Live Blog: Kwame Kilpatrick Trial Day 29 - Fox 2 News Headlines

Live Blog: Kwame Kilpatrick Trial Day 29

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And we have another full day of testimony behind us.  Judge Edmunds says she want to start 15 minutes early tomorrow and reminds the jury it's Immigration day so be prepared to stand in line.

I'll be in that line too.  And M.L. Elrick will have a complete wrap up of today's testimony on Fox 2 News at 5 anted 6, and a few Daily Take Away's on MyFox


RAtaj now showing previous document for $12 million, it's amendment 4 (3 was for 23, 4 is for 12)  and Rataj is saying this would be a good time to stop, he has more questions but next segment is too long for today.


RAtaj asks Latimer to read into record the emergency support letter calling for outside contractors to help with the sinkhole and upping money for 1368 to ay for it. 

Rataj asks if this was Kwame giving Mercado control to deal with sinkhole.  Latimer says yes.

RAtaj asks if it took a full year to fix that mess.  Latimer says yes.  My question is, did Kwame make sure Bobby got a piece of that? Or did Inland just that all on their own?

RAtaj now showing the $23,000,000 amendment for the sinkhole.  RAtaj is going through the amendments now, some were done by executive order and some were signed by council.


RAtaj now showing subcontractor approval request.   dated 04/23/2003,  adds Willie McCormick and ASsociates to contract.  Latimore says not necessarily to add but you have to sign this to officially include the sub contractor on the contractor.

Rataj asks if this is almost a year after the start work letter.  Latimore says it could have been adding him midstream or could have just been late paperwork.

Rataj now showing the subcontractor approval, (same date) for Superior.  Latimore says he doesn't know if they were on original bid or added later.

Switching to another approval request, this one is for Ferguson.

RAtaj now showing Mercado letter to Kwame about Special Administrator's order.  Latimer says it's a cover sheet for a document that says the Mayor can execute an emergency order for the sinkhole without the Council's approval.

RAtaj asks if that's so they could deal with the sinkhole emergency with delay.  Latimer says yes.


RAtaj now introducing another document that he says he doesn't know how to describe.  It has contract numbers on the left and on the right the contract prices and amendments listed.

Rataj is asking about 1368, and the 15 mile sinkhole.  SAys amendment 3,4, and maybe 5 have to do with that sinkhole.

Adds $23,000,00 for #4 and $12,000,000 for #5.

RAtaj asks if total revenue for inland was $138,000,000. Latimer says that's true.


RAtaj now showing Mercado's Letter to Lakeshore saying the contract was canceled.  Latimer says it is the letter sent to Lakeshore.

NOw we're looking at the letter Mercado sent to the Water commission. for 1368.  Rataj says this is a motion to grant an increase.  Latimer says true.

Is for 1361 under 1368 because they were rolled together.  Latimore says yes.

Now asking Latimer to read into record.   Addresses expiring contract and need for more work and says 1368 will be increase by $10 million.

Rataj asks if  this was out in the suburbs.  Latimer says correct.


RAtaj now showing Memo from MErcado to Latimer, July 2003.  This cancels contract 1361.  This is the contract Lakeshore complained was awarded and pulled.

RAtaj is asking if it's true that 1361 was never awarded this contract.  Latimer says that's true.

RAtaj asks if Mercado had every right to do that. Latimer says correct.

Rataj asks if that saved money.  True.


Rataj showing "start work" letter.  Now showing the Start work meeting sign up sheet.  Folks from DWSD, Inland, but nobody from the mayor's office.  Latimore says correct.  This is to give the contractor documents so he can officially begin work.

Switching to letter from Mercado to Inland, Rataj asks if this is the official letter notifying INland it has finally got the contract.  Latimer says yes.  Start date is July 2002.  Completion date is three years later.

RAtaj says it looks like Inland has already started work from previous document.  Latimer says it looks that way.


RAtaj now showing a letter saying DWSD can't pay yet because it hasn't been approved by Council.  Rataj says contract has still not been awarded.  Latimer say correct.

Rataj changing documents.  This is a contract for consultant services with Inland.  Rataj asks if Latimer has seen this before, they're thick aren't they.  Latimer says correct.  Of course thick, it's a contract drawn up by lawyers and they get paid by the work, right?

Showing signature page now, says approved by city council on June 6, 2002.  Latimer agrees this is the "official" date.  AGrees that Mayor doesn't have to sign it.  And Bobby is not in the picture yet sot Inland got it without him.  STill makes you wonder though why Inland brought him in later, after Kwame was Mayor.


