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Live Blog: Kwame Kilpatrick Trial Day 28

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DETROIT (MyFox Detroit) -

Thomas is back on the flow chart now.  Asks if DBH and DHB are over-riding issues in the city.  Latimer says yes.

Thomas asks about special administrator of water before Kwame and if before ARcher Latimer remember Coleman Young.  Latimer says yes.

Thomas asks about "design and build process" described in flow chart.  Latimer says process applies.  Judge says lets wait and do that in the morning.  And we're done for the day.  M.L. Elrick will have a complete wrap up at 5 and 6 on Fox 2, plus his Daily Take Away on MyFoxDetroit.com.  See you tomorrow.

12:55

Thomas asks if DLZ got re certified later after one of the brothers running the company moved back to Detroit.  Latimer says he heard there was some kind of rift but wasn't aware of the details.

Thomas showing a flow chart now prepared by IMG.  Latimer says this was prepared for Judge Feikens.  Latimer says Feikens was put in charge of DWSD because of the pollution lawsuit.

Thomas asks if Latimer remembers when the Detroit River was brown.  Latimer says yes and it's approved since then.

Thomas asks if Feikens was also changed with making the department more efficient. Latimer agrees.

Thomas asks if IMG was hired to study efficiency.  Latimer says yes.

12:50

Thomas is looking at the negation recommendation letter for 2014 and asking if this directly prior to the Super Bowl.  Latimer says yes.

Thomas asks if they were on a pretty short leash for time.  Thomas corrected that Super Bowl was already over, says he got off track and will get to the SuperBowl later, moves on to the list of contractors.

Thomas asks if there is a cost to giving preferences. Latimer says yes, agrees that as an African American male there are costs to not getting contracts.

Thomas asks if it's proper and right to do that.  Latimer say yes.

Thomas asks if it may have cost more in theory but having local contractors may have saved money as well.  Latimer says correct.

Tomas asks if people earning money in the city will pay income tax.  Latimer says correct.

Thomas asks if multiplier effect  also plays a role.  Right.

12:44

Thomas up, asking about the process of evaluation.  SAys he wants to talk about as needed contracts and what was going on in the city at that time.  Asks if minority hiring was important.  Latimore says no.  SAys that was in the past but struck down by Supreme Court.

Thomas says Detroit wanted to promote putting minorities to work, for the multiplier effect it would have on the economy.

Latimer agrees with Thomas that ARcher brought in the Detroit BAsed Business idea to counter the case the court struck down.

Thomas asks if preference was given to DBB and DBH companies.  Latimore says correct.  Thomas asks if that stood the test of time.  Latimer says correct.

12:38

Now looking at letter prepared by Latimer recommending Lakeshore get the contract, also signed by Mercado.

Chutkow now puts up the negotiation recommendation letter for the other contract.  DPM was recommended for this contract.  It shows that Superior came in $2 million less.  Chutkow asks if Superior had a history of low balling bids.  Latimer says not in his experience.

Chutkow asks if Superior might have saved the department money.  Thomas objects.  Judge sustains.  Chutkow is done.

12:34

Latimer says this only happened on one other contract that he can remember.  Latimer says the change in process reduced DLZ's score.  Latimore says it's his understanding that PPM's partner Xcel was related to Ferguson.

Latimer says Superior/DLZ submitted a good proposal.

12:31

Chutkow puts up another document, Latimer explains it's the certificate of certification for A&H contractors.

Chutkow asks if in May of 2006 Latimer learned that A&H didn't have DHB certification.  Latimer says it came up on one of the Lakeshore contracts and they investigated to verify by contacting Human Rights.  SAys the answer came back that A&H didn't have Detroit Headquartered but did have Detroit Based Certification.

Chutkow asks if they'd accept a late certification.  Latimer says it had to be in 24 hours prior to submission of proposals.  Latimer says he told MErcado this one was late and MErcado told him to add it. 

Latimer says they'd received missing certifications but not new certifications.  Says this changed Lakeshore score and moved them from 4th to second.  SAys Lakeshore got one contract and DPM got the other.

