Detroit, Flint contractors charged with defrauding federal demolition program
Two men are charged with defrauding a federal program for contractors doing demolitions in financially hard-hit areas of Michigan, including Detroit and Flint, state prosecutors announced.
David Gillespie, 34, of Detroit, and David Holman, 48, of Metamora, in Lapeer County, are charged in separate schemes involving the Troubled Asset Relief Program, the Michigan Attorney General's Office announced Thursday.
Attorneys for both men told the Free Press on Friday their clients are fighting the allegations.
State prosecutors allege Gillespie's company, Detroit Environmental Solutions, purported to be a distinct entity from another business, BBEK Environmental, to satisfy TARP requirements. Under the law, demolition contracts procured by BBEK needed air quality monitoring to be conducted by an independent, third-party business.
They said that was a critical requirement when dealing with asbestos and other harmful particles. Prosecutors allege the business was funded by and operated by principals of BBEK, and the intent was to keep air testing expenses within the scope of revenue for BBEK.
City takes action
After the charges were announced Thursday, the city of Detroit's Office of Inspector General issued a statement on the interim suspension of Detroit Environmental Solutions, Gillespie and any companies they have ownership or financial interest in from conducting business with the city and not awarding them any city contracts pending the city office's investigation.
The interim suspension is for 90 days or until the city inspector general makes a final determination. Gillespie and the company also are precluded from serving as a "subcontractor or as a goods, services, or materials supplier for any contract" for the city, per the statement.
Jim Makowski, Gillespie's attorney, said "we've been cooperating with investigators for months" and said the criminal charges were "kind of a kick in the teeth."
"We are going to vigorously defend this. We don't believe my client has done anything wrong," Makowski said. "No one is ever claiming he didn't do the work. They're claiming there's a problem with corporate structure."
Gillespie is charged with one count each of conducting a criminal enterprise and lying to a police officer and three counts of false pretenses in varying dollar amounts from as low as $20,000 to more than $100,000. His case is filed in 67th District Court in Flint. No hearing dates were set Friday.
Second case involves dirt fraud
In a separate case, Holman is accused of fraudulently billing TARP and the city of Detroit more than $1 million for dirt used to fill demolition sites that his company, Den-Man Contractors, obtained for free from prohibited or unknown sources, according to the state Attorney General's Office release.
Holman is accused of knowing the backfill material violated terms of his multiple city contracts and didn't do any testing to ensure the material was not contaminated. The city has incurred more than $3.5 million in costs to test the sites where Den-Man Contractors' prohibited-source dirt was used, state prosecutors said.
They said 87 properties failed testing standards for contaminants and 51 residential properties remain untested. Den-Man Contractors is based in Warren.
"Mr. Holman adamantly denies that he committed the crimes alleged in the Attorney General's complaint. He looks forward to presenting his case in a court of law and restoring his good name," according to a statement from SBBL Law in Grand Rapids, which is representing Holman.
Holman is charged with one count of conducting a criminal enterprise and 11 counts of false pretenses, with dollar amounts varying from $1,000 to more than $100,000. His case is filed in 36th District Court in Detroit. No hearing dates were set Friday.
"Criminal enterprises target public funding programs, where hundreds of thousands, or even millions, of dollars are awarded in contracts to fulfill public work," Michigan Attorney General Dana Nessel said in the release. "We must vigilantly defend public funds from abuse and criminal greed, especially when those crimes impact public health and safety."
In April, Detroit's Office of the Inspector General temporarily suspended Holman, his business and any companies he has ownership or financial interest in because of the accusations. The suspension was to be for 90 days or until the city's inspector general determined whether to debar the contractor.
At that time, Nessel's office also issued criminal enterprise and false pretense charges against one of Den-Man's former employees, David MacDonald, who was employed there in 2017 to lead the company’s demolition program. His responsibilities included securing backfill dirt from approved sources, according to prior Free Press reporting.
In May, Holman and Den-Man Contractors sued the city's Office of the Inspector General in response to the temporary suspension.
Contact Christina Hall: chall@freepress.com. Follow her on X, formerly Twitter: @challreporter.
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This article originally appeared on Detroit Free Press: Detroit, Flint contractors charged with defrauding TARP program
