transcript of march 7, 2012 responsible vendor hearing for l. d'agostini & sons, inc

HEARING (D'AGOSTINI)March 7, 2012HEARING (D'AGOSTINI)March 7, 2012

1 STATE OF MICHIGAN

2 RESPONSIBLE VENDOR HEARING

3 March 7, 2012

4

5 IN RE: RESPONSIBLE VENDOR HEARING

6 (D'Agostini)

7 __________________________________/

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9 The Responsible Vendor Hearing (D'Agostini),

10 Taken at 735 Randolph,

11 Detroit, Michigan,

12 Commencing at 2:15 p.m.,

13 Wednesday, March 7, 2012,

14 Before Laura T. Krystopowicz, CSR-5882.

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2:11-cv-13101-RHC-MKM Doc # 253-4 Filed 11/14/12 Pg 2 of 35 Pg ID 4653


1 COMMISSIONERS:

2 Brad Kenoyer

3 Jim Thrower

4 Brian Williams

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6 ALSO PRESENT:

7 Bob D'Agostini

8 Gino D'Agostini

9 James D'Agostini

10 Mark McAlpine

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1 Detroit, Michigan

2 Wednesday, March 7, 2012

3 2:15 p.m.

4

5 COMMISSIONER KENOYER: Good afternoon. Let's

6 get started on our final responsible vendor hearing.

7 For those of you who were not in the room before, my

8 name is Brad Kenoyer. I've got Brian Williams down

9 there on that side of the table and Jim Thrower over

10 here. The three of us comprise the Hearing Committee

11 of the Board of Water Commissioners.

12 So, before we get started, I'd like to

13 briefly review what happened before today as well as

14 how today's hearing will be conducted. On January

15 26th, we sent David Zack -- is this David Zack that we

16 have in front of us here?

17 MR. MCALPINE: No. I am Mark McAlpine.

18 Mr. Zack works in my office.

19 COMMISSIONER KENOYER: Okay. Thank you. A

20 letter by overnight mail apprising L. D'Agostini and

21 Sons that the Board of Water Commissioners had decided

22 to review their status as a responsible vendor. In the

23 letter, we apprised D'Agostini that our review of its

24 status will be based on its conduct and performance

25 related to DWSD contracts, including CS1368 and CM2014,



1 as discussed in the third superseding indictment,

2 United States of America v. Kwame M. Kilpatrick, case

3 number CR1020403-NGE. So, at that point, we requested

4 D'Agostini submit ten written copies of their written

5 response by February 7th. On February 1st, 2012, we

6 sent D'Agostini another letter rescheduling the hearing

7 for today and extending the time for submission for

8 response until March 2nd.

9 So, before we get started today, I would like

10 to point out a few points. We are digitally recording

11 this hearing. So, anyone who is speaking, witnesses or

12 the vendors themselves, please speak clearly in the

13 microphones. We also have a court reporter here

14 keeping notes that will be published. And also Brian

15 Williams will be our official timekeeper. So, please

16 respect whatever directions he is giving, as it's

17 required to keep this hearing on schedule.

18 So, the hearing schedule today will be as

19 follows: D'Agostini will be entitled to make a

20 presentation of 30 minutes. Followed by approximately

21 20 minutes of question and answer. And then we will be

22 concluding with the vendor summary. In total, we're

23 allotting 1 hour, 15 minutes to the overall

24 proceedings.

25 So, with that, I would like to ask my fellow



1 commissioners if they have any other comments before we

2 get started.

3 Commissioner Williams.

4 COMMISSIONER WILLIAMS: I think in fairness,

5 because the D'Agostini people should know that, and I

6 think they were in the room, but we should clarify that

7 the previous matter with DLZ was continued over until

8 next Wednesday commencing at 1:00. I think that there

9 is certainly a possibility we'll do the same here. But

10 we'll let you know before we conclude as to how this

11 proceeds. But there is a possibility that this will

12 continue. If it does continue, it would continue to

13 next Wednesday afternoon. And it would follow the DLZ

14 continued hearing. And then, just for the record, any

15 decision by the Board with respect to the status of

16 D'Agostini and Sons would be Wednesday the 14th at a

17 special board meeting, which will begin at 2:30 in this

18 room.

19 COMMISSIONER THROWER: And they must have

20 information in by?

21 COMMISSIONER WILLIAMS: Well, if we go that

22 route.

23 COMMISSIONER KENOYER: Yes, thank you. I

24 know I'm speaking for myself, but I would appreciate

25 some extra time to digest what's said here today



1 because we take it very seriously.

2 So, with that, please go ahead with the

3 30-minute presentation.

