Sources reveal that a probe into the actions of a Houston-based industrial waste-handling firm is focusing on several Detroit politicians, including former mayor Kwame Kilpatrick. Others mentioned to the Detroit Free Press were Bernard Kilpatrick, Kwame’s father, and Monica Conyers, the president of the Detroit City Council and the wife of Rep. John Conyers (D-MI). Sources say that there is still little direct evidence that Synagro Technologies gave any bribes to city council members in order to win a $1.2 billion contract with the city. (Detroit Free Press)
Hartford mayor Eddie Perez was arrested on Tuesday for bribery related to the renovation of his home. Perez allegedly used a city contractor to do $40,000 worth of renovations to his kitchen and bathroom and only paid $20,000 for it even after investigators started asking questions. The contractor, Carlos Costa, had previously held a $5 million streetscape contract with the city. (Associated Press)
American International Group, the troubled insurance giant that has seen eye-popping losses and was essentially nationalized in September, has announced that it will pay bonuses to employees of a division that sold credit default swaps for the company. These are the same risky financial products that caused the insurer’s staggering losses. According to an expert, it is possible that AIG is contractually obliged to pay bonuses to its employees. This illuminates a shortcoming of the government’s TARP program, of which AIG has been the largest recipient. (Associated Press)
In other AIG-related news, a former executive of the company was sentenced to four years in prison for a fraud that cost shareholders more than $500 million. Christian Milton was convicted of conspiracy, securities fraud, mail fraud and making false statements to the SEC, all of which related to a complicated reinsurance scheme that would falsely pad the company’s losses by $500 million. The fraud took place in 2000 and 2001, long before the company’s current troubles. (Associated Press)
Authorities are investigating a growing number of Ponzi schemes similar to, though smaller than, the one allegedly ran by Bernard Madoff. The Wall Street Journal reports (sub. req.) that at least six suspected multimillion dollar fraud cases have come to light this month. The New York Times explains that frauds are coming apart as hard times cause investors to withdraw their money from investments and lack of market confidence makes it harder to find new investors. (Wall Street Journal, New York Times)
The ACLU has made a request to the Obama administration to release documents from the Bush era that justified spying and interrogation programs. Now that President Obama has rescinded a 2001 directive that provided the legal grounding for rejecting disclosure requests, public interest groups believe they have a better shot at getting access to such documents. (McClatchy)
