I got hardcore surrealist programming on my system as a small
child; simultaneously I was hipped to wonderful, awful, and wonderfully
awful horror films.
I am forever grateful to......
The Ghoul!
I just figured he had an outlet for all his mad, vast energies: the
world'd be a duller place if he took Ritalin. Eh what old thing?
People will do what they will do. People will also use "perceptions"
gained through their faulty (at best) "senses" to evaluate other
people's behavio/ur; to deem it 'good,' 'bad,' or 'odd.'
I remember that somehow all this was so much better with the polka music blasting.
I know not why.
Hiya kids! Hiya hiya hiya!
Froggy!!
"...A world of Light/She gonna open our eyes up..."
31 Cord L29 Speedster
1931 Cord L-29 Phaeton
1936 Custom Beverly Supercharged
1936 Cord 810 Phaeton
36 Cord 810 Westchester 4-door Sedan
1937 Cord 812S Custom Berline
1937 Cord 812 Beverly Sedan
37 Cord 812 Beverly
1937 Cord Sportsman Convertible Coupe
| |
| |
David Fishman, on a subsequent visit to the Salumeria Rosi, trying the offerings at the restaurant on the Upper West Side. “Good variety,” he wrote.
By SUSAN DOMINUS - The New York Times
Spam Drops After Internet Providers Disconnect a California Hosting Firm
By Brian Krebs
washingtonpost.com Staff Writer
Wednesday, November 12, 2008
The volume of junk e-mail sent worldwide dropped drastically today after a Web hosting firm identified by the computer security community as a major host of organizations allegedly engaged in spam activity was taken offline, according to security firms that monitor spam distribution online.
While its gleaming, state-of-the-art, 30-story office tower in downtown San Jose, California hardly looks like the staging ground for what could be called a full-scale cyber crime offensive, security experts have found that a relatively small firm at that location is home to servers that serve as a gateway for a significant portion of the world's junk e-mail.
The servers are operated by McColo Corp, which these experts say has emerged as a major U.S. hosting service for international firms and syndicates that are involved in everything from the remote management of millions of compromised computers to the sale of counterfeit pharmaceuticals and designer goods, fake security products and child pornography via email.
The company's web site was not accessible today, when two Internet providers cut off MoColo's connectivity to the Internet, security experts said. Immediately after McColo was unplugged, security companies charted a precipitous drop in spam volumes worldwide. E-mail security firm IronPort said spam levels fell by roughly 66 percent as of Tuesday evening.
Spamcop.net, another spam watch dog, found a similar decline, from about 40 spam e-mails per second to around 10 per second. (See their graphic representation here.)
Officials from McColo did not respond to multiple e-mails, phone calls and instant messages left at the contact points listed on the company's Web site. It's not clear what, if anything, U.S. law enforcement is doing about McColo's alleged involvement in the delivery of spam. An FBI spokesman declined to offer a comment for this story. The U.S. Secret Service could not be immediately reached for comment.
Also unclear is the extent to which McColo could be held legally responsible for the activities of the clients for whom it provides hosting services. There is no evidence that McColo has been charged with any crime, and these activities may not violate the law.
Mark Rasch, a former cyber crime prosecutor for the Justice Department and managing director of FTI Consulting in Washington, DC said Web hosting providers are generally not liable for illegal activity carried out on their networks, except in cases involving copyright violations and child pornography.
In the case of child pornography, providers may be held criminally liable if they know about but do nothing to eliminate such content from their servers. For example, in 2001, BuffNET, a large regional service provider in Buffalo, N .Y., pleaded guilty to knowingly providing access to child pornography because the company failed to remove offending Web pages after being alerted to the material.
Rasch said liability in such cases generally hinges on whether the hosting provider is aware of or reasonably should have been aware of the infringing content.
"It's a little bit like a landlord who owns a building and sees people coming in and out of the apartment complex constantly at all hours and not suspecting their may be drug activity going on," Rasch said. "There are certain things that raise red flags, such as the nature, volume, source and destination of the Internet traffic, that can and should raise red flags. And to have so many third parties looking at the volume and content from this Internet provider saying 'This is outrageous,' clearly the people doing the hosting should know that as well."
Global Crossing, a Bermuda-based company with U.S. operations in New Jersey, which was one of the two companies providing Internet connectivity to McColo, declined to discuss the matter, except to say that Global Crossing communicates and cooperates fully with law enforcement, their peers, and security researchers to address malicious activity.
Benny Ng, director of marketing for Hurricane Electric, a Fremont, California company that was the other major Internet provider for McColo, took a much stronger public stance upon receiving information about this investigation from washingtonpost.com.
"We shut them down," Ng said. "We looked into it a bit, saw the size and scope of the problem [washingtonpost.com was] reporting and said 'Holy cow!' Within the hour we had terminated all of our connections to them."
Paul Ferguson, a threat researcher with computer security firm Trend Micro, said despite the apparently unilateral actions by McColo's Internet providers, his opinion is that U.S. authorities should have been examining McColo and its customers for a long time.
"There is damning evidence that [McColo's] activity (allegedly hosting purveyors of spam) has been going on there for way too long, and plenty of people in the security community have gone out of their way to raise awareness about this network, but nobody seems to care," Ferguson said.
Multiple security researchers have recently published data naming McColo as the host for all of the top robot networks or "botnets," which are vast collections of hacked computers that are networked together to blast out spam or attack others online. These include SecureWorks, FireEye and ThreatExpert.
Reports by Joe Stewart, director of malware research for Atlanta-based SecureWorks, said that these known botnets: Mega-D, Srizbi, Pushdo, Rustock and Warezov, "have their master servers hosted at McColo."
Stewart said he has complained to McColo several times about botnets operating out of the company's servers, and each time, he said, the company claimed it was addressing the problem. But according to Stewart, they did so by just moving the offending Web sites to a different section of their network.
"McColo runs a service that offers its clients quite a bit more protection from takedowns than the average Web host," Stewart said. "If they get abuse complaints they will try to appease whoever is complaining, but the end result is usually they just end up moving their Internet addresses around."
Collectively, these botnets appear to be responsible for sending roughly 75 percent of all spam each day, according to the latest stats from Marshal, a security company in the United Kingdom that tracks botnet activity.
Vincent Hanna, a researcher for the anti-spam group Spamhaus.org, said Spamhaus sees roughly 1.5 million computers infected with either Srizbi or Rustock sending spam over an average one-week timeframe.
Hanna said McColo has for years hosted botnet and other suspicious activity, and that it has a reputation as one of the most dependable players in the so-called "bulletproof hosting" business, which are Web servers that will remain online regardless of complaints.
"These are serious issues, almost all relating to the very core of spammer infrastructure," he said.
Researchers have found that on any given day, about half of all spam sent through the top botnets are ads for male enhancement products and other knockoff designer drugs, with a fair number of the online pharmacy sites linked in spam messages that were hosted at McColo.
Last month, the Federal Trade Commission convinced a U.S. district court to seize the assets of an international spam network selling counterfeit prescription drugs, a network Spamhaus identified as the largest "spam gang" in the world. The spammers allegedly used the Mega-D botnet, which is capable of sending 10 billion e-mail messages each day.
Jart Armin, a private security researcher who documented the activity at McColo in a report published today, said McColo is currently hosting at least 40 different child pornography Web sites or sites that collect payment for the illicit content -- and that traffic analysis showed that one of the sites garnered between 15,000 and 25,000 visitors each day.
Ian Amit, director of security research for Aladdin Knowledge Systems, an Israeli security intelligence firm, said cyber criminals have for many months used servers at McColo to manage Web sites that push out new versions of the "Torpig," or "Sinowal" Trojan horse program, which is widely considered one of the stealthiest and most sophisticated families of malicious software in existence today.
In October, RSA FraudAction Research Lab learned a single cyber crime group has used the Torpig Trojan to steal more than a half million bank, credit and debit card accounts from infected PCs over the past two-and-a-half years.
