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Former Detroit mayor facing extortion, bribery charges

By Ashley Hayes, CNN
Former Detroit Mayor Kwame Kilpatrick is serving up to five years in prison for probation violation.
Former Detroit Mayor Kwame Kilpatrick is serving up to five years in prison for probation violation.
  • Kwame Kilpatrick is currently in prison in a state case
  • The new indictment adds more federal charges against him
  • Prosecutors maintain he and others engaged in extortion, bribery
  • If convicted, he could face 30 years in prison

(CNN) -- A federal grand jury has indicted the imprisoned former mayor of Detroit, Kwame Kilpatrick, on new charges including racketeering, extortion, bribery and filing false tax returns, authorities said.

Kilpatrick, his father and two former city officials, among others, were "working together to abuse Kwame Kilpatrick's public offices, both his position as a state representative as well as his position of mayor of Detroit, to unjustly enrich themselves through a pattern of extortion, bribery and fraud," Barbara McQuade, U.S. attorney for the Eastern District of Michigan, said Wednesday.

"The defendants used the power and authority of Kwame Kilpatrick's public offices to unjustly enrich not only themselves, but also their families and their associates, at the expense of taxpayers and donors," she said. The charges include conspiracy under the Racketeer Influenced and Corrupt Organizations Act.

Kilpatrick is serving a prison sentence of up to five years for violating probation in a 2008 case against him. That case involved two state felony counts of obstruction of justice stemming from his efforts to cover up an extramarital affair. He also pleaded no contest to charges of assaulting a police officer attempting to serve a subpoena on one of his friends in that case.

He previously was facing 19 federal counts of felony fraud and tax charges and was accused of using the Kilpatrick Civic Fund -- a tax-exempt fund meant to pay for voter education and boosting community activities -- for his own benefit, as well as that of his friends and family. The superceding 38-count, 89-page indictment announced Wednesday adds charges against Kilpatrick.

Kilpatrick's attorney, James Thomas, said Kilpatrick denies the claims in the indictment.

Ex-Detroit mayor going to prison

"The indictment is just an allegation," he said. "I have confidence in our case." He said he and his client take the indictment seriously.

The Detroit Free Press newspaper quoted Thomas on Thursday as saying that Kilpatrick is innocent and will be vindicated at trial.

Others charged include the former mayor's father, Bernard Kilpatrick; Bobby Ferguson, who owned or controlled two businesses that obtained contracts for city work; Victor Mercado, former director of the Detroit Water and Sewerage Department; and Derrick Miller, who served as Kwame Kilpatrick's deputy chief of staff when he was a Michigan state representative and served as his chief administrative officer and chief information officer when he was mayor of Detroit.

At the heart of the scheme was alleged corruption in municipal contracting, McQuade said, most of it centered in the Detroit Water and Sewerage Department, where authorities found some 13 alleged schemes involving work contracts. Generally, Ferguson and others used Kilpatrick's office as mayor to coerce contractors to include Ferguson's office in contracts it otherwise would not have been awarded, providing him with "tens of millions of dollars," she said. The coercion was to the detriment of other minority contractors who otherwise would have had an opportunity to do city business, McQuade said.

In one such incident, according to the indictment, the group conspired to hold up another company's $50 million sewer lining contract until the company agreed to give Ferguson $24.7 million in work. In another, Kwame Kilpatrick and Mercado canceled a company's $10 million sewer repair contract after the company refused to provide Ferguson with a 25% share, then awarded the work to another company who agreed to give him a portion of the contract.

"We want to send a strong deterrent message to anyone in government that if you steal from taxpayers, you are going to be held accountable, even if you leave office before the investigation ends," she said.

In addition, Kilpatrick and others allegedly demanded bribes from those seeking to do business with the city or its pension fund. Prosecutors allege they received more than $1 million in cash and rides on private jets, McQuade said.

And, the indictment alleges, Kilpatrick defrauded donors to nonprofit organizations including the Kilpatrick Civic Fund, using money raised for payments to friends and relatives, yoga lessons, golf-related expenses, summer camp for his children and leasing a home after he left the mayor's residence.

The indictment is the culmination of a six-year investigation, McQuade said. The current Detroit city administration assisted investigators, she said. "We are hopeful that this case and this indictment brings closure to this chapter in the city's history."

She said the investigation took years because authorities from various federal agencies had to sift through hundreds of thousands of documents and interview hundreds of witnesses.

"When greed controls the decision-making process of our public officials and the people that they surround themselves with, financial fraud and deceit is likely to follow," said Erick Martinez, special agent in charge of the Internal Revenue Service's Criminal Investigation Division. The former mayor, he said, "took steps to conceal his financial activities."

An arraignment date had not been set, McQuade said Wednesday. If convicted, the former mayor faces a maximum sentence of 30 years in prison, she said.