FBI investigation of Detroit politicians focuses on nonprofits, towing, and campaign money
Detroit – Federal agents investigating several members of the Detroit board and staff are investigating whether anyone has personally benefited from campaign contributions or non-profit donations and whether they have extorted businessmen, have sources told the Detroit News.
The details give new insight into an ongoing FBI public investigation into corruption that emerged in high-profile raids last month on Detroit City Hall and the homes of council members Janeé Ayers and Scott Benson and of their chiefs of staff.
Interviews, an FBI search warrant, and nonprofit files reveal a new thread of a conspiracy investigation focused on finding evidence of bribery, extortion, wire and mail fraud. Federal tax returns and state business records, meanwhile, link Benson to a nonprofit nonprofit with a criminal on the board.
When FBI agents raided Benson and Ayers’ offices on August 25, they were looking for bank documents, check stubs, cash, campaign fundraising records, and documents pertaining to law enforcement organizations. social protection 501c4, according to search warrants obtained by The News. They ended up seizing electronic devices, towing papers, shredded papers, and payroll records for a Benson assistant.
No one has been charged with wrongdoing in connection with last month’s FBI raids which also took place at the homes of Ricardo Silva and Carol Banks, chiefs of staff of Ayers and Benson respectively.
The focus on nonprofits, extortion, mail and electronic fraud, according to the search warrant, is reminiscent of the federal lawsuits eight years ago by former Mayor Kwame Kilpatrick. The disgraced mayor was convicted of treating his nonprofit like a personal piggy bank, spending donor money on spa and resort vacations, yoga classes, fees schooling for parents, counter-surveillance equipment and more.
“It doesn’t surprise me,” said Detroit defense attorney Michael Bullotta, the former federal prosecutor who helped secure Kilpatrick’s conviction. “The downside is that several politicians (nationwide) have used them as personal slush funds, taking advantage of vague definitions of what promotes social well-being.”
On Tuesday, city councilor André Spivey is expected to plead guilty to a bribery conspiracy charge in federal court. Spivey and an unidentified member of its staff are accused of accepting more than $ 35,000 in bribes to be “influenced and rewarded” for votes on council and on sub-committees “concerning an industry under scrutiny by the council, “according to the criminal record.
This industry is towing, sources told The News.
The town hall raid came three year after month after towing mogul Gasper Fiore was sentenced to 21 months in federal prison for bribing politicians to secure municipal contracts. He bribed so many politicians that Bullotta dubbed Fiore the “corruption baron”.
After the FBI raids last month, Mayor Mike Duggan vowed to revamp municipal towing operations to thwart corruption.
Erik Gordon, professor at the Ross Business School at the University of Michigan, noted that “the impact of corruption on Detroit is not wonderful. Corruption appears to be ingrained in the culture of Metro Detroit ”.
“There has been a well-known corruption in the towing industry and people promise to fix it, and then something happens on the way to fix it, and that doesn’t change,” he said.
During the raid on Detroit City Hall last month, FBI agents seized towing documents, checks and an envelope marked “Troy’s Towing” while searching the offices of Ayers and Benson.
The court-authorized search warrant allowed FBI agents to seize records regarding 501c4 organizations, but it is not clear whether any records were taken by investigators.
Benson’s charitable acts are illustrated on a simple website for a group called Save Detroit Jobs and Impact Detroit.
He is shown in photos feeding people at a holiday buffet and smiling and socializing in a neighborhood.
The website doesn’t include much else except for a large blue and gold “DONATE” button and text inviting people to join Benson in “supporting community events and opportunities to” employment for Detroit residents in every district ”.
In the volunteer section of the website, Banks is listed as the contact person. It’s the name of Benson’s chief of staff whose home was raided by FBI agents just as investigators were searching town hall.
Wayne County campaign finance data, meanwhile, shows that a committee named Save Detroit Jobs paid banks $ 11,751 in salaries and reimbursements in 2016.
A woman answering Banks’ cell phone hung up on a reporter for comment.
Silva, meanwhile, declined to comment. “Unfortunately, I can’t say anything,” he said.
Meanwhile, the Impact Detroit website has little additional information and does not include copies of the group’s annual tax returns or identification of board members.