Amit said he found that recent Torpig attacks were being coordinated out of a Web server in Florida, which in turn was controlled by a VPN server running at McColo. Aladdin's findings were mirrored by those of researchers at iDefense, a security firm in Sterling, Virginia.
"We traced back the management connections, and found that the criminals were logged into the attack server in Florida using connections from McColo," Amit said.
Over the past year, media attention paid to Internet service providers and hosting companies that were profiting from cyber crime activity forced two of the most notorious networks underground or off the Web entirely.
Late last year, stories published by washingtonpost.com and elsewhere about criminal activity and child pornography at the St. Petersburg based Russian Business Network (RBN) caused the hosting company's upstream Internet providers to cease routing traffic for the company. The same thing happened in September, when upstream Internet providers pulled the plug on Northern California based Intercage following media reports about the level of cyber-crime activity emanating from its network.
But some security experts worry that if major Internet providers similarly shun McColo, it will only make the criminals and their activities harder to track and to block. Stewart, of SecureWorks, notes that in the case of the RBN, the company's clients didn't really go away, but instead simply dispersed their operations to less concentrated areas of the Internet.
"Everything will just be more spread out and harder to mitigate," Stewart said. "We rather like knowing where the bad activity is coming from, so protecting our networks is easier."
Jon Praed, founder of the Internet Law Group in Arlington, Virginia., and an attorney who has pursued spammers in cases filed by some of the nation's largest ISPs, said many security companies do not want safe havens to go away because it merely forces those companies to work harder to find the cyber-crime intelligence that powers their businesses. What's more, he said, if enough Internet providers begin severing ties with known sources of illegal activity, the cyber-criminal groups will be increasingly forced into a smaller number of areas on the Internet, ultimately increasing their costs and making them easier to isolate, identify and block.
"Good network providers are going to have to step up and separate themselves from these providers who are increasingly depedent on criminal operations," Praed said. "The fact that McColo, a virtual den of iniquity, is able to survive into 2008 in the United States is a willful sign that we haven't yet begun the job of driving these operations to places where we can begin to curtail their existence."
Detroit Mayor Names Relative to Direct Construction.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 03-JUL-02
Byline: M.L. Elrick
Jul. 3--Detroit Mayor Kwame Kilpatrick has appointed a second relative to a high-ranking post in his administration.
Ayanna Benson, a distant cousin, has replaced Quinette King as general manager of the Detroit Building Authority, Kilpatrick confirmed Tuesday. The mayor said Benson, a longtime city Planning and Development employee, is a second cousin of the mayor's father, Bernard Kilpatrick.
Earlier this year, Kilpatrick hired his uncle, Raymond Cheeks, to oversee Detroit's 10 neighborhood city halls. The Building Authority and neighborhood city halls jobs each pay between $59,300 and $89,000 annually, according to city records.
King, a 16-year veteran of the Building Authority, was appointed general manager eight years ago by then-Mayor Dennis Archer. Recently, Kilpatrick praised King at ceremonies marking the reopening of the Erma Henderson Marina and a ground-breaking for the Farwell Recreation Center.
The Building Authority oversees construction projects for many city departments, including police, fire, zoo and recreation. King said the authority, which is involved in about 60 projects, hires contractors and has a budget of about $200 million.
Asked if she resigned or was asked to leave by the mayor, King said, "It was a little bit of both." She would not elaborate.
Kilpatrick said Benson went through a rigorous interview process. "She's been with the city for 20 years, working in neighborhood development, understands development, planning," he said.
Benson did not return messages left at the Building Authority or the Planning and Development Department, where she last worked as executive manager of community and public services.
Other mayors have put relatives in key posts. Archer selected his sister-in-law, Beth DunCombe, to run the quasi-governmental Detroit Economic Growth Corp. Kilpatrick said he does not have any other relatives on the city payroll. In February, after hiring his uncle, the mayor said of his relatives: "I will not hesitate to put them in place if they're the best person."
City Councilwoman Sharon McPhail said she did not know Benson or whether she was qualified for the job, but said the mayor should not hire his relatives.
"The city ought to have an ethics ordinance that prohibits it," she said. "It just doesn't look good."
Detroit's New Head of City Construction Projects Has No Experience in Field.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 11-JUL-02
Byline: M.L. Elrick
Jul. 11--New York City's building commissioner is a veteran of city construction projects, including managing the Ground Zero cleanup. In Chicago, the Public Building Commission honcho formerly ran a major city department.
Yet Detroit Mayor Kwame Kilpatrick's choice to oversee city construction projects ranging from renovations to the Great Apes Exhibit at the zoo to a possible new police headquarters has no such experience.
Newly appointed Detroit Building Authority Director Ayanna Benson, Kilpatrick's third cousin, has worked for the city for about 20 years, most recently as executive manager of the Planning and Development Department's neighborhood development division. That division worked with local organizations seeking community development block grants.
Spokeswoman Sylvia Crawford declined to discuss Benson's duties with the Planning and Development Department. Benson did not return calls seeking comment.
Kilpatrick has said he hired Benson, 51, after a rigorous interview process.
Benson, who will be paid $89,000, is one of eight staff members of the Detroit Building Authority, which manages construction projects for most city departments, initiating design, monitoring costs and overseeing contractors. The authority is also responsible for maintenance at 35 specially designated areas, including Harmonie Park and Greektown.
The authority currently oversees $200 million in projects, said former director Quinette King, who spent eight years in the agency before being named director eight years ago by then-Detroit Mayor Dennis Archer.
Benson's apparent lack of experience with construction or as a department head stands in contrast not only with her peers in other big cities, but with the heads of such efforts for the State of Michigan, the Detroit Public Schools and Wayne County.
In New York, Department of Design and Construction Commissioner Kenneth Holden, who oversees public building projects, worked his way through the city's building ranks. After serving as director of the mayor's Office of Construction, he became first deputy commissioner of the Department of Design and Construction.
Department spokesman John Spavins said Holden replaced a professional engineer. Spavins said there is no requirement that the commissioner be an engineer or architect, but city officials want someone with "a strong management background, a strong knowledge of capital construction procedures."
In Chicago, Public Building Commission Executive Director Eileen Carey is a former head of the city Department of Streets and Sanitation and the mayor's Constituent Services Office, said commission spokesman Jack Beary. He said there are no prerequisites for becoming director.
"She's an experienced administrator, that's her expertise," Beary said.
Michigan requires the overseer of state building projects to have specific qualifications. Okey Eneli, director of infrastructure services, is a certified professional engineer, said Penny Davis, spokeswoman for the Office of Management and Budget.
"Task- or skill-oriented jobs have specific requirements of a professional degree or experience in a given field," Davis said. "You don't want some Joe Schmoe that came out of college with an English degree taking a stab at this. ... These are all qualified people who have a background and knowledge geared to the tasks that they're doing."
Although they don't specify qualifications, Detroit Public Schools' and Wayne County's building efforts are led by people with experience in those fields.
Robert Francis, executive director of the Detroit Public Schools' $1.5-billion capital improvement program, said he has 25 years of experience managing building operations, maintenance and construction.
The Wayne County Building Authority approves contracts, which are overseen by Tom Schmeltzer, director of the county's building division, said county spokeswoman June West. She said Schmeltzer was a skilled tradesman who became director about 10 years ago.
Kilpatrick saw other women, ex-guards say
They are lying for money, he responds
By JIM SCHAEFER and M.L. ELRICK
Free Press staff writers
Originally published May 22, 2004
Two former mayoral bodyguards and a fired deputy police chief claim in a lawsuit that Detroit Mayor Kwame Kilpatrick ruined their careers because he feared they might expose a trail of marital infidelities.
In interviews with the Free Press and in sworn depositions unsealed Friday, the two former guards said Kilpatrick used them and other police officers on city time to set up dalliances with at least five women in Detroit and elsewhere.
Kilpatrick said Friday his accusers are lying.
"All of the allegations are completely false; it's a travesty that they would do that," Kilpatrick said.
But former police officer Walt Harris said: "There's been many instances where he made rendezvous with women."
In one instance, Harris said, he took the 33-year-old married mayor to a late-night meeting with a woman wearing only a full-length fur coat.
