News and Press Releases

Former Detroit Water Director Sentenced In
Kilpatrick Corruption Case

 

FOR IMMEDIATE RELEASE
May 22, 2014

The former Director of the Detroit Water and Sewerage Department was sentenced to eight months in a halfway house after having pleaded guilty to conspiracy in the case of former Detroit Mayor Kwame Kilpatrick, announced U.S. Attorney Barbara L. McQuade.

Joining on the announcement were Paul M. Abbate, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, Carolyn Weber, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation Division and Randall K. Ashe, Special Agent in Charge, Environmental Protection Agency, Criminal Investigation Division (EPA-CID).

U.S. District Judge Nancy G. Edmunds imposed sentence on Victor Mercado, 62, of Stuart, Florida.

According to the superseding information, from June 2002 to June 2008, Mercado served as Director of the Detroit Water and Sewerage Department (DWSD), reporting directly to Kilpatrick.  In this capacity, Mercado was responsible for administering more than $2 billion in contracts with private companies.

The plea documents stated that Mercado, acting at the direction of Kilpatrick, unlawfully steered contracts and payments to Kilpatrick co-conspirator Bobby Ferguson. Mercado influenced the procurement process to Ferguson's advantage, and directed a bidder to include Ferguson on a DWSD contract if the bidder wanted to receive favorable consideration on the bid.  Mercado took these steps as a result of regular and consistent pressure from Kilpatrick and his staff to help Ferguson obtain DWSD business regardless of procurement policies, rules and regulations.

“Although Mr. Mercado was acting under pressure from the mayor, he must be held accountable for abusing his position of trust and causing harm to the city,” McQuade said.

“While Director of the Detroit Water and Sewerage Department, Mr. Mercado violated the law by unlawfully steering business contracts at the direction of the former mayor,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “This criminal conduct inflicted economic harm upon the city, and Mr. Mercado must be held accountable for his actions.”

“Illegally influencing the bidding process for managing wastewater and sewage can significantly endanger public health and safety,” said Randall K. Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Michigan.  “As a public servant charged with protecting Detroit’s residents, these actions are particularly egregious. Today’s sentence sends a clear message that EPA and its partners will prosecute municipal officials that skirt their responsibility to protect those they serve.”

“Public corruption remains a top priority for IRS-Criminal Investigation and this case represents the value of the collaborate efforts of law enforcement to hold those in positions of public trust accountable,” said IRS Acting Special Agent in Charge Carolyn Weber.

From January 2002 to January 2006, Kilpatrick served as Special Administrator over the DWSD. That designation, arising from a federal consent decree resolving a lawsuit alleging federal environmental violations, gave Kilpatrick authority to award DWSD contracts directly with outside parties, bypassing city procurement procedures, and also gave Kilpatrick responsibility over the operation of DWSD's wastewater treatment plant to ensure compliance with environmental standards.

As stated in the plea documents, Kilpatrick used his position as Mayor of Detroit and Special Administrator of DWSD to pressure city contractors to give subcontracts or payments obtained under those contracts to Ferguson, or risk having the contracts delayed, awarded to competitors, or canceled, resulting in economic harm.  Invoking and otherwise exploiting his well-known affiliation with former Mayor Kilpatrick, Ferguson pressured city contractors to hire or pay him for DWSD contracts.

This case was investigation by special agents of the FBI, IRS and EPA-CID and was prosecuted by Assistant United States Attorney Mark Chutkow, Michael Bullotta and Eric Doeh.

 

 

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