Tag: kwame kilpatrick
Ex-Detroit Mayor Kwame Kilpatrick Appeals Corruption Conviction

Ex-Detroit Mayor Kwame Kilpatrick Appeals Corruption Conviction

By Tresa Baldas, Detroit Free Press

DETROIT — Almost a year into his lengthy prison term, former Detroit Mayor Kwame Kilpatrick is asking a federal appeals court to toss his conviction and grant him a new trial.

The disgraced ex-mayor, who is serving a 28-year prison term for public corruption, argued in court documents filed Wednesday that he didn’t get a fair trial for three reasons:

— He was forced to go to trial with a lawyer he didn’t want — and shouldn’t have had — due to a conflict of interest.

— The nearly $4.7 million he was ordered to pay in restitution was not authorized under federal law.

— The judge erred in allowing two FBI agents to offer their opinions to jurors about what Kilpatrick’s and others’ text messages meant and how texts and phone calls showed the ex-mayor was involved in crooked contracts.

“Kilpatrick was denied a fair trial because the court allowed the two case agents to testify 23 times and ‘spoon-feed’ the jury the prosecution theory of the case based on the agents’ review of all the text messages, recorded calls, and documents, (which) the jury never had the opportunity to review on their own and to use to draw their own conclusions,” Kilpatrick’s lawyer, Harold Gurewitz, argued in the filing with the 6th U.S. Circuit Court of Appeals.

The 80-page filing focused heavily on Kilpatrick’s longtime defense attorney James Thomas, whom Kilpatrick tried to get thrown off the case at the start of his trial, citing a conflict of interest. Thomas and his associate were working for a law firm that was suing Kilpatrick for the same alleged crimes of which Thomas was defending him.

At Kilpatrick’s request, Thomas asked U.S. District Judge Nancy Edmunds to withdraw from the case. But Edmunds denied it, noting that when Kilpatrick ran out of money and couldn’t afford a lawyer, he requested Thomas, so he got him. Edmunds also found that Thomas had been a good and effective lawyer for Kilpatrick.

Thomas represented Kilpatrick throughout the six-month trial, which ended with Kilpatrick getting convicted in March 2013 on 24 counts for crimes including racketeering, extortion, and bribery. He was sentenced to 28 years in prison.

Thomas was not readily available for comment.

Two months after the guilty verdict, Kilpatrick officially dumped Thomas, telling Edmunds that “a grave error” occurred in his case and that he needed a new lawyer.

Thomas agreed that it was time for him to step down.

Edmunds appointed Gurewitz to handle Kilpatrick’s case.

“Among the basic duties owed by a criminal defense lawyer to his client are the duty of loyalty, the duty to avoid conflicts of interest, and the overarching duty to advocate the defendant’s cause,” Gurewitz wrote in the latest filing.

Photo via WikiCommons

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$85 Million Swaps Settlement Opens Door For Quicker Detroit Bankruptcy Exit

$85 Million Swaps Settlement Opens Door For Quicker Detroit Bankruptcy Exit

By Nathan Bomey and Matt Helms, Detroit Free Press

DETROIT — Judge Steven Rhodes on Friday approved a settlement between Detroit and two global banks over a disastrous financial bet engineered by former Mayor Kwame Kilpatrick’s administration.

Rhodes — who had rejected two previous settlements as too generous for UBS and Bank of America — ruled that the city can pay $85 million to eliminate the pension debt interest-rate transaction known as “swaps.”

The judge said the deal sets the stage for a potential “cram down” — a bankruptcy restructuring plan approved over the objections of retirees and financial companies — and urged creditors to negotiate with the city in confidential mediation sessions.

“The message is that now is the time to negotiate,” Rhodes said.

Rhodes scolded Detroit bankruptcy parties for waging an “orchestrated public relations campaign,” saying that negotiating in public is “counterproductive.”

“This bankruptcy is not about who wins in the court of public opinion,” he said.

The judge put aside his misgivings that the original Kilpatrick swaps deal was “likely” illegal, saying the new settlement was acceptable to allow Detroit to escape a $288 million obligation. He said he “commends” Detroit and the banks for reaching an “entirely reasonable” deal.

Rhodes had rejected two previous settlements of $230 million and $165 million.

That means the judge saved the city more than $200 million in payments that otherwise would have gone to the banks. Now, Detroit can pay off the swaps gradually.

Rhodes endorsed Detroit emergency manager Kevyn Orr’s bid to exit bankruptcy by Oct. 15.

“The settlement agreement is quite likely to be the fastest, surest and least costly way for the city to achieve that goal,” Rhodes said. “The record supports that judgment.”

With the judge’s approval, the banks have agreed to vote in favor of Detroit’s bankruptcy restructuring plan, potentially giving the city an avenue to force other creditors to accept the deal.

The swaps were brokered by Kilpatrick’s administration in 2005 and 2006 to secure a steady interest rate of 6 percent on a $1.4 billion pension debt loan. The bet soured when U.S. interest rates plummeted, sticking the city with a $50 million-per-year bill.

In 2009, Detroit pledged its casino tax revenue as collateral on the swaps, jeopardizing the city’s most dependable source of cash.

Rhodes had questioned the legality of the collateral pledge because the Michigan Gaming Act limits the way casino taxes can be used.

Nonetheless, he ruled “it is beyond serious dispute” that the city can strike a settlement even if the lien might have been invalid.

Orr testified that the city was close to filing a lawsuit against the banks, but eventually reached a deal he considered acceptable to avoid a risky and costly legal battle.

Rhodes agreed that it would take too much time and money for the city to fight the banks.

But several major creditors — including the city’s retiree committee, several European banks and bond insurers Syncora and Financial Guaranty Insurance — objected to the settlement.

Photo: ifmuth via Flickr