Fraud, Facades, Faeries, and Feigned Foolishness in Grantgate

[XLFD]

It behooves you to read this article as a bit of background on this subject, but you may perhaps skip it if you listen to the video starting with the comments at the June 8, 2015 Ludington city council meeting's public hearing on façade grants, starting about 14 minutes into the video, and read what is basically alleged summarized here:

1) The city manager prepared an application for façade grants (likely with generous help from Heather Venzke Tykoski, the Community Development Director hip deep in other shady procurement issues).  This application was for two businesses wanting façade grants, one of which is co-ran by the treasurer of the DDA (and President of the Ludington/Scottville Chamber of Commerce Kathy Maclean, pictured left).

2)  In the application, two questions pertain to disclosing any sort of ties the grantees may have with the local unit of government set to administer the grant.  The application fails to do this by saying no city official or their family members are involved. 

3)  The application further says there is a $1000 contribution from the DDA to the treasurer of the DDA, a contribution which she would have to explicitly approve.  There is no indication in the budget or the DDA minutes of the last two years that this contribution has been approved by the DDA, with her abstention and notification to the DDA that she will benefit greatly from the grant.

4)  KDMAC's own pre-application and application, likely signed by her husband and not yet available, also failed to note these facts of association, for then the grant application would have noted that admission.  Their application also officially claims they are not meeting their obligations for their $100,000+ rental rehab grants they received throughout 2010 and 2011.  Both Shay and Maclean state they have no renters in their four upstairs apartments, nor are they advertising them anywhere, especially at the state site.  They must do this to be compliant with state rules.

With that in mind as a base, let's take a look at how the Ludington leadership handled the revelations that Shay, Maclean, and Tykoski (Councilor Tykoski's wife) were engaged in fraud and deceit in their filling out of applications.

After he closes the public hearing after I spoke, the mayor makes the motion to approve the application for façade grants, and opens the floor up to discussion at 19:20 into the video.  With the current council's apathy for doing things lawfully, I figured they might just vote this fraudulent application through without discussion, but they didn't.  The transcript of the majority of the discussion follows, with some annotations in RED.

June 8, 2015, Ludington City Council from Mason County District Library on Vimeo.

Councilor Holman:  Your Honor, are we going to separate these our are we voting on both of them at the same time.

City Manager Shay:  I do want to make a note here, because there were some allegations, baseless allegations by Mr. Rotta that Kathy expends funds, she writes the checks for the DDA and so forth, that is not true.  All the expenditures for the DDA actually go through the DDA budget, which is a portion of the city's budget, and that goes through our accounts payable portion that our city clerk oversees and it's something that the Finance Committee also reviews in terms of payments, bills, as well.  [How Clintonian!  Her position requires her to approve every single voucher to be paid by the DDA, so what if she doesn't physically write the checks] 

So Kathy Maclean does not have this checkbook that she writes out checks for DDA purchases at all.  It all goes through the City accounts payable section that is overseen by the entire DDA Board.  Any expenditures that they want to make is also, then goes through the accounts payable portion, and is reviewed by the Finance Committee as well as the city council.  [Note, the $1000 has never been approved by the DDA Board, at least in open session which it must be, to be set aside for this purpose.]

Councilor Holman:  And I am the chairman of the Finance Committee.

CM Shay:  That is correct.  [...and a very vigilant one-- ha, ha]

Councilor Johnson:  John, can I?  Is Kathy even considered a city official?  [Background:  Les Johnson served on the DDA Board as secretary for many years before becoming a city councilor and did both jobs for a few years.  Never did he note in his minutes when any DDA Board member would be financially benefitting from the DDA's decisions, including the yearly influx his party store got for selling liquor at various city functions such as NYE Ball Drop, FNL and Oktoberfest.  The answer to his question is obvious, but when your city manager doesn't swear an oath and your mayor swears an oath as a police officer and mayor at the same time, faeries and unicorns are possible.]

