Judge orders subpoena in demo probe to be released

Ian Thibodeau
The Detroit News

Detroit — A subpoena sent to the Detroit Land Bank Authority by federal inspectors conducting a criminal investigation into the city’s demolition program must be released to the public next year after a months-long legal battle.

“It’s time to (expletive) or get off the pot,” Wayne County Circuit Judge David Allen told attorneys representing the land bank and Special Inspector General for the Troubled Asset Relief Program, or SIGTARP.

Allen ruled the subpoena be released on Jan. 12.

Tuesday’s hearing comes after Allen held a hearing over the matter in September and allowed the document to remain secret for the time being, stressing to attorneys for the land bank and U.S. government that he believed the subpoena is ultimately “the public’s business.”

The battle stems from the efforts of a government watchdog group, headed by convicted felon Robert Davis. The group asked the court to compel the release of the document after the land bank this summer turned down a Freedom of Information Act request Davis filed to obtain copies of subpoenas received by the land bank, its attorneys, contractors and others from the FBI and SIGTARP about Detroit demolition contracts or its program.

In its denial, the land bank cited law enforcement and personal privacy exemptions in the state’s FOIA rules. But Davis and his attorney, Andrew Paterson, have argued the subpoena cannot be withheld because it is a public document.

“I applaud Judge Allen,” Davis said Tuesday. “Judge Allen made a courageous decision today, and I thank him for allowing the public to have an opportunity to review the public’s business.”

Defending attorneys argued Tuesday that releasing the subpoenas would expose information that could reveal the “nature and scope” of the investigation and would potentially hinder the ongoing investigation.

Paterson said there’s no evidence the subpoena would jeopardize anyone’s right to a fair trial.

“People have a right to know,” he said. “They’re the only ones in the dark at this point.”

Allen decried the secretive nature of the investigation in his ruling.

“This is public funds, public entities, and we’re all here on the public dime,” Allen said. “This involves a public matter, this has been a matter that’s been in the papers...”

While it’s not a party to the lawsuit, the federal government weighed in this spring through court filings, confirming its probe and arguing it has a direct interest in preventing the public release of the subpoena. Doing so, federal authorities contend, would interfere with the ongoing investigation. Officials for the U.S. Attorney’s office, Department of Justice and SIGTARP also have appeared in circuit court to stress the release would harm the investigation.

In a declaration filed this month in Wayne County Circuit Court, Christy Goldsmith Romero of SIGTARP confirmed the agency issued an administrative subpoena to the land bank on May 9.

Romero wrote the release of the subpoena “further identifies those individuals and entities who would be providing information to the federal government in a criminal investigation.”

Mayor Mike Duggan’s administration program came under scrutiny last fall amid concerns over soaring costs and bidding practices. Detroit officials have defended the program, which has brought down close to 11,000 blighted homes since 2014, and say they are cooperating fully with all investigations.

Detroit’s auditor general and one of the city’s largest demolition contractors, Adamo Group, also have confirmed they’d received subpoenas from SIGTARP related to the demolition program.

In May, the FBI’s Detroit office acknowledged it’s investigating the program.

Duggan revealed this fall that U.S. Treasury had prohibited the use of federal Hardest Hit Funds for demolitions for two months beginning in August after a probe conducted by the Michigan Homeowner Assistance Nonprofit Housing Corp., in conjunction with Michigan State Housing Development Authority, turned up questions over “certain prior transactions” and indicated specific controls needed to be strengthened.

A separate independent audit commissioned this summer by the land bank found excessive demolition costs were hidden by spreading them over hundreds of properties so it appeared no demolition exceeded cost limits set by the state.

The audit turned up mistakes over a nine month period between June 2015 and February, including inadequate record keeping, bid mistakes and about $1 million improperly billed to the state.

Twitter: @Ian_Thibodeau

Staff Writer Christine Ferretti contributed