The allegations raise questions about the proper use of city resources and personnel, and could cost taxpayers millions in lawsuit payouts.
Speaking to reporters Friday night, Kilpatrick said: "They will say anything to get money. They are suing the city. . . . They want the taxpayer dollars and we're refusing to give it."
Harris and Officer Harold Nelthrope, who were among those who provided 24-hour protection for the mayor and his family, said they never saw Kilpatrick being intimate with any of the women. They said they knew the name of only one woman.
But they said they were convinced the meetings were romantic interludes.
Wayne County Circuit Judge Michael Callahan released documents that Kilpatrick had fought to keep secret. The judge's action came after the Free Press appealed the sealing of records in a lawsuit filed by Nelthrope and ex-Deputy Chief Gary Brown, who ran internal affairs. Harris has also sued.
Callahan ordered the mayor and his wife, Carlita, to appear for depositions next month in Brown's and Nelthrope's whistle-blower lawsuit. The lawyer for Nelthrope and Brown plans to question the Kilpatricks separately under oath about their personal lives.
The mayor called a news conference last year to denounce rumors of a wild party at the Manoogian Mansion, his official residence.
He proclaimed: "I would never disrespect my God, my wife, my children or the citizens of Detroit with this nonsense."
In their depositions, the former bodyguards also accused Kilpatrick of having an improper relationship with mayoral chief of staff Christine Beatty. She has said she recommended removing Brown in May 2003, shortly after the deputy chief had begun to investigate alleged wrongdoing by the mayor's inner circle.
Beatty could not be reached for comment Friday. But in a sworn deposition last winter she said she never had a romantic relationship with Kilpatrick.
The newly released records for the first time assert that Brown was fired to keep him from discovering Kilpatrick's alleged philandering.
"The logical next step in his investigation would be to interview members" of Kilpatrick's security team, said Michael Stefani, the lawyer representing Brown, Nelthrope and Harris. "And that's what Christine Beatty was afraid would come to light."
Nelthrope was reassigned from house duty at the Manoogian to a midnight shift at the 7th (Mack) Precinct. He went on stress leave after it was disclosed that he contacted internal affairs officers with allegations against Kilpatrick's security team leaders. He also mentioned rumors -- never substantiated -- of a wild party at the Manoogian. He said he has been threatened.
Harris asked to be transferred from the security team last spring.
A midnight ride
Harris criticized the team's leaders last summer in a lengthy interview with the Free Press, but did not mention the mayor's conduct beyond characterizing him as a hard worker who put in long hours.
One of the mayor's most-trusted guards, Harris was a 9-year police veteran who had spent three years on the security team of Mayor Dennis Archer.
He said he is having financial troubles, but is not lying to improve his chances of a lucrative settlement. He is now a deputy sheriff in Monroe County, Indiana.
Harris told the Free Press that on a midnight in December 2002 or January 2003 the mayor ordered him to drive from the Manoogian Mansion, the official residence, to the Lofts apartments on East Jefferson Avenue. A woman wearing only a full-length fur coat came out to meet Kilpatrick, Harris said.
"It was windy. One hand went to stick the key in the gate to lift the arm up. When she did that her coat blew open and the mayor looked at me and laughed. . . .
"I was able to see her skin. And I'm thinking, 'She has nothing on up under that and it's cold outside,' " he said. "I'm positive. She had nothing on up under that coat."
Before walking off arm-in-arm with the woman, Harris said, the mayor told him to go park in the shadows and wait.
A time in Washington
Harris also detailed a trip to Washington, D.C., for a political meeting in which he said he and a fellow bodyguard escorted a woman to the mayor's hotel.
Harris said he, Officer Mike Martin, Kilpatrick and his assistant DeDan Milton went to a popular dance club called Dream. Harris said he refused to go in because a doorman demanded that the bodyguards check their department-issued guns, which Harris said is against policy.
Harris stayed outside in a limousine for about three hours -- with the guns -- while the mayor and the others were inside.
After midnight, the group went to another club called Zanzibar.
Kilpatrick danced there with a couple of women, Harris said. When the group left, Harris jumped in the front seat with the limo driver.
Martin opened the door and a woman got in and sat next to Kilpatrick, Harris said.
"He had his arm around her," Harris said. "I'm like, what's going on?"
At the hotel, Harris escorted Kilpatrick inside, and Martin walked in with the woman. "He comes up, walks her to the mayor's room," Harris said.
In his deposition, Harris said he exchanged looks with Martin.
"Martin laughs, 'Yeah, you know, the mayor, he doing his thing,'" Harris said.
When Stefani deposed Martin, he admitted accompanying Kilpatrick to Zanzibar, but said the mayor did not dance or bring a woman back to the hotel.
The next morning, as Harris arrived at Kilpatrick's door to escort him through the day, he said he heard the mayor and a woman inside the room saying their goodbyes. Harris said he remembered a shower running, but did not see the woman.
At a barber shop
Another time in Detroit, Harris and Nelthrope said, they chauffered the mayor in his city Cadillac to meet a woman at a McDonald's restaurant on Grand River on the west side.
Nelthrope said the meeting happened one night in 2003. The woman met them in a parking lot and followed them in her car to a barber shop on Leslie, just a couple of blocks from where the mayor lived at the time.
"She had on a real low-cut skirt," Harris said. "She had nice-looking legs. She was a decent-looking lady."
Nelthrope and Harris said the mayor and the woman went into a back room for 20 minutes while they waited outside.
Harris said the mayor and woman came out of the barber shop where "the mayor hugged her and they kissed."
He said it was a peck on the lips, but he recalled thinking, "He's not trying to be discreet. Out in the open, he hugged her, gives her a kiss."
In his deposition, Harris said Kilpatrick and the woman engaged in a passionate embrace.
"Business lunch at 11 o'clock at night? In the back of a barber shop?" Nelthrope asked. "Give me a break."
Why now
Harris said he is speaking out now because he has become disenchanted with the mayor and feels Kilpatrick or his associates tried to frame him.
He was one of a few officers who traveled with the mayor, as did former team leaders Loronzo (Greg) Jones and Martin. "He got comfortable with me," Harris said of Kilpatrick. "And he trusted me."
Two of Harris' former colleagues praised him.
"Walt's one of the most professional guys I ever met," Officer Jesus Colon told the Free Press Wednesday. "He wouldn't make nothing up."
Colon worked with Harris on the security team until Colon was reassigned to the 7th (Mack) Precinct.
Sgt. Michael Moore, a crew chief on the security team from January 2002 through May 2003, described Harris as "honest, forthright," in a deposition.
Neither Colon nor Moore said they had heard rumors that the mayor committed adultery. Both said they never saw the mayor try to meet women.
"Half the time that women were around, he backed away from them," Colon said in the interview.
In depositions, Jones and Martin said they were not aware of Kilpatrick cheating on his wife, lawyer Stefani said.
Martin said he did not procure women for the mayor.
"I'm a police officer, not a pimp," he told Stefani.
Jones is a former high school football teammate of the mayor who introduced Kilpatrick to Martin during the 2001 mayoral race. Martin provided security for Kilpatrick during the campaign.
The lawsuits are pending. No trial date has been set.
OCT. 14, 2004: Bank gave mayor's aide $12,000 boost
Grant helped Beatty obtain a mortgage
By M.L. ELRICK and JIM SCHAEFER
FREE PRESS STAFF WRITERS
Originally published October 15, 2004
Detroit Mayor Kwame Kilpatrick's chief of staff received a $12,000 grant from Fifth Third Bank -- nearly five times what the bank offers others -- to help her buy a home in Detroit's upscale Rosedale Park neighborhood, according to records the Free Press obtained.
The money helped Christine Beatty qualify for a mortgage after the bank denied her initial application because of her low credit score.
The documents, provided by attorney Michael Stefani, who is suing Kilpatrick, also confirm that the bank took Beatty's position as chief of staff into account, noting on a list of "positives" that she worked for the mayor.
