Greektown mogul Jim Papas is alleged to have given bribes to then Detroit Police and Fire pension trustee Paul Stewart, who was indicted Wednesday, and a second trustee, according to federal court records, pension fund documents and sources familiar with the investigation. (The Detroit News)
Detroit — Greektown mogul Jim Papas allegedly bribed two city officials with $20,000 worth of casino chips while pursuing pension fund deals for himself and others worth millions, according to a federal indictment, city records and sources familiar with the investigation.
The revelation sheds light on the source of payments that the indictment described as bribes that are part of an alleged conspiracy that federal prosecutors say cost Detroit pension funds more than $84 million.
Papas allegedly gave the bribes to then Detroit Police and Fire pension trustee Paul Stewart, who was indicted Wednesday, and a second trustee, according to federal court records, pension fund documents and sources familiar with the investigation.
Papas, 64, of Grosse Pointe Shores, has never been charged with a crime in connection with the scandals, or any alleged bribes outlined in the pension indictment Wednesday.
It was unclear if Papas is a target of the ongoing federal investigation.
"They are merely allegations and nothing more," Papas' attorney Christopher Andreoff said about the bribery claims. "They have not been proven to be true."
The second trustee is Marty Bandemer, a former pension trustee and Detroit Police union president who has not been charged amid the ongoing FBI probe.
The allegations are the latest involving Papas, a politically connected businessman and power broker whose name surfaced periodically during the trials of ex-Mayor Kwame Kilpatrick and Sam Riddle, the political consultant for former Councilwoman Monica Conyers.
Meanwhile, the Detroit Police and Fire pension board voted Thursday to stop paying legal fees for pension fund lawyer Ronald Zajac and Stewart in light of the bribery conspiracy indictment.
Business leader, political donor
Papas is a deep-pocketed political donor who built an empire of restaurants, businesses and office space in Greektown and the region while supporting a variety of mostly Democratic causes. He also raised money for campaigns and groups, including Kilpatrick's nonprofit organization. His fundraising efforts were mentioned a few times during the Kilpatrick corruption trial.
The mogul and his late partner, Ted Gatzaros, were early backers who pushed to bring casinos to Detroit.
The partners and their wives sold a 40 percent stake in Greektown Casino for $265 million.
The partners — Gatzaros died in January — co-own the Atheneum Suite Hotelin Greektown, which was built in 1992 using millions in public funds.
The city's Police and Fire pension fund owns approximately 35 percent of the hotel.
Almost 20 years after the hotel was built, federal prosecutors allege Papas paid bribes to trustees on the Police and Fire pension board.
Papas is not identified by name in the bribery conspiracy case against five people, including former Police and Fire pension fund lawyer Zajac and Jeffrey Beasley, the ex-Detroit treasurer and Kilpatrick's fraternity brother.
The person who paid what the indictment labeled bribes is referred to by prosecutors as the "principal of Company R."
The unnamed principal controlled a hotel, raised money for the Kilpatrick Civic Fund and tried to profit from a Romulus deep injection well.
Sources with intimate knowledge of the federal probe confirmed to The News that the unnamed principal is Papas.
Papas was widely known to have been involved in the Romulus deep injection well, a pension fund investment that factored into Riddle's federal corruption trial in 2010. Riddle was convicted after reaching a plea deal with prosecutors.
Papas testified during the trial that Conyers twice pressured him to hire Riddle as a consultant at a cost of $10,000 each time.
Papas testified he had taken over the deep injection well in Romulus, but the U.S. Environmental Protection Agency had not issued a needed license transfer.
He asked Conyers if she could give him contact information for someone who worked for her husband, U.S. Rep. John Conyers, D-Detroit.
The councilwoman set up a three-way phone conversation with a staffer in her husband's office, Papas testified. The staffer said John Conyers might be willing to write a letter to the EPA in support of the license transfer, which the congressman later did.
The trial featured evidence that Monica Conyers and Riddle used the letter as bait to extract the second $10,000 consulting payment from Papas.
In the pension case, prosecutors describe the payments:
"During the course of the conspiracy, the principal of Company R gave a $5,000 casino chip as a bribe to Paul Stewart in order to influence and reward Paul Stewart in his votes as a trustee of the Police and Fire Retirement System," the indictment reads.
"On three different occasions during the course of the conspiracy, the principal of Company R gave $5,000 casino chips to Trustee B as bribes in order to influence and reward Trustee R (sic) in his votes as a trustee of the Police and Fire Retirement System."
Funds allegedly solicited at parties
Papas teamed with Zajac, the general counsel of Detroit's two pension funds since 1982, to organize birthday parties in 2007 for three high-ranking pension officials.
The officials were Beasley, the city treasurer; Stewart, the vice president of the Detroit Police Officers Association; and Bandemer, president of the union that represents most of the city's police force.
During the birthday parties, Zajac and Papas allegedly solicited cash gifts from pension fund businessmen, according to the indictment.
Beasley allegedly received $10,000 cash. Stewart and Bandemer each received $5,000, prosecutors allege.
The party location? Papas' hotel, the Atheneum, prosecutors say.
Soon after the parties, Beasley, Stewart and Bandemer voted to give the pension fund lawyer a "substantial raise" in October 2007, according to prosecutors.
The raise bumped Zajac's pay to more than $400,000 a year.
Bandemer, 59, meanwhile, was the public face of the Detroit Police Officers Association until resigning mid-term in December 2011.
The indictment identifies an official who received $15,000 in casino chips as "Trustee B."
"Trustee B" is Bandemer, according to dates of key votes listed in the indictment, a review of pension board meeting minutes and interviews with sources familiar with the investigation.
Bandemer's attorney Steve Fishman could not be reached for comment Thursday.
Bandemer and others allegedly used their public positions to enrich themselves by demanding or accepting bribes and kickbacks, including cash, Playboy party tickets, trips, designer watches, gambling money, massages and more, according to the indictment.
Bandemer allegedly received cash from Zajac and others to run for election as president of the police union and $11,000 in cash bribes from an unnamed consultant who was pursuing a pension deal, according to the indictment.
Bandemer also allegedly received $2,500 from a pension fund businessman in approximately fall 2007, according to the indictment.
Days later, prosecutors allege Bandemer brought a motion to the Police and Fire pension board to wire $16.9 million to the businessman's company.
In early 2008, the businessman allegedly gave Bandemer $2,500 cash in Florida, prosecutors allege.
In March 2008, the businessman allegedly paid for Bandemer, Stewart and his mistress to take a ship to Freeport, Bahamas, according to the indictment.
In October 2007, Bandemer voted to fire a real-estate investment consultant who failed to donate to Kilpatrick's nonprofit group, according to the indictment.
Leading up to the firing, Bandemer and Stewart complained that the consultant "had not been generous in paying for drinks and entertainment for them," according to the indictment.