Karmanos says loan was for Kilpatrick's resignation

Catherine Jun and Doug Guthrie / The Detroit News

Detroit --Local business leaders agreed to loan former Mayor Kwame Kilpatrick nearly a quarter-million dollars in an attempt to get him to resign, Pete Karmanos Jr., chairman and CEO of Compuware, admitted this afternoon.

Karmanos, who also hired Kilpatrick for a Compuware subsidiary in Texas, said a $240,000 loan was extended to help Kilpatrick -- and the city.

"Together with other concerned citizens, I made a personal loan to former Mayor Kilpatrick last year so that we could encourage him to resign," Karmanos said in a statement. "We were concerned about the city, and we wanted to help care for his family until he could get back on his feet."

Kilpatrick, testifying in Wayne County Circuit Court over his restitution following last year's conviction related to the text message scandal, told Judge David Groner that he got the loan from Karmanos and three other heavy hitters -- Roger Penske, Dan Gilbert and Jim Nicholson -- the day after he got out of the Wayne County Jail. He said he doesn't have to begin repaying it until next year.

Nicholson is president and CEO of PVS Chemicals. Karmanos is CEO of the Compuware Corp. and owner of the Carolina Hurricanes, Plymouth Whalers and Florida Everglades hockey franchises. Penske is owner of Penske Racing, the Penske Corp. and is one of the corporate directors at General Electric. Gilbert is chairman and founder of Rock Financial and Quicken Loans and is owner of the NBA franchise Cleveland Cavaliers.

Groner had asked Kilpatrick questions about the ex-mayor's household finances in today's hearing, which was prompted by Wayne County Prosecutor Kym Worthy's allegations that Kilpatrick has "willfully" failed to meet the terms of his criminal probation stemming from guilty pleas in the infamous text message scandal.

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In questioning, Kilpatrick, dressed in a gray suit with a black-and-white-checkered tie, said he signed a loan agreement on Feb. 4 in Karmanos' home or office agreeing to receive a loan amount of $240,000.

Documents show the $240,000 loan by the four lenders was paid to Kilpatrick in two parts: $150,000 on Feb. 4 and then $90,000 was sent to him in June. Upon questioning, Kilpatrick said he couldn't remember what he did with the $90,000.

Kilpatrick stated that when he received multiple checks on Feb. 4, totaling $150,000, he endorsed and gave them to his wife, Carlita Kilpatrick.

"I just assume that she went ahead and deposited the checks," Kilpatrick said.

Before adjourning, questioning by prosecution suggested that Kilpatrick also may have received a gift of $50,000 from bridge mogul Matty Moroun after Kilpatrick was released from jail. The gift could have been additional financial details Kilpatrick was obligated to report.

Kilpatrick said that it was his wife, Carlita Kilpatrick, and children that received a gift from Moroun. The ex-mayor said it was given while Kilpatrick was jailed and that he did not know the amount.

"Because of the work of your office... there's a whole lot of people who have tried to help my wife and children to be supportive," Kilpatrick said to Wayne County Assistant Prosecutor Athina Siringas.

Phil Frame, a Moroun spokesman , said the billionaire bridge owner did give Carlita Kilpatrick and children a gift of $50,000.

"It wasn't a lump sum," Frame said. "It was individually and equally divided between the three children and his wife. Mr. Moroun has no regrets in doing so. His reasons are spelled out in a letter he sent Carlita."

That letter, dated Jan. 26 -- just days before Kilpatrick was released from jail -- reads in part: "Enclosed, please find a token of my affection for the Kilpatrick family. I trust that these gifts will be received in the spirit in which they are offered: only as my heartfelt encouragement as you move forward together as a family and to NOT be distracted by immediate challenges. ... I regret that the ill-winds of cynical politics have provided additional burdens on your family and it is my hope that your family emerges stronger and better than ever."

On the stand, Kilpatrick appeared at times frustrated and cautious, carefully answering questions about the details of his wife's finances. He was asked on numerous occasions about his wife's employment, now or in the time since his incarceration, which ended Feb. 3. He appeared to know few details.

"I've been through a year, an incredibly revolutionary process in my life," he said. "It's by the grace of God I'm still with her."

He added: "As we work out our issues, there's things that I don't know."

"Whenever there's a liability, there's an asset," Siringas said in court. "This defendant had assets of over $240,000 that were payable to him. The defendant failed to disclose any of those assets to the court in violation of all orders of the court."

As part of a sentence agreement last year, Kilpatrick pleaded guilty to three felony counts related to the text message scandal. He spent 99 days in jail and agreed to pay the city $1 million in restitution during five years of probation.

When asked about his liabilities, Kilpatrick said that he still owed $914,000 in restitution.

Groner's questioning of Kilpatrick today came after Siringas told the courtroom that the prosecution also suspects that Kilpatrick may have committed perjury when he sought reconsideration of his restitution payment earlier this year.