Rataj now showing more documents outlining the many more things that a contractor has to comply with.  Latimer agrees that Mercado isn't Director yet.  Says first the contract has to be signed by the Director (and city council ) but not the Mayor.

March 2002 document from Corey Thomas,  Kwame is now Mayor.  It's an invoice cover sheet.

Rataj is asking if Inland is now billing $291,250.  Latimer says yes.  Rataj asks if Inland was already doing work.  Latimer says possible.

New exhibit now, nope, we're taking a 5 minute break.


RAtaj asks if the bonds are to protect the city.  Latimer says for the most part that's true.

Rataj now showing a memo to Corey Thomas of DWSD from INland saying contract compliance outstanding tax payment.  Latimer says you have to get income tax clearance and property tax clearance.  SAys it looks like Inland was showing proof of paying a tax bill so they can get clearance before the contract is awarded.  Latimer agrees Inland has still not been officially awarded the contract.

So we know that Bobby is eventually going to get added to this contract, and by now Kwame is in office, so is Rataj going to show us that Inland won't get the contract until Bobby signs on?  Isn't that counter intuitive to his defense?


FEb 4 2002 letter now.  Kwame is in office but Mercado is  not.  Latimer is still in contracts and grants but not the manager.   Latimer says this letter returns requested documents, like the bond certificates, the work plan, and insurance documents, among many more.

RAtaj says there's a lot of stuff there.  Latimore says correct.

Latimer explains that a performance bond is required by law because you can't put a Klein on public property and this makes sure the contractor will finish the work or the bond company will pay up.

Rataj says but Inland only wanted to proved a $25 million bond, then another $25 million bond, a deviation of DWSD policy.  Latimer says it's not city policy.


RATaj now showing letter from December of 2001, asks, just to be clear, inland has still not been awarded the contract.  Latimer says true.  And Rataj took that letter away without telling us what it was and has a new one up.  Latimer says  this is a request by Inland to ad a subcontractor,  Ferguson Enterprises.  Rataj also asked if Kwame had taken office yet.  But the Judge just pointed out that This letter is from 3/13/03.

So Kwame is in office by now.

RAtaj is now showing a letter between two "fellahs" from finance.  ASks Latimore what's going on.  Latimer says They're talking about 1368.

RAtaj says they're asking why a 25 mil contract is now 50, were they in the dark on process. Latimer says yes.  This is from 2002 Jan.  Latimer says Inland still doesn't have the contract award yet, still steps to go through.


RAtaj asks if since the new contract was going to be rolled into an existing contract this meant INlans would stay on the jog.  Latimer agrees.

Now showing letter from Water Systems Head Engineer to aLatimer.  Latimer says he reviewed the documents and is recommending changes in the wording and stuff he'd wants added to the contract language.


RAtaj now showing letter from interim director Leavey and asking where are we in the process.  Latimer says this is where they send it to the Water Commissioners.

Rataj asks if after the motion is approved the contract is still not awarded.  Latimer says true.

This for 1368 which is for inspection and rehab of circular and non circular sewers, in case you were interested.

RAtaj is back tracking now and showing that Inland was proposing lower costs than Lanzo and asks if Latimer agrees that the this is still in the recommendation phase, and Latimer agrees.

Latimer is now reading that the contracts will be combined to cut administrative work.  DWSD will have more flexibility assigning tasks.  Latimer explains that with one contractor it will be easier to make assignments.


RAtaj now showing a letter summing up the meeting.  Rataj asks if the contracts have been awarded yet.  Latimer says no.

Rataj asks if negotiations break down does the department then go to Lanzo (second bidder on this RFP)  Latimer says yes.

Asks for explanation of "retainage."  Latimer says that's money that's held back to make sure tasks are completed.

RAtaj asking about bonds.  SAys Inland wanted to provide two 25 million dollar bonds but not at the same time.

Latimer agrees that a 50 million bond should have been provided.

Rataj asks if he disagreed.  Latimer says no, if someone wants to change language they send it to the legal department.

Rataj says would you agree this is a deviation.  Latimer says yes.


RATaj asks if these were two $25 million contracts rolled into one contract and both were awarded to Inland.  Latimer says correct.

Rataj asks Latimer to explain what a negotiating meeting is.  Latimer say it's to nail down price and scope of services.

Rataj now showing 2001 meeting sign in sheet.  It shows the participants from DWSD, Inland, AND, some guys from a company called Insituform.  Latimer says these are the guys with the patent for the sewer lining process and a subcontractor for Inland.

Rataj asks if anyone from the Mayor's office was there.  Latimer says no.


RAtaj is looking at Inland documents now.  Contract 1361, This is the emergency sewer repair RFP from 2001 (a full year before Kwame took office)  Latimer says it's a request about services being ;performed by inland un another contract 1325.