Latimer says MErcado told him 2015 should go to DPM and 2014 should go to Lakeshore.

12:23

That letter was back dated to before DLZ submitted their bid.  Latimer says he wouldn't know if DLZ was told about the revocation.

Now looking at a Memo from Phillips to Mercado, Latimer, and Then Deputy director Gary, Fujita. It's dated Nov. 26, 2007.  It says DLZ is certified and certification should be good until August 2008.  Latimer says it's after the award of the contracts.

Chutkow going back to scoring lists again.  Superior/DLZ top both the standard and Average Cost RAnkings but drop to 3rd after certification once DLZ had certification revoked.  Only 2 contracts were going to be awarded.

12:16

Chutkow asks if Mercado tipped Latimer off about something coming in the mail.  Latimer says yes but didn't know what it was.  Not looking at  Letter from Grant Phillips saying DLZ's DHB was revoked.  Not a Detroit Headquartered Business any more.

12:13

Thomas was just whispering with Chutkow at the podium, now the two are having a small conference with Latimer.  It sounds like he's answering some technical questions, giving glossary like descriptions of some of the terms in the contract.

Chutkow now showing a new exhibit, it's a page out of the Mayor's calendar.  It shows the meeting with Mercado and Latimer.  Latimer says that's when they met.

Now Chutkow is showing a letter from Latimer to the director of the human rights department Grant PHillips letting him know the dept is evaluating contracts 2014 and 2015 and asks to verify DLZ's headquarter location.

Latimer says Mercado requested he send the letter.

Latimer says Mercado didn't explain why.  Says they have checked qualifications in the past.

Latimer says it's used in the scoring and evaluation process.  It's dated May 5th, the day after the meeting with the mayor.

12:05

Court is back in session, everyone is standing, and the jury filing in.  It's almost ceremonial, the entry of the jury, it reminds me just who holds the fate the defendants in their hands.

12:02

And Chutkow asks for a 5 minute break.

11:54

Latimer says the Mayor asked about Superior's partner DLZ, the top bidders on these contracts, and Latimer told him DLZ was based in Columbus Ohio.  Says Mayor used DLZ as an example.

11:51

Latimer says typically the RFP explains the evaluation process.  Latimer says he can't recall using Average Cost method before or after this project.

ACcording to the document the Average cost ranking evaluation was done about a month after the standard cost ranking evaluation.  Latimer says he shared results with MErcado.

Lakeshore moved up, but not to the top.

Chutkow now showing the evaluations for contract 2015.  Superior, EBI, and DPM are top on the standard ranking.  For the Average Cost evaluation DPM moved up to number two and EBI dropped to 5th.

Latimer says MErcado told him they had to meet with the Mayor, that when he asked what it was about Mercado said we have a meeting shut up.

Latimer says he explained to Kwame that people were concerned and complaining about not enough work going to local economic development.

11:44

Latimer says he recommended that 2 companies be tossed because of trouble on previous jobs and inability to do the work.  Says Mercado said he didn't want to throw out any companies so they'd use Average Cost to decide who would get the contract.  Latimer says he was concerned about changing the evaluation rules halfway through the process.  Says it may not look good.

Latimer says he told Mercado it doesn't look good to do this. Says after you've seen the result it doesn't look good.

Latimer say he told Mercado it doesn't look good.

11:37

Back from sidebar.  Chutkow asking about Superior Engineering being ranked number one in the Standard Scoring.  Latimer explains that Superior was partnered with DLZ and Lakeshore was partnered with Ferguson. 

Latimer says he presented the rankings to Mercado.  Says Mercado had concerns about the wide range of pricing and that some of the low prices were too low.  Latimer says he recommended the 2 lowest priced firms be tossed because they didn't have documentation to justify the dollar amounts.  Could' T substantiate that low price was real.

11:33

Chutkow now introducing a new document showing the rankings of contractors.  There are three ways, Standard, Average cost and Average after DHB"S.  These scores were done in 2006.  Latimer says these are for contracts 20-14 and 20-15 and the Mercado didn't want both contracts to go to the same bidder.  Wanted to split them up.  And we're getting a sidebar.