4 MR. MCALPINE: Good afternoon. My name, as I

5 said, is Mark McAlpine. I'm an attorney that

6 represents D'Agostini. With me is Bob D'Agostini,

7 president of the company, Gino D'Agostini, the vice

8 president and one of the project managers for the sink

9 hole project, and Jim D'Agostini, owner and vice

10 president and general counsel.

11 Let me just start by saying that we are here

12 in a spirit of cooperation. We applaud your effort to

13 address correction in the procurement process for DWSD.

14 And if we can do anything to help you in that regard,

15 we're happy to do it. We've made no secret of our

16 objections to the process that we're in, however. We

17 have been told only that the indictment is what the

18 Board is looking at in connection with its inquiry.

19 Our concern is that clearly the indictment does not

20 allege that D'Agostini has done anything wrong. I'm

21 going to go through the specific allegations in a

22 moment. But beyond even that, it is an indictment.

23 They are unproven allegations. There is a trial coming

24 up this fall. Who knows whether the government is

25 going to be able to prove its case or not. Who knows



1 the context in which the text messages occurred. There

2 are a lot of unknowns. And that is also at the base of

3 our objections in going through the process based on

4 that document.

5 Our client is happy to answer any questions

6 you have about the performance of this or any other

7 project. They're proud of the work they've done for

8 the DWSD. They've got a long distinguished

9 relationship and they're happy to talk about it. But

10 for purposes of today, even though we've had a number

11 of conversations with your lawyers, the only thing

12 we're told is that we need to focus on the indictment

13 and the language that's in the indictment. So, that's

14 all we did. Your lawyer admitted in federal court that

15 we don't know the basis for the indictment. We don't

16 know what documents the grand jury saw or the

17 testimony, and we don't know either. That means we're

18 left as the lawyers and the client to read the

19 indictment and try to figure out what it means. So,

20 that's what we've done. We did nothing more than what

21 a transactional lawyer would do in reviewing a

22 contract. To look at the language and see what it

23 means. So, let's do that.

24 Before I get there, your notice mentioned two

25 contracts, CS1368 and CM2014. As near as we can tell,



1 there are no allegations in the indictment regarding

2 D'Agostini's involvement with CM2014. And, therefore,

3 we really have no knowledge of any concerns that the

4 Board may have with respect to that contract. We can

5 answer questions, if you have them, but the indictment

6 doesn't tell us anything at all about that contract as

7 it would relate to D'Agostini. So, other than

8 answering questions, I am not going to address that.

9 We will address the sink hole contract. That's the

10 specific allegation in the indictment.

11 Now, there are about four or five things to

12 say about the indictment. First, there's an allegation

13 that Mr. Ferguson thought he had an agreement with

14 D'Agostini to share work on the sink hole project

15 50/50. That's in a text from him. There is no

16 involvement of D'Agostini in that chain of

17 communication. But the more important thing, this

18 Board responded to a FOIA request. And according to

19 its own documents, it is clear that no 50/50

20 arrangement ever existed. On this project, ultimately

21 Ferguson was paid about $2.5 million, but as a

22 subcontractor to Inland. D'Agostini had no

23 relationship, subcontractor or otherwise, during this

24 project with Ferguson. I contrast that with the fact

25 that D'Agostini, with its subs, was paid roughly $28



1 million. Obviously, from your own documents, you can

2 see that there was no 50/50 sharing agreement. But go

3 the next step, there is a suggestion in one of

4 Mr. Ferguson's texts that somehow D'Agostini was in

5 charge of the subcontracting process on this project.

6 But you know, from your records, that Inland was the

7 general contractor. L -- or I'm sorry. D'Agostini was

8 only one of around 20 subcontractors to Inland.

9 Ferguson, apparently, was one of them.

10 It's also important to know that as the

11 general contractor, Inland was the party who was

12 deciding who was going to be awarded what contracts and

13 for what amounts. D'Agostini, as a simple

14 subcontractor, wouldn't be involved in that process.

15 And more than that, wouldn't know what other

16 subcontractors were getting, what their money, how much

17 they were paid, what their scopes of the contract work.

18 A subcontractor simply isn't privy to that kind of

19 information in the hands of the general.

20 Now, beyond that, again, if we go back to the

21 indictment, there's no allegation that D'Agostini

22 actually did what Ferguson thought he was getting.

23 There is no allegation that D'Agostini paid any money

24 to anybody for not working or for services that weren't

25 provided. It's just simply the case that there are no



1 allegations of wrongdoing on D'Agostini's part. But go

2 beyond that, again, we'll have to read the documents.