RAtaj says 1325 is about to expire so the engineers are gearing up for letting out more work.  Latimer says yes.

RAtaj asks if it's signed by the general supervisor of engineering.  Latimer says yes.

Now looking at a DWSD from 2001 from Kathy Leave the interim director,  contracts 1368 1362, and Rataj asks if Mercado and Kwame are not in office yet.  Latimer says correct.

RATaj asks if this letter to Lanzo Construction is telling them they're not the highest bidder.  Correct.

Now Rataj is showing a letter from Latimer (when he was an analyst)  referring to contract 1362 to Dennis  Subset of Inland.  Rataj asks if he's letting Subset know about a negotiation meeting that's coming up.  Latimer says yes.


Rataj asks if Mercado canceled other contracts and the current director has canceled contracts and it's proper to do that.  Latimer says yes.

Rataj asks if MErcado's job was to provide clean water as cheap as possible.  Latimer says yes.


RAtaj is now showing a bunch of the "thanks but better luck next time" letters to other companies.  Latimer is basically saying, yep, that's what these are.  Rataj asks, so lakeshore was never awarded that contract.  Latimer says yes.


We're back.  Rataj is showing the cover page for contract 1387 and talking about complaints that the contract was even needed.

RAtaj is moving on to a memo from Fujita to Mercado, from 2003, Fujita is asking "I thought there was a hold on this.  There's handwriting from Mercado says Darryl please see me I thought we already have similar contracts."

Rataj is asking if 1387 was similar to 1368.  Latimer says no.  1368 was an actual construction contract.  1387 was for managing projects.

Rataj asks if DWSD was still trying to figure out if they needed 1387.  So, are you as confused by all these contract numbers as I am?

Maybe this will help,  1387 is for "as needed construction phase assistance services."  No?

This is the interdepartmental memo where Mercado says the project will be canceled and done in house or through an existing contract.  So Rataj has shown that canceling a contract has been done before, took awhile, but remember he can't just come out and say "Hey, it's been dozen before."  He has to lay the foundation and then prove it.


And the judge calls for the morning break.  Man can Rataj talk fast when he gets on a roll.  Hard to Keep up.  What he was getting at was that under contract 1387 in 2003 it looked like a couple of pals in the engineering department were trying to steer a contract to Lakeshore.  Folks in the department were complaining, also complained that scores were unfairly inflated and that Lakeshore was not completing projects on time or on budget.  So the culture at the time was unscrupulous.

Now Rataj only has to get the jury to think that culture changed when it came to his client's dealings, eh?


Rataj  now showing a memo from DWSD engineers complaining that Lakeshore wasn't completing work on time or under budget.  Claims the contract was being steered to Lakeshore.  Latimer says that's what it says.

RAtaj asks who wrote it.  Two Indian names that were hard to pronounce, some chuckles as Latimer struggles through.  RAtaj asks if these two relationship with Lakeshore and asks if the letter complains they were trying to steer the contract to Lakeshore and that Lakeshore's scores were boosted unfairly.  Latimer says Yes.

Rataj asks if Latimer agrees with him that the contract was not yet aware, they were still in the process.  Latimer say correct.


Rataj Shows a memo from Latimer to Fujita.  Latimer says it like a previous member where Mr. McGrell was chosen as an evaluator gut he didn't have time so Latimer wrote this letter to have him removed.

Rataj is working through contract 1387  an as needed construction, says Lakeshore can't claim it lost money because it was an "as needed contract" and DWSD may not have assigned them any work.  Latimer says correct.

Latimer is now explaining a new document, says it's a cover sheet for recommendations for the director and asks for permission to negotiate with contractors.

AT the bottom of this is a  handwritten note saying the contract looks like an attempt at outsourcing and questions whether it should even be a contract.  Rataj asks through out this testimony if Lakeshore was actually awarded this contract yet. Latimer say no.  This is all stuff from 2003.


Rataj asks if Lakeshore was never technically awarded that contract.  Latimer says correct.

Showing a Memo from Fujita to Qaqish.  It's questioning as needed construction services contracts.  Latimer agrees he was aware that people in the department were asking questions like this.

Rataj asks who is Jackie Jordan.  Latimer says that was his boss when he worked in the contracts department.

The Judge is asking Rataj to slow down so the court recorder can get it down.  Good thing for us too cuz the man is talking a mile minute.

Now showing another memo.  Latimer say it's asking for the following people listed here to evaluate the contract.  

Rataj asks if it's an RFP.  Latimer says yes.

