Prosecutors look at pensions of school scandal convicts
But garnishing incomes will net only small amount
By Chad Halcom, Macomb Daily Staff Writer, december 28, 2004

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Decades of public service mean comfortable lifetime pensions for many of the convicted and sentenced defendants in the East Detroit-Clintondale schools corruption scandal -- but could the taxpayers be allowed to get any of that money back?
Possibly.

But in order to use their pensions to pay off restitution federal prosecutors are seeking from a large group of the defendants, the former public officials affected would have to live for 600 years or so.

As the last few convicted defendants await sentencing in January to close the high-profile case, federal prosecutors are contemplating garnishing their future retirement income to gain restitution for the two school districts they raided for cash.

"Often we work with them and try to make a payment schedule arrangement," said Jacqueline Hotz of the U.S. Attorney's financial litigation unit, which is charged with recovering restitution and fines from sentenced defendants in criminal matters. "But if we are seeing post-judgment enforcement problems, or we happen to uncover more assets a defendant may own, we can come back to court and argue they aren't being aggressive enough in their payment obligation."

Hotz's unit can garnish up to 25 percent of future pension payments to retired persons as payment toward restitution.

According to pension information obtained by The Macomb Daily under the Michigan Freedom of Information Act, at least six of the retired public officials convicted at U.S. District Court in the case collect sizable monthly pensions.

Cashing in are former East Detroit Superintendent John F. Gardiner, with $3,178.01 per month; former Clintondale Superintendent Raymond M. Contesti, with $4,514.37 per month; former East Detroit Superintendent Allan Torp, with $5,446.05 per month; former Clintondale finance director William Britt, with $5,229.31 per month; former East Detroit maintenance-operations director Frank Brasza with $1,648.21 per month; and retired Macomb County Sheriff's Inspector Ronald Lupo, with $3,541.01 per month.

Contesti has already arranged to pay $300,000 as a lump sum for his restitution payments under the terms of his sentencing in court earlier this month.

Britt had to pay $2,800 as reimbursement for a landscaping job given to him as a gift.

But Brasza, Lupo and Gardiner could all be on the hook for garnished pension payments as federal prosecutors seek to collect a joint restitution judgment exceeding $1.5 million from a group of the defendants.

The three better be in great shape, or the restitution burden would likely outlive them. Even if federal officials could obtain the full 25 percent as a pre-tax garnishment, it would amount to restitution payments of only $2,091.81 per month. If all the restitution were collected that way, it would take about 600 years.

For Gardiner, as an example, federal officials may have little other choice but to go that route. Defense attorney Fred Gibson said his client has virtually no equity on the home he co-owns in Eastpointe with his wife Diane because it has been "mortgaged to the hilt" for legal fees and other hardships.

He also has few assets to liquidate other than his future pension checks, which Gibson said he didn't know could be garnished. Gardiner awaits sentencing Jan. 11.

"That's what we're arguing; he can't be liable for the money others have taken," Gibson said. "But by the nature of the conspiracy charge, anyone allegedly involved in conspiring with the other defendants is responsible for everything the conspiracy allegedly took. That's why we're trying to fight these allegations so vigorously."

Other defendants, such as Lupo who has an upscale home, or Brasza who has more than $200,000 in fluid assets and investments with his wife, Rosa, could be made to pay restitution by liquidating those possessions. Other defendants who were already ordered to pay the same restitution could also lower the sum by paying off their share.

The school corruption scandal and federal court case grew to include at least 20 defendants in a deep-seated conspiracy that secured $52 million in school bond construction work for a building contractor in return for lavish favors and cash payouts. In all, officials believe the districts were defrauded of at least $3 million and perhaps twice that much in taxpayer monies.

So far 18 of the 20 defendants have been convicted in federal court and either await sentencing or have served some prison time. One defendant awaits trial later this year, and another's case was dismissed without prejudice, meaning it could be prosecuted later.

Corinne Harper, an East Detroit Schools Board of Education member who has been coming to court and tracking the sentencings, noted that pension payments are dictated by the state, and are not under the school board's control. While she feels that Gardiner and the other defendants should settle their debts, she was reluctant to advocate taking their future livelihood.

"They've been judged and sentenced, most of them, and some of them are going