The Free Press reported Tuesday that a Fifth Third loan officer, citing a referral from the mayor, earlier had asked underwriters to make an exception for Beatty. Kilpatrick and bank officials have said he did not intervene.
The documents show that Beatty's position and the grant, which she doesn't have to pay back, helped her obtain a $237,000 loan from Fifth Third under the Economic Empowerment Program the bank created earlier this year to settle a dispute with the U.S. Department of Justice. Federal officials had accused the bank of failing to do business in minority areas.
Jack Riley, a Fifth Third spokesman, would not confirm Thursday whether Beatty received a $12,000 grant toward her down payment. He has said she received money from the Economic Empowerment Program, but he said privacy laws prevented him from discussing details.
The bank's newspaper advertisements say qualified applicants can receive a grant of up to $2,500 to help them buy a home. Riley said the bank can increase that amount if it sees fit. He said the limit was not in place when Beatty received her mortgage in May.
"When this loan was done, and it was one of the first or second EEP loans, we had not established the parameters" for down payment grants, Riley said.
He said he believed other loan recipients had received more than $2,500 in down payment grants but could not offer specifics.
"Ms. Beatty's loan approval process was consistent with the loan approval process of other applicants," Riley said.
The bank created the $3.2-million Economic Empowerment Program for people buying homes or starting businesses in Detroit. The fund officially was unveiled in June at the Wayne County Community College District's downtown campus, with much fanfare. Kilpatrick attended the kickoff, as did Beatty's loan officer, Keith Anderson.
The financing program is open to everyone, regardless of race or income level, but Riley said it is intended to serve low- and moderate-income applicants.
Beatty, whose salary is $140,001, used the loan to buy a $255,000 home.
Officials from the mayor's office did not comment Thursday evening.
The Free Press reported Tuesday that Beatty wrote an April 2 letter on official mayor's office stationery asking Anderson to overlook blemishes on her credit record that jeopardized her chance of getting a mortgage. She signed the letter with her name and "Chief of Staff, City of Detroit, Mayor Kwame M. Kilpatrick."
She has said Anderson asked her to send the letter. She said Monday she did not consider it a violation of the city's ethics policy, which forbids city employees from using their position for private gain or engaging in behavior that gives the appearance of impropriety.
The mayor's office had no comment on Beatty's actions. She is currently on medical leave.
Kilpatrick has accused Stefani of illegally obtaining documents from Beatty's bank loan file to advance a lawsuit against the city. Stefani filed the suit on behalf of fired Deputy Police Chief Gary Brown.
Beatty's attorney, Harold Gurewitz, said: "I don't believe there is anything at all about public employment that should result in a violation of a person's privacy rights. And we intend to aggressively pursue appropriate remedies."
Stefani has said he did nothing illegal to get the paperwork, which includes a memo he said Anderson wrote on April 14 that said Beatty was a "personal referral from the mayor" and urged an underwriter to make an exception for her because "I was told that 5/3 Bank is working on a deal with the mayor and the City of Detroit for collection of taxes. ... This could go a long way with 5/3 Bank's efforts in the City of Detroit, and the Mayor would think very favorable of our Bank."
Anderson declined comment Tuesday when reached at his Detroit office. Fifth Third Bank has no contracts with Detroit, city officials said. Riley has said the bank bids on city work.
He has declined to comment on the memo's authenticity because doing so would violate Beatty's privacy. He said the bank is investigating how Stefani obtained the documents.
Stefani is suing the city on behalf of Brown and Officer Harold Nelthrope, who have accused the city of violating the state's Whistleblowers' Protection Act and retaliating against them for their involvement in an internal affairs investigation of alleged wrongdoing by the mayor, his family and their police bodyguards.
Nelthrope used to work on Kilpatrick's security team.
Budget crisis: Retiree: Why is Detroit broke?
Source: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 31-OCT-05
Byline: Marisol Bello
Oct. 31--Today, the Free Press begins five days of reporting on crucial issues in the mayor's race. Come back on Tuesday for a look at what Mayor Kwame Kilpatrick and challenger Freman Hendrix are saying about crime and police issues and how that matches what's really happening.
Mayor Kwame Kilpatrick says rumors of Detroit's financial demise are exaggerated. Challenger Freman Hendrix says they are all but gospel.
The extremes leave city voters like Fredericka Johnson to sort through the bureaucratic, often arcane political shell game that is government financing.
Make no mistake: Real issues face Michigan's largest city with ramifications that stretch way beyond its borders.
Already, cuts in police, firefighting, bulk trash pickup and bus routes have residents howling.
Kilpatrick says his plan to lower taxes and bring high-tech industries to Detroit will create jobs and put the city back on track.
Hendrix, too, says he would lower taxes, entice small businesses to set up shop, and make tough choices to downsize city government that will turn the city's finances around.
Beyond the campaign rhetoric heading into the Nov. 8 election, some city residents wonder how things got so bad, so quickly.
"You go to bed one day and the city is doing good and you wake up the next day and the city is going into receivership," said retiree Johnson, 65, who lives in northwest Detroit. "Why are we broke? The city has never been in a shape like this. Never."
Johnson retired 10 years ago after more than 20 years as a City of Detroit secretary. Now, she hears the city wants to cut her pension and health care to help balance the budget.
She fears that would make a mess of her personal budget as property taxes, homeowners' insurance and gas bills rise.
"Why are they going to make us suffer?" she said.
Today, the Free Press looks at what the candidates are saying about Detroit's budget crisis and how it squares with reality.
Issue: Scope of budget problem.
Kilpatrick says: The city faces a $139-million budget gap. Kilpatrick's administration is working to reduce the gap, trying to negotiate health care concessions, laying off more employees and bringing in more revenue through changes in the state's utility users tax. The city is nowhere near going broke.
Hendrix says: The city faces a projected $300-million shortfall by the end of this fiscal year -- June 30, 2006. Mismanagement and wanton spending by the mayor have worsened the crisis to the point that insolvency -- and a state takeover -- are real threats.
The Free Press found: Administration documents show the city faces a projected shortfall of $187 million for this fiscal year.
Auditor General Joseph Harris said the city's shortfall could reach $300 million if significant cuts are not made soon. He said it is inevitable the city will run out of cash; the question is when.
The city's chief financial officer, Sean Werdlow, says the city could start to run out of cash by December without more layoffs or union concessions.
State officials with the Department of Treasury say they are monitoring the city's finances, but have no plans to step in.
Politically, Gov. Jennifer Granholm would want no part of a state takeover unless there is absolutely no alternative.
Issue: What, who caused crisis.
Kilpatrick says: The national, state and local economy, and the city's -- and region's -- reliance on the troubled automotive industry. Growing pension and health care costs. Decades of population loss without downsizing city government under his predecessor. Continued cuts in state and federal aid.
Hendrix says: The crisis has been 30 years in the making, but Kilpatrick ignored the problem and made it worse over the last three years.
The Free Press found: The city always has struggled financially, hitting bottom during the early 1980s when Mayor Coleman Young laid off police and cut employee salaries.
The city enjoyed a respite during the 1990s under Mayor Dennis Archer, who benefited from having fellow Democrat Bill Clinton as U.S. president and a booming economy.
Under Kilpatrick, the city has suffered one of the worst economies in its recent history and the budget has reached a crisis point.
When Kilpatrick took office in 2002, he faced a $75-million shortfall (Kilpatrick says it was $100 million). That has skyrocketed to $187 million today.
Archer said he left a template for Kilpatrick that included selling an 860-acre city-owned tract for $50 million. That would have helped eliminate the first-year deficit and created a surplus of $11 million.
Kilpatrick said he could get more money for the property. He was wrong. The city has sold more than 400 acres for $18 million and is expecting to get $7 million from additional parcels.
Meanwhile, estimates show the city lost up to 12,000 residents a year over the last five years, further eroding the tax base.
The city's pension and health care costs increased by 26% since Kilpatrick took office, even as the city spent 19% less on salaries. By comparison, during Archer's last four years in office, from 1997 to 2001, employee benefits increased by 4% and salaries went up 20%.