11:28

New document.  Memo to Latimer from Mercado about canceling contract 1361 and transferred to 1268.  Latimer says it's dated the day after the email Mercado asked him to write the email.

Latimer says it was copied to a number of project managers and division heads, the requesting division.

Chutkow had asked if Latimer knew why Mercado wanted him to write that email and if was to use to justify the letter to the department heads. Thomas objected.  The judge allowed it but then Latimer said he didn't know.  When Chutkow tried to get clarification Latimer said he didn't know. Chutkow again tried to ask in another way and Thomas objected again saying if the guy doesn't know he doesn't know.  Judge Edmunds agreed and Chutkow has to move on.

11:23

Chutkow switching exhibits.  Latimer identifies this as the email he sent to Mercado about the cancellation of the contract.

Date is July 14th 2003.  SAys contract 1361 is canceled and will be added to 1368. Latimer says money will be saved by managing just tone contract.  Says he wrote it because Mercado asked him too.  Thomas is objecting.  Judge says he can tell what he was told.

Latimer says he wrote a prior email saying Mercado had the option of reducing the scope but didn't have to cancel 1361.  Latimer's opinion is the contract didn't need to be canceled, he had other options.  Says it's correct that Mercado had already signed off on it.  Says the words Save Money managing one contract rather than 2 were dictated to him by Mercado.

Chutkow asks if Mercado explained why he changed his mind.  Latimer says only the info he told him to write in the email.  Says he was uncomfortable writing this email because these weren't his words.

Says Mercado also asked to do a similar email on another project.

11:13

Latimer now looking at the setup contract that identifies sub contractors. This subcontractor form relates to a sewer lining contract and shows that Ferguson is being added to the contract.  Latimer says this is a Capital Project, Wall Street Financing.  Latimer says the contract was held up but he doesn't know why.

11:07

Latimer is now looking at the letter to the water board after the department negotiated and approved the contract. Says this is one of the last steps.  Latimer says it's signed by Mercado and stamped approved, which means the board signed off on it too.

swapping exhibits now.  Latimer says this is the board minutes with the motion to approve.  Latimer says the justification for the contract is to repair sewer lines on an emergency basis.  Says significant amount of work is done to get to this point.

11:03

Chutkow now showing Lakeshore's proposal for emergency sewer repair, project number 1361.  Chutkow asks if Lakeshore filled requirement for 100% Detroit Based, actually exceeded the requirement.

Latimer says they checked out as Detroit based business.  Says Lanzo and Hayes are local companies too, do excavating and sewer work.  Says he never got an complaints about work performance. 

10:58

Chutkow now showing a letter to Rachmale.  It's a contract proposal letter that was sent out to Lakeshore. Latimore says this contract was awarded on merits.  It's an operations and management contract.

Latimer says it's an as needed basis if an emergency should arise.  Says the company would be on stand-by.  Says funding source is important.  There's 2.  Operation or CApital Funding.  This would be borrowed money through a bond say.  Funds can't be co-mingled.

10:50

Darryl Latimer is being called to stand and sworn in.  Mark Chutkow is doing the questioning.  Latimer is the Deputy Director of the Detroit Water and Sewerage Department.  Been Deputy Director for 2 years.  He was the contracts and Grants Director before that.  Was interim Director in late 2010 through early 2011.  Says he's worked for the department for 24 years.

He was the head governmental analysts when Kilpatrick took over.  Oversaw consultant contracts.

10:45

The court room is filling up again.  "all rise."  Court is back in session.

10:44

Evelyn asks if on one contract he could have used any contractor but chose to go with Ferguson.  Rachmale says the department asked him to keep Ferguson on the job.

Evelyn says Hardiman testified that the profit margin was 10 percent. EVelyn asks if Rachmale is a millionaire.  Prosecution objects. Judge sustains. Evelyn rapid fires off a couple more questions so fast I couldn't even hear what he was saying, says he's done, and Judge Edmunds calls for a 20 minute break.  AND, excuses Rachmale.  We'll have a new witness after the break.  Could be Darryl Latimer from the water department.  We'll see.

