The indictment charges BOBBY W. FERGUSON with obtaining millions of dollars in public works contracts through fraud, false statements and bid collusion. Those offenses took place as part the Garden View Estates project, a mixed use multiunit public housing development located at the site of the former Herman Gardens in Detroit, Michigan.
BOBBY W. FERGUSON, MICHAEL WOODHOUSE, CALVIN L. HALL, FERGUSON ENTERPRISES, INC. and XCEL Construction Services, Inc. are charged with conspiracy to commit mail fraud and conspiracy to defraud the United States. That activity included preparing and submitting a proposal and other materials for XCEL Construction Services, Inc. which contained materially false information concerning the ownership and key employees of XCEL Construction Services, Inc. After XCEL Construction Services, Inc. obtained the $11.7 million contract to act as Construction Manager for the infrastructure installation phase of the Garden View Estates, BOBBY W. FERGUSON illegally steered the primary contract to perform more than $9 million in demolition, earthwork and utilities work to another one of his companies called Ferguson Enterprises, Inc.
The selection of Ferguson Enterprises, Inc. by XCEL Construction Services was falsely represented to have been the result of a “competitive” bidding process when, in fact, both companies were controlled by BOBBY W. FERGUSON. In addition, BOBBY W. FERGUSON is charged with recruiting and directing the owners of two other Michigan companies to submit false and fraudulently inflated bids to ensure that the bid submitted by Ferguson Enterprises, Inc., which was itself inflated, would appear to be the low bid for the demolition, earthwork and utilities work at the Garden View Estates project.
The indictment also charges BOBBY W. FERGUSON, MICHAEL WOODHOUSE, CALVIN L. HALL and XCEL Construction Services, Inc. with conspiracy to launder millions of dollars in criminal proceeds through bank accounts of XCEL Construction Services, Inc. That activity included the withdrawal of hundreds of thousands of dollars in U.S. currency from accounts at First Independence Bank in Detroit, Michigan. In addition, BOBBY W. FERGUSON and SHAKIB DERIA are charged with conspiracy to violate the Bank Secrecy Act which requires banks to file Currency Transaction Reports any time a customer withdraws more than $10,000.00 in cash. To avoid that requirement, BOBBY W. FERGUSON and SHAKIB DERIA made nineteen sequential withdrawals of $9,500.00 each in order to obtain $171,000.00 in cash from the bank account of another of Ferguson’s companies called A & F Environmental/Johnson Construction Services.
The indictment also charges BOBBY W. FERGUSON, Michael Woodhouse, Ferguson Enterprises, Inc. and XCEL Construction Services, Inc. with conspiracy to willfully injure property of the United States. Those charges arise from Ferguson Enterprises, Inc. improperly dumping tens of thousands of cubic yards of construction debris, soil and excavated materials at the Garden View Estates site. The subject construction debris, soil and excavated material was generated at unrelated job sites Ferguson Enterprises, Inc. was performing for the Detroit Water and Sewerage Department at locations in and around
Detroit, Michigan. Instead of properly disposing of those materials as required by law, BOBBY FERGUSON and Ferguson Enterprises, Inc. avoided hundreds of thousands of dollars in disposal fees and instead dumped multiple truckloads of excavated soil, construction debris and other materials at the Garden View Estates site. Preliminary estimates indicate that it will cost the Department of Housing and Urban Development more than $1,200,000.00 to remove and properly dispose of the thousand of yards of soil and debris and to clean up sections of the Garden View Estate site which are now contaminated. Although XCEL Construction Services was paid more than $500,000.00 in public money to act as the Construction Manager for the Garden View Estates site, because that company was controlled by BOBBY W. FERGUSON, it failed to monitor or prevent the illegal dumping activities by Ferguson Enterprises, Inc.
The indictment also charges BOBBY W. FERGUSON with being a felon in possession of firearms. Those charges arise from two semi automatic pistols that were found during a search conducted by federal agents of the private office of BOBBY W. FERGUSON at Ferguson Enterprises, Inc., 14385 Wyoming, Detroit, Michigan.
Finally, the indictment charges BOBBY W. FERGUSON and SHAKIB DERIA with conspiracy to obstruct justice for providing false information to federal agents following the discovery of one of the firearms, a loaded Bryco .380 caliber pistol, that was found in a safe adjacent to Ferguson’s desk in his office at Ferguson Enterprises, Inc.
In announcing the charges unsealed today, U.S. Attorney McQuade, stated, "The unsealing of this indictment marks a decisive step to end the era of fraud and corruption in publicly funded projects in the City of Detroit. Misuse of funds meant to provide safe and affordable public housing is simply intolerable."
Ms. McQuade continued, "We will use all available legal means to ensure that these defendants, and not the taxpayers, pay to correct and clean up the Garden View Estates project."
Andrew Arena, Special Agent in Charge, Federal Bureau of Investigation said, "This indictment and the associated charges are part of the continuing investigation into the corruption and fraud that has long plagued the City of Detroit," said Special Agent in Charge Arena. "The FBI, with our law enforcement partners, will continue to investigate and expose the individuals who participate in these schemes involving blatant greed."
Special Agent Breck Nowlin, HUD-OIG stated, “Hard working, law abiding citizens are no longer willing to tolerate those who use deceit and fraud to line their pockets off programs designed to help and improve the community, like the HUD Hope VI program. These charges should serve as notice that law enforcement and the United States Attorney's Office will protect those who so desperately need assistance and bring to justice those who look to get rich at their expense and the expense of the public.”
“The defendants’ illegal disposal practices created an unacceptable condition for future residents of the Garden View Estates which now has to be remediated at the expense of the taxpayers" said Randall K. Ashe, Special Agent in Charge of EPA’s Office of Criminal Enforcement for the Michigan region. "These charges demonstrate our commitment to prosecute violators who damage the environment and at the same time endanger the public. This manner of 'doing business' is both dangerous and criminal and will not be tolerated.”
"The Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) is pleased to join our law enforcement colleagues in announcing these charges today,” said Jon T. Rymer, Inspector General, FDIC. “The FDIC OIG is committed to investigating these financial fraud schemes and protecting the institutions and the public from the financial damages that they cause. The American people need to be assured that their government is working to ensure integrity in the financial services industry and that those involved in criminal activities that undermine that integrity will be held accountable."
BOBBY W. FERGUSON faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of over $2.5 million.
MICHAEL WOODHOUSE faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of over $2.5 million.
CALVIN L. HALL faces a statutory maximum penalty of up to 20 years in prison on the most serious charges contained in the indictment and fines of over $2.5 million.
The subject charges returned against SHAKIB DERIA carry total penalties of up to 10 years in prison and fines of over $500,000.00.
Defendants Ferguson Enterprises, Inc., XCEL Construction Services, Inc. and A & F Environmental/Johnson Construction Services each face corporate fines that could range between $1,000,000.00 and more than $10,000,000.00.
The case was investigated by agents of the FBI, HUD-OIG, EPA-CID, and FDICOIG.