Executive Embezzlement in Ludington: Obvious Overbilling

[XLFD]

This is a sad story of intrigue involving Ludington's City Attorneys from Manistee and Grand Rapids and their associate, Ludington's City Manager John Shay, an import from a small southeastern Michigan town called Almont where he served as Village Manager. 

Regular readers of this website will be familiar with both entities and their inability to properly serve the residents of Ludington and to observe the laws of our city, our state, and even our nation.  They have refused to follow rules of public disclosure of their records, disobeyed the Open Meetings Act, actively refuse to swear an oath of office, and have passed laws and policies that violate the rights of the people and their duty to respect them. 

Briefly stated, City Attorney Richard Wilson submitted invoices for legal services to the city for three full years, where he and his fellow attorney George Saylor overbilled their negotiated rate with the city, which was agreed to each year on their contract.  City Manager John Shay rubber stamped and signed each of these 38 invoices, even when the rate was $135 per hour more than they agreed to.  But this wasn't even the worst of the graft and corruption, however, it is the most obvious to illustrate and easiest to explain. 

This short video was from the November 24, 2014 meeting and includes an admission by the City Attorney, an apology, and then an attempt at justifying why it happened.   The show starts at 2:15 in, and the transcript follows.

November 24 2014 Ludington City Council PART II from Mason County District Library on Vimeo.

Part 1:  Admission and Apologies

"Mr. Rotta at the last couple of meetings has, aah, brings questions about my firm's billings with the city, which has prompted Mr. Shay's office and my accounting department in Grand Rapids to review those and I believe Mr. Shay sent a spreadsheet out earlier. 

There were some instances of overbilling there were also instances of underbilling, aah, I'm not sure why, uh, I have a couple of ideas... but the point is, is that we have determined that there was a net overbilling over the last two or three years of about $1400, and that will be credited to the city in the October invoice that we have been holding until we could go over the invoices, uh, those have been reviewed, aah, both by my accounting staff, uh, and the city's, uh, I'm not sure whether Mr. Shay did all that work himself or with Jackie, but anyway we have looked those over and like I said, there has been some underbillings there's been some overbillings.

I'm going to try and work with my accounting department to make sure it doesn't happen again, and I certainly apologize to everyone on the city council, um, but the full amount of the credit will be given as $1411.50 I believe is what it turned out to be... on this month's invoice.  So... if there's any questions on that, I'm happy to answer them."

To refresh Mr. Wilson's memory, I brought this up at this meeting and the previous three meetings, which isn't very exacting for him when he says "couple" which indicates two, not four meetings.  Perhaps this explains his problem with accounting numbers.

Wilson does address the overbilling issue, to his credit, and also admits to under-billing, which also occurred due to the generous agreement the City of Ludington has with their attorneys.   Fortunately, we are told his billing staff and City Manager Shay have reviewed the ledger and found the overage. 

Unfortunately, these are the two entities that conspired on this overbilling scheme for over three years.  He also failed to address the issue regarding the city funneling money to Richard Wilson to pay a business the City of Ludington has never agreed to support.  City Manager John Shay sat mute on the subject for the fourth time, yet was the only one to sign the invoices.  His contract is scheduled to be voted on at tonight's council meeting, here are his initialized signatures on the 38 invoices that were overbilled.

A good attorney will tell you not to volunteer information when you are being investigated, even when the guy leading the charges is a simple, indigent man from Dowland Street.  And particularly when your own records don't support you. 

Richard Wilson should have listened to those good attorneys he brushes shoulders with at the Mika Meyers firm, attorneys he has helped overbill the taxpayers of Ludington to pay an unlawful rate.  Instead he continued his narrative to offer an implausible defense tactic of deceit...

Part 2:  Tallies and Tall Tales

"But, unh, here's what I think is happening... is, since when I joined Mika, Myers, uhhh, I don't bill by dollars and cents and not by numbers, so I have a two billing rate, which converts to dollars obviously, I have a number three billing rate, I have a number four billing rate, aah, say I bill the cities on my number two rate, OK. 

If one of the other attorneys at Mika Myers bills for work done on behalf of the city, the computer automatically puts that in at their number two rate.  But their number two rate is not the same as my number two rate.