Also under Kilpatrick, the city lost 24% of its state and federal revenue and 14% of local revenue, even with $100 million in new casino taxes.
During Archer's last term, the city's federal money remained steady, its state revenue increased 14% and its local revenue grew by 62%.
Issue: Which candidate better handled the budget.
Kilpatrick says: He and his administration have made tough decisions, laying off hundreds of workers and eliminating thousands of positions. They've reduced the budget, trimmed city services and restructured the police and fire departments. By contrast, Archer and his deputy mayor, Hendrix, bloated city government.
Hendrix says: He and Archer balanced seven straight budgets and shepherded the city through consecutive bond rating increases. Many of the employees they added were funded by federal, state and charitable grants.
The Free Press found: Under Archer, the city's bond rating improved seven consecutive times.
In Archer's last four years in office, his administration increased the number of city workers by 1,600 to a total of 21,000 when he left in 2001. Grants paid for 5% of those employees.
Archer didn't negotiate union contracts before he left, saying the city couldn't afford raises.
Kilpatrick negotiated 48 contracts and gave employees 2% raises over two years. This year, though, Kilpatrick has yet to negotiate health care and pension concessions from the unions.
Although Kilpatrick reduced the budget this year, the City Council voted for even deeper cuts that the mayor hasn't made.
Kilpatrick has cut 1,914 people and eliminated more than 2,000 vacant positions in general city departments.
But the cuts weren't enough to cover the shortfalls, so he has borrowed money by issuing city bonds each year to close budget gaps.
That task has become more difficult because the city's bond ratings have dropped under Kilpatrick.
Despite his efforts, Kilpatrick has been unable to balance the budget during his first three years.
Kilpatrick at crossroads in battle to save Detroit, his job.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 24-JAN-05
Byline: M.L. Elrick
Jan. 24--With a fight against union leaders and City Council members looming, Mayor Kwame Kilpatrick may find that the trust he needs to help pull Detroit out of a financial quagmire is harder to find than a cherry red Lincoln Navigator.
After a weeklong assault, Kilpatrick tried to regain some of his flagging credibility Saturday, when he reversed himself and admitted that the shiny new Navigator reporters found in a locked police garage originally was leased by the city for his wife, Carlita Kilpatrick.
"There were some screwups on communications," Kilpatrick said during an unprecedented and sometimes combative 70-minute news conference in his city hall offices. "I'll take the lumps on that. I'm upset that we handled it the way we handled it."
The mayor also denied a Friday Free Press report that said Washington, D.C., police supervisors cut off after-hours VIP protection for Kilpatrick when he visited their city because his nightclub hopping might result in embarrassment or injury to their police security team.
Even Kilpatrick loyalists worried that the stories could seriously wound the mayor.
"The timing could not be more unfortunate," said Conrad Mallett Jr., who helped run Kilpatrick's 2001 mayoral campaign. Regaining the momentum Kilpatrick said he sought by touting his austerity plan in a televised address nearly two weeks ago won't be easy.
"The mayor has reached the tipping point where the public now assumes the worst about him," said Sam Riddle, a longtime Detroit political consultant.
Kilpatrick adviser Adolph Mongo said the reports will make it harder for Kilpatrick to push his agenda and win re-election, though he said he is confident the mayor can do both.
City Council members such as Sharon McPhail, who is running for mayor, tried to turn the situation to their advantage, using the airwaves to question the mayor's integrity and his ability to erase a projected $230-million deficit. If the mayor cannot balance the $1.4-billion general fund, the consequences could be as dire as a state takeover of the city's operations.
"By Mayor Kwame Kilpatrick's own admission, his own budget staff has been presenting nothing but ominous financial news since he took office in 2002," McPhail said in a statement released last week. "In fact, Detroit's budget crisis has been made all the worse by Mayor Kilpatrick's inability to focus his attention on the very grim financial condition of the city until now."
Blaming a weak economy and a workforce too large for Detroit's shrinking population, Kilpatrick has said he will balance the city's budget by laying off nearly 700 workers, eliminating more than 200 vacant positions, selling city cars and asking all employees to take a 10-percent pay cut and reduced benefits.
"I think the mayor's credibility is absolutely paramount in this next period when this city is being hit by a perfect fiscal storm," said Councilwoman Sheila Cockrel, who said the mayor's news conference helped restore some, but not all, of his credibility.
Councilwoman JoAnn Watson said she is not concerned about Kilpatrick's recent travails.
"I just want to concentrate on the budget issues," she said.
And Al Garrett, president of the American Federation of State, County and Municipal Employees Council 25, which represents about 5,000 of the city's 17,000 employees, said union members never planned to take Kilpatrick's word without scrutinizing his plan first.
"We're not going into this thing trusting anyone," he said of Kilpatrick's plan to balance the budget with concessions from workers.
"There's some people mad at the mayor," Mongo acknowledged. But he said the way TV news reporters dogged the mayor -- even going to Washington, D.C., to confront him -- could help Kilpatrick.
He said a neighbor who told him she did not vote for Kilpatrick was disgusted with the coverage. "They're going too far with our mayor," Mongo said the woman told him.
"That's the first time I heard her say 'our' mayor," he added.
Bob Berg, a Kilpatrick adviser who endured many controversies while working as former Mayor Coleman Young's press secretary, said the mayor has put the controversy behind him. "You've really got to be careful about reading too much cosmic significance into everything," he said.
One way Kilpatrick plans to overcome his latest bout of bad press is by being more open. He said he will hold weekly news conferences, beginning Jan. 31. But his three years in office suggest the mayor has a way to go. Over the past 18 months, for example, his office has routinely ignored Freedom of Information Act requests.
And while Kilpatrick acknowledged Saturday that he knew about the Navigator in December, he didn't mention that he rejected it around the time reporters began asking about it.
After being stung for days by accusations that he was hiding a requisition for the Navigator, he released the requisition form and several other documents. Yet the names and phone numbers of the city employees involved in the transactions had been redacted.
Audit faults Kilpatrick for disregarding rules.
Source: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 18-FEB-05
Byline: M.L. Elrick
Feb. 18--Detroit Mayor Kwame Kilpatrick's staff spent more than $35,000 on meals in violation of city policy, an audit revealed Thursday.
Between January 2002 and last September, the mayor's office was reimbursed for meals even though they had not obtained required approvals for the expenditures beforehand, Auditor General Joseph Harris said in a review of spending by Kilpatrick and his staff.
Harris' audit also found that the city paid more than $2,000 in late fees on the mayor's city-issued credit card and failed to provide receipts documenting $16,527 in charges.
The audit also accused the administration of dodging City Council approval for $44,000 it spent on an event that may not have been a justifiable use of taxpayer money.
The audit is the latest report from Harris revealing a lack of accountability in the mayor's office as well as a disregard for city procedures. Earlier audits revealed that three mayoral aides embezzled tens of thousands of dollars from a petty-cash fund in Kilpatrick's office and widespread failure by mayoral employees to justify cash advances they received for city-funded trips.
Harris declined comment on the audit released Thursday, saying the document spoke for itself.
A written response by Patricia Peoples, executive assistant to Kilpatrick's chief of staff Christine Beatty, acknowledged many of Harris' findings and said the mayor's office is working to comply with city regulations.
However, Peoples objected to Harris' assertion that the mayor's office attempted to avoid City Council scrutiny by breaking up the $44,000 it spent to help put on a Feb. 8, 2003 event at Cobo Hall.
The mayor's office issued two checks, for $20,000 and $24,000, to PSI Productions & Events Planning Inc. for media equipment rental and labor for a forum titled "The State of the Black Union IV -- The Black Church: Relevant, Repressive, or Reborn?"
Harris said the mayor's office should have issued one check for $44,000. The City Council must approve any expenditure over $25,000.
The audit also noted "the mayor's office could not document how the event provided services to city citizens" and did not demonstrate how the expenditure was "necessary, reasonable or in any way a responsible use of the city's public funds."
Peoples responded that "As host ... the mayor's office is still under the opinion that the event provided services to city citizens." She did not provide details.
