Detroit’s Ex-Mayor Sentenced to 28 Years for Corruption

Photographer: Bill Pugliano/Getty Images

Former Detroit Mayor Kwame Kilpatrick. Close

Former Detroit Mayor Kwame Kilpatrick.

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Photographer: Bill Pugliano/Getty Images

Former Detroit Mayor Kwame Kilpatrick.

Ex-Detroit Mayor Kwame Kilpatrick was sentenced to 28 years in prison for public corruption as U.S. prosecutors sought to link his conduct to the city’s bankruptcy, which came almost five years after he left office.

The 43-year-old Democrat, who was mayor from 2002 until 2008, was found guilty in March of 24 counts of racketeering conspiracy, extortion, bribery and tax evasion. An associate, contractor Bobby Ferguson, was also convicted on multiple charges, and his father, Bernard Kilpatrick, was found guilty of filing a false tax return. They will be sentenced on later dates.

“Mr. Kilpatrick was a larger-than-life character who lived” the high life as mayor, U.S. District Judge Nancy Edmunds said at a sentencing hearing in federal court in Detroit today. “He chose to waste his talents for personal aggrandizement and enrichment.”

Prosecutors asked Edmunds to sentence Kilpatrick to at least 28 years, saying he “systematically exploited his office to enrich himself, his friends and his family.” The U.S alleged that his conduct worsened Detroit’s fiscal woes a half-decade before it filed its record $18 billion municipal bankruptcy in July.

“Kilpatrick is not the main culprit of the city’s historic bankruptcy, which is the result of larger social and economic forces at work for decades,” prosecutors said in an Oct. 3 court filing. “But his corrupt administration exacerbated the crisis.”

‘Cheap Shot’

Defense lawyers called the linkage a “cheap shot” in court papers and sought a sentence of no more than 15 years. Even “15 years is an enormously long time in anyone’s life,” Kilpatrick’s attorney, Harold Gurewitz, told the judge today. “Locking up people for a long time is not a deterrent.”

Kilpatrick did a lot of good for Detroit and shouldn’t serve as a “scapegoat” for the city’s current problems, Gurewitz told Edmunds.

“I am not making any such statement about Kwame Kilpatrick pushing Detroit into bankruptcy,” Edmunds said. The bankruptcy filing resulted from years of economic decline, she said.

“I really messed up,” Kilpatrick said in a tearful address to the judge today. “I apologize to the city for having abandoned you.”

Kilpatrick said he had never stolen anything and defended his friend Ferguson, saying the contractor was making $20 million a year before they ever met.

‘Staggering Crimes’

Prosecutor Mark Chutkow urged Edmunds to give Kilpatrick a long prison sentence, saying the case is about the “staggering crimes he committed that he set in motion.”

“So far, Kwame Kilpatrick has not been remorseful or contrite,” Chutkow said.

Kilpatrick will appeal, Gurewitz said. The sentence “didn’t need to be this long,” he said in a phone interview. The judge’s reasoning in handing down the long sentence “sounded like it was written by the government,” he said.

The sentence “sends a powerful message, I think, that the people of Detroit will not tolerate this kind of abuse of the public trust,” U.S. Attorney Barbara McQuade said in a press conference after the hearing.

“I appreciated his remorse for letting so many people down, but at the end of the day he did not accept responsibility for stealing from the people,” she said.

‘Negative Chapter’

Dave Bing, Detroit’s current mayor, said in an e-mailed statement that he was glad “this negative chapter” in the city’s history has ended.

“Public service requires a higher standard of ethics and accountability,” Bing said. “Today’s sentencing sends a strong message to everyone in public office.”

Kilpatrick, who has been held in federal prison in Milan, Michigan, since his conviction, resigned in September 2008 after pleading guilty to two state felony counts of obstruction of justice for lying on the witness stand in an unrelated case.

In the federal case, prosecutors claimed Kilpatrick, the son of former U.S. Representative Carolyn Kilpatrick, created a culture of corruption and exploited his power while the city was failing.

Kilpatrick “created a pay-to-play system for the provision of city goods and services which compromised vast swaths of city government, including the water and sewer system, the convention center, the pension system, casino developments and recreation centers,” prosecutors said in a sentencing memorandum filed Oct. 3.

‘Rigged Bids’

“Kilpatrick extorted city vendors to help his co-conspirators and to line his own pockets. He rigged bids and took bribes. He defrauded non-profits to enrich himself, his wife and his associates,” the government lawyers said. “And worst of all, he did it in a city where poverty, crime and lack of basic services made it one of the most vulnerable metropolitan areas in the nation.”

“A thousand years won’t repair the damage, but 28 years gives the city some closure on the affair,” Erik Gordon, a University of Michigan Law School professor, said in an e-mail after the hearing. “Kilpatrick and his administration created the climate of corruption and disregard for the people of Detroit that deepened the city’s troubles and spun its future out of control.”

Kilpatrick’s corruption wasn’t cited among the reasons for Detroit’s bankruptcy, either by the city’s emergency manager, Kevyn Orr, or its creditors. Orr blamed decades of economic decline and population loss.

Pension Fund

While Kilpatrick was mayor, Detroit arranged to borrow more than $1.45 billion to plug a hole in the city’s pension fund for its retired workers.

Interest-rate swaps related to that debt almost caused the city to default on payments to the swap holders in 2009, the city has said. Under the swaps contracts, if interest rates rose above a certain level, the holders had to pay the city. If rates fell, the city would have to pay the swap holders.

When rates fell, Detroit avoided default by renegotiating the contracts to give the swap holders collateral rights over casino taxes. As part of the bankruptcy, the city will try to buy its way out of the contracts by paying the holders about $250 million.

“Had the city of Detroit not entered into the $1.4 billion pension certificates of participation and the subsequent swaps in 2006 and 2009, the city’s financial status would be less dire today,” Bill Nowling, Orr’s spokesman, said in an e-mail. “Thirty-nine cents of every dollar the city spends was going to service debt, the lion’s share of which was created by the swaps.”

The criminal case is U.S. v. Kilpatrick, 10-cr-20403, U.S. District Court, Eastern District of Michigan (Detroit). The bankruptcy case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Steven Church in Wilmington, Delaware at schurch3@bloomberg.net; Steven Raphael in Detroit at sraphael5@bloomberg.net

To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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