CM Shay:  I didn't, I mean, I didn't consider her a city official.  She's the Treasurer on the DDA Board, and when we have our monthly DDA meetings, the city prepares a report of the expenditures the DDA has spent and then she simply summarizes that report.  She doesn't even prepare the report, that's done by the city, she only is presenting what the city has given her.[She swears an oath after her appointment and approval, she votes on matters of public policy for the city of Ludington-- but she's not an official?  Is John Shay really this dumb?  Or is it an act to assuage his understanding bosses on the council?]

Councilor Johnson:  Any business downtown can apply for this façade grant

CM Shay:  Umm-hmm.  Yes.

City Attorney Wilson:  First of all, I am going to assume that what Mr. Rotta said was correct; that Kathy has a major interest in KDMAC...

CM Shay:  Yes.  It's true.

CA Wilson:  Any contract that KDMAC has then with the DDA or the City needs to be approved, after notice, by a 2/3 roll call vote of the DDA and I don't know whether, if that's been done.  It's possible under Michigan law for a public official to have a contract with the government unit that he or she is a public official of, and that's probably not a very good grammatical way of saying that sentence, but you have to follow process of written notice, the secretary of that body, then have a 2/3's roll call vote of what would be the proposed contract, before the official can enter into that contract.

(Cross talk with Shay)  I'm new into this so I... [Wilson does tackle a part of the contracts between public agencies with public officials legislation, which is noteworthy that he does, he does it very delicately throughout.  But he doesn't address the fraudulent representations until Krauch does later.]

CM Shay:  That has not happened.

CA Wilson:  OK.  Then that needs to happen.  

CM Shay:  Now for purposes of, let me ask you of the timing of that for the purposes of this.  This is to apply for a grant which the City of Ludington is the grantee.  You're talking about you say a contract that the terms of the contract or in terms of the actual repair work problem?  [if you look at the video, Shay throws out a bunch of nervous 'tells' and he becomes slightly confused as to what his best tactic to take is throughout the discussions.  He effectively dodges the city throwing the fraud word at him.]

CA Wilson:  It would be whatever contract KDMAC would enter into either with the DDA or the City to be awarded some of these funds.  OK?

CM Shay:  So at this point is this resolution is to apply for the grant, so...

CA Wilson:  It's probably premature that, at this point there has been no contract between the DDA or the City and KDMAC...

CM Shay:  It's just to apply for a grant...

CA Wilson:  Then I don't have any objection to approving the application for the grant [despite the obvious fraud and undeclared conflict of interest funding on the application?]; going further down the road, however, we need to make sure that the contracts with public officials statute is complied with.

CM Shay:  It has to be noticed and then a 2/3's majority vote by the DDA Board?  ["I'm just learning this fact after being a village and city manager for twenty years people"]

CA Wilson:  It's whichever public entity she is entering into the contract with; okay?  Okay; we can talk after the meeting about what the details are about that, then I'll guide you through it.  But there is a process for doing that, that provides public notice and so on.

CM Shay:  And there has not, there has not been a 2/3's vote at all on that.

Councilor Holman:  Has there been a 2/3's vote on the Sandcastles?  Does that have to come also?

CA Wilson:  Is there any public official that is a member of the Sandcastle people?

Councilor Holman:  No.  Are we ready now for a motion?

Councilor Krauch:  I have a question.  I'm just curious... do we feel, Richard (Wilson), that this application would need to be amended in any way?  Particularly...[... to avoid the clear fraud involved.]

CA Wilson:  Well Item 4 is a little (Krauch:  4 and 5.) UGLG... Unit of general local government.... I think yeah, they probably need to, need to disclose that. 

Councilor Krauch:  My thought is, absent any amendment, four and five are problematical.

Councilor Holman:  I agree Mike.  Okay so then once again, do we split this or...

Mayor Cox:  I can entertain a motion then to, is this time sensitive, John?

CM Shay:  I... probably the cleanest way would be to put it back on the agenda for the 22nd?

Mayor Cox:  I will entertain a motion...

