Feds open investigation of Kwame Kilpatrick to recoup taxpayer money squandered in scandal – Detroit News

Detroit — Federal prosecutors have opened an investigation to force former Detroit Mayor Kwame Kilpatrick to pay more than a million dollars inrestitution to taxpayers amid questions about whether he was paying a debt to the city and Internal Revenue Service stemming from a racketeering conviction and other crimes.
The investigation includes requests filed in federal court Friday to seize money from Kilpatrick and his wife’s PayPal accounts and from a crowdfunding account soliciting donations for the couple to buy an $800,000 home in Florida and provide for their newborn son, Kyng Malachi Kilpatrick.
The investigation is the latest in a globe-spanning hunt for money Kilpatrick received during his reign in office by rigging city projects, extorting contractors, defrauding people who donated to his nonprofit and pocketing more than $840,000 cash.
The move comes 18 months after then-President Donald Trump commuted Kilpatrick’s 28-year sentence for orchestrating a racketeering conspiracy out of Detroit City Hall. Kilpatrick’s conduct since being freed has raised questions about his rehabilitation, finances and whether he had started paying restitution stemming from his federal conviction and assorted crimes.
Kilpatrick, 52, has generated attention in recent weeks, asking the public to donate money so he can buy a home in Florida and selling copies of his new book for $19.99 yet has not made a payment in nine years toward the more than $800,000 in restitution he owes Detroit taxpayers.
“His conduct in setting up the (fundraiser) to buy a lavish home is simply more of the same from Kwame Kilpatrick,” said Detroit defense lawyer Michael Bullotta, a former assistant U.S. Attorney who prosecuted Kilpatrick. “And it makes one think that he is not remorseful or has not learned any lessons from his years in prison.”
Kilpatrick did not respond to a message seeking comment Friday.
Meanwhile, Kilpatrick also was originally ordered to pay $1,520,654 in restitution to Detroit taxpayers and $195,404 to the IRS as part of his 2013 conviction in a federal racketeering conspiracy case. In that case, Kilpatrick was convicted of extorting city contractors and steering work worth millions of dollars to friend Bobby Ferguson.
The paperwork filed Friday indicates Kilpatrick still owes $193,303.61 to the IRS. The $1,520,654 owed to the city was satisfied by seizing money and other assets from Ferguson during the federal investigation.
There were no documents filed in federal court as of early Friday, more than 24 hours after the enforcement action was entered into the public court docket.
A lifetime of missteps, crimes and scandals have saddled Kilpatrick with $11.5 million in debt and barred him from holding state or local office in Michigan until 2033.
The court filing follows a series of financial moves by Kilpatrick in the roughly 18 months since his 28-year prison sentence was commuted by Trump.
Kilpatrick and relatives created nonprofits in Georgia following his release. The former mayor was previously convicted of treating a nonprofit like a personal piggy bank, spending donor money on spa and resort vacations, yoga lessons, college tuition for relatives, counter-surveillance equipment and more.
Documents list Kilpatrick and his second wife, Laticia Maria McGee, as the owners of Movement Ministries. The address listed is for a UPS in a strip mall near his father Bernard’s home in Fayetteville. Someone with the same name as his sister, Ayanna Kilpatrick, incorporated another nonprofit ministry at the same address earlier this year called Project 61 Ministries. 
Last week, Kilpatrick and his wife asked supporters for donations toward a home in Orlando, Florida. The couple asked for donations in increments up to $8,000, according to Deadline Detroit. The overall fundraising goal for the home was $800,000.
As of Sunday, the fundraising post on plumfund.com appears to have been modified since those reports. The post no longer includes wish list items, such as donations toward the home, nor a figure for how much money has been donated. 
WJBK-TV interviewed former Assistant U.S. Attorney Anjali Prasad, who now runs the Bloomfield Township firm Prasad Legal PLLC. Prasad told the station the federal government would lay claim to the donations for a home because Kilpatrick still owes restitution to the city and IRS. 
When Kilpatrick was released from federal prison in January 2021, it freed him from what was tied for the longest sentence for public corruption in U.S. history. Kilpatrick had served seven years on 24 felony convictions based on prosecutors’ accusations he orchestrated a racketeering scheme out of Detroit City Hall.