10:16

Thomas asks if RAchmale even complained.  Rachmale says no.  Says in  meetings he did have with Kwame he never brought up losing the contracts.

Thomas now showing a letter from Mercado canceling the contracts.  Thomas reads "we TRUST THERE WILL BE FUTURE OPPORTUNITIES FOR YOU."

Thomas asks if he didn't make $157 million in future opportunities.  Rachmale says he billed that but didn't make $157 million.

10:13

Thomas is up, asking RAchmale about contracts that "were taken from you."  Asks if Rachmale said the contracts were taken from him.  RAchmale says yes.  Asks if those contracts were on an as needed basis and could be canceled at any time.  Rachmale says he's not aware of that.

Thomas is now hunting for an example.  Showing Rachmale a document.  Now asking if a reward was made as to his bid on an as needed basis.  Yes.  Asks if City can cancel an as needed contract. Yes.  Asks if Rachmale knows that a contract can be canceled if it's in the best interest of the City. Yes,

Does he know if the contract was given to someone else. yes.  Asks if there's already a contractor out there that could do the job it might be in the city's interest. Yes.

Thomas asks if the city might not even need a reason.  Yes.

Asks if without any other knowledge about why the contract was canceled he thought Ferguson was involved.  RAchmale says yes.

10:06

Chutkow now asking about competing bids.  RAchmale says he didn't list Ferguson because Ferguson was competing for the contract along with another contractor as construction manager.

Rachmale now explaining that his company finished another Ferguson project to accommodate the city, one that Lakeshore didn't bid on.

Chutkow now showing the defense exhibit listing the Lakeshore contracts.  Chutkow asks if all of the $157 million went into Lakeshore's pocket.  Rachmale says no, the paid subs, bought material and supplies, and the 4 percent was leftover for profit.  Says Lakeshore got 8 cents on the dollar and had to pay expenses so the final profit margin was more like 3 cents on the dollar.

9:52

Chutkow asks what Rachmale would do with a contractor he wasn't worried about making unhappy.  Rachmale says he'd try to work things out but would replace the contractor if that didn't happen and he wouldn't pay him a million dollars.

Rachmale says no he wouldn't have paid Ferguson if he hadn't been worried about making him unhappy.

9:49

Chutkow now asking if working on old sewer systems means unexpected things come up. Evelyn objects.  The Judge shuts him down too.

Chutkow asks if Lakeshore got fines relating to the Joseph Compau outfall.  Rachmale's says no. ASked if Water Department was happy and if Lakeshore got more work.  yes.

9:47

Chutkow now showing text message between Bobby and Kwame talking about the price of his contracts.  Rachmale says no. Thomas objects.  Judge Edmunds overrules, says Thomas asked him all kinds of questions about why he wrote that letter to the judge, this is proper redirect.  Thomas sits down in a huff.

Chutkow asks if, when Rachmale wrote that letter he know Kwame and Bobby were talking to his contracts.  RAchmale says no.

9:43

Chutkow now asking if Rachmale ever took advantage of his relationship with Patel to help him with the City.  Rachmale says no.  Chutkow asks if Patel had any power to make contract decisions.  Rachmale says no and adds that his work for the building and safety department was small, about a fifth of a penny for every dollar lakeshore made.

Chutkow asks if revenues from the building department cross his desk.  Rachmale says no.

9:39

Chutkow ask when RAchmale started buying real estate with Dilip Patel's wife Mena.  Rachmale says 1996.  Says Mena Patel kept the books and found tenants and that's what he was paying her for.  RAchmale says after the allegations surfaced he told Dilip Patel to stay away from Lakeshore.  Says his relationship with the Patel's has changed and it's strained.

9:33

Chutkow is now up for redirect.  Thomas just got done asking a bunch of questions about the support letter, emphasizing that Rachmale sent the letter despite further charges being leveled at the mayor.  Rachmale says he wasn't aware of all the charges and may have done things differently had he known.  TI got no  idea where Thomas was going with that.

9:29

Jim Thomas is up, he's looking at that phone list again, specifically the entry of Diana Stewart VP operations for A&H.  Thomas wants to know if RAchmale knows who she is the mother of.  RAchmale sounds unsure, finally says Kandia Milton.