3 So, if you read that count carefully, you see that

4 Mr. Ferguson thinks he has some sort of a deal. He's

5 got -- he thinks he's got some sort of way to get

6 involved in the project. But you'll see, if you read

7 on in the allegation, there is a point where the

8 allegation or the indictment talks about Ferguson

9 starting to pester Inland to be paid monies for work he

10 didn't do because he didn't get the work he thought he

11 was going to get on the project. And ultimately, the

12 allegation is that Inland paid Ferguson in response to

13 those -- that pressure. If there was a deal between

14 D'Agostini and Ferguson, he would have been pressuring

15 D'Agostini for payment. There was no deal. There was

16 no approach.

17 Now, given the fact that we can't see any

18 part of the indictment that identifies anything we did

19 wrong, we're left at a loss for what else we can say

20 other than to tell you what the logical reading of the

21 indictment means. But we're here anyway. We're going

22 to try to answer your questions. What we're going to

23 do is give you some background on the project. Bob

24 D'Agostini is going to describe what it was. What were

25 the circumstances that led to D'Agostini being hired on



1 the project. Gino D'Agostini, who was the co-manager

2 of the project with his now deceased father, will talk

3 to you about what actually happened on the project.

4 And then finally, Jim D'Agostini, general counsel, will

5 talk about his involvement in the project and the part

6 he played, the company played, in the investigation

7 that led up to the indictment. And then we'll be happy

8 to answer your questions.

9 COMMISSIONER KENOYER: Thank you.

10 BOB D'AGOSTINI: Good afternoon.

11 COMMISSIONER WILLIAMS: Good afternoon.

12 COMMISSIONER THROWER: Good afternoon.

13 COMMISSIONER KENOYER: Good afternoon.

14 BOB D'AGOSTINI: I'm Bob D'Agostini and I'm a

15 principal in L. D'Agostini and Sons and I have been

16 with L. D'Agostini and Sons for all my working years,

17 which is over 40 years. L. D'Agostini and Sons is a

18 family-owned business. We're the third -- on the third

19 generation. We're a well-known business throughout the

20 state, throughout the communities. I've been in

21 business over 50 years. We have an impeccable

22 reputation for integrity, for treating our clients

23 fairly, and getting the work done in a timely and

24 efficient method. I want to say that we work for

25 municipalities, counties, cities throughout three



1 different states. And we have never been accused of

2 any dishonesty or have we ever been debarred from

3 procuring work.

4 As far as with DWSD, we have a long and

5 successful relationship. We have been working with

6 them for at least 40 years that I can remember. We

7 built approximately north of $250 million worth of

8 work. While at times our relationship with DWSD has

9 been intense in negotiating change orders or timely

10 payments, we consider that we had a good relationship

11 with DWSD. As I say, our company is known for taking

12 on the toughest of jobs and getting it done and getting

13 it done right in a timely manner. And we think that is

14 why DWSD approached L. D'Agostini and Sons to work on

15 the 15 Mile sink hole emergency repair project.

16 To give you a little bit of project overview,

17 the project involved a sudden collapse of an 11-foot

18 diameter sewer, interceptor sewer, that was

19 approximately 60 feet below the surface. Our first

20 order of business, once we arrived on the job site, was

21 to try and stabilize the areas at the sink hole and

22 immediately adjacent to the sink hole. There was

23 danger of losing houses. The residents had to be

24 evacuated. We had to try and stabilize the sink hole

25 by injecting cementateous grout, sinking, dewatering



1 wells to lower the water table, and placing sheet piles

2 to support the adjacent earth. At the same time, a

3 bypass pump system had to be in place, put in place, to

4 relieve the interceptor, which handled up to 30 million

5 gallons per day of sewage. At the same time, the sink

6 hole was growing larger and larger and larger. The

7 dynamics of the situation were just incredible. But a

8 lot of things were happening. The bypass pumping,

9 temporary bypass pumping, involved sinking 20 foot

10 diameter shafts 60, 70 feet deep upstream and

11 downstream in the damaged interceptor and placing bulk

12 heads for the use of divers going inside and placing

13 bulk heads. At the same time, the bypass pumping was

14 put into effect. We had to excavate down. This sink

15 hole is approximately 250 feet long and maybe 80 feet

16 wide. We had to excavate the material, get down to the

17 damaged sewer, assess the situation, and try and

18 determine what was to be done to fix it. The repair

19 was made and the site was back filled. Numerous

20 utilities that were above and adjacent to the damaged

21 utility had to also be replaced and the road surface

22 replaced. The work was continuous 24 hours a day for

23 five months, approximately, with only one day off,

24 Christmas day. The bypass pumping that was put into

25 place, just to give you an oversight about how there



1 was an emergency repair is the bypass pumping that was

2 put into place could only handle about -- it could only

3 handle a portion of the flows and it would not be able

4 to withstand or would not be able to handle pumping all

5 of the water should we have a significant rain event.