Though his sentence was shortened, Kilpatrick still owed the city $1.5 million and the IRS $195,000 at the time of his release.
The federal restitution is a piece of a larger financial vise awaiting Kilpatrick. His debts include amounts for unpaid taxes, criminal convictions, attorney fees, loans and credit card bills.
Four years ago, he was also ordered to pay $552,862 to the U.S. Securities and Exchange Commission stemming from another City Hall scandal.
The SEC claimed Kilpatrick was part of a scheme to strong-arm a city pension fund businessman for $125,000 worth of private flights, Prince concert tickets, steakhouse dinners, golf trips and VIP hotel rooms in Las Vegas.
Kilpatrick’s finances came into sharper focus in early 2018. That’s when U.S. District Judge Arthur Tarnow ended a six-year legal battle by issuing a nearly $7.5 million judgment to a firm owned by minority contractor Willie McCormick.
McCormick sued the former mayor and Ferguson in 2012, alleging they ran a secret scheme to steer water department work to favored firms. Kilpatrick, Ferguson and former mayoral aide Derrick Miller never responded to the civil lawsuit, and McCormick was awarded a default judgment.
The SEC, meanwhile, alleged the city officials received extravagant gifts in exchange for approving pension fund deals pitched by Detroit businessman Chauncey Mayfield, whose firm reaped millions of dollars in fees tied to about $115 million in investments made by the city’s pension funds.
Kilpatrick and former Detroit Treasurer Jeffrey Beasley never responded to the civil lawsuit and a judge later issued an approximately $700,000 default judgment against the pair. Beasley was sentenced to 11 years in federal prison for pocketing bribes while serving on the city’s pension fund boards.
Kilpatrick previously claimed he was broke before being convicted of racketeering conspiracy in 2013 and, in a court filing, said he had 96 cents in his prison commissary account. 
The city and county have not pursued Kilpatrick for $1 million restitution as part of a separate text-message scandal that led to his resignation as mayor. As part of that scandal, Kilpatrick surrendered his state pension to the county.
He still owes $854,062.60 in restitution and has not made a payment since February 2013, according to Wayne County court records. Maria Miller, spokeswoman for Wayne County Prosecutor Kym Worthy, on Friday said probation department officials handled collection efforts.
Miller also said city officials had not contacted the prosecutor’s office about the unpaid restitution because, until early last year, Kilpatrick was in prison.”
“We will be looking into this matter with the probation department,” Miller wrote in an email to The News on Friday.
Kilpatrick has a history of failing to disclose assets that could be used to pay court-ordered restitution.
State prison officials launched an investigation in early 2013 amid concerns Kilpatrick was hiding assets that could be applied toward the nearly $855,000 in restitution he owes the city. They opened the investigation after learning that a Chicago pastor had wired Kilpatrick $2,000 at the end of 2012.
During that investigation, which unfolded while Kilpatrick was standing trial in federal court on racketeering conspiracy charges, Kilpatrick admitted receiving and failing to disclose almost $4,000 in wire transfers.
In response, prison officials forced Kilpatrick to wear an electronic tether, confined him to his mother’s home and banned him from traveling to Texas, where his family had relocated after he resigned in disgrace.
Federal prosecutors are typically aggressive in seizing assets to satisfy debts stemming from criminal convictions, including garnishing wages and retirement benefits. 
The case of one convicted bureaucrat helps illustrate the challenges and opportunities awaiting corrupt public officials following a prison sentence.
Former Detroit official Charlie Beckham served two years in federal prison after being convicted in 1984 of receiving more than $16,000 in illegal payoffs from a sludge-hauling contractor. At the time, Beckham was director of the city’s Water and Sewerage Department.
He filed for bankruptcy, lost a home to foreclosure and failed to pay $250,691 in state and federal taxes. But the financial problems and rap sheet did not stop Beckham from working for every Detroit mayoral administration since Mayor Coleman A. Young until retiring from a six-figure taxpayer job in Mayor Mike Duggan’s cabinet in 2018.
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