Some attorneys number two rate is less than mine, some, it's more than mine, and uhh... I think that's where that's happened.  We'll make sure that that doesn't happen in the future..."

With just minor revisions, the city attorney agreement with the City Attorney law firm has been standard, even when the Gockerman, Wilson, Saylor and Hesslin PC's were assimilated by Mika Myers.  This is reproduced below and is publicly available here on p 9,10 for the current year.  It should be noted that at the council meeting Wilson added a $20 special work raise while striking off any criminal attorney work just before the raise and change were voted on.  Less work for more money-- to a lawyer, and seven Ludington city councilors, it makes sense.

The attorneys get a sizable retainer each month ($4250) which covers the basic work of the attorney:  attending two city council meetings each month plus possibly 1 or 2 other board meetings as necessary, advising city officers on general legal matters that come up, and preparing general legal documents.  They were also allowed to charge $185 per hour for special projects between the years 2011 and 2013 inclusive. 

They should not be charging the special rate for actions covered by the generous retainer, and as per the contract; the city must pay $185 per hour for each special project, no matter which employee at the law firm performs the work.  Thus, legal secretaries, law clerks, paralegals, and other legal support staff that normally charge under $100 per hour for services could get the $185 rate with this agreement if the law firm utilized them on special projects. 

These parts of the contract will be looked at in full to how that the law firm has drastically overbilled the Ludington taxpayers by many thousands of dollars in a Ludington Torch thread to come out before the December 15 council meeting where the city attorney's future with Ludington will be decided.  For now, we shall only focus on Richard Wilson's statements at this meeting. 

A little history.  About five years ago, the City of Ludington hired the Manistee firm of Gockerman, Wilson, Saylor, and Hesslin (GWSH) from Manistee and have rehired them yearly since.  On April 29, 2013, both GWSH and Mika Meyers, Beckett & Jones (MMBJ) announced they would join forces effective May 1, 2013.  GWSH effectively merged into the much larger MMBJ firm, and the billing records since that time reflect some participation by additional attorneys in special projects on the MMBJ letterhead. 

Richard Wilson suggests that the switch of billing 'computers' and billing methods led to the rash of overbillings that popped up, explains it so as to make it somewhat believable.  But if we accept this explanation, the two and a half years before the juncture of May 1, 2013 should not have mistakes.  But this is far from the case.

The first invoice from January 2011 is perhaps most representative of this, where Richard M. Wilson (RMW), failed judicial candidate George V. Saylor (GVS), and Kate Glancy (KEG) are paid anything but $185 an hour.  The two men get the $195 rate throughout, whether it is

In case you are curious, the FOIA request that took 1.5 hours of RMW's time (and nearly $300 of your money) was a simple request to inspect all ordinances passed since 1992 that raised the mayor's annual salary from $300 to $4800 and the councilor's from $50 to $3600.  Something that should have been available in the city's code of ordinances was effectively denied because the city asked for $114.51 because it took the city clerk three hours to locate the one ordinance that was never added to the available city code and should have been.  Honorable city officials would have been ashamed that their record keeping in the electronic age was so deplorable. 

The January 2012 invoice had the three attorneys getting the same rates, just like they did for the intervening months of 2011.  You will note the cash they are getting here unlawfully is for the FOIA lawsuit we filed which was in the discovery phase.  KEG was charging less ($135) because she was basically a paralegal and assistant attorney at these points.  The image below shows that Wilson didn't charge the City for his E-mail to Saylor asking if he made anybody cry that day, though it does show that Saylor charged the taxpayers at least $400 for him being at a deposition where the plaintiff didn't show because they had a motion to quash deposition timely filed with the court and with Saylor:

Let's forward to their last GWSH invoice dated 4-30-2013, which has RMW doing a lot of work at $195 still, just like the previous 28 months. 

You know, it would be interesting to see all those 4-29-2013 E-mails and the opinion by MMRMA Attorney VanderLaan on the old WSP.  And even though they merged into Mika Meyers (MMBJ) on May 1st, we find that the remainder of 2013 had attorneys still getting that $195 rate or better, this one from 11-22-2013 shows that they now are giving the attorneys from MMBJ that rate such as DAD and RMR. 