RAtaj asks if Lakeshore has not gotten 1387 as of this point.  Latimer says correct.

Rataj is going through previous contracts under different directors. 


RAtaj now showing a roster of DWSD Directors from 1919 to 2002.  Asks about Charlie Williams, to stints during Young administration.   ASks if Latimer knew he had a relationship with Tony Suave and was a minority front.  Latimer says he doesn't know that.

Asks about Fujita for a time then Mercado.  Latimer says correct.


Latimer is now explaining what minority owned business are and says he agreed with policy behind executive orders from the Mayors.

Rataj asks if he knows who Bobby is.  Yes.  Detroit based business. Yes.

Asks if contact with Bobby was mostly by phone. Yes.  Asks if Bobby called him to ask questions about contracts, payment, regular contractor concerns.  Yes.

RAtaj says most of the calls were about payment.  Latimer agrees.

Rataj asks if Bobby had  a strong personality but never threatened to go to the Mayor.  Latimer agrees no threats of that nature


Rataj asks if at that time some engineers tried to steer contracts to their favorite contractors. Yes.

Asks if Mercado tried to change that culture.  Yes.

Asks if Mercado was a by the book kind of guy.  Yes.


Bobby's attorney Mike Rataj is up.  Asking about Latimer employment out of college.  Gets to his current job as Deputy director.  asks if his duties include helping the director run the department in every aspect.  Latimer says yes.

Rataj asks if he was manager of grants in 2003.  Yes.

Asks if prior to that he was an analyst in contracts and grants section.  Yes.

Asks if he understands the inner workings of the department. yes.

asks if he knows who Dan Edwards is.  SAys yes, he was also an analyst.

Asks if they were both in department, equal footing in the department.  Yes.

RAtaj asks if there are hundred or so outstanding contracts at any time. yes.

Asks if there were 40 -60 at the time, yes.


Thomas asks if Mercado was doing his job and saving money.  Latimer says yes.

Latimer says that may have been but that's not the conversation he had with the director. Thomas says but that's what happened.  Latimer says yes.  So even if the reason was to steer a contract to Bobby, Thomas has come up with alternate reasons for it to work in his defendants favor.


What Thomas is talking about here is the contract award process outline in testimony yesterday where under the standard bid award process Superior Engineering came in first, EBI was second, and Lakeshore came in 3rd.  Mercado then changed it to the AVerage cost method, this time Superior came in 1st, DPM/Xcel came in second, and Lakeshore 4th.  Then, they went to the AVERAGE after DBB's where DPM/Xcel came in first and Lakeshore was second.

Thomas SAys Superior's partner DLZ was falsely claiming to be a Detroit BAsed Business.  The prosecution objects.  Thomas is changing his tact and asking Latimer if he knew that DLZ was not a DHB.  He gets there.

Latimer agrees that without the DHB points it drops them out of the running.

WHat Thomas has done here is get Latimer to confirm that there were good reasons for dropping Superior and EBI.  EBI for low balling and Superior because it's partner didn't really  have a headquarters in Detroit.  I'd say he earned his money today.


Thomas asks if standard policy of picking contractors was deviated from.  Latimer says yes.

Thomas asks if Superior would have had credits for DBB.   Yes.

Asks if EBI was working, what was their quality of work.  Latimer says one manager was good but when he left they started having problems and project wasn't completed and there was a lawsuit.

Thomas asks if lawsuit was started when all this was going down.  Latimer says they knew it was coming but doesn't remember if it was underway.

Thomas asks what contractors do when they really want a job.  Latimer says they put in a low bid and hope to make up for it with an amended contract or with more work later.


Thomas asks if money got rolled into Inland's contract and there was a cost savings.  Latimer says yes.

Thomas says Inland was working in that area and what are the concessions.  Latimer says Inland agreed to a lower price than Lakeshore.

Thomas says so Victor Mercado got the price lowered.  Yes.


Thomas asks if there were ways to avoid waiting a year or two.  Latimer says correct.

Thomas asks if DWSD looks over shoulder of person doing work.  Correct says Latimer.

Thomas asks if Mercado wanted to transfer 1361 to 1368.  Latimer says yes and agrees Mercado had power to do that.  Thomas asks if Latimer disagreed.  Latimer says yes.

Thomas asks if he knew Rachmale met with Mercado back in June.  No.

Thomas asks if he can show him a document to refresh his recollection that they met.  Don't know why, the guy just said he didn't know.  Wasn't disputing it.  Thomas say, oh, I guess I don't have to refresh your recollection. Asks if Mercado did this from time to time.  Latimer says yes.

Thomas asks if this is done in normal performance of his duties (Mercado).  Latimer says yes.


