Corporatism, GOPocrisy, Michigan Republicans, Rick Snyder — March 25, 2014 at 1:09 pm

BREAKING: The NERD Fund is back – Snyder administration faces charges of nepotism and corruption


“We are on it…”

This morning the Michigan Democratic Party released emails obtained through a FOIA request suggesting that Richard Baird, Governor Rick Snyder’s “Transformation Manager” who was once paid from the New Energy to Reinvent and Diversify (NERD) Fund, intervened on behalf of Governor Snyder’s cousin George Snyder to ensure he was protected from budget cuts in 2011. The NERD Fund has since been shut down by the governor after accusations that its secret donors were obtaining political favors in return for contributions to the multi-million dollar slush fund. CVS Caremark, the only known contributor, received a $60 million no-bid contract with the City of Detroit subsequent to a donation to the fund, for example. The fund’s other donors were never revealed.

The new allegations surround a $19.2 million contract with the state held by Haworth, Inc. to supply office furniture. One of Haworth’s preferred dealers is DBI Interiors. The president of DBI is George Snyder, cousin of Republican Governor Rick Snyder.

On March 13th of 2011, just a month after Gov. Snyder revealed a budget he claimed asked for “shared sacrifice” from Michiganders, George Snyder emailed Baird, asking for assistance with the $19.2 furniture contract that benefitted both Haworth and DBI. Minutes later, Baird forwarded the email to Phyllis Mellon, then Chief Deputy Director of the Michigan Department of Technology, Management, and Budget (DTMB), asking her to call him about it.

Less than two weeks after the email exchange, the Senate passed legislation with the cost-cutting language in place that lessened the value of their contract. Three days after that, on April 29th, George Snyder again emailed Baird saying, “We are very upset and nervous about language in the Senate budget bill on furniture, and advise [sic] on who I can discuss this with. Baird responded to him saying, “[Budget Director] John Nixon’s people are on this. Sit tight.” Baird then immediately forwarded the email to Nixon who responded, “We are on it.”

On May 12th, the state House passed the Senate bill with the cost-cutting language stripped out, a move that significantly benefited Haworth and DBI. On June 21st, Governor Snyder signed the bill into law without the cost-cutting language feared by the Governor’s cousin George, thereby protecting their $19.2 million contract.

Two months later, facing negative press about their contract, George Snyder reached out to Baird again asking for a meeting with incoming DTMB director Phil Jefferies. In that email, he thanks Baird for helping his accountant’s daughter get a job in the Snyder administration. Baird agreed to set up the meeting.

Ironically, just a week and a half after the bill benefitting DBI and Haworth was signed into law, Gov. Snyder signed another bill requiring the state government to make impartial decisions when awarding construction contracts.

Apparently impartiality was not something needed when considering the contract that benefitted his cousin and his business associates. Their connections in the Snyder administration appear to have paid off. A year later, in September of 2012, Haworth’s $19.2 million contract was increased, more than doubled, in fact, to over $41 million. In February of this year, the Snyder administration granted Haworth a 2.6% price increase on furniture sold to the state and extended their contract to February of 2015.

It’s worth noting that Haworth and DBI connected donors have given over $600,000 in contributions to Republican campaigns (including Governor Snyder) and to the Governor’s “Governor’s Club” fund which has raised nearly $1 million since Gov. Snyder took office in 2011.

Another group, Integrated Strategies Inc. also appears to have benefited from a close relationship with then NERD Fund-paid Richard Baird. Around the same time that DBI and Haworth were scheming to preserve their contract amidst cost-cutting efforts by Republicans, Steve Trecha, President and CEO of Integrated Strategies Inc reached out to Baird asking for his help in preventing the rebidding of a contract they had secured. The next day, March 15, 2011, Baird forwarded Trecha’s email on to Budget Director Nixon (Page 1, Page 2) saying, “Per our discussion”.

Four months later, Integrated Strategies was awarded an additional $2.2 million “Supply Chain Transformation” contract with the Michigan Department of Corrections.

Again, it’s worth noting that Trecha donated $750 to Rick Snyder’s campaign before the Supply Chain contract was awarded. After the award, Trecha donated $7,300 to Gov. Snyder and Lt. Gov. Brian Calley’s campaigns.

The Michigan Democratic Party has sent a letter (pdf) to Patrick Miles, Jr., the U.S. Attorney for the Western District of Michigan requesting that he investigate these two matters.

I am legal counsel for the Michigan Democratic Party. I am writing to bring to your attention matters that are of serious concern because they impact the integrity and transparency of our State government. I write to you because I understand that your office has responsibility for investigating potential federal criminal violations. […]

These transactions raise serious questions about how governmental business has been conducted in the Snyder administration. But from the available information it is not clear whether they simply show special treatment by government officials for relatives and favored interests, or whether they are evidence of illegal “pay-to-play” arrangements. A crucial missing element is information about the NERD Fund, the secretive and unreported tax exempt entity that paid Richard Baird’s salary during the period the transactions took place. Disclosure of the NERD Fund’s contributors and expenditures could well answer many questions about how the Governor’s office has conducted its affairs.

As the United States Attorney, you have the authority and responsibility to enforce federal criminal laws designed to combat state and local corruption and “pay-to-play” schemes, including the mail and wire fraud statutes,18 U.S.C. §§ 1341 and 1343 including the honest services amendment, 18 U.S.C. § 1346, the Hobbs Act 18 U.S.C. § 1951, and the program bribery statute, 18 U.S.C. § 666. I understand that initiation of an investigation is a serious undertaking for a federal prosecutor, one that requires at least a reasonable suspicion of potential criminal conduct. While I lack expertise in federal corrupt practices laws, I believe that the evidence discussed above, together with the unknowns surrounding the secretive NERD Fund, reasonably raise questions about the propriety and legality of the actions that have been revealed.

I respectfully ask you to carefully review the enclosed information and to take any action you believe to be appropriate.

Governor Snyder hoped he could quietly shut down the NERD Fund without disclosing his donors and simply move Richard Baird onto his staff with no further conversation. These allegations suggest that may not be the case and raise big questions about how Governor Snyder was calling for shared sacrifice from Michigan residents on one hand then gave corporations a nearly $2 billion tax break and, perhaps, protected his cousin and corporate friends from sharing in that sacrifice on the other.

MDP Chair Lon Johnson issued this statement:

While parents and seniors were being told by the governor they must sacrifice to balance the state’s billion-dollar deficit budget, Rick Snyder’s family and political friends were being taken care of. This scandal reveals hypocrisy reaching directly into the governor’s office and is a serious and disturbing breach of public trust.

Lonnie Scott, executive director of Progress Michigan, took this jab:

Snyder spent 2011 balancing a $1.8 billion tax break for corporations on the backs of seniors, middle class families and school children and now we find out his office was cutting backroom deals to line the pockets of his cousin. We need a governor who works for everyone, not just his wealthy pals and well-connected special interest friends. This information is extremely troubling and we hope the Attorney General will investigate. Perhaps Bill Schuette should’ve invested his time and resources focusing on rooting out corruption, rather than fighting to protect discriminatory policies that continue to keep loving families apart.

Stay tuned. This could get very interesting. And, unfortunately for Governor Snyder, it’s making national news.

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]