Mayor Kilpatrick's legal fund backers have ties that bind
Key fundraisers have city contracts, but deny conflict of interest.
Christine MacDonald and David Josar / The Detroit News
Thursday, April 24, 2008
DETROIT -- Key players on Mayor Kwame Kilpatrick's legal defense fundraising team have at least $5 million in current or pending city contracts, and others stand to make much more from the mayor's proposed $300 million economic stimulus project if he remains in office.
Of the 13 known committee members on Kilpatrick's Detroit Justice Fund, at least five have Detroit contracts or other financial ties to city business or the mayor. Fund members, four of whom live in Detroit, are raising money to pay lawyers who will seek to exonerate Kilpatrick of felony charges stemming from the text-message scandal and whistle-blowers' lawsuits.
Attorney David Baker Lewis is one of the fundraisers with the strongest City Hall financial interests. Kilpatrick wants Lewis' law firm as a counsel on his stimulus bond sale. Another is banker Donald Davis, who has two proposed contracts, including one for $4.6 million to lease computer software to the city.
Some critics say it's a conflict of interest to tap city contractors for help in raising money to cover the mayor's legal fees.
"By any standard definition ... about what a conflict of interest is, this is one," said Wayne Norman, an ethics professor at Duke University, who added that just the perception of a conflict, without evidence of wrongdoing, can undermine citizens' trust. "He is supposed to do what is best for the city. ... The fact that a citizen can reasonably wonder about that undermines the trust in the office and institution."
But some of the fund's members say they've done city work for decades -- long before the scandal and $8.4 million whistle-blower settlement. They say they just want to assure that Kilpatrick can afford to mount a good defense.
"My motive is not to get rich," said the Rev. Horace Sheffield III of New Galilee Baptist Church, denying a connection between fundraising and his $220,000 in current city contracts. "I think (Kilpatrick) is a gifted young man and needs support.
"If I am in trouble, I am not going to expect people I haven't helped to help me. That's the way it is."
Of Sheffield's two city contracts, he said one is for about $100,000 to teach people how to create nonprofits, and he said he has held the annual contract for more than 20 years. A more recent $120,000 contract is intended to teach young adults job skills.
Councilwoman Sheila Cockrel said the connections create at least the appearance of a troubling conflict, and she plans to grill Kilpatrick staffers about upcoming contracts in the budget committee she heads.
"The question is what is the relationship between the award of these contracts" and the Detroit Justice Fund, Cockrel said.
The defense committee members were picked in an "organic process" facilitated by the mayor, said Marcus Reese, a spokesman from Strategic Impact Strategies LLC, an East Coast-based company hired by the mayor to shape his side of the story.
"Most, if not all, of these people are strong supporters of the mayor who think he will be vindicated," Reese said.
As for conflicts of interest, Reese said there is "none."
The fund will become vital for Kilpatrick, a career politician who makes about $176,000 a year, as he racks up legal and public relations bills. Privately some of his advisors have estimated that tally will reach $2 million.
By comparison, President Clinton raised about $6 million through his defense fund but faced about $10 million in legal bills when he was under fire in the Monica Lewinsky controversy.
Who has ties
Among the Detroit Justice Fund members who have financial ties to the city:
• Lewis' law firm billed Detroit more than $300,000 for representing the mayor in the whistle-blower suits, and Kilpatrick is recommending the firm as counsel for the bond sale that would finance the mayor's economic stimulus plan. James Canning, a Kilpatrick spokesman, wouldn't provide the contract value.
The Lewis & Munday law firm has long-standing ties with the mayor, representing him personally in a recount challenge to the 2005 general election, as well as helping with police discipline cases and providing legal advice to the Detroit Building Authority, which manages capital improvements.
Lewis, who declined comment when contacted by The Detroit News, has done city work with his various firms since the 1970s.
• Davis runs two companies with pending contracts before the Detroit City Council, including the software proposal.
He is chairman of First Independence Bank, which already manages some city money, and chairman of Minority Alliance Capital, a joint venture between First Independence and two other minority banks.
Kilpatrick, who proposes contracts generally for council approval, wants the bank to be an investment manager for the stimulus bond sale and would be "managing money" for the city, Canning said. He wouldn't provide figures Wednesday on how much the city would pay Independence Bank for that service.
The mayor's office would not answer questions on how or why they selected First Independence Bank to help with the bond issue. Documents that Kilpatrick submitted to the council listed the bank as a trustee but Canning said that wasn't accurate.
Davis sees no conflict of interest with either contract. He said the five-year, $4.6 million Minority Alliance Capital software contract was an open bid and his proposal was the best. He did say his work with the bond project wasn't competitively bid by the city.
Davis said he is a part of the mayor's defense fund effort because he believes in the "constitutional right of due process."
"I don't think due process is a conflict of interest," he added.
• A. Gregory Eaton, of the high-powered Lansing-based lobbying firm of Karoub Associates, has a business partner who recently sold property to the city. Eaton's partner in Metro Cars, Cullen Meathe, bought a warehouse near Tiger Stadium in 2002 for $3.5 million and then sold it to the city two years later for $8.6 million. The building now will be used for the city's forensic crime lab, which would be funded through the mayor's proposed bond sale.
Eaton said his job is to solicit donations. "Some people say 'No,' some say 'Hell no,' some say 'Yes,'" he explained.
Kilpatrick served five years in the state House; Eaton's lobbying firm is among the most influential in the capital.
"It's like your son is in trouble, tells you he's made mistakes and you want to help," Eaton said.
• Donald Watkins, a Birmingham, Ala., lawyer considered to be among the nation's wealthiest African Americans, was recruited by Kilpatrick to open a branch of his bank, Alamerica, to fill the void created when Comerica, which has provided City Hall banking services, moved its headquarters to Texas.
"He was not what the media portrayed ... he wasn't the hip-hop mayor or wearing an earring," said Watkins, who met the mayor once."I've not started fundraising yet but I've helped suggest some legal counsel," said Watkins, who got HealthSouth Chief Executive Officer Richard Scrushy acquitted of 36 charges in 2005.
Watkins said he convinced Kilpatrick to hire James W. Parkman III as part of his legal team. Parkman helped represent Scrushy.
Watkins hasn't decided whether to open a branch of Albama-based Alamerica Bank in Detroit.
"We're waiting to see what will happen with the current situation, if it will blow over," he said.
'Why should I?'
Among prominent CEOs contacted by The News, Roger Penske, Jim Nicholson and Dan Gilbert declined to say whether they'd contribute, or even if they have had recent discussions with Kilpatrick.
In fact, they've been silent throughout the unfolding scandal.
Former Piston and successful entrepreneur Dave Bing said the fund won't see a dime from him.
"Why should I?" asked Bing. "I don't think there's a reason.
"I have money invested in the city. I've invested my money where I want to, where it's most needed."
A spokesman for Compuware CEO Peter Karmanos, who gave $100,000 to one of the mayor's Political Action Committees in 2005, said the businessman hasn't been approached as a donor. But he'd "probably give" if asked
"The mayor deserves a good defense and that's not showing prejudice one way or the other," said Karmanos spokesman Jason Vines.
Reese, the spokesman for Kilpatrick's PR firm, says no running total of contributions is available.
Updates on committee members and how much has been raised will be disclosed according to the IRS reporting requirement for a tax-exempt 527 group, he said.
