U.S. Attorney, Ethics Boards Asked To Investigate Contracting Improprieties Before Detroit City Council Today

Request focuses on actions by attorneys at Detroit-based Miller Canfield law firm in scheme forcing the city to beg for money it already borrowed and has to pay interest on 

DETROIT, Nov. 26, 2012 /PRNewswire-USNewswire/ -- Michigan AFSCME Council 25 is requesting criminal and civil investigations be conducted by the U.S. Attorney General Office, the Michigan Attorney General's Office, the Attorney Grievance Commission and the City of Detroit Board of Ethics for millions of dollars in contracting irregularities pending before the Detroit City Council today.

"In order to receive money that the city of Detroit already borrowed, State Treasurer Andy Dillon is forcing the City to grant a contract to the Miller Canfield law firm worth millions of dollars, by agreeing to a Milestone Agreement that Miller Canfield drafted," says Ed McNeil, special assistant to the president.

Attorneys at the Miller Canfield law firm were the primary drafters for the 2011 Public Act 4. When the City announced its financial crisis, the State Treasurer told the City to hire the Ernst & Young accounting firm. When the state began negotiations with the City over the Consent Agreement, under Public Act 4, the City was told to hire the Miller Canfield law firm. That same law firm was being used by the state – in that same series of negotiations.

"That is like the husband in a divorce proceeding dispatching his divorce lawyer to his ex-wife. The end result is what we see in the Consent Agreement, which is slanted heavily in favor of the state and against the City," said attorney Richard Mack.

During these negotiations, the City Council was being given legal advice by Miller Canfield. Members of the City Council asked about whether the firm was tasked to draft Public Act 4, and about their representation. Miller Canfield FAILED to disclose to the City Council that it also represented the state in the same negotiations over the Consent Agreement.

The use of the Miller Canfield law firm violated City Charter. The Charter requires approval of the Corporation Counsel before outside legal counsel is retained.

During this same time, the City negotiated with the Michigan Finance Authority to float more than $130 million in bonds. The State Treasurer sits on the MFA board – but not in his role as Treasurer. In this transaction, Miller Canfield represented the City, the State Treasurer and the MFA! In a normal transaction, the MFA will have the bonds floated and then transmit the money to the municipality. The Miller Canfield representation resulted in the City's money being given to a third party – the State Treasurer. This is unheard of, and would not have happened if the City had a lawyer in the transaction, acting in its best interest. Now, the City must beg for its own money, that it is paying interest on.

It gets worse. The Miller Canfield law firm negotiated a Milestones Agreement that was signed by the City and State officials. Again, the City did not have its own attorney in the negotiation. As a result, the Miller Canfield law firm wrote into the Milestone agreement a contract which will result in millions of dollars to that firm. Now the City is being forced to award that contract to Miller Canfield – today – at the risk of losing receipt of its own bond money from the State Treasurer. This Milestone agreement is fraught with other provisions which violate the City Charter and its Ordinances.

Due to the facts stated above, Michigan AFSCME Council 25 is requesting a criminal investigation be opened by the U.S. Attorney and the Michigan Attorney General's Office. Separate requests are being made to investigate conflict of interest conduct by Miller Canfield attorneys. That request is being made to the Attorney Grievance Commission. The City of Detroit Board of Ethics is also being asked to investigate the city administration's actions in the matter.

SOURCE Michigan AFSCME Council 25, AFL-CIO

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