LINKEDINCOMMENTMORE

Detroit — Mayor Mike Duggan on Wednesday hailed a federal investigation that secured guilty pleas from two men in a lengthy criminal investigation into the city's demolition program as a step forward in returning integrity into the federally funded program's bidding process.

"Because of the excellent work of these federal agencies," Duggan said during a media briefing at the Coleman A. Young Municipal Center, "it is much more likely that we will be receiving competitive and honest bids from the contractors for years to come."

Duggan said the city of Detroit's lawyers are looking into whether the city can recover money after two former employees of the prominent demolition firm Adamo appeared Tuesday in federal court in Detroit to enter their guilty pleas for accepting bribes from contractors and rigging bids.

Federal prosecutors had shielded the accused bribe payer's identity in court records, referring to the company simply as "Contractor A."

CLOSE

Duggan reacts to guilty pleas from two men who admitted to accepting hundreds of thousands of dollars' worth of bribes involving the demo program. John Greilick, The Detroit News

But on Tuesday one of the men who pleaded guilty unmasked the company that allegedly paid nearly $400,000 in bribes to secure demolition contracts funded with federal money.

While pleading guilty for pocketing cash, Aradondo Haskin, who spent time working for the city's Building Authority, identified the alleged bribe payer as Rich Berg, an executive with the Detroit firm Environmental Specialty Services. Berg and attorneys for the company have not responded to requests for comment.

Anthony DaGuanno, 61, of New Baltimore, is charged with accepting bribes and rigging bids from the same contractor as Haskin.

Duggan said he had not heard of Environmental Specialty Services until this week, as the city typically does not contract directly with asbestos-removal companies.

"I don't want to get ahead of this," Duggan said. "We'll see if ESS is charged. We'll see if ESS is convicted. That makes it a whole lot easier if there's a criminal conviction to succeed in a civil case. We're looking at all available options."

CLOSE

The Detroit mayor admits the feds' statement that no other public officials are expected to face charges came as a surprise to him. John Greilick, The Detroit News

Duggan declined to say if he knew anything about possible charges that could be brought against Environmental Specialty Services but said it is "a reasonable conclusion" that the city will no longer be doing business with the firm.

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 any federal dollars it may have received as a subcontractor under the program.

Duggan added that it appears demolition company Adamo was the victim.

"As you read the (indictment), Adamo almost certainly lost bids because their subcontractor price was higher, and it pushed their bid price higher," he said. "Adamo was probably the victim."

The Department of Justice signaled Tuesday that it doesn't expect to bring more charges against public officials for wrongdoing in the effort that's awarded the city about $259 million to tear down more than 11,000 blighted homes.

The rare declaration came without explanation 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. That likely means bid-rigging allegations against officials in the Mike Duggan administration will not face further scrutiny.

"I've said from the beginning that if any public official committed a crime, they should be charged," Duggan said Wednesday. "In the three-year investigation, I never saw any evidence that anyone running the land bank or building authority had broken any laws."

He added the Justice Department's statement is "a great relief."

The federal government, in a joint Tuesday statement with the federal watchdog agency investigating the program, emphasized the prosecution "serves as a warning" to public officials, but added the government "does not anticipate charging any additional public officials."

Duggan added the city will take a look at its hiring practices, as it grows its procurement division in preparation of the federally funded demolition program being transferred to the city for the next five years.

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 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, making a similar statement.

The criminal charges were the first in the long-running investigation that came about after concerns were raised in the fall of 2015 over questionable bidding practices and spiraling costs.

The conspiracy that triggered the most recent federal investigation dates to January 2010 — before the start of the federal demolition program and Duggan's first term — and continued through January 2019, federal prosecutors contend.

Haskins served as field operations manager for the Detroit Building Authority, which oversaw the demolition program in Detroit. He admitted Tuesday to receiving $26,500 in bribes.

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

Both 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.

The federal complaints against Haskins and DuGuanno note investigators concluded that the city and Adamo had no knowledge of the scheme.

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 Michigan State Housing Development Authority, which administers funding for the program through its Michigan Homeowner Assistance Nonprofit Housing Corp., said late Tuesday that it will conduct a review of how much it has reimbursed the land bank for invoices submitted by Environmental Specialty Services.

cferretti@detroitnews.com

LINKEDINCOMMENTMORE
Read or Share this story: https://www.detroitnews.com/story/news/local/detroit-city/2019/04/10/mayor-mike-duggan-federal-demo-probe/3422848002/