Kilpatrick dominates Detroit pension fund case

Robert Snell
The Detroit News

Detroit — Former Mayor Kwame Kilpatrick is in prison but his name and crimes dominated the start of jury selection Tuesday in a federal corruption case against his fraternity brother and three others.

Kilpatrick is an unindicted co-conspirator in a complex criminal case that explains what happened to money from a $1.4 billion Wall Street deal blamed for helping plunge Detroit into bankruptcy. Prosecutors allege the money ended up in the pockets of businessmen who bribed pension officials, including former Detroit Treasurer Jeffrey Beasley, with cash, exotic trips and a Christmas basket stuffed with cash.

Kilpatrick’s name came up repeatedly Tuesday as defense lawyers questioned prospective jurors about their views on race, exposure to pretrial publicity and awareness of the former mayor’s crimes and record-tying 28-year corruption sentence.

“You didn’t follow the Kwame Kilpatrick (corruption) case?” Beasley’s defense lawyer Walter Piszczatowski asked one prospective juror Tuesday.

“No,” the white, stay-at-home mother said. “That’s good,” Piszczatowski said.

Beasley, who was Kilpatrick’s fraternity brother at Florida A&M University, and three others are accused of participating in an alleged corruption spree bankrolled by a soured Wall Street deal that is central to the city’s bankruptcy case.

Jury selection is expected to last at least this week and to be followed by a two-month trial.

One legal expert is surprised Beasley and the others opted to stand trial in the first major public corruption case since Kilpatrick’s conviction. The trial is being overseen by U.S. District Judge Nancy Edmunds, who sentenced Kilpatrick and contractor Bobby Ferguson to more than 20 years in federal prison.

“Boy, she has not given an inch,” said Peter Henning, a Wayne State University law professor and former federal prosecutor. “They’re in real trouble if they get convicted.”

The case spans 2006 through April 2009 and alleges pension fund corruption cheated retirees out of more than $84 million. The alleged corruption compounded the impact of a money-losing Wall Street deal Kilpatrick backed.

Federal prosecutors allege city pension officials started approving a series of corrupt investments with businessmen in January 2006, six months after the Wall Street deal started injecting $1.44 billion into the Detroit pension funds.

Flush with cash, pension fund trustees loaned more than $200 million to businessmen accused of paying bribes and kickbacks, according to federal prosecutors. The businessmen included Georgia resident Roy Dixon, 51, who is charged with embezzling more than $3 million with the help of former Detroit Lions wide receiver Mike Farr and spending some of the cash on an $8.5 million mansion in Atlanta.

Kilpatrick is an unindicted co-conspirator because Beasley, 45, of Chicago allegedly pressured people to contribute money to the ex-mayor’s nonprofit group in order to get pension fund loans.

The defendants deny being influenced by perks that allegedly flowed during business dealings and trips to Las Vegas, England and the Caribbean.

The four defendants are Beasley, Dixon and two former pension officials: Trustee and former vice president of the Detroit Police Officers Association Paul Stewart and Ronald Zajac, 70, of Northville, former top lawyer for two municipal pension funds.

If convicted, the men face 20 years in federal prison.

Defense lawyers were wary of having their clients blamed for weakening the city’s pension funds and becoming scapegoats for Detroit’s bankruptcy.

Beasley, Zajac and Dixon tried unsuccessfully to block jurors from hearing the pension funds lost money on allegedly corrupt deals.

One prospective juror, a black woman from Detroit, said Kilpatrick was treated differently because he is black.

“I felt some people who should have been held accountable weren’t held accountable,” the unemployed cook said.