Kilpatrick’s Friend Ferguson Facing 8 Federal Fraud Charges

Bobby Ferguson, a controversial city contractor and friend of ex-Mayor Kwame Kilpatrick, has been indicted on eight charges, including conspiracy to defraud the United States, mail fraud and money laundering.

Ferguson was charged with obtaining millions of dollars in public work contracts through fraud, false statements and bid collusion. The charges stem from the Garden View Estates project, a mixed-use, multi-unit public housing development at the old Herman Gardens site on Detroit’s west side.

It is the latest indictment in an ongoing investigation into City Hall corruption that has led at least 10 felony convictions–including former City Councilwoman Monica Conyers–and comes 20 months after the FBI searched Ferguson’s offices in Detroit. Kilpatrick was indicted June 23 on 19 fraud and tax counts, and officials said more charges are possible.

“The unsealing of this indictment marks a decisive step to end the era of fraud and corruption in publicly funded projects in the City of Detroit,” said U.S. Attorney Barbara L. McQuade. “Misuse of funds meant to provide safe and affordable public housing is simply intolerable.”

Ferguson will be arraigned at 1 p.m. Monday in U.S. District Court and faces up to 20 years in prison and fines of more than $2.5 million. {snip}

His companies, meanwhile, could face fines ranging from $1 million to more than $10 million.

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“When did it become a crime having a friendship with someone in public office?” Ferguson wrote.

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A Detroit News investigation in 2008 showed Ferguson and his companies had received at least $170 million in city contracts–$109 million from the Detroit Water and Sewerage Department alone–since Kilpatrick took office in 2002.

Councilman Kwame Kenyatta said he wasn’t surprised to learn of Ferguson’s indictment and said the charge stemming from Garden View Estates shows that the Detroit Building Authority needs more scrutiny. The building authority did much of the infrastructure work on the housing project, such as creating roads through the area. The council doesn’t approve building authority contracts.

“That is how a lot of those contracts with Ferguson slipped through,” Kenyatta said.

Also named in the indictment:

* Shakib Deria, 42, of Troy, an employee of Ferguson Enterprises and vice president of A&F Environmental/Johnson Construction Services.

* Michael Woodhouse, 52, of West Bloomfield Township, president of Xcel Construction.

* Calvin L. Hall, 42, of Detroit, vice president of Xcel Construction.

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Xcel won an $11.7 million contract to serve as construction manager of the Garden View project, and Ferguson is accused of illegally steering the contract to perform more than $9 million worth of work to another one of his companies, Ferguson Enterprises.

The move was falsely represented to have been the result of a competitive bidding process, though Ferguson controlled both companies, McQuade said.

Ferguson also is charged with recruiting and directing owners of two other companies to submit false and inflated bids to ensure the Ferguson Enterprises bid would appear to be the low bidder for demolition, earthwork and utilities work on the Garden View project.

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Ferguson and Woodhouse, along with Ferguson Enterprises and Xcel Construction, also were charged with conspiracy to willfully injure property of the U.S. They are accused of dumping tens of thousands of cubic yards of construction debris, soil and other materials at the Garden View site. The materials were dumped there after being hauled from other Ferguson Enterprises job sites related to Detroit Water and Sewerage Department projects. By dumping the materials, Ferguson and his company avoided hundreds of thousands of dollars in disposal fees.

The dumping took place between April 2007 and last month, according to the indictment.

It will cost the U.S. Department of Housing and Urban Development more than $1.2 million to clean up the site and remove the materials.

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