Nessel's office charges contractor with falsely billing Detroit $1M for demolition program

Michigan Attorney General Dana Nessel's office issued charges against a demolition contractor accused of fraudulently billing the city of Detroit for backfill dirt.

Howell resident David MacDonald, 50, who was employed by Warren-based Den-Man in 2017, is facing criminal enterprise and 11 false pretense charges for billing Detroit more than $1 million for dirt obtained at no cost from environmentally contaminated sources and then used at demolished properties, according to Nessel's office.

MacDonald was employed by Den-Man Contractors to lead the demolition program. His duty was to find backfill dirt for demolition sites that the city paid Den-Man to handle. The contract required Den-Man to find dirt from approved sources and the company was entitled to bill the city for the price of the dirt, according to Nessel's office.

MacDonald lied about the source of the dirt and billed the Detroit Land Bank Authority for incorrect fees, according to a news release. 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

Den-Man Contractors did not respond to a request for comment but said in an email that MacDonald has not been employed at the company since 2018. Efforts to reach MacDonald on Tuesday were unsuccessful.

“These crimes, a scam against the people of Detroit and abuse of public funds, amount to public harm for private greed,” Nessel said in a statement. “We have a responsibility to protect public funds from abuse, and to protect already vulnerable neighborhoods from environmental attacks."

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) conducted the investigation. The federal agency is tasked with preventing and detecting fraud, waste and abuse in the federal funds appropriated by Congress through the Emergency Economic Stabilization Act and the Consolidated Appropriations Act of 2016.

“This investigation stems from the reviews of the Detroit (Hardest Hit Fund), to ensure that backfill dirt used by contractors complies with the program requirements,” said Melissa Bruce, principal deputy inspector general for SIGTARP, in a statement. “The requirements by contractors to use safe and approved backfill materials and substantiate backfill costs are critical to ensuring TARP funds are properly spent for the public’s safety and program requirements in Detroit.”

The sites will need to undergo testing for environmental quality, according to a news release.

In June 2022, the city ordered Den-Man to replace the fill 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 for direct contact. The city also required the company to test or replace material on an additional 127 sites of demolition it conducted as part of the city’s demolition program.

Additionally, the Detroit Land Bank sent its own corrective action letter to Den-Man ordering immediate testing or replacement of backfill at 57 demolitions it conducted for the Land Bank. Samples were taken from eight sites, which complied with EGLE Generic Residential Cleanup Criteria requirements but did not meet the quality requirements under its contracts with the Land Bank.

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: Dana Nessel charges contractor in $1M fraudulent bill to Detroit