Thomas now showing Latimer a document to refresh his recollection.  Thomas is getting at Mercado being a resourceful manager and trying to save money.  But Latimer keeps saying you can't mix Capital and Operating budgets.

Thomas says Lakeshore initially gets 1361 but it was previously an Inland Contract.  Latimer says it's a fair statement.

Thomas asks when initial proposal is made is that where they were at the time the initial award was made.  They're back to the flow chart now.  The third block on the sheet says Proposal approval.  Latimer says during negotiations the scope of operations may change,.

Thomas asks if there's a lot of tugging.  Asks what happens when negotiations break down.  Latimer says you go to number 2 bidder.

Thomas asks if there was more contract work to do with Lakeshore.  Latimer says yes.


Thomas asks if a smart manager wisely allocated resources.  Latimer says correct.

Asks if discussion was before Lakeshore got the job.  Correct.

Thomas asks if that changed and the job was rolled into another contract.  Yes.

1361 was Lakeshore,  Thomas asks if there were reasons for dropping that contract and giving it to Inland.

Thomas asks if you can take that money and use it another way.  Latimer says no, you can't mix the funds.

Thomas asks if Latimer says you can fund it out of Capital Budget.  What if you fold it into the other contract.  Latimer says when the auditors see it they'll pull it out of the Capital Budget and you'll have to come up with the operation budget money later.

Latimer says Capital improves asset and you'll only get a loan if you improve the ass est.  Latimer says there could have been a savings.


Thomas asks what happened to 1361.  Latimer say it never got executed.

Asks if Mercado was an effective manager.  Latimer says yes. 

Thomas asks if Latimer advanced under Mercado.  Latimer says one level.  Thomas asks if Latimer could express his opinion.  Latimer says yes.

Thomas asks if Mercado had a great deal of experience in the private sector and was an innovator at DWSD.  Latimer says yes.  Department won quality awards.

Thomas asks, best water in the country?  Yes.

Asks if Mercado knew what he was doing.  Correct.


Thomas asks if people who don't get what they're hoping for would be disappointed. Latimer says correct.

Thomas asks if they made their presence known, some more than others. Latimer says correct.

Right now they're talking about contract 1361.  Thomas asks if everyone gets a letter, thanks for  your participation but better luck on the next one.  Latimer says that's pretty much the case.  (That's pretty interesting since Thomas made a big deal out of the fact that the department on one of those same letters told Lakeshore it looked forward to working with them again.


Thomas asks if Archer's Exec order was different.  Latimer says he's not sure thinks it was also 30 percent.

Thomas now showing the design build process flow chart.  Says he doesn't want Latimer to think he's  throwing him any curves but wants to talk about 10 mil sewer contract that was first awarded to Lakeshore but then given to Inland.  asks if both companies were good.  Latimer says correct.

Latimer says the contract was not "as needed" even though it followed some of the same guidelines.

Thomas asks if people talked about it.  Latimer says people always talk about results.

Latimer says putting together an RFP is expensive. Thomas asks if it's the cost of doing business.  Latimer says correct.


The Jurors are seated and Mr. Latimer is being reminded he's still under oath.  Jim THomas is up. He's just handed Latimer a copy of an executive order from Kwame from 2003 that Thomas says codifies previous practices of the city.  Latimer says correct.

Thomas asks what the document does.  Latimer says it shows what percentages should be used when awarding contracts to Detroit Based Business and Detroit Headquartered Businesses.

Thomas asks if Kwame wanted more and Latimer wanted less.  Latimer says not on this.  They were talking about LED credits which is a different issue.

Thomas now referring to a paragraph about  purchasing ordinance, all bids for all departments, and the next paragraph that relates to all contracts.  Latimer agrees.


"all rise" court is in session.  Judge Edmunds asks if they're ready for the jurors.


The court room feed is up and running.  Jim THomas is stacking papers at the defense table.  Gerald Evelyn is greeting Susan Can Duesen with  a brief hug  and kiss on both cheeks, Bobby Ferguson does the same.  John Shea is talking to Mike Rataj.  It's a pretty loose and casual bunch at the defense table this morning, a looks like a group of friends just getting ready for another day at work.  Kwame Kilpatrick is the last defendant to enter the room.  He went straight to his seat and sat down.

The Prosecutors, Chutkow, Bullotta, et al, just entered in a group and are now chatting behind the table on there side of the room, John Shea is joining them.

Bernard is has now made his way around the defense table to talk to his son.   


Good morning from the Theodore Levin Federal Court House in balmy downtown Detroit.

Ken Martinek is Senior Producer-Investigations for Fox 2 News.  You can contact him at

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