6 So, that's why the 24 hours a day. At the times that

7 we had rain, we would have to evacuate the excavation

8 until the water subsided, the temporary bypass pumping

9 caught up, and then we would go back into the

10 excavation inside the existing pipe and continue to do

11 our work. Thankfully we didn't have a major rain

12 event. And, therefore, there were no steps backward in

13 this project. We just kept working forward and we got

14 it done. It took us six months, but we restored the

15 flow. And I consider that to be a minor miracle,

16 looking back at it now.

17 In 2006, the American Society of Civil

18 Engineers cited this project as a project that was well

19 managed, well engineered, and well put together and

20 done in a very short period of time. I don't know if

21 anybody in this room can remember, but as a kid, I

22 remember going by the sink hole of 1978, which happened

23 about 500 feet east of this location, and I used to go

24 by there wondering -- you know, not a bit of repair and

25 I would just look at it, because I've been in this



1 business since I was nine years old. But anyways, that

2 project took three and a half years to complete. And

3 there was corn fields and a two-lane road at the time.

4 With that being said, I want to tell you that

5 at no time did we have dealings with Ferguson or his

6 companies on this project. No one from the city or

7 anyone from DWSD ever approached us to apply pressure

8 to use Ferguson on this project. And until the

9 indictment was released, I can tell you that I wasn't

10 even aware of Ferguson working on the project. And if

11 you remember at the time this project was being built,

12 there was nothing about what we know of today with the

13 Kwame administration and what was going on.

14 But anyways, with reference to our

15 subcontracting on the project, we just take care of

16 what we have to take care of as the subcontractor

17 getting the work done. We handle our paperwork. At no

18 time did we have access to the general contractor's

19 paperwork, which indicated, you know, the

20 subcontractors, the amount, or any other information.

21 It's just not normal for a subcontractor to know what's

22 going on with the general contractor's line of business

23 and his dealings with the subcontractors.

24 In fact, the only thing unique about this

25 project is that it was an extreme emergency and that



1 there was, you know, safety and property damage that

2 had to be considered. And we didn't see anything that

3 could be construed as out of the ordinary.

4 And I'll tell you what, we were floored when

5 we learned of the allegations and the indictment. And

6 if the allegations and the indictment are true, we had

7 no clue, not a whiff. We had no clue that anything

8 like that was going on.

9 I would like to thank you for the opportunity

10 to present myself to you.

11 COMMISSIONER KENOYER: Thank you very much.

12 Did you have an additional speaker, witness?

13 GINO D'AGOSTINI: Good afternoon, Ladies and

14 Gentlemen. My name is Gino D'Agostini, Jr. I have

15 been with LDS since as long as I can remember. I, as

16 Mark eluded to earlier, I did co-manage this project

17 with my father, the 15 Mile Road sewer. I mainly did a

18 lot more of the night work. But him and I did overlap

19 a lot, pretty much every day, for the time that I was

20 out there. I worked with all the subcontractors. I

21 interacted in meetings. There was a lot of work that

22 was being done. So, I was from one side of the site to

23 the other side of the site. And I can assure you that

24 there was a lot of work being done and we were out

25 there doing the biggest portion of it, which was



1 restoring flow to the sewer and getting the work

2 completed. It was an extremely urgent project by

3 nature because of the area that it facilitated and its

4 -- other than that, though, it was a pretty typical

5 project, particularly deep, pretty wet, but nothing

6 that was out of our realm of expertise.

7 During the project, I didn't have any reason

8 to believe that there was any foul play or any

9 on-goings other than what we were there assigned to do,

10 which was repair the sewer in a timely manner and for

11 the most cost effective way possible. I can also tell

12 you that on this project, we did not have any dealings

13 with Bobby Ferguson or his companies and that we were

14 not responsible for hiring any of service

15 subcontractors. We hired some other subcontractors.

16 But Ferguson was not hired directly by us. We didn't

17 split or share any of the work with Ferguson. There

18 was never any deal that might have been eluded to in

19 these text messages. But I can assure you that there

20 was no deal between us and Ferguson to split any work.

21 I mean, the proof is in the pudding. We did the

22 majority of the work. We repaired the sewer and in a

23 timely manner. We never paid anything to Ferguson on

24 15 Mile Road. We never had any access to any of their

25 files, you know, any of Inland Water's files, their



1 subcontractors. We had access to what we had, which

2 was our files, what was submitted to DWSD, and our

3 dealings with DWSD and Inland, in particular.

