For over a year I have written about the inappropriate and politically motivated charges of 9 counts of manslaughter against Nick Lyon, former DHHS director, and others in the Flint Water Crisis by AG Nessel. Former DHS director Jim Haveman sent me an article that appeared in the January 17, 2022 edition of The Guardian. The article brings together important information that further complicates the case and questions the legal approach by AG Nessel and her team. Here are excerpts from the article.
The former criminal prosecution team investigating the Flint water crisis was building a racketeering case against state officials. Then the team was dismantled A team of prosecutors and investigators leading the investigation into the Flint water crisis from 2016 through 2018 were assembling a racketeering case against the architects of a bond deal that residents and experts say sparked the health disaster, sources familiar with the criminal investigation have told the Guardian. The case – which would have come under the Rico (racketeer-influenced and corrupt organizations) laws often used to charge organized crime groups – was widespread and set to implicate additional state officials who played a role in the poisoning of Flint, according to these sources. But when the team was suddenly broken up and the investigation restarted with a new set of investigators, the Rico case never materialized….
The disappearance of the financial fraud charges is significant because the bond deal that allowed the city of Flint to switch its water supply had been heavily investigated by the Schuette-era prosecution. In 2014, Flint needed to borrow nearly $100m to join the proposed Karegnondi Water Authority (KWA), a new regional system that Flint would join as both a customer and part owner. But at the time, the city was broke and at its borrowing limit. A state-issued environmental order allowed the city to get around its debt limit and access $85m in funding, money earmarked for an “environmental calamity” – in this case, the cleanup of a local lime sludge pit. But the prosecution under Schuette alleged that the money supplied by this order for the cleanup was redirected for other purposes instead allowing Flint to issue tens of millions of dollars in bonds to join the KWA.The allegedly fraudulent environmental order also mandated that the city of Flint use the Flint River as its water source while the KWA pipeline was under construction. It outlined tens of millions of dollars in upgrades needed for the city’s water plant so that the plant could safely treat Flint River water for residents to drink. The problem: updates were nowhere near completed when the city switched its water supply to the Flint River in April 2014. In addition, a failure to add proper corrosion control chemicals into the Flint River water supply resulted in lead leaching off Flint’s older pipes and poisoning residents’ drinking water…..
Speaking before a state government committee in 2018, Andy Arena, former director of the FBI’s office in Detroit, said: “We believe there was significant financial fraud that drove this.” Arena was the chief Flint water investigator under the Schuette-era investigation but was dismissed after Nessel took office. After his firing, Arena revealed that his team was within six months of filing significant financial charges, which he described as “dropping a heavy rock”.Sources familiar with the Flint criminal investigation told the Guardian that those impending indictments were to be filed as Rico charges. In modern history, Rico charges have been most commonly – but not always – used against members of the mafia and organized crime syndicates.
Documents obtained by the Guardian further confirm Flood’s investigation was looking into potential bribery and racketeering, crucial cogs of Rico cases. In one petition to subpoena an outside contractor who worked as a KWA project manager, obtained by the Guardian, prosecutors said they had “reasonable cause to believe that corrupt transactions involving certain contractors, the Genesee county drain commissioner’s office, other entities and persons of interest” had occurred. The header of the petition specified that prosecutors were investigating bribery, racketeering and false pretenses. Despite the original investigation’s momentum, the racketeering investigation vanished after Nessel cleaned house and relaunched the inquiry…..
Multiple sources familiar with the investigation noted that if the financial fraud or Rico charges had been filed, the state of Michigan might have faced hundreds of millions in liability over the KWA bond deal – since the attorney general’s office under Schuette ultimately signed off on the allegedly fraudulent administrative order that greenlit Flint to borrow tens of millions to join the KWA. (The order was signed by an assistant attorney general in Schuette’s office.)JPMorgan Chase and Wells Fargo, who along with a third financial firm underwrote the KWA bond deal, could have also faced similar financial penalties for failing to do their due diligence, as outlined in the administrative order that preceded the bond deal, to ensure that necessary upgrades to Flint’s water plant were completed, such that the plant could safely treat Flint River water. In 2020, the banks were sued on behalf of 2,600 Flint children for their “conscience shocking behavior” in financing the deal that led to “dire health consequences to the children of Flint”.
Why Nessel, who stressed justice for Flint as an attorney general hopeful, and the prosecution team she selected, dropped already-filed financial fraud charges against state and city officials is an open question. For many who have extensively followed and studied the Flint water crisis, Nessel’s moves don’t make sense.“I never understood why the attorney general disrupted the initial investigation, dropped the initial charges, or set a different direction in her new charges that chart a course away from the issues of financing the KWA pipeline,” Peter Hammer, a Wayne State law professor who wrote an extensive civil rights report on the Flint water crisis, said. “Her decisions mean that some of the most important questions relating to the crisis – the political and economic forces driving the KWA pipeline – are not being addressed. This adds a new tragedy for the people of Flint, who deserve to know the root causes of their suffering and to hold any financial wrongdoing accountable,” added Hammer.
Here is a link to the full article as it appeared in The Guardian. https://www.theguardian.com/us-news/2022/jan/17/flint-water-poisoning-charges
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