Feds don't expect more public officials to be charged in Detroit demo probe

Detroit — The Department of Justice does not expect to bring any more charges against public officials for wrongdoing in Detroit’s federally funded demolition program, it signaled Tuesday.

The unusual pronouncement came without explanation deep in a press release regarding the guilty pleas from two men who admitted to accepting hundreds of thousands of dollars' worth of bribes and rigging bids to demolish homes in the city. That likely means bid-rigging allegations against officials in the Mike Duggan administration will not face further scrutiny.

The federal government, in a joint Tuesday statement with the federal watchdog agency investigating the city's demolition program, emphasized the prosecution "serves as a warning" to public officials "that soliciting or accepting bribes will be punished and as a promise to the taxpaying public that such violations of the public trust will not be tolerated."

But the statement then disclosed a key sentence: "The government, as of today’s date, does not anticipate charging any additional public officials." 

"We're grateful to the federal agencies that conducted such a thorough investigation of the program," city spokesman John Roach said. 

But it is possible the Justice Department’s Antitrust Division could file a civil lawsuit against contractors to recover money involved in bid rigging, said Peter Henning, a Wayne State University law professor and former federal prosecutor.

“It sounds like the city may be off the hook. My guess is they had hoped to learn more about people higher up, but if there’s nothing there, there’s nothing for them to pursue,” Henning said. “It sounds like this is the end.”

The government’s statement that no more politicians would be charged is an unusual courtesy for public officials embroiled in a federal criminal investigation, but not a first.

In February 2015, a wide-ranging, three-year investigation of Wayne County government ended after federal prosecutors declined to pursue criminal charges against former Wayne County Executive Robert Ficano and two former high-ranking deputies.

"It was not that 'they couldn't find any federal violations involving Ficano'; it was that there was no evidence that Mr. Ficano did anything that was criminal or participated in any criminal activity,” Ficano’s lawyer, Steve Fishman, told The News in February 2015.

The Wayne County corruption investigation focused on former economic development chief Turkia Mullin and former Deputy Wayne County Executive Azzam Elder.

In February 2015, lawyers for Elder and Mullin provided copies of a letter from then-U.S. Attorney Barbara McQuade. She said investigators could not identify any violations of federal law involving Elder or Mullin.

In another twist of events Tuesday, a former city official during a court hearing unmasked the company that allegedly paid almost $400,000 worth of bribes to secure demolition contracts funded with federal money that was supposed to revitalize Detroit.

While pleading guilty to a bribery conspiracy charge Tuesday, former city official Aradondo Haskins, 48, of Detroit identified the bribe payer as Rich Berg, an executive with the Detroit firm Environmental Specialty Services.

In 2015, the company was awarded $545,000 in federally funded work from the Detroit Land Bank for asbestos abatement involving 55 properties, according to the land bank.

That does not account for federal dollars they may have received as a subcontractor under the program. 

The identification served as something of a legal faux pas. Federal prosecutors had shielded the accused bribe payer's identity in court records, referring to the company simply as "Contractor A."

"I, uh, accepted monies from contractors to provide contracts for their behalf," Haskins told U.S. District Judge Victoria Roberts.

The judge pressed Haskins about which contractor.

"Rich Berg," said Haskins before using Environmental Specialty Services' initials, "ESS."

Berg, 50, of Shelby Township, did not respond to message seeking comment Tuesday.

The admission Tuesday injected drama into a criminal case that emerged one day earlier when Haskins and a second man, Anthony DaGuanno, 61, of New Baltimore, were charged with accepting bribes and rigging bids to demolish homes in the city.

The cases marked the first criminal charges filed in a long-running investigation of Duggan's program to rehabilitate the post-bankrupt city by using federal funds earmarked for some of the cities hardest hit by the Great Recession.

The charges against two former employees of prominent contractor Adamo Group allege a pattern of corruption and dozens of secret payoffs amidst an unprecedented plan to remove thousands of dangerous, blighted structures as part of a $259 million effort.

"The corruption of the government contracting process by these two individuals damaged the integrity of the demolition program and broke the public trust," First Assistant U.S. Attorney Saima Mohsin said in a statement Tuesday.

The conspiracy dates to January 2010 — before the start of the federal demolition program and Duggan's first term — and continued until three months ago in January.

