Kwame Kilpatrick: Lifestyle Analysis in Criminal Cases

kwame-kilpatrick-white-collar-crimeIn 2008, former Detroit Mayor Kwame Kilpatrick was charged in state court with 8 felonies related to perjury, misconduct in office, and obstruction of justice. In On September 2008,he pleaded guilty to two felonies for obstruction of justice and was sentenced to four months in the Wayne County Jail and ordered to pay $1 million of restitution to the city of Detroit.

The fun didn’t stop there. Kilpatrick has been accused of hiding money that could be used to pay $855,000 restitution owed to the city of Detroit, stemming from the conviction. Despite claiming poverty and an inability to pay the restitution he owes, money has been magically appearing! Money was transferred to his wife, and Kwame  himself received $4,000 from a mystery source. None of these funds were disclosed to the state by Kilpatrick, despite being required to do so under the conditions of his probation. It is suspected that Kilpatrick has money hidden, and that is the source of the funds.

And to keep things interesting Kilpatrick is currently on trial for federal charges of public corruption. He is alleged to have been involved in racketeering and extortion which netted him hundreds of thousands of dollars personally. Contractors who wanted to do business with the city were allegedly coerced into giving money under the table to Kilpatrick.

How is the government proving the financial portion of the case? It appears to be based on a lifestyle analysis, which the feds are more apt to call the net worth method of proof.  As happens in many cases involving financial crimes such as drug dealing, money laundering, and bribery, the government went through Kilpatrick’s finances with a fine tooth comb.

They looked at his spending, his known sources of income, and found that there was a significant difference. The feds say that while Kilpatrick was mayor, he spent $841,000 more than he earned, according to his income tax returns. There was no explanation for where these funds came from – – no savings depleted, no assets sold, no inheritances or legitimate gifts – – so the assumption is that these funds came from the racketeering and extortion activities.

When you look at the figures that IRS Agent Carl Selz testified to, it’s pretty incredible. He calculated the cash deposits made by Kilpatrick and the personal expenses paid by the Kilpatrick Civic fund, and found the following:

  • In 2003, Kilpatrick reported income of $152,000, but his real income was $230,000
  • In 2004, Kilpatrick reported income of $133,000, but his real income was $194,000
  • In 2005, Kilpatrick reported income of $125,000, but his real income was $201,000
  • In 2006, Kilpatrick reported income of $118,000, but his real income was $217,000
  • In 2007, Kilpatrick reported income of $123,000, but his real income was $219,000
  • In 2008, Kilpatrick reported income of $41,000, but his real income was $291,000

Even with clever subjects, it is possible for a skilled forensic accountant to sort through the financial details and find hidden income and assets.

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6 Comments

  • Melinda says:
    1 February 2013

    Thanks for this article, Tracy! I’ve been following this case closely from day one as the city I live in borders Detroit. I am constantly amazed at how blatantly Kwame breaks the laws and the lengths he will go to to keep the money coming in. I don’t know if you saw the recent stories about the letter his wife, Carlita, sent out recently asking people to donate something like $20,000 so they could send their kids to private schools. It’s unbelievable! My hope is that he will soon be convicted of the federal charges (along with his father and his buddy) and we will never hear of him again.

  • Tracy Coenen says:
    1 February 2013

    Melinda – You’ll hear from him again. He is the kind of criminal who LIVES for the spotlight. You better believe that he thinks he’s invincible and he is enjoying the publicity of this trial.

  • Joel Ungar says:
    1 February 2013

    Tracy – I’m a life long resident of Metro Detroit. Kwame has played off of lingering racial issues for the last ten years to justify his narcissistic behavior and complete disregard for the law. For as much as we thought we knew leading up to this trial, the ongoing revelations still shock even me. Paying $32,000 cash days after getting out of jail for a prepaid lease on an Escalade but then a year later says he can only pay $6 a month towards his restitution. The massive amount of unreported income you detail above. It just doesn’t seem to end.

    Thanks for sharing this aspect of our local nightmare.

  • Melinda says:
    1 February 2013

    Sadly, I know you’re right, Tracy. What blows me away is that I believe that if he were able to run for office again, he would be re-elected by the citizens of Detroit. I am constantly floored by how many people defend this thug. For a real eye opener, check out his FB page. Many people still refer to him as “Mr. Mayor” and even “a man of God”. It’s revolting. I have heard numerous people say (in both interviews on tv and radio as well as in personal discussions) that “everybody steals, Kwame just got caught”. With thinking like that, it’s no wonder that Detroit is in the shape it’s in.

  • Joel Ungar says:
    1 February 2013

    Melinda – you are right on the money. In fact, I think I’ve written Facebook post roughly identical to what you’ve written.

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