Robert Snell and Mike Wilkinson / The Detroit News
Detroit — A company headed by a member of Gov.-elect Rick Snyder's economic team was one of several contractors who unwittingly pumped millions into ex-Mayor Kwame Kilpatrick's alleged criminal enterprise, The Detroit News has learned.
Although the government hid the companies' identities in the indictment, public records and interviews helped put names to aliases. The list of companies includes deep-pocketed donors and powerful executives who were forced to pay money in exchange for keeping or getting city contracts.
The companies involved are going to be needed by the FBI and the U.S. Attorney's Office to help prosecute the case.
"It's always hard to say whether the payer of a bribe is culpable or a victim of the crime," said Peter Henning, a law professor at Wayne State University and former federal prosecutor. "Sometimes that's hard to distinguish."
So far, most executives linked to the corruption probe have escaped indictment. Some witnesses were granted immunity and others are victims, U.S. Attorney Barbara McQuade said.
Among the contractors who were extorted to retain Bobby Ferguson as a subcontractor include Walbridge, a general contractor headed by John Rakolta Jr., a longtime area powerbroker who was named Monday to the Michigan Economic Development Corp. by Snyder.
The list also includes Detroit-based Lakeshore Engineering Services, a firm first identified by The News as cooperating with federal investigators, and Inland Waters Pollution Control.
Inland is a Detroit Water and Sewerage contractor linked to Grosse Pointe Farms businessman Anthony Soave, who is aligned with political action committees that contributed $55,000 to Kilpatrick campaigns.
Walbridge, identified in the indictment as "Company W," was portrayed as a company that was extorted to use Ferguson , a close friend of Kilpatrick, and his companies as a subcontractor in 2003 and refused to use him in 2007.
Richard Zuckerman, a Detroit-based attorney for Walbridge, said prosecutors have talked with company officials for more than a year and were clear that they felt Walbridge was a victim of "the Kilpatrick Enterprise."
Zuckerman said the company was "happy" to assist the investigation.
"They did fully cooperate," Zuckerman said.
Firm rejected Ferguson
The company was the winning bidder in 2003 on a project after it was extorted to use Ferguson.
In 2007, though, Walbridge was bidding on a $140 million project. It rejected a request from Ferguson, prosecutors say, to get 35 percent of the project.
Even after Kwame Kilpatrick interceded, asking a Walbridge rep to "play fair," Walbridge declined to hire Ferguson.
The next month, the water and sewer contract went to a rival company.
Snyder spokeswoman Geralyn Lasher on Thursday said: "We haven't seen any of those details, but John Rakolta's expertise in business and his ability to be a booster for the city of Detroit and credentials speaks for itself."
Rakolta's name was linked to Kilpatrick following the text-message scandal that chased the mayor from office. He was one of five executives who had agreed to each loan Kilpatrick's family $60,000 while he was in prison in 2008 and 2009. Rakolta later would be the only executive to reconsider and not send the money.
'Forced' to do business
In 2005, Inland Waters Pollution Control agreed to pay Ferguson $350,000 in relation to its repairs of a massive sewer break in Sterling Heights.
The 89-page indictment alleges that a "Company I" paid the money because there were threats that Kilpatrick would hold up $12 million in repairs for the Detroit Water and Sewerage Department. Ferguson did no work on the project, according to the indictment.
Using Detroit City Council and water department records, The Detroit News determined that "Company I" listed in the indictment is Inland.
Tom Fallucca, the attorney who has represented Inland and Soave, said: "My client was anxious to cooperate with this investigation.
Fallucca said the Kilpatrick administration "forced" companies to hire contractors and consultants "in order to do business in the city."
He declined further comment.
Inland is one of dozens of companies owned by Soave Enterprises, a Detroit holding company headed by Anthony Soave. He is the president and chief executive of Soave Enterprises and a supporter of Kilpatrick.
Soave and his businesses were among 64 groups of individuals and corporations listed on a 2005 grand jury subpoena.
An Inland executive provided $300,000 worth of flights on a private jet to the ex-mayor and his pals to protect the executive's business interests in Detroit. The flights included trips to Bermuda, Florida, Houston, Cleveland and Washington, D.C.
Inland formed a joint venture with Ferguson company Xcel Construction on a $30 million Detroit Water and Sewerage project in 2006.
The company also was forced to hire Ferguson in 2002 as a minority subcontractor on a $50 million sewer-lining project, the indictment said. Ferguson eventually received $24.7 million.
Extortion leads to deals
Also referenced in the indictment are Lakeshore and a related company, A&H Contractors Inc., both of which cooperated with investigators after receiving subpoenas from a federal grand jury.
The companies are identified as "Company L" and "Company A" in the indictment.
Initially, Lakeshore refused to participate in the conspiracy, whose members included Kilpatrick; his father, Bernard Kilpatrick; Ferguson; former Detroit Water and Sewerage Department director Victor Mercado; and former aide Derrick Miller.
Lakeshore's refusal to participate was costly, at least initially.
In spring 2003, Ferguson visited a Lakeshore executive at home and said he wanted 25 percent of the company's $10 million sewer-repair contract. The Lakeshore executive refused.
Ferguson found another taker.
Inland agreed to Ferguson's demand in May 2003, according to the indictment.
Two months later, Mercado canceled Lakeshore's deal and gave it to Inland, according to the indictment.
The next time Ferguson approached Lakeshore, he walked away with money.
Stung by Mercado yanking the $10 million contract, an unidentified Lakeshore executive understood it could not win a deal without paying Ferguson, the indictment said.
"He (sic) gotten smart," Ferguson told Miller, according to the indictment.
Lakeshore is headed by Bloomfield Hills businessman Avinash Rachmale, 45; A&H Contractors is a Detroit-based construction firm headed by businessman Thomas Hardiman Sr.
A lawyer representing A&H did not return a call seeking comment Thursday.
When Lakeshore won a $19.9 million sewer contract in April 2005, the winning bid listed Ferguson as a subcontractor.
Ferguson demanded and received $1.3 million, despite not doing work, the indictment said.
In September 2005, when the contract was increased by $8 million, Ferguson demanded $450,000 more — including $25,000 immediately.
Lakeshore employees quickly collected $25,000 cash and delivered it to Ferguson.
"When hundreds of people are counting on you for employment and you lose one city contract without explanation and then another … you are faced with the dilemma of either putting people out of work in this economy or giving in," Lakeshore spokesman John Truscott said.