The audit also found that Kilpatrick failed to provide receipts for more than $16,000 charged to his city credit card. Those charges amounted to 8 percent of all charges to the credit card between January 2002 to last September, Harris said.
"Due to the lack of purchase slips/receipts, the legitimacy of the credit card purchases cannot be validated," the audit said.
The largest transaction without a receipt was $11,644 charged to the card by the Greater New Orleans Sports Foundation on Jan. 28, 2002. The city disputed the charge more than two years later, but the charge was put back on the city's account last April. Ron Maestri of the Greater New Orleans Sports Foundation said Thursday that he didn't know what the charge or the dispute was about.
Peoples wrote that the city "continues to aggressively dispute" the charge and is "actively seeking" receipts for $4,882 in charges on the credit card.
It is unclear why the mayor was in New Orleans. The audit had some good news for the mayor's office. It reported that all but seven of the 141 travel advances in dispute now had receipts.
Mayoral candidate says: Trim Kilpatrick's security to reopen police stations.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 25-FEB-05
Byline: M.L. Elrick
Feb. 25--Detroit mayoral candidate Freman Hendrix suggested Thursday that shrinking Kwame Kilpatrick's security team could help cover the cost of reopening the city's police mini-stations.
Standing in front of a shuttered mini-station at the Grandland Shopping Center on Detroit's west side, Hendrix said he would reopen the police outposts and expand CB patrols to help reduce crime in neighborhoods. He said Detroit's financial woes -- Kilpatrick says the city faces a potential $231-million shortfall in its 2005-06 budget -- make hiring additional police unlikely.
Mayoral spokesman Howard Hughey and police spokesman James Tate declined comment. Kilpatrick has said even though homicides increased last year, crime in general has decreased.
Detroit could find money to reopen the mini-stations by reducing the number of police protecting Kilpatrick and his family. The mayor's security team has 21 budgeted positions at a cost of $2.4 million.
The Free Press has reported that Kilpatrick has one of the largest mayoral security teams in the nation, although it is slightly smaller than the team that protected Mayor Dennis Archer and his wife.
Hendrix also suggested saving money by cutting the city's travel budget and returning the red 2005 Lincoln Navigator the city leased for Kilpatrick's wife, Carlita, which has since been reassigned to the Police Department.
In addition to Hendrix and Kilpatrick, City Councilwoman Sharon McPhail is also running.
Freman Hendrix says mini-stations in Detroit neighborhoods can help reduce crime.
City is near top of list of spenders.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 22-MAR-05
By Kathleen Gray And Marisol Bello
Mar. 22--Detroit spends more on city government than most of the nation's big cities, a Free Press analysis shows.
State of the City broadcasts Detroit Mayor Kwame Kilpatrick is to deliver his fourth State of the City address at 7 p.m. today at Orchestra Hall. There are no tickets available. The speech will be televised live on WJBK-TV (Channel 2), WDIV-TV (Channel 4) and WXYZ-TV (Channel 7). It will be broadcast live on WJR-AM (760), WWJ-AM (950) and WDET-FM (101.9).
Detroit ranks fourth among the nation's 15 largest cities in number of employees for every 1,000 residents; none of the three Michigan cities that follow Detroit in population -- Grand Rapids, Warren and Sterling Heights -- have even half as many employees per capita as Detroit.
The reality of a bloated workforce and budget drowning in about $200 million in red ink faces Mayor Kwame Kilpatrick as he prepares to deliver his State of the City address at 7 tonight.
"Right-sizing," the new buzzword for cutting city employees, has become a focus for the Kilpatrick administration and the Detroit City Council as they work to balance the budget even as thousands of Detroiters continue their flight to the suburbs.
The Free Press analysis of how Detroit compares with other communities also found overall city general fund spending of $1.58 billion out of whack with most other big cities. Detroit ranks fifth in overall spending per capita, behind New York, Philadelphia, San Francisco and Chicago, spending $1.7 million for every 1,000 residents.
What happened?
While the city's wallet remained wide open, tax revenues have declined. Detroit, which relies mostly on income taxes while many cities' primary revenue is property taxes, has suffered through hard economic times with an unemployment rate of about 14 percent. And the city's needs are unique to other cities'; for example, harsh winters mean it must provide snow removal and aging infrastructure means high repair bills.
The city's median income -- at $26,157 -- is the lowest of the country's 15 largest cities, based on 2003 U.S. census data.
And this year, the city dropped below 900,000 residents after reaching a high of more than 2 million in the mid-1950s. Since the 2000 census, the city has lost a net of 51,883 residents.
Meanwhile, the city's tax burden is among the highest in the nation, according to an annual report compiled by the City of Washington, D.C, comparing its tax burden to other large cities.
"We just can't afford it," said Detroit Auditor General Joseph Harris, a critic of some of the administration's financial decisions.
Detroit does not have the capacity to sustain high spending, Harris said, especially with its poverty and high unemployment rates.
Other cities, such as San Francisco and Chicago, he said, have greater contributions from businesses and residents. He cited San Francisco as a city smaller than Detroit but having one of the highest median incomes in the country.
Harris consistently has said the city must cut its total workforce of about 18,000 by as many as 2,000 workers, otherwise state receivership is likely. But so far, Harris said needed change hasn't occurred.
It's not that the city hasn't tried to cut workers.
Kilpatrick announced more than 600 layoffs in January and the elimination of 200 vacant positions. The mayor said earlier this year that the Belle Isle Aquarium would have to close and that overnight bus service would end to cut $22.5 million from the budget. Protests delayed both actions, now set to take effect next month.
"Nobody said it would be easy," said Earl Ryan, president of the Citizens Research Council, a Livonia-based think tank that analyzes state and local government finances. "Whenever you try to cut back services, you'll get complaints."
Still, other cities have done it. Columbus, Ohio, another Rust Belt city slow to recover from the recession, has slowed its spending. Since 2000, the general budget of the city, with a population of about 728,000, is up by only 1 percent. To accomplish that, the city cut 25 percent of its workforce, eliminating 470 positions the last four years.
The city also cut hours at recreation and health centers, required employees to share more in health-care costs and cut grants to community organizations, said Mike Brown, spokesman for Columbus Mayor Michael Coleman.
"We tried to protect the basic neighborhood services and determine what the priorities are for City Hall," he said. "These are tough decisions that every community is facing."
In Indianapolis, the nation's 12th-largest city with 783,000 people, the city expects a $57-million shortfall this year. But the city has spent the last 15 years reducing the size of its workforce, dropping from 4,700 in 1991 to 3,000 today, said budget manager Jeff Seidenstein.
The city privatized services, including its wastewater treatment plants, to help shed employees, an option that is staunchly opposed by Detroit's unions and several City Council members.
"It was controversial here, too," Seidenstein said. But the city's budget problems likely would have been a lot worse if they hadn't made some move to reduce the number of employees, he added.
The city is now looking to consolidate its police and fire services with the county's.
Anne Kinney, a researcher with the Government Finance Officers Association in Chicago, said many factors have to be taken into account before meaningful comparisons between cities are done. It's not fair, for example, to compare Detroit with Phoenix, the nation's sixth-largest city. Phoenix doesn't have to pay for snow removal.
Older cities like Detroit, also have to deal with aging roads, sewer lines and crumbling public buildings.
"And cities in the Midwest provide full service, while cities in other regions don't supply quite the same services," she added. "In the West and in some places in Arizona, even fire departments are privately run."
Detroit laid the groundwork for its current financial mess in the economic boom days of the 1990s, said Ryan. Despite a declining population, it used surpluses to hire more workers instead of upgrading technology which might have saved money now.
"That simply was not a sustainable policy," said Ryan. "Had the city adopted a strategy of downsizing in the mid-1990s when it had substantial resources, the crisis of downsizing today wouldn't be necessary."
The state of Michigan has had similar problems. During the 1990s, taxes were cut several times when the economy was booming. Since 2001, billion-dollar deficits have plagued legislators.
"During the '90s, the dot.com industry wasn't the only bubble to burst. There were state and local bubbles, too," said Ryan. "And now we're paying the price for that."