State business records identify a 501c4 nonprofit that also goes by the names of Save Detroit Jobs and Impact Detroit and lists a catch-all credo: “promote social welfare, public policy, participation of citizens, activities, programs and events organized in conjunction with the promotion of these purposes.
The documents make no mention of Benson.
The association was formed in 2016 by Alan Wilk, an attorney with the Dykema law firm who worked for the Duggan campaign. Wilk did not respond to a message seeking comment.
It is not clear whether Ayers is linked to a nonprofit, although FBI agents were authorized to seize documents relating to 501c4 nonprofits during the raid of his office. She could not be reached for comment and the search warrant for her home remains sealed in federal court.
These groups have proliferated in recent years because donors do not have to be publicly disclosed and detailed financial reports on income and expenses are only filed when groups raise more than $ 50,000 per year.
Although the donors do not appear on Internal Revenue Service public records, FBI agents are able to obtain the names.
“They are extremely popular. They are not strict charities,” Bullotta said. “Donors don’t like them because they can’t deduct the contribution, but politicians like the flexibility of what they can do with the money, which includes donating to other politicians.”
Federal tax returns for the nonprofit Impact Detroit provide little additional information. The group has generated $ 165,000 in revenue in recent years, but posted a deficit of $ 17,000 in 2018, according to the latest detailed tax return.
A review of state documents filed for Impact Detroit shows the group’s treasurer is former state representative Kenneth Daniels, who was convicted of carrying out multiple financial transactions for the Detroit drug dealer Carlos Powell to hide Powell’s illegal activities from authorities.
Daniels was sentenced to one year in federal prison in 2014, and prosecutors also charged Daniels with paying a $ 3,000 cash bribe to an unidentified senior official in the Kilpatrick administration.
Daniels said he had not been contacted by the FBI about the ongoing corruption investigation. He described Benson’s nonprofit as a real charity group that in recent years has donated free car seats, bikes, coats, socks and scarves to residents of Detroit.
“It’s legit,” Daniels told The News.
He described Benson as a beloved politician who shows up at neighborhood events year round.
“You don’t just see it on election day,” Daniels said.
Daniels said he can’t figure out why the FBI is focusing on Benson.
“I was totally shocked,” Daniels said. “He never showed me that I was anything other than what he is: genuinely concerned about people.
“James Brown was the hardest working man in showbiz. I call (Benson) the James Brown of City Council.”
When asked about Daniels’ assessment, Benson’s attorney, Steve Fishman, said, “I agree with him 100%. As The Impressions sang: “Amen. “
Benson doesn’t live lavishly, Daniels said. He lives in a modest 1,550-square-foot, three-bedroom brick bungalow in the east end of town that was searched by FBI agents last month.
“It’s not like he has a big house. He drives a city car and rides his bike around the neighborhood,” Daniels said. “It’s not like the Kwame thing, no.”
One of the pillars of the federal racketeering conspiracy case against him was Kilpatrick’s use of a 501c4 nonprofit. In addition to racketeering, extortion, bribery and tax crimes, Kilpatrick has been convicted of 11 counts of mail fraud and arson for defrauding donors and spending money on personal luxuries. which had nothing to do with social protection.
Each count carried a maximum federal prison sentence of 20 years and was viewed by legal insiders as the most serious charges against Kilpatrick during the six-month trial.
The Kilpatrick Civic Fund spent $ 2,500 on tuition for Kilpatrick’s sister, actress Diarra Kilpatrick, at New York University and $ 1,000 for her cousin at Tennessee State University in 2001.
The association spent $ 5,000 on preschool tuition for the mayor’s children and donated $ 1,500 to Kilpatrick’s other sister, Ayanna Ferguson, in February 2002.
“There really is a huge loophole, but when the expenses are purely personal, I think prosecutors can make a pretty good point,” Bullotta said on Wednesday.
Last month’s FBI raids coincided with agents contacting the Wayne County Clerk’s Office, which tracks campaign contributions. Office spokeswoman Lisa Williams confirmed the contact but declined to comment further.
The Secretary of State’s office, which regulates state-level campaign finance, has not been contacted by the FBI in connection with the investigation, said Tracy Wimmer, spokesperson for the Secretary of State. ‘State Jocelyn Benson.