4 Like I said before, there was a lot of other

5 subcontractors other than just out there and we did not

6 hire all the subcontractors. I did see Ferguson

7 equipment on the site. But that was nothing out of the

8 ordinary. They're -- at the time, in 2004, I didn't

9 know what I know now, but at that time, he was known as

10 a, you know, respected minority contractor who was

11 qualified to do certain work that was available at that

12 site. And as far as I knew, as far as I can say to the

13 best of my knowledge from my father, what he knew, that

14 everything was on the up and up. We were there to

15 repair a sewer, plain and simple. At no time during

16 the project, when I was out there, did I witness

17 anybody pressuring any of your employees or agents,

18 anybody, my father, to have to hire Bobby Ferguson. I

19 was never approached or pressured to hire Bobby

20 Ferguson. We never hired Bobby Ferguson.

21 I was interviewed by the FBI regarding this

22 matter. They asked me if I had ever been pressured by

23 anybody to hire Bobby Ferguson on this project, or

24 others. I've never been approached to do any of that.

25 I would just like to make that point clear.



1 In closing, I would just like to say that,

2 like my uncle described, the project was very complex

3 and it took a lot to get it done. We're very proud of

4 what we did out there. It's unfortunate that other

5 people were associated with it. But, at the same time,

6 we would still like to remember it for the great

7 project that it was. So, thank you for your time.

8 JAMES D'AGOSTINI: Good afternoon,

9 Commissioners. I'm James D'Agostini. I was introduced

10 by Mr. McAlpine earlier. I'm the general counsel of

11 L. D'Agostini and Sons. I oversee all the legal. I

12 hold other offices too, secretary and treasurer. I

13 oversee the legal, financial, and sophisticated matters

14 of the company. I review and sometimes I -- I'm

15 principally involved in setting policy, or even

16 exclusively. Our company has a high standard of

17 quality work. And equal to that is our long-standing

18 reputation of integrity. Our company follows a strict

19 policy that we will not tolerate, engage in, or be a

20 participant in, in any form or manner, in any unethical

21 or wrongful conduct. We earn our business and we

22 continue to earn it based on good work and a reputation

23 for integrity. That goes back to the day when the

24 company was founded by my father. He passed away a

25 long time ago. But to this day, he stands as the most



1 hard working and honest man that I ever met. And he

2 passed that, those values, down to all of us who run

3 this business today.

4 The 15 Mile project, which is obviously the

5 focus of the indictment and this hearing, well, I

6 wasn't directly involved with the project. You know, I

7 was aware of what was going on and the kind of work we

8 were doing. I did -- I would normally be called upon,

9 for example, to review contracts, subcontracts, any

10 issues relating to those matters. And from my

11 perspective, this project flowed and ran just like any

12 other one that we had ever done. Except for the fact

13 that it was a very large complex and emergency repair,

14 it was another construction project. And nothing

15 unusual really happened. I mean, it could have, based

16 on the severity of the problem we were facing, it could

17 have resulted in a major catastrophe. But actually,

18 the project went relatively well, exceedingly well,

19 given those circumstances. The only issue actually, as

20 I recall, that ever came up, that even deserved my

21 going out there and having any type of formal meeting

22 was the idea of site safety. You know, there had to be

23 a pretty thorough and well thought out site safety plan

24 for that project. It was unusual conditions that we

25 were facing. And so, I actually attended that meeting



1 at the site to be involved in that process. But other

2 than that, everything was quite normal. And I can tell

3 you, unqualifiedly, that no one ever, as has been

4 previously stated, to my knowledge, asked us to funnel

5 any work to anybody, Mr. Ferguson or his companies, to

6 pay off anybody, to do anything that was referenced in

7 this indictment. In fact, I really didn't have any

8 knowledge or even a hint of any improprieties affecting

9 that project until we were asked to be interviewed by

10 FBI agents. In fact, Gino has already indicated that

11 he was interviewed and so was I. We were interviewed

12 separately. This is back in 2010. And as I recall,

13 pretty clearly, the FBI was looking for information to

14 assist them in what they described as a several-year

15 investigation by the FBI into corruption involving the

16 city of Detroit. The interview focused almost

17 exclusively on whether our company was being pressured

18 by city officials, or anyone else, to hire Bobby

19 Ferguson for the 15 Mile Road project, for example, or

20 any other project. And, of course, I stated that I

21 wasn't aware of any. There was no deal making, no

22 request for immunity, no sort of asking for any kind of

23 protection. We weren't a target of the investigation,

24 as I was informed. In fact, from what I can tell, we

25 weren't even a suspect of any wrongdoing. I think what



1 they saw was some of these text messages and they

2 wanted to know what we knew. And we shared everything

3 we knew, which isn't anything, because we were not

4 aware of those matters that were discussed in those

5 text messages. And in deed, I can say this without any

6 -- without qualification, I understand one of the

7 agents is actually in this room and I was led to

8 believe that that person would corroborate anything I

9 state here. But I don't recall a single allegation or

10 statement made by the agents to indicate that we had,

11 in fact, done anything wrong. That we had committed

12 any sort of act of wrongdoing. Gino, he was

13 interviewed as well. Both he and I went there

14 separately without counsel. And we went freely.