And let's not forget that Saylor merited a $340 rate for preparing documents whose purpose was only to harass the FOIA plaintiffs with ridiculous cost determinations; plaintiffs who were deemed the prevailers in their case on appeal. 

Richard M Wilson claims the #2 rate happens to be different for all the attorneys at MMBJ, however, each of the attorneys (except for an occasional leap up to $330) who were used by Ludington for special projects from MMBJ were granted the $195/hour rate, which went against our contract with them. 

Here's a few examples of the contract violators (those paralegals that charged less than $185 are not pictured, primarily because they don't have the experience to rate a picture at MMBJ).  Look at all these Grand Rapids lawyers representing the interests of a city located one hundred miles away and charging more than they should.  Don't you love paying them $195/ hour to come up here and represent 'Ludington', then drive back?  You must; you tip them at least $10 an hour:

Photo not available

Photo not available.

[Willy]

Wow. Well done X. It is amusing that Wilson brings up "under charging". The only way the citizens of ludington will discover how much overpayment Wilson's firm received is through an independent audit performed by an outside accountant, one who is not friendly with Ludington's good ol boy club. Having Shay and Wilson checking things out is like having the wolves count the sheep. Just think, this could have been going on unnoticed for a lot more years if you had not been a concerned citizen. It makes one think that if this is going on with the City Attorney then where else is there this kind of funny business going on in City Government.

[XLFD]

Thanks a lot Willy, and of course, at the Ludington City Council meeting this night the topic was once again brought up with extra meat in the only public comment not involving pickleball courts.  The City Manager contract for 2015 was unanimously passed with a 6-0 vote (Holman was absent) without any sort of negative comment from the council about John Shay, only gushes. 

Councilor Winczewski showed her general ignorance (because Holman wasn't there?!) of the city manager's relationship to the council.  You'll enjoy the video once it comes out for entertainment value, but the mirth will be tempered by knowing what they are doing is unlawful, inefficient, and fully appeasing bad behavior.

[stump]

When it's a attorney embezzles money from the city it's not his fault? It doesn't even get a second though? OH, I'm sorry [ that you caught those over charges ] will do. Bull crap. If an average joe miss billed the city it would be front page news with prosecutor Paul taking it to the limit

[XLFD]

 Remember all the hubbub about the petunia lady and her embezzlement of nearly $50,000.  I believe that if all the overcharges, all the non-contracted charges, and all the fraudulent charges are added together in the three years plus of the cozy city attorney-city manager relationship you would get tens of thousands taken from the City of Ludington by these two acting in cooperation.  She got six months in jail, four upfront. 

I wonder if current city employee and circuit-court-judge-elect Susan Sniegowski would recuse herself if these scofflaws would be taken to her court?  Not that official-friendly Paul Spaniola would ever do it.

[Willy]

Where is the over-site when it comes to Shay and what he is doing? Who checks to see if he is on the straight and narrow ? There seems to be no checks and balances when it comes to Ludington's City Manager. The Mayor and City Council are clueless about what Shay is doing except when it comes to what Shay wants them to know. This blind loyalty to Shay is very disturbing especially if large amounts of money cannot be adequately or reasonably accounted for. Does the City of Ludington have a bookkeeper on staff to oversee where and who the money goes to. I know the Treasurer collects the money but do they require a paper trail when the money is released to City officials? 

[XLFD]

Just wait until you see the comment by Councilor Winczewski saying Shay keeps the councilors in line. 

Maybe in the future a police line-up?  It was earlier proclaimed proudly at a meeting that they have two people look and sign the invoices for public expenditures-- believe it or not, they were lying.  All 38 of these invoices only had John Shay sign them, and nobody's looking over the fox-- Shay gets as much accolades from the city officials as serial police brutalist Aaron Sailor, for similar reasons.

[AQUAMAN]

Congrats goes out to freshman Kathy W.: you get the distinguished award of "brown-noser of the year" plaque. I'm sure Shay will gladly make a power point presentation for that award at the New Year. Note: (enabling and praising City Officials' corruption and illegal activities puts that person in the position of a likely conspiracy), just fyi Kathy dear...lol. You may want to consider following Wanda soon, before you get in over your head!