Thomas now showing letter to Judge Groner that Rachmale sent to Support the Mayor during his sentencing for the whistle blower case.  Thomas wants to know if Rachmale saw leadership from the Mayor and progress for the City.  Yes.

Thomas wants to know if his support was despite the widely publicized state charges.  RAchmale says he saw a personal issue and a business issue.

Thomas wants to know if he had a special relationship with the Mayor.  Rachmale wants to know what he means by special.  Thomas says Rachmale was on the transition team.  RAchmales says that was a limited relationship.

9:22

EVelyn is now showing an email from Brian Caldwell at A&H saying Dilip was questioning authorization of work done in the building after a tenant has moved in.  The email also says a contractor named Bruce Washington had not been paid.  Evelyn wants to know if Dilip stopped the payment.  Rachmale says no.

9:18

EVelyn how has a Lakeshore phone list on the screen, Dilip Patel's name is on it, and Evelyn is asking if means Patel was an employee.  EVelyn also asks if Patel made business decisions for Sky Group, Lakeshore real estate company.  Rachmale says no. Rachmale says no.  Evelyn also points out that there are other names on the list that are not employees but they have outside email addresses.  Rachmale sticks with his story that Patel was not an employee.

9:13

Court is in session.  Gerald Evelyn is asking Rachmale about his relationship with Dilip Patel.  Rachmale says he did not hide his ties to Patel and granted complete access to government agents when they first interviewed him.  EVelyn is now showing a business card with Patel's name on it and the Sky Group name on it.  Rachmale is still claiming that Patel was not being paid.  Evelyn also asked RAchmale about investment money he owes Patel.  Rachmale says that money is in escrow and he hasn't paid Patel anything.

9:02

Avanish Rachmale, Lakeshore Engineering President, will be back on the stand this morning.  It could be an interesting morning if we pick up where we left off yesterday.  Bobby Ferguson's attorney got Rachmale to admit a longtime friendship with an insider at the City of Detroit's building and safety department, a guy who was directly responsible for supervising the employees who inspected Lakeshore asbestos removal contracts with the City.  What came out in court was that Dilip Patel had a cell phone paid for by Lakeshore, free access to the building, a Lakeshore email account, and even an office in the Lakeshore building, an office that Rachmale says he didn't know about.

So it looks like Rachmale was no stranger to courting connected persons who could help him win city contracts.  And the $155 million in city contracts he got after teaming up with Bobby Ferguson would make it appear that he was very successful.

And Patel may not have been the only insider courted by Rachmale.  Bernard Kilpatrick's attorney, John Shea, brought out more interesting testimony about those 2 big contracts won by Lakeshore but pulled before they could get started.  These are the now famous, $10 million and 5 million" contracts that figured so heavily in the testimony of Tom Hardiman.  From what both Hardiman and Rachmale testified to when questioned by prosecutors, it appeared that Bernard was hired to find out what happened to those contracts.  The prosecution's story was simple, Lakeshore won 2 contracts, had them pulled, couldn't find out why, hired Bernard as a consultant, paid him $2500, and Bernard told them to talk to Bobby.  But Shea ran through the dates on contracts and the times of meetings with Bernard, and in the only "Aha" moment of the trial so far, got Rachmale to admit that Bernard may have been brought on board well before those contract problems started.

She also surprised me when he asked Rachmale if was not Bernard who told them to talk to Bobby but another guy, Perry Metah.  That was going back deep into Hardiman's testimony.  I didn't remember that.  But Shea brought up Rachmale's grand jury testimony, his interviews with agents, and Rachmale's own testimony.  So I guess this is why defense attorneys make big bucks.  And why the defense was so testy about hearsay being allowed during testimony.  As Shea brought out, Rachmale heard it from Hardiman who heard it from Metah who we are to assume, heard it from Bernard.  Unless he heard it from someone else. 

Some simple stories have not so simple endings.

8:35

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

Ken Martinek is Senior Producer-Investigations for Fox 2 News.  You can contact him at ken.martinek@foxtv.com

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