the question of whether it was proper to steer a grant to his wife and friends.
Regardless of how anyone would rate Carlita Kilpatrick's work, it is unlikely that either grant would have been approved had state officials known that the wife of the state representative who pushed through the grants was directly benefiting, Department of Management and Budget spokeswoman Leslee Fritz said last week.
DeGrow, along with several state budget officials who spoke on the condition they not be identified, said they weren't made aware Carlita Kilpatrick would get a six-figure subcontract.
Kilpatrick's role in getting state grants that brought business to his wife comes to light as the embattled mayor is facing eight felony charges of perjury and other offenses in connection with a text message scandal. The City Council moved last week to begin a process to remove the second-term chief executive from office.
State learns of subcontracts
Months after the grants were issued, state budget officials learned that Ferguson's Detroit Three Dimensional Community Development Corp. (Detroit 3D), and Vann's Vanguard Community Development Corp. had subcontracted with Carlita Kilpatrick.
Detroit 3D, headed by Ferguson and his wife, Marilyn, paid $100,000 to Carlita Kilpatrick's consulting firm, U.N.I.T.E., to provide eight months (at $12,500 per month) of character education and conflict resolution skills to students in unspecified Detroit schools.
The money came from a $250,000 grant issued to Detroit 3D in September 2000 to provide unspecified help to young people and senior citizens. Detroit 3D was to get another $250,000 in 2001.
Carlita Kilpatrick became a conflict resolution consultant after moving to Detroit in the mid-1990s, after graduating from Florida A&M University, where she met her future husband.
The Ferguson project was described vaguely in the grant application as a way to "provide a wide scope of services to residents who do not have access or knowledge of many services available to them."
More than two years after the Detroit 3D grant was approved, and after state officials repeatedly pleaded with the company to provide evidence of what it was doing with the money, then-budget director Don Gilmer canceled the second $250,000 installment.
In a letter to Ferguson's wife, Gilmer said he concluded that the initial $250,000 had been spent for unauthorized purposes and that Detroit 3D had failed to document other spending.
"I am not comfortable that the intended purpose of this grant has been met, and, therefore, believe the release of any additional funds would not be in the best interests of the State of Michigan," he wrote.
Among the 82 grants, the one to Detroit 3D was the only one that lost money for poor performance, state budget officials said.
Invoice sought $200 an hour
The second grant earmarked by Kilpatrick went to Vanguard Community Development Corp. for programs promoting the arts on the north side of Detroit. Vanguard received two installments of $150,000 each from the state. State officials said there were fewer concerns about that grant.
Donna Givens Williams, who at the time was the executive director of Vanguard, said this week the nonprofit paid Carlita Kilpatrick's company using other money it had raised, once state regulators raised concerns about using state money to pay U.N.I.T.E.'s invoice -- signed by Carlita Kilpatrick -- for $75,000.
The invoice based the contract payment, in part, on getting $200 an hour for developing a curriculum for character education and alternatives to violence.
She said a program on conflict resolution that Carlita Kilpatrick proposed for Sherrard Elementary in Detroit never got off the ground. Williams blamed the school administration for rejecting the program, not Carlita Kilpatrick.
Williams said she hired Carlita Kilpatrick after she was introduced to her by her husband, then a state representative. Williams said Kwame Kilpatrick did not force her to make the hire.
"I met her, I liked her," Williams said. "She did some work. It probably wasn't $37,500 worth of work ... there were a lot of challenging circumstances that weren't her fault. ... If I had felt she wasn't committed, I would have had a real issue."
Tutoring and housing
Vann said his nonprofit has provided cultural education, tutoring and housing in a desolate patch just east of New Center in Detroit.
"We have great programs at Vanguard," he said. "We're very proud of it."
Vanguard's grant application also was submitted Aug. 31, 2000 -- just one day before a news release from Engler's office announced the approval of the 82 projects from a field of 550 applicants. The release said that "due to the high level of interest, there were many worthy projects that did not receive funding."
On June 22, 2000, Kwame Kilpatrick, then the second highest ranking Democrat in the state House, wrote to then-State Budget Director Mary Lannoye and thanked her for giving consideration to the Detroit 3D and Vanguard grants. Neither nonprofit had submitted grant applications at that point.
"These organizations are doing excellent work," Kilpatrick wrote.
Kilpatrick's two projects, especially Detroit 3D, stood out among the grants for their lack of detail on how the money would be spent, according to state budget officials who reviewed the applications.
Under "project description," the Vanguard application said it planned to use the grant "through the Aspire Community Arts Program" for training low-income Detroit residents in the performing arts. They said they would do performances at Vann's Second Ebenezer church and the now-closed Sherrard school, near I-75 north of I-94.
Tutoring and mediation
In preparing Detroit 3D's application, Marilyn Ferguson wrote that it would provide "peer mediation" and "tutoring for the youth," and "meals and assistance" for poor senior citizens.
After issuing the grant, officials tried repeatedly to verify that the work was done.
After the first $250,000 payment to Detroit 3D in September 2000, state records show the next contact with the company came when a letter from Marilyn Ferguson, who at this point was signing correspondence Marilyn Johnson (her maiden name), arrived in June 2001 at the state budget office. The letter assured that the first $250,000 has been utilized, and requested the next installment.
Marilyn Ferguson cited the same language from earlier correspondence in trying to explain what her nonprofit was doing with the money. "The first half of the grant was used to begin Conflict Resolution, Peer Mediation and Self-Esteem Workshops in the community elementary schools," she wrote.
Detroit 3D also purchased a duplex to house homeless senior citizens, she wrote.
The letter was accompanied by what appears to be an adding machine slip with a column of figures totaling $249,435.89, and copies of checks to various companies and a bank draft for $100,000 to U.N.I.T.E. Carlita Kilpatrick's company.
No more money
On Aug. 24, 2001, state budget official Philip Alderfer replied in a letter that the next $250,000 would not be released until Johnson explained why expenditures had apparently been made for "purposes outside the scope of the grant."
Four months later, having not heard from Johnson, Alderfer's successor asked again for documentation and notifyed Detroit 3D that if the company didn't produce something by Jan. 15, the budget office would "seek recovery of these funds."
The final correspondence in the Detroit 3D file is from Gilmer on Nov. 14, 2002, informing Detroit 3D that the second installment would not be forthcoming.
"I am not comfortable that the intended purpose of this grant has been met," Gilmer said.
In a telephone interview earlier this month, Gilmer said he couldn't recall the specific grant. But by November 2002, the outlines of the still-acute state budget crisis were becoming clear, he said.
"We were looking for any money we could find," Gilmer said. Cutting off Detroit 3D was probably not a tough call, he said.
The state did not seek recovery of what it said were misspent funds. By then, state Rep. Kwame Kilpatrick was Mayor Kwame Kilpatrick.
Contact DAWSON BELL at 313-222-6609 or dbell@freepress.com or JIM SCHAEFER at 313-223-4542 or jschaefer@freepress.com or M.L. ELRICK at 313-222-6582 or mlelrick@freepress.com. Staff writer Jennifer Dixon and Library Director Alice Pepper contributed to this report.