CM Shay:  Well you might as well do both, MEDC requires a minimum of two applications for the façade program.

Councilor Krauch:  Is there a deadline before these have to be submitted? 

Clerk Luskin:  Excuse me, we are meeting on June 11th as well as the workshop...

CM Shay:  Again, that's considered a special meeting... we will see if we can do it on June 11th.

CA Wilson:  You need to amend the agenda for that meeting and post that.

The decision is made to table the resolution and resume looking at it on the June 11th meeting.

Councilor Winczewski:  Can I ask another question on this, just for clarity?  If, like, the owner of the Blu Moon was on the DDA Board... she would have to go through the same process to get the façade?  (Wilson:  Yes)  Anybody who's on the DDA Board?

CA Wilson:  Any public official, and I don't have the statute in front of me, but any public official or any public employee who enters into a contract with the government that he or she works for...

CM Shay:  She don't work for the government ["None of us work for the government, we work for the people damn it-- and my six figure salary paid by money faeries"]. 

CA Wilson:  But if she's an appointed member of the DDA she can't have a contract with the DDA without going through the process.  Just like anybody on this council could not have a contract with the City of Ludington without going through this same process.

The discussion ends with Councilor Krauch labelling the incorrect information on the application as an 'administerial error', where they finally and officially table the issue.

But complete falsehoods knowingly put on an application for hundreds of thousands of dollars in state grants does not stop at just an "administerial error".  KDMAC Ventures LLC and its members, Kathy and David Maclean filled out and signed their own applications for this without noting that Kathy would be a city official taking her part in "approving all vouchers for the expenditures of funds for the [Ludington DDA] authority."

John Shay saying that the DDA is contributing $1000 to KDMAC's efforts is totally incorrect.  The 2015 budget has no such claim, and there has been no vote on this expenditure ever taken at the Ludington DDA, with the notable abstention of Kathy Maclean with her conflict of interest noted in the minutes of the meeting.  John Shay cannot predict what the DDA will commit to in the future without it being openly discussed, and cannot put so on an application without that also being fraudulent.

Such, simple, easy to correct 'oversights', shows the levels of corruption and incompetency in the management of our city and in the administerial levels of the grants.  But what do they do to correct the situation after being called on it and talking openly about the issues involved?  Take a look for yourself in the amended packet for today's (June 11, 2015) special meeting [ packet ], with what should be an amended application.  A quick check on p. 25 and p. 26 shows they refuse to acknowledge that they are dealing with a Ludington City official in questions four and five, and then that contribution of $1000 from the DDA which has not been made or budgeted for on p. 33. 

Apparently, our city manager who has been working over a dozen years as a Ludington city official without actually taking the time to become one by swearing an oath of office, is just too stupid to know what a 'city official' or 'city employee' is after all this time.  Or realize that filling out an official application like this falsely is a crime of fraud.  When you can willfully swear falsely on a court affidavit when the city you manage is on trial, it comes rather easy to do this.  His bosses on the city council positively adore it.

[Willy]

A job well done X. Nothing like making the Manager and Council look like deer in headlights. How insulting to have Shay stammering and feigning ignorance about what the process is for grant approvals that involve City Officials. But..I...Um...well...uh?  While Scottville has it's Clown Band, Ludington has it's own clowns, the City Clowncil. Scottville can be proud of their clowns but Ludingtonians can only hang their heads in shame because the Clowncil gives "clowns" a bad name. I was shocked that your information was actually discussed and acted upon by Ludingtons Clowncil. The only way things are going to change is by a clean sweep of the Clowncil in the next elections. The Clowncil chose well when they illegally appointed Krauch because he defends the other illegal actions and fraud as an "administerial error". You can take your blindfold off now Krauch.