15 Now, as has already been discussed by our

16 outside counsel, the Kilpatrick indictment does not

17 really allege anything, from my interpretation. I read

18 it over and over again. It doesn't really allege that

19 we did anything wrong. There is no activity on our

20 part that we engaged in that was wrongful. I read the

21 indictment as just saying simply that Ferguson was

22 trying to have his influence with the Mayor to try to

23 get work on the 15 Mile Road project. But that never

24 got down to us. Because, as stated, Ferguson didn't

25 work for us. And we were not involved with any kind of



1 splitting or sharing of any work. The facts will clear

2 it up fairly clearly that no work was split up on a

3 50/50 basis clearly. You have those records in your

4 files just to show that very clearly. In fact, we did

5 a FOIA request to see what you had and that's exactly

6 the evidence that you do have.

7 Ferguson wasn't our subcontractor. We didn't

8 have any dealings with him on that project. And you

9 know, according to the indictment, Ferguson was

10 apparently unhappy with the amount of work that he got.

11 So, he targeted Inland, whose party he had a contract

12 with, to exact something out of them. There's just no

13 single allegation, even by the U.S. attorney, that we

14 did anything wrong in this whole thing. And we didn't

15 have any knowledge, as I said earlier, of any of this

16 going on.

17 You know, the city has done their own

18 investigation. You should be aware of these facts. In

19 fact, we're baffled over why the Board would, in

20 December, without notice to us, debar us. And even

21 based on the facts today, consider us for barring us

22 now. Debarring of the company is simply completely

23 unjustified and unwarranted and it would effectively

24 destroy a company like ours. Since our founding, more

25 than 50 years ago, the bulk of our work has been in



1 public works and almost invariably, any bid for a

2 public project, and even private projects for that

3 matter, require disclosure of a debarment. Debarment

4 for an alleged fraud or unethical violations would

5 almost certainly disqualify our company of getting --

6 or any affiliate of our company, from being awarded

7 just about any project. We would be out of business.

8 I'll just wrap this up to say that, you know,

9 the city of Detroit has been one of our best customers.

10 We feel that we've been a trusted vendor and reliable

11 and effective vendor over the years. We want to

12 continue that relationship. And there's no valid

13 reason why it shouldn't be continued.

14 We're prepared to answer any questions.

15 Thank you.

16 COMMISSION KENOYER: Okay. Thank you very

17 much. I appreciate everyone's presentations today. I

18 would also like to recognize the fact that I appreciate

19 and recognize the tone intended for this hearing, which

20 is non adversarial and this committee is here to merely

21 collect facts, and we appreciate your appearance here.

22 That ends the opening speech time. So, I

23 would like to move into the Q and A period. It looks

24 like Commissioner Williams is gathering a few questions

25 here. So, perhaps I'll look to the floor to see if



1 Commissioner Thrower has any questions he would like to

2 start with.

3 COMMISSIONER THROWER: Thank you,

4 Commissioner Kenoyer. I'm going to say I really

5 appreciate the family coming today and giving us

6 information as it relates to the indictment of

7 Kilpatrick. But there are certain procedures and

8 processes that we must follow also and certain

9 questions that we must ask as a matter of process here.

10 So, the question that I would ask --

11 COMMISSIONER WILLIAMS: I was deferring with

12 counsel. So, I'm sorry.

13 COMMISSIONER THROWER: Yes, sir.

14 COMMISSIONER WILLIAMS: Did you ask a

15 question?

16 COMMISSIONER THROWER: No. I'm getting ready

17 to.

18 And this comes from the fact that paragraph

19 32, "On or about September 1st, 2004, after visiting

20 the site of the sewer collapse, Kwame Kilpatrick

21 schemed with Ferguson about how they could get Ferguson

22 work at the site. Ferguson advised Kilpatrick that

23 although Inland Water would be overseeing the overall

24 project, subcontractor D'Agostini had hired all the

25 subcontractors at the site. Kilpatrick responded



1 perfect, that's what I needed. Ferguson replied that

2 Ferguson and Kilpatrick needed to meet about how

3 Ferguson would move in, given the arrangement of

4 company, saying we need to meet on how I move in. I

5 got a great idea, sir." That brings about a question

6 here. Is it true that D'Agostini hired all the

7 subcontractors at the site? And was it ever true that

8 D'Agostini hired any subcontractors at that site and

9 why and who?