Siringas said Kilpatrick filed a motion via his attorney, Michael Alan Schwartz, for reassessment of his restitution payment through a sworn affidavit. Kilpatrick signed the document on March 24, alluding to having just $6 remaining for restitution after he paid his other living expenses.

"He was required to disclose it ($240,000 in loans) back when he said he had only $6 to live on," Siringas said in court today. "He had $240,000 in assets. He lied about it in an affidavit. He came to the court saying, 'Oh, look at me, I can't live the way I want to live.'"

Siringas said Kilpatrick's statement in the affidavit may have constituted perjury, a criminal offense.

"I wanted to put Mr. Kilpatrick on notice. Mr. Schwartz on notice," she told the court.

Schwartz requested a 10-minute recess to discuss the matter with his client.

"Obviously, this is something that has just been brought to my attention," Schwartz said.

Kilpatrick ultimately took the stand following an argument between Schwartz and Groner regarding whether Kilpatrick was required to take the stand. Schwartz argued Kilpatrick was entitled to exercise his Fifth Amendment right in light of the prosecutor's revelation of possible criminal charges.

Once Groner completed his questioning, Assistant Prosecutor Robert Spada sought to question the ex-mayor about his and his wife's bank records. Statements from five bank accounts show as much as $1,160,374.09 deposited, and as much as $1,140,498.56 withdrawn from October 2008 through earlier this month.

Further, an account in Carlita Kilpatrick's name showed deposits in the amount of $132,515.53 around March.

"I think these are very important," Spada said.

Schwartz objected to the relevance of the documents, saying Kilpatrick's wife has nothing to do with his conviction.

"That's not his bank record, that's the bank record of his wife. He has nothing to do with that," Schwartz said.

That sort of back and forth between the parties began almost immediately at the hearing. Kilpatrick and Schwartz took their seats at the defense table in the hushed courtroom before the hearing started shortly after 1:30 p.m. But as soon as Groner took the bench, he informed the room that he was late because minutes earlier, he received documents from the Wayne County Prosecutor's Office that prosecutors planned on displaying in the courtroom.

He expressed "concern" that private information, such as attorney names and other details, would be revealed in court before they could be reviewed. Schwartz requested they look over the documents in private first. The judge led attorneys into the jury room to review the documents before proceeding. Kilpatrick retreated to the privacy of a side sequestering room.

The prosecution wants to present the documents because they include a key witness that has not yet been publicly disclosed.

After six minutes of closed discussion, Groner and the lawyers emerged. The judge said he was assured by the prosecution that any private information would be properly redacted. The hearing resumed with Kilpatrick raising his right hand, giving the oath, and being asked to take the witness stand.

Kilpatrick's lawyers earlier this month delivered to the judge more than 100 pages of documents. Prosecutors also got authorization for investigative subpoenas for financial records of people alleged to have loaned Kilpatrick money after his release from jail. The investigative targets included Kilpatrick's new employer, Compuware, and his wife.

Groner noted in his first remarks that he has signed a protection order on the 100 pages that were turned in earlier this month, recognizing there would be confidential and privileged information in there that shouldn't be disclosed publicly in this hearing.

Ray Page, an attorney and acquaintance of Kilpatrick, hugged the ex-mayor when he walked in. Adolph Mongo, who describes himself as a political consultant and supporter of the former mayor, was also sitting nearby.

"Never in the history of the county of Wayne have they held this kind of hearing, not for rapists or murderers," Mongo said. "You'd think he was a serial killer."

After the hearing, Mongo called it a "witch hunt."

"Today I saw them retrying the former mayor," Mongo said. "The hearing was supposed to be about restitution. It came out looking like a witch hunt. Especially when you start naming his benefactors and people who helped him. I think the prosecution was playing to the media and trying to embarrass the man."

The burden of the hearing was on prosecutors to show the evidence behind Worthy's claims that Kilpatrick failed to disclose complete information about his financial worth, failed to turn over promised assets including a pension from his years as a member of the Michigan House of Representatives, and improperly cut his monthly $6,000 restitution payments in half. She has implied that Kilpatrick may be misleading authorities about his true financial worth.

Probation workers from the Michigan Department of Corrections compiled an assessment of Kilpatrick's ability to pay restitution based on details Kilpatrick previously provided. Groner had ordered Kilpatrick to disclose additional finances, including holdings in his wife's name and the values of political trusts and foundations. Much of this remains confidential.

Worthy also has a huge cache of text messages sent and received by Kilpatrick and his associates that may have information on financial dealings while Kilpatrick was mayor. Although thousands of the messages have been made public, Worthy's complete collection includes more than 600,000 texts.

Ultimately, the hearing concluded just as the prosecution's questioning of Kilpatrick became heated. Groner set Nov. 17 for the hearing to continue.

Staff writers Mike Wilkinson and Charlie LeDuff contributed to this report.

dguthrie@detnews.com (313) 222-2548