[AQUAMAN]

That's funny as heck Willy, but all so true. Did Holman and Shay accidentally take each others' meds.? Sure seemed like it. The usually calm, cool, collective Shay was way off his game, and trembling behind the desks as he watched X approach to talk. He looked very antsy right from the very start. Constantly twitching and fumbling in his seat, and hoping for a "hail Mary". Afterward, all he could do is try to shake off a big hit, and, oops, almost down for the count. Even the fakealoo excuse as payments coming from the City Treasurer's office as normal accounts payable weren't enough to get a simple "I so motion" for passage on that. Krauch seemed to save the day at the end. But, never saw so many comment on anything so routine in the past, and hide behind Wilson for as much as they could. Usually, the game is to quickly pass anything, no matter the ammunition. Look at Shay's laugh when he hears absolutely no one say "I so motion", hysterical is the word. Great job of thorough and quality investigation X, really a "hail Mary touchdown" for the good guys for a change, John Q. Public! 

[XLFD]

Did you notice the head scratching too, as if he borrowed Councilor Holman's comb recently?  

A responsive city leadership would have also addressed the fraud issues involved with this application and the underlying rental rehab fraud/rule-avoidance allowed by Heather Tykoski and the Macleans.  Four apartments that the state spent at least $140,000 on, that are not being used-- unless the Macleans reserve them for something other than renting them to lower income individuals, which they must do for at least three of them, if my reading of the state rental rehab rules are correct.

Ludington has their own rules for rental rehab, including this, which one could say should have precluded KDMAC's participation in that program:

[XLFD]

Just call us West Clowntown when it comes to our city government affairs. 

At yesterday afternoon's meeting, Shay did read and afterwards gave me a copy of a revised application that they passed for these façade grants, which differed from the one they sent out to the public and the clowncil in their packet they published in the last link in the article. 

Since they didn't allow the public to review the 'amended application' or the right to comment in a public hearing before voting for an 'amended application', they technically have violated state requirements for CDBG applications as regards public hearings.  Namely, section 570.482 (2), (6), (7).  Since they amended the application significantly from its original form, the hearing probably should have also been re-noticed in the newspaper. 

[stump]

You have to wonder as Holman, the chairman of the finance committee filled out the paper work. She sure wanted to get a motion for it. Haven't heard her yap so much in any meeting before. Something to think about.

[AQUAMAN]

Look at Holman's reactions to the fact that her very own finance committee is responsible for the entire facade paperwork handled and approved by her committee. She says i.e., "and I'm the finance committtee"? Like she was spoon fed the entire time on everything, and has no mind nor will of her own, which is quite accurate. I noticed when Holman made new ordinance motions right after the other, the city treasurer sat right next to her mimicking every word she said, indicating that Holman had the treasurer make the entire presentation, and that she just read what was prepared for her, not her words, nor her work at all. Again, our councilors are led by staff, and haven't got any idea of what they are truly doing, without background people doing all the legwork. We have a very hollow council imho, devoid of brain matter, and simply there as clucking ducks of what their staff's work entails. That is why Shay has sooooo much power over them. He is the tail that wags the dog, simple as that. 

[stump]

So they just changed all the fraudulent check marks on the application and that made everything alright? Where do I sign up for money? I can't believe that the council would not look at the whole picture of this person. $100,000. dollars plus taken from the tax payers with nothing to show for it? If you people on the council don't know , THAT'S A CRIME!!!!!! Now she's trying to get more money buy filling out more false paper work? By the way, was the paper work for the apartment money filled out the same way?

[XLFD]

I have copies of the application and pre-application for the rental rehab at 102 West Ludington signed by David Maclean of KDMAC and approved by Heather Venzke (Tykoski) signed well before the Macleans brought the building. 

State rules mandate that the applicants have clear title to the building they are applying for, otherwise it is fraud, as the application asks that very question.  But the documents I reviewed didn't even include the title therein, because any legitimate title would have shown KDMAC had the title only after months later.  Our long-term President of the local Chamber of Commerce and the Treasurer of our DDA is engaged in significant wrongdoing, stealing from the local, state and federal government, while lying to them.  Our already shifty and discredited city manager and community development director were knowledgeable and willing accomplices.

