Ex-Detroit employee's suit claims she was fired for flagging feds over grant program

This story has been corrected to identify Katerli Bounds as the Detroit official who allegedly suggested former employee Kennedy Shannon was insubordinate.

Detroit — A former employee is suing the city on claims she was fired this spring for flagging the federal government about concerns tied to the administration of a grant program to aid entrepreneurs.

Kennedy Shannon filed a whistleblower lawsuit Thursday in Wayne County Circuit Court alleging the city first suspended her without pay and ultimately fired her after she raised concerns about Detroit's Motor City Match program. She's seeking more than $25,000 in damages. 

The suit contends Shannon informed Katerli Bounds, the city's director of grants, and Ryan Friedrichs, Detroit's chief development officer, that there were "major compliance and HUD regulation issues" with the program and that the city "should not make any more payments to this organization."

Shannon, in the filing, said she also flagged Detroit's Office of Inspector General about the concerns as well as others tied to the Make Your Date program, a nonprofit that's already the subject of a probe over claims Detroit Mayor Mike Duggan and city employees gave it favor. 

On Friday, Kamau Marable, the city's deputy inspector general, confirmed the office has opened an investigation into the Motor City Match program. 

Shannon and her attorney were not immediately available for comment on Friday. 

Detroit Corporation Counsel Lawrence Garcia on Friday rejected Shannon's claims that she'd been let go in retaliation for raising concerns over the Motor City Match program. He contends the dismissal was tied to her attendance record. 

According to the four-page complaint, Shannon, who was employed as an associate director in the office of grants management, informed her bosses of the need for an audit. She ultimately contacted the U.S. Housing and Urban Development Department and "informed them that plaintiff did not think that the Motor City Match program was compliant" on a "variety of issues." HUD agreed, the complaint says. 

Shannon, who oversaw the city's grant-funded projects and audit support, contends she was "admonished" for doing so. She also sent an email to the Detroit Economic Growth Corp., the quasi-public development agency that manages the program with oversight by the city's Economic Development Corp., outlining why she would no longer be approving any more requests from the DEGC for the program until an audit was conducted.

The Detroit News reported last month that the city had suspended use of federal funds for the program after a HUD audit that found record-keeping and spending problems. 

The city has said it is working with HUD to supply and revise certain documentation.

The News also reported this week that several city employees have received federal dollars under the program, despite rules that ban their participation. Administrators have said they found no conflicts and have sole discretion on eligibility. 

After Shannon emailed the DEGC, the suit says, Friedrichs called for a meeting. During that meeting, Bounds allegedly told Shannon that not signing off on the Motor City Match packets was "insubordination" and that "she could be terminated."

On Saturday, the city provided The News with a copy of a March email Friedrichs sent to Bounds and Shannon following their discussion about the match program that they contend further refutes Shannon's claim.

In the email, Friedrichs noted "takeaways" arrived at from the discussion, including that "staff members are supported in their ability to make a final decision on their sign-off on a packet," he wrote. 

Shannon was suspended for 30 days, without pay, on May 1.

On May 9, the lawsuit says, she turned over documentation on Motor City Match as well as information regarding Duggan's "false statements about the Make Your Date program" to the office of inspector general. 

She was terminated May 23. 

Garcia countered that Shannon had "a chronic history of disciplinary action" and that she was suspended on May 1, with a recommendation for termination, based on concerns over her time cards. 

Garcia contends that on more than one occasion, Shannon took pay and claimed to have worked but was not working, according to personnel records. Shannon, he said, abandoned a grievance over her termination on July 2.

"The evidence that supports our position on why she was suspended and then discharged is pretty darn strong," Garcia said. "Her ability to allege or believe that there was some ulterior motive, that's kind of hard to disprove with a piece of paper but that's what's going to be litigated."

Shannon, Garcia said, did raise concerns over a "mistake in the administration of the program." Her recommendations were welcomed and used to improve the system, he added.

Garcia declined to discuss the inspector general probe of the match program, as not to interfere with the investigation, he said. 

cferretti@detroitnews.com