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‘False pretense’ charges may be hard to pursue in Flint

Jim Lynch, and Jennifer Chambers
The Detroit News

The most serious criminal charges filed against a pair of former Flint emergency managers and two city officials rely on the legal concept of “false pretense” — a charge most often involving untrue statements made to defraud a victim.

Proving parts of that equation may be as simple as producing emails and documentation culled during the Michigan Attorney General Office’s yearlong investigation into the Flint water crisis. But the false pretense premise may be difficult to prove in the Flint case, according to legal experts. Hurdles may lie ahead in how those accused benefited from their alleged illegal actions, and who was harmed.

Prosecutors allege that former emergency managers Darnell Earley and Gerald Ambrose, as well as Flint public works officials Howard Croft and Daugherty Johnson, misled state officials about the severity of a long-standing environmental problem in order to secure borrowing capacity for the financially troubled city. Millions of dollars purportedly meant to address a lime sludge dump site off Flint’s Bray Road instead helped the city pay for a pipeline to connect with the new Karegnondi Water Authority.

On Tuesday, Special Prosecutor Todd Flood put it bluntly: “The sludge lagoon was not an emergency.”

While under the control of a string of emergency managers, Flint left its traditional water supplier, the Detroit Water and Sewerage Department, in April 2014 as a cost-saving move. Hoping to eventually connect with Karegnondi, the city began drawing water from the Flint River.

Without proper treatment of that river water, the next year and a half resulted in lead contamination and an outbreak of Legionnaires’ disease that killed 12 people.

In order to pay for its share of the Karegnondi project, Flint needed to borrow money — something it could not easily do since the city was in receivership at the time. City officials needed Michigan’s Department of Environmental Quality to issue an administrative consent order due to the sludge site, and they finally got it in March 2014.

According to court documents, Flint and DEQ officials had already agreed on how to dispose of the lime sludge at the site in 2013.

Peter Henning, a Wayne State law professor and former prosecutor with the U.S Department of Justice Criminal Division’s Fraud Section, said proving the first aspect of the false pretense charges — that untrue statements were made — might be simple enough, he said.

“But the problem is that false pretense is a theft offense, at least under the traditional understanding of the crime,” he said Wednesday. “You obtain money or property by false representation ...

“Normally, the perpetrator gains something and the victim suffers an identifiable loss.”

What Earley, Ambrose, Croft and Johnson gained from such deception is unclear. Charging documents in the case do not insinuate that money eventually borrowed by Flint went directly into their pockets.

During a Tuesday press conference announcing the latest charges, Attorney General Bill Schuette was asked what the motive or benefit was for Earley and Ambrose.

“I’m not sure you can always fully capture the motive ...,” he said.

However, the charging documents include a reference to one statement made by Johnson, then a public works employee, regarding the switch to Karegnondi: “(Croft) stated that prior to the switch, defendant Johnson states that they would forever be ‘heroes’ if they switched to the Flint River and saved the city money.”

Each of the four men charged this week face 20-year sentences for false pretense and conspiracy to commit false pretense. State investigators believe Earley, Flint’s emergency manager from 2013 to 2015, and Ambrose, who held the position in 2015, allowed the switch to the Flint River before the city’s treatment plant was ready. In the face of rising public health concerns, they are alleged to have resisted a return to the Detroit Water and Sewerage Department.

Croft and Johnson are charged with putting “pressure on individuals at the (Flint) water treatment plant to get the plant to work, despite having been told it wasn’t ready.”

Another potential problem is the lack of a clearly defined victim in the case, legal experts say.

Ann Arbor criminal defense attorney John R. Minock said after reading details on the case, including the warrant request, he was left with more questions than answers.

“It seems to be an unusual use of the false pretenses statute. The details of the investigation in the warrant request are not detailed enough to fully understand the prosecution’s theory,” Minock said on Wednesday. “My question is who was defrauded here?”

One of the elements of the charge is that the defendant intended to cheat someone and that person lost something of value, Minock said.

“In my 42 years of work, I have seen this (charge) in a white collar setting, such as real estate and investment schemes. But to see this in a political mismanagement case seems odd.”

Henning similarly questioned who the state sees as the victim in this case. Flint, as an entity, might be a possibility. But since those charged in the case were emergency managers and city officials acting on behalf of Flint: “Flint wasn’t lied to. Earley and Ambrose were Flint,” Henning said. “They became Flint when they became the city’s emergency managers.”

A bond-buyer would be another possibility but that, too, is problematic. Since the city of Flint has not defaulted on its bond payments, there is no victim. And while MDEQ officials may have been lied to about the “calamity” posed by the sludge site, Henning said it is difficult to see how the state was harmed.

On Wednesday, a spokeswoman for Schuette’s office provided an email response to questions regarding who the victim in the Flint case would be.

“The charges of false pretenses and conspiracy to commit false pretenses will be tried in court,” wrote Andrea Bitely.

“The attorney general won’t allow the families of Flint to be swept under the rug; he will continue to seek justice for the nearly 100,000 residents of Flint that are still paying the price for the disastrous decisions made by the defendants who placed their health on the line to save a few dollars. The residents of Flint deserve better, they deserve accountability and they are who Attorney General Schuette is fighting for.”

jlynch@detroitnews.com

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