10 MR. MCALPINE: Let me preface the answer by

11 letting you know that our office, as outside counsel,

12 has conducted investigations of the company and we've

13 asked those questions ourselves. The answer I can tell

14 you, and if we need more factual support from the

15 participants we will get that, but the fact is, and

16 this again is reflected in your documents, Inland

17 Waters hired roughly 20 subcontractors directly. One

18 of which was D'Agostini. D'Agostini had a series of

19 subcontractors under it that assisted in constructing

20 the repair portion of the project. You can essentially

21 look at the project as the repair, which is the

22 stabilization, the access shafts, and then the

23 excavation repair work. That's what D'Agostini did.

24 Inland handled all the support stuff. The pumping

25 systems and all the other things that needed to make



1 the project work, like cleaning the pipe when it was

2 done and so forth. But as general contractor, Inland

3 was the party that hired subcontractors. We had some

4 under us, but the majority of the subcontractors were

5 under Inland.

6 COMMISSIONER THROWER: All right.

7 COMMISSIONER KENOYER: I would like to have

8 Commissioner Williams speak.

9 COMMISSIONER WILLIAMS: Can you clarify,

10 because I think it was discussed before in a formal

11 contract Mr. D'Agostini would have reviewed. My

12 recollection is what one of you said was that you were

13 out on the site almost immediately because of the

14 emergency nature. Can you describe how you got there,

15 who asked you to the site, if you recall?

16 MR. MCALPINE: Let me have Bob answer that

17 question. He was one of the first representatives of

18 the company on site.

19 BOB D'AGOSTINI: What I can tell you in

20 regard to that question is that I received a call, it

21 was a Sunday morning and it was around 5:00 in the

22 morning, and Gino's dad, and my brother Gino, Sr., was

23 on the site. He had been called to investigate a sink

24 hole collapse. He arrived at the site and he called me

25 and asked me to come up and take a look at it with him



1 because it was a little bigger than what everybody had

2 -- was led to believe that it was. And if my

3 recollection is correct, I went out there, it was him

4 and I. There were some people from Detroit Water and

5 Sewer there. One of them was Mr. McConnell and I can't

6 recall the others. I would be guessing. But -- and

7 then within hours, there were lots of people there

8 because of the -- I mean, this thing was just growing.

9 When we were looking at it, it was as big as maybe half

10 of this room. And then within four hours, it was twice

11 the size of this room and it just kept growing and

12 growing. So, there was a lot of things going on. And

13 that's what I can tell you.

14 COMMISSIONER WILLIAMS: If I can follow up,

15 D'Agostini and Sons' involvement at the site was

16 because of a contact from DWSD, not from Inland, and

17 not from anybody in the Mayor's office initially?

18 BOB D'AGOSTINI: Yes. As far as I know, and

19 I was one of the first ones there, this phone call to

20 me, the phone call to my brother, visited the site, and

21 we looked at it. That's the first contact that we know

22 of.

23 COMMISSIONER WILLIAMS: Okay.

24 COMMISSIONER KENOYER: I have one quick

25 question for you. I realize you stated earlier that



1 you were not aware that Ferguson was on the job. But I

2 wondered if you can speak, in general terms, as to what

3 type of work Ferguson was there to perform?

4 BOB D'AGOSTINI: Honestly, I can only tell

5 you that Ferguson's company is a construction company.

6 I was involved on the project maybe the first two

7 weeks. I mean, I'm sure there's things on the project

8 that he could perform, but I can honestly tell you that

9 I was never aware of him performing any work on the

10 project.

11 COMMISSIONER KENOYER: Okay. I believe that

12 concludes the question and answer period. Do we have

13 any other questions?

14 COMMISSIONER WILLIAMS: No.

15 COMMISSIONER THROWER: No.

16 COMMISSIONER KENOYER: Okay. At this time, I

17 would say we are going to enter the final portion of

18 the hearing, which is the vendor summary. So, I would

19 like to welcome anyone to give a summary.

20 MR. MCALPINE: Just some very brief comments.

21 As I said at the very beginning, we certainly applaud

22 the process we see you going through. We have our

23 concerns about timing and information being shared

24 ahead of time and we're not abandoning those concerns.

25 I can certainly understand why this Board would respond



1 to the indictment. Clearly, there are some issues in

2 there that you must be concerned with. There are

3 contractors in different positions. D'agostini is one

4 of those contractors who just happened to get mentioned

5 in the indictment to give context to what the charges

6 were being brought and how they were being described.