Kilpatrick says city won't pop for bubbly.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 04-MAY-05
By M.L. Elrick and Jim Schaefer. Staff writer Marisol Bello contributed to this report.
May 4--Bubbly is out of bounds.
Detroit Mayor Kwame Kilpatrick conceded that Tuesday before refusing to discuss any details of the $210,000 credit card tab that the Free Press reported he passed on to taxpayers.
"I will check that out, and if that is true, I will refund," he said of a bottle of Moet & Chandon Nectar Imperial champagne charged to Kilpatrick's city-issued credit card in 2002 at a toney Atlanta restaurant owned by hip-hop music icon Sean (P. Diddy) Combs.
The Free Press disclosed the champagne purchase as part of a report on Kilpatrick's use of his credit card during his first 33 months in office. The newspaper got the city records nearly a year after filing a Freedom of Information Act request.
But while Detroiters demanded answers about the pricey meals charged to the mayor's credit card -- even bumping talk of the Tigers' victory Monday over the World Series champion Boston Red Sox and the Pistons' impending playoff game on sports radio call-in shows on Tuesday -- Kilpatrick refused to discuss on what and with whom he has been dining on the city's dime.
He defended his road trips.
"What we do there is promote business. What we do there is promote the city of Detroit. What we do there is try to get companies to come here. What we do there -- in Washington, D.C., and New York, and in Atlanta and L.A., in Las Vegas -- is try to get companies to locate in the city," Kilpatrick said. "I will continue, vigorously and aggressively, going after business for this town."
Callers and readers objected to the symbolism of the purchases, made amid Detroit's deep slide into financial crisis.
The bulk of the charges were for airfare and hotel stays, but the newspaper revealed that the mayor charged 78 meals to the card while in Detroit and on the road, not including hotel room service.
On one day in January 2002, the mayor charged more than $600 at two upscale hot spots in Washington, D.C.
The cost of meals was as low as $29 at Mama's Place in Detroit and as high as $456 at the swanky Capital Grille in Washington, D.C. The biggest tab was $1,285 for a "dinner event" at Sweet Georgia Brown in Detroit.
The mayor's salary was $176,176 before he said he cut it 10 percent in March to help close a projected $230-million gap in the city's $1.6-billion general fund budget. He is the only city employee who is issued a credit card.
In all but a handful of instances, Kilpatrick did not provide detailed receipts showing what was purchased and who ate the meals.
In two rare instances where detailed receipts were provided, the bills reveal lobster and crab leg dinners and alcohol purchases. City policy prohibits the use of the card for alcohol.
Kilpatrick said Tuesday that the alcohol -- beers, Malibu Rum drinks, Glenlivet scotch and Chambord liqueur -- was not for him. He didn't say whether he would pay for those drinks.
"People know that I don't drink," he told reporters after a news conference announcing the kickoff of the city's annual Motor City Makeover volunteer spring cleanup program.
He said the Free Press article focused on about 10 percent of the total expenses on his credit card and did not properly consider the good the trips did for Detroit.
"Here we go again," Kilpatrick told reporters. "It's unbelievable that the focus is not on what we're doing for the city; it's about all of this kind of crap."
Specifically, the mayor said his travels have landed $2 billion in investment in Detroit, including the downtown Hard Rock Cafe and $30 million in federal grants. Late Tuesday night, the mayor's office issued a statement reiterating that the expenses were for business-related travel.
The mayor's dining habits prompted an outcry by the City Council and unusually candid comments by former Mayor Dennis Archer.
"That story in the Free Press, it does not look good," Archer told Frank Beckmann on WJR-AM (760) early Tuesday. The situation with the card "does not feel right. It could have been avoided if there had been some checks and balances."
Archer said he used a nonprofit fund established by business leaders to pay for some of his travel and meal expenses. He said he never charged alcohol to his city credit card. City officials told the newspaper they could not find records detailing Archer's expenditures.
Archer told Beckmann he would have informed Kilpatrick about the fund, but the new mayor didn't ask and didn't seem interested in his advice.
Kilpatrick told reporters Tuesday that he was aware of the fund, which he said is bankrolled by city contractors, but declined to use it to defray expenses. He said he sometimes uses campaign funds. He did not elaborate.
Council members said earlier Tuesday that Kilpatrick was showing a lack of respect for taxpayers.
Several of them called for the mayor to relinquish the card.
"I take my staff to lunch a couple of times a year, but I pick up the bill," said council President Maryann Mahaffey. "It's a question of how you regard your responsibility to the taxpayers."
Councilwoman Sharon McPhail, who is running for mayor, said the council has tried to scrutinize the mayor's spending habits. She said the city's Law Department refused to grant the council a subpoena for the financial records.
Freman Hendrix also is running against Kilpatrick.
Archer, who in 2001 declined to back a candidate to succeed him, said on the radio he will make an endorsement by the end of the month. Hendrix is Archer's former deputy mayor.
Council jobs go to family, friends.(City Council hires dozens of outside contractors)
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 06-JUL-05
Byline: Marisol Bello
Jul. 6--At the same time Detroit is laying off hundreds of city workers to repair its desperate finances, the City Council has hired dozens of outside contractors -- in some cases hiring each other's relatives and political allies -- spending more than $2 million in 14 months.
A Free Press review of the contracts in each member's office found that although council members have railed against hiring outside contractors at the expense of city workers, several have relied heavily on such contractors to do everything from attending community meetings and performing clerical duties to outlining policy issues and legislation.
Each contractor is hired at will, with the council members deciding how many to hire and how much to pay them.
In one instance, Councilwoman JoAnn Watson paid former Council President Erma Henderson $23 an hour for advising her on the lack of black firefighters in the city and the need for a more spiritual life for Detroiters. Watson, often critical of outside contractors, has hired the most with 27.
In another, the daughter of Councilman Alonzo Bates made $21 an hour as a summer intern in another council member's office.
City payroll records for 2004 show council members spent at least $1.5 million on personal service contractors, who are employees that do not receive health care or pension benefits. From January through April of this year, council members spent another $560,000 on such contractors.
City Council members and the contractors they hire have come under fire in recent months since allegations arose that Bates paid two contractors for working in his office at the same time they were working elsewhere, one in Detroit and one in New York. The FBI is scrutinizing the hirings.
The issue came up again when the city's auditor general released a report late Tuesday -- conducted at the behest of the council president and president pro tem -- that reviews each member's contracts.
The audit cleared most of the council members of any wrongdoing, but found significant problems in the offices of Bates and the late Kay Everett that made it difficult to determine whether employees worked for the hours they were paid. The report found minor clerical issues related to members Watson and Barbara-Rose Collins.
Auditor General Joseph Harris had declined a Free Press request for comment about the audit or its findings.
The Free Press found numerous instances where council members have made their offices tightly knit circles, surrounding themselves with employees who are connected to their allies.
Watson hired Councilwoman Sharon McPhail's sister, paying her $28 an hour. Robin McPhail, who did not return calls for comment, made $9,600 from September through December for her work in Watson's office.
Watson did not respond to repeated attempts to discuss her contracts.
McPhail said she had nothing to do with Watson hiring her younger sister.
"That wasn't my decision," she said. "I made sure I stayed out of it."
In another instance, Councilwoman Alberta Tinsley-Talabi hired Bates' daughter as an intern, paying her $21 an hour. By comparison, a senior aide in Tinsley-Talabi's office earned $25 an hour.
In exchange, Bates hired the daughter of one of Tinsley-Talabi's employees. It is unclear how much he paid her.
Tinsley-Talabi said Aisha Bates, a third-year student at Spelman College, is working in her office again this year, supervising a summer youth program and working on policy issues.
"Our kids go to college and they need opportunities also," Tinsley-Talabi said. "As long as people are performing a function, I think it's OK. ... People should not be left out because of who their parents are."
Alonzo Bates did not return calls for comment.
One good-government expert said there are no hard and fast rules for public officials hiring relatives or friends. But Earl Ryan, director of the Citizens Research Council, said the council should be able to defend its hires.