And our other leaders and local 'journalists' are okay with it.  This is how great of a culture of corruption we have here in Ludington.  The citizens need to rise up against it, or risk having our officials forever taint our reputation with their complicity in such illegal dealings.

[Willy]

These Council members are showing just how inept and ignorant they are. It has only been a short time ago when Holman was pleading for people to get angry about X filing FOIA's to obtain public information. She wanted an uprising to discourage Democracy and now she's quite content with the potential fraud, corruption, ignorance, lying, deceit, cover ups, ect. that has been coming to light for a long period of time and which involves her own Council, City Manager and other public officials. She's demonstrating just how stupid she thinks the public is. The reprinting of a famous Holman quote is in order

[AQUAMAN]

All of this info. being made public, should, and would be enough for any self-respecting official to totally withdraw the entire application. But Hell NO, they are going to find, per CA Wilson, another way to make it fly, even in it's illegal version. Let's just do the last legal method, and have a 2/3's vote on the matter in a closed meeting. So, is that meeting legal at this point in time? Is that meeting open to the public? Whom will be the 2/3's voters? Shay, Venzke/Tykoski, and Maclean? If that's the next steps, which is what both Shay and Wilson have stated right on the record at the last CC Mtg., then we obviously can see that these narcissists are forcing the matter at any cost. What should also be obvious, is that this matter started out illegally way back in what, 2010? That being the case, which I believe it is according to X's info. at this point in time, well, then the entire scam for grants was illegal right out of the box, long ago. That just compounds the entire matter with this yet new application to continue the restorations in a totally illegal manner. The agency that lets these grants should be made well aware of this from the start long ago, so that any future grants will be refused. And the other previous grants should also be investigated, and promptly made public, and those too, tainted as they are, made to repay and prosecute the persons responsible to the fullest extent of the law. 

[XLFD]

I agree Aquaman, but the inability of any grown-ups to step forward in our current local government and justice system and lead a fair investigation into these charges of impropriety that is borne out by the public records tells you how corrupt the whole system is. 

Councilor Holman does believe in democracy but only if it involves votes between seven like-minded individuals supposedly representing over 8000 other individuals who receive no voice for their actual concerns. 

[Jasper]

I watched the video!  Unbelievable!  The behavior exhibited by some of these council member's is rather disturbing.  Councillor Holman's(IMHO) behavior acts like a grade-school child with all her irrelevant silly comments, and cackling.  Councillor Castonia(IMHO) speaks as if he just visited one of the local brewery pubs.  Monotone and a flat affect.  Who elects these people to represent Ludington?  

A question I have is the following:  Why during the open comment section where the public are allowed to voice concerns, ask questions, etc...there is no response from any of the Councillor's?  I have lived in other communities, and witnessed the Councillor's, the Mayor, etc...respond to the citizens' questions, concerns, etc...But not here.  

It appears the citizen's are being ignored, and their concerns are not even addressed by the entire lot of them.  It really is understanding why the meetings are so sparsely attended.  Why bother?  They don't listen, nor do the lot of them even respond to a question, or concern asked during the public comment period.  Why is that?  

 

It also appears from the apologies many of the Councillor's verbalize while presenting pertinent information regarding the running of the city...the lot of them just rush through it, and apologize in advance for taking so long.  Really???  Councillor Holman is a perfect example of this.  Why would she even comment and apologize to the Mayor, and the rest of the Councillor's for this?  Really, it not is not nickel and dime payments to the City etc...

After viewing the video, it appears the entire lot of them just want to get it over with as quick as possible. It appears the lot of them do not take their positions seriously.

Seriously, this is just really messed up.  Again, who voted these people into their positions?  Do Citizens not care about what is happening in their City?  I guess if it only affects them.

But Holman can get her feather's all raised over sign placement for the various community events. Same thing applies when it comes to a fun-run or other such events. The lot of them are concerned with policing, etc...But, something serious like land-lord issues, land-lord fees, sidewalks, the entire lot them are speechless!  

It really is beyond comical!