7 That doesn't make those allegations true, at least as

8 to D'Agostini. And the facts demonstrate, at least,

9 that whatever Mr. Ferguson thought he was going to,

10 that was not known to D'Agostini. There was no

11 agreement, as we saw it. And your documents show that

12 he never did get any work from D'Agostini, let alone be

13 involved in the sharing process.

14 The concern -- and I know this Board will do

15 this. And I'm happy to see this kind of an effort to

16 make sure that you don't take a rash and unfounded

17 step. And that's why we're happy to provide you with

18 information, and any more that you would like. But at

19 the end of the day, we're confident that this Board

20 would not take such a harsh and Draconian measure based

21 on an indictment that doesn't even mention any

22 wrongdoing by our client and where the indictment still

23 hasn't been tested in court.

24 So, our request is that you don't throw the

25 baby out with the bath water. You've got a good



1 contractor here. They've had a long successful

2 relationship. They got your sink hole fixed. They got

3 it done in record time. You don't want to lose that.

4 And they don't want to lose you as a good customer.

5 Thank you.

6 COMMISSIONER KENOYER: Okay. Thank you for

7 that final statement. I would like to open it up to

8 final comments or motions from the Board members or

9 from the committee members.

10 COMMISSIONER WILLIAMS: You know, let me make

11 a comment first on the materials and the presentation,

12 and this is purely from my standpoint. I found the

13 candor of the three D'Agostini's who spoke refreshing,

14 enlightening, and frankly anticipated almost every

15 tough question I had. I guess it's a sign of a good

16 lawyer preparing them. I would say this, that -- and I

17 would like to phrase this in the context of a motion,

18 which for my other two commissioners to consider, but I

19 want to be clear that in the life of the relationship

20 between DWSD and all of its contractors, those of us

21 who are newly appointed to the Board and are new at

22 this, we don't have the 50-year history. So, it's

23 simply based on the facts that are -- have come to me

24 to date. On that basis, I would make a formal motion,

25 which is that this committee recommend to the full



1 board for its consideration at its March 14th meeting,

2 that at the present time, the committee is not in

3 possession of sufficient facts or other evidence which

4 would enable it to conclude that L. D'Agostini and

5 Sons, Inc. is not a responsible bidder.

6 Now, this is carefully crafted by lawyers.

7 So, you'll see there are two negatives. But that

8 effect is, and I'll repeat it if you want, that we're

9 not, at least in my opinion, we're not in possession of

10 sufficient facts which would enable us to conclude that

11 you're not a responsible candidate. So, that is my

12 motion.

13 COMMISSIONER KENOYER: Okay. We have a

14 motion on the floor. Commissioner Thrower, would you

15 like to second that motion?

16 COMMISSIONER THROWER: Commissioner Kenoyer,

17 Commissioner Williams, I will second the motion.

18 COMMISSIONER KENOYER: Okay. Excellent. I

19 would like to call a vote then. All in favor say I.

20 COMMISSIONER WILLIAMS: I.

21 COMMISSIONER THROWER: I.

22 COMMISSIONER KENOYER: I.

23 All right. So, it's the committee -- or the

24 Hearing Committee's recommendation to the full board,

25 which will be voted on on the 14th, that we have fully



1 endorsed Commissioner's motion. So, with that, I would

2 like to conclude these hearings. Thank you all -- oh,

3 I'm sorry. It looks like we have one additional

4 comment.

5 COMMISSIONER WILLIAMS: What that means, it

6 means you don't have to be here at 1:00 next Wednesday.

7 You may want to be here at 2:30.

8 MR. MCALPINE: Very good.

9 COMMISSIONER KENOYER: Okay. Thank you

10 everyone.

11 (The hearing was concluded at 3:00 p.m.)

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1 CERTIFICATE OF REPORTER

2 STATE OF MICHIGAN )

3 ) SS

4 COUNTY OF MACOMB )

5

6 I hereby certify that I reported

7 stenographically the foregoing proceedings and

8 testimony under oath at the time and place

9 hereinbefore set forth; that thereafter the same was

10 reduced to computer transcription under my

11 supervision; and that this is a full, true, complete

12 and correct transcription of said proceedings.

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21

22 LAURA KRYSTOPOWICZ, CSR-5882

23 Notary Public,

24 Macomb County, Michigan.

25 My Commission expires: July 5, 2012


transcript of march 7, 2012 responsible vendor hearing for l. d'agostini & sons, inc

Documents

placing bulk

hire bobby

responsible

sink hole

bypass pumping

text messages

commissioner

general contractor