"The council absolutely needs to be sensitive to these kinds of decisions because it certainly raises questions," Ryan said. He said the barometer should be whether the hires are qualified and if their pay is commensurate to other employees hired on a more objective basis.
The city's ethics ordinance prohibits conflicts of interest, such as council members with ties to a company vying for city business. But the city has no policy related to hiring friends or relatives. Mayor Kwame Kilpatrick has had at least a half-dozen relatives on the city's payroll at any given time.
Because each council member runs his or her office like a mini-fiefdom, each decides how many contractors to hire and how much to pay them. As a result, pay scales vary wildly. Legislative aides in Watson's office can earn $5.68 an hour, while those in Collins' office can make up to $50 an hour. Council members are only limited by how they want to spend their office budget. They cut their office budgets from $730,000 to $585,000, beginning July 1.
Although the council votes on the contracts, members rarely -- if ever -- vote against a colleague's contracts. The contracts are so pro forma that they often come up in the middle of the contract's term or even after the term has ended.
Even death isn't a problem. The council decided after Everett died last November to continue the contracts in her office through the end of the fiscal year -- June 30. At least seven of the 11 contracts in her office were renewed since January.
In another instance, McPhail put her Lansing-based communications director, Steve Serkaian, on a contract from October to December last year, but the contract didn't come up for a vote until January. She later extended the contract to run from January to June, but it didn't come up for a vote until May.
Serkaian is also the spokesman for McPhail's mayoral campaign, which she announced in December.
Since October, the city has paid Serkaian $22,500 for his work in McPhail's council office. McPhail said contracts, such as Serkaian's, routinely go up for a vote late because of delays in how the city processes them.
"It could take three or four months for a contract to get approved," McPhail said, adding that the council can not vote on a contract until the city conducts background checks.
She said she is paying Serkaian for his work on the mayor's race out of her campaign funds. McPhail's 2004 campaign finance records do not show payments to Serkaian.
She said her latest campaign reports, which are due July 22, will show payments to Serkaian. Meanwhile, she said: "That contract is over. He is no longer working for the city."
Councilwoman Sheila Cockrel employed the daughter of mayoral candidate Freman Hendrix last summer and briefly in December. Cockrel is supporting Hendrix in this year's tightly contested race.
Cockrel paid Erin Hendrix $13 an hour to work on policy issues related to the city's land bank plan and to perform clerical duties. Hendrix was paid a total of $5,400 for her work.
Cockrel said Erin Hendrix approached her after she graduated from the University of Michigan.
"She couldn't get a job in the city of Detroit because of who her father was," Cockrel said.
Detroit is spending more than it gets.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 10-SEP-05
Byline: Marisol Bello
Sep. 10--The Detroit City Council's budget guru issued a sobering report Friday with a litany of fiscal problems that if left unchecked could lead to a fourth year of deficits and threaten the city's solvency.
In the eight-page report to the council, fiscal analyst Irvin Corley Jr. said Mayor Kwame Kilpatrick's administration has yet to take action on key pieces of the budget. The report said that if the needed cuts aren't made or new revenue found, the city could face a $215-million shortfall in its general fund by June 30, 2006, the end of the fiscal year.
"The fact remains that the administration continues to spend more than the city collects in revenue," Corley said in the report. "The longer this continues the larger the total problem to be solved grows. And the deeper the reductions will have to be."
The report raises further concerns that Detroit residents could continue to lose city services if departments have to shut down or lay off significant numbers of workers to help solve the budget problems.
Budget Director Roger Short said he received the report late Friday and could not comment in detail because he had not had time to research Corley's claims.
"There were some things I disagree with and some things I just did not understand," Short said about the report.
Short, Deputy Mayor Anthony Adams, the police chief and the fire commissioner are expected to provide the City Council with an update next Friday on the budget and police and fire restructuring plans that were announced last month.
Corley commended the administration for its efforts to reorganize the departments. But he said the changes, particularly those in the Police Department, do not save the city enough.
Among the other concerns Corley cited:
--The current budget factored in a $102-million shortfall in the budget from fiscal year 2004-2005, which must be addressed during the current fiscal year. But Corley said the city's accounting system shows the shortfall for the previous fiscal year could actually reach $124 million.
--If the city posts a $124-million deficit in its general fund for 2004-05, it could mean that when the city finally closes its books on that fiscal year, it will show that the city is insolvent because its overall liabilities would be greater than its assets. That would devastate the city's standing with the bond rating agencies and make it difficult to borrow money. Such a scenario hasn't happened since the early 1980s.
--The city owes about $120 million to its pension funds this year. But only $105 million was budgeted.
Councilwoman Sheila Cockrel said the report is further reason why the council has to press the administration for its strategy to resolve the fiscal crisis.
"The reality is some very tough choices are going to have to be made by the city's elected and appointed officials," Cockrel said. "We have to be about austerity, restructuring and sacrifice."
Auditor questions home sales.
Publication: Detroit Free Press (Detroit, Michigan) (via Knight-Ridder/Tribune Business News)
Publication Date: 18-NOV-05
Byline: M.L. Elrick
Nov. 18--Henry Hagood, a former city official, recently resigned amid accusations he sold city-owned property on the cheap to a friend.
Detroit Auditor General Joseph Harris has accused the city's top development officer of obstructing his investigation into the sale of hundreds of homes to developers who resold many of them for 10 times what they paid.
Harris said Thursday that Walt Watkins, the city's chief development officer, refused to provide him with records for the Detroit Neighborhood Development Corporation (DNDC). The city set up the corporation in the late 1990s to manage, sell or demolish homes caught up in the bankruptcy of the MCA Financial Corp. and RIMCO. The corporation is overseen by city Planning and Development Department (PDD) officials who report to Watkins.
"The lack of cooperation by the PDD to provide the records, coupled with the lack of oversight over the DNDC, raises concerns about the propriety of the transactions," Harris wrote. "We are concerned that there may have been misappropriation of funds and property, and other fraudulent activity connected with the property acquired and sold through the DNDC."
Howard Hughey, a spokesman for Mayor Kwame Kilpatrick, said the corporation is not a city agency and Watkins has nothing to do with running it.
"Joe Harris' audit is questionable at best and downright misguided at worst," Hughey said, adding that the mayor would also like to know if anything improper happened.
At issue are 373 homes the Detroit Neighborhood Development Corporation sold to four businessmen.
Some of the homes were sold at a time when the corporation was run by Dave Benson III. Benson's wife, Ayanna, is Kilpatrick's cousin, whom he picked to run the Detroit Building Authority. Benson could not be reached for comment.
Harris said his auditors identified several trends that concerned them, including:
The four businessmen sold 158 homes within three weeks of buying them. Of those, 76 were resold the same day.
The businessmen bought 45 homes for $207,705, then resold them for more than $2.2 million -- a 1,000 percent increase.
The amount paid to the Detroit Neighborhood Development Corporation for 299 of the homes could not be determined because the sale prices were not disclosed. The businessmen resold them for a total of $3.6 million.
Detroit Neighborhood Development Corporation President Jannie Warren, a city official, "claimed she did not know the location of the DNDC office or where the records were," the auditor's report said.
Henry Hagood, a former high-ranking city official who recently resigned amid accusations he sold city-owned property on the cheap to a friend, is still on the Detroit Neighborhood Development Corporation board.
Harris said Thursday it is difficult to determine exactly what happened with the home sales because of Watkins' and Warren's failure to turn over Detroit Neighborhood Development Corporation records. He said his auditors learned what they know about the sales by reviewing county land records.
"We don't know what went on, we're just speculating about this -- like everyone else -- about what kind of scheme this was," Harris said.
He said it appeared the homes were sold without required city inspections. He said he also did not know whether any of the homes were renovated before being resold.
Dalton Brown, a businessman who Harris said bought 63 homes, declined comment Thursday evening.
Brown, a former Detroit Housing Department administrator, was convicted of bribery charges in 1997 and sentenced to six years in prison. He has said he and his son each sent Kilpatrick $3,400 in contributions for this year's election, which is the maximum amount allowed.
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