Detroit suspends contractor accused of illegally billing city for $1M in dirt
Detroit's Office of the Inspector General is temporarily suspending a contractor accused of fraudulently billing the city for backfill dirt.
Den-Man Contractors, owner David Holman and any companies he has ownership or financial interest in will not be awarded any city contracts until the Detroit Inspector General completes an investigation. The company will be suspended for 90 days starting April 27, or until Inspector General Ellen Ha makes a final determination of whether to debar the contractor.
The company is alleged to have billed Detroit more than $1 million for backfill dirt obtained at no cost from environmentally contaminated sources and then used at demolished properties. Michigan Attorney General Dana Nessel's Office issued criminal enterprise and false pretense charges against the company and former employee David MacDonald on Tuesday.
More: Nessel's office charges contractor with falsely billing Detroit $1M for demolition program
MacDonald was employed at Den-Man in 2017 to lead the company’s demolition program. His responsibilities included securing backfill dirt, to be used at properties, from approved sources pursuant to city contracts. The contracts also authorized the company to be reimbursed for the price of the dirt.
MacDonald claimed to have paid for the dirt that was obtained at no cost, falsified documents that identified the source of the dirt and charged the city and Detroit Land Bank Authority for incorrect fees, according to Nessel's office. Den-Man received $1,148,513.61 for reimbursement for backfill material without incurring those costs.
More: Detroit Land Bank agrees to pay $1.5M to settle federal investigation
The inspector general's office, in a news release, said Holman’s lack of oversight allowed MacDonald to engage in the alleged criminal behavior.
"Because of the actions taken by Mr. MacDonald as well as the actions not taken by Mr. Holman may pose health and safety issues to the residents in the City of Detroit, the City is now having to pay large sums of money to test the environmental quality of the backfill used at the properties filled with unapproved dirt sources," according to a news release.
Den-Man Contractors was not immediately available for comment. Efforts to reach MacDonald this week have been unsuccessful.
Den-Man and Holman are suspended from eligibility for any city contracts and are barred from serving as a “subcontractor or as a goods, services, or materials supplier for any contract," according to the city's debarment ordinance.
The inspector general has the authority to issue three 30-day suspension periods in addition to the 90-day suspension. Inspector General Ha has the authority to debar contractors from working with the city but companies can appeal those decisions.
The city in June 2022 also ordered Den-Man to replace the backfill material it used at seven residential demolition sites after testing revealed it did not meet the city’s contractual requirements or the Michigan Department of Environment, Great Lakes, and Energy Generic Residential Cleanup criteria.
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) also participated in the investigation.
Dana Afana is the Detroit city hall reporter for the Free Press. Contact Dana: dafana@freepress.com or 313-635-3491. Follow her on Twitter: @DanaAfana
This article originally appeared on Detroit Free Press: Detroit suspends contractor accused of illegally billing city for dirt