Haskins served as field operations manager for the Detroit Building Authority, which oversaw the demolition program in Detroit. He admitted receiving $26,500 in bribes and told the judge he was fired from his job in Toledo on Tuesday following media reports about the criminal case.

The $372,000 in bribes DaGuanno received, meanwhile, is gone, and he appeared in court with a taxpayer-funded lawyer.

Both pleaded guilty Tuesday and face up to 2 1/2 years in federal prison. They were released on $10,000 unsecured bond and will be sentenced in August.

DaGuanno was charged with conspiracy to commit honest services fraud, a five-year felony. Haskins was charged with one count of conspiracy to commit bribery and honest services fraud, a felony punishable by up to five years in federal prison.

DaGuanno on Tuesday said he received the bribes from the contractor in exchange for helping the contractor receive demolition jobs worth hundreds of thousands of dollars, federal prosecutors said.

"I accepted money for disclosing bid information to a subcontractor so he could submit a lower bid," DaGuanno, dressed in a short-sleeve blue shirt and khaki pants, told the judge.

The plea deal does not require DaGuanno to cooperate with the ongoing investigation, his lawyer, Richard Helfrick, told reporters.

"He cooperated in the sense that he pleaded guilty and accepted responsibility," Helfrick said. "But they have not asked him to testify against anyone."

Haskins was escorted from his arraignment by seven members of the prosecution team who formed a human shield around Haskins as he was trailed by a handful of reporters.

Haskins' attorney, David Burgess, refused to talk about any ongoing cooperation.

"I can't get into that," Burgess told reporters. "It's privileged."

Matthew Borgula, a Grand Rapids-based attorney hired by Adamo to represent the company in the federal investigation, told The Detroit News on Tuesday that DaGuanno was a "valued employee" of the family business and the company was shocked to learn of the federal charges against him.

“He was a trusted employee, and he abused the trust of the company for his own benefit,” Borgula said. “It’s a family business, and he was treated like he was part of their family.” 

Borgula said while employed with the firm, DaGuanno was “well compensated.” He did admit his wrongdoing to Adamo and then "was fired, per company policy," Borgula said.

“Obviously, they don’t tolerate employees taking bribes,” he said. 

As for Haskins, Borgula said he left Adamo “to pursue better opportunities, according to him.”

Adamo didn’t learn of any misconduct involving Haskins until the federal charging document, he said.

The company and owner Richard Adamo have cooperated with the investigation and with requests for documents and information. 

A 2016 audit of federal demolition dollars commissioned by the Michigan State Housing Development Authority raised the prospect of bid rigging and collusion, chiefly in cited email correspondence between Haskins and an asbestos survey company.

The 40-page state investigation and audit into Hardest Hit Fund expenditures included reference to Haskins and emails he sent to contractors and subcontractors.

Activist Robert Davis in 2017 sued the state Housing and Development Authority and Michigan Homeowner Assistance Nonprofit Housing Corp. to compel them to release audit and financial documents related to the state’s investigation of the demolition program. The suit led to the release of documents that referenced the ongoing federal probe.

“They did not willingly disclose any of this information,” Davis said. “It’s something they had a responsibility to do, considering the hundreds of millions in taxpayer money being allocated by public officials.”

The Michigan State Housing Development Authority said, "MHA will conduct a thorough file review to assess how much it has reimbursed the Detroit Land Bank for Environmental Specialty Services invoices and determine any potential program impacts related to this development."

Detroit City Council President Pro Tem Mary Sheffield has called for congressional hearings over the city’s federally funded demolition work and increased oversight. 

On Tuesday, she reiterated that the program has been mired in controversy since it first began and lacking in transparency.

“My main issue is protecting residents here in the city of Detroit, protecting taxpayer dollars and making sure they are used appropriately," Sheffield said after Tuesday's formal council session. “I’m just letting the investigation play out."

The developments in federal court are the latest corruption scandal to engulf Detroit City Hall in the six years since former Mayor Kwame Kilpatrick was sentenced in a racketeering and bribery scheme. Detroit City Councilman Gabe Leland is awaiting trial in a separate bribery conspiracy.

rsnell@detroitnews.com 

(313) 222-2486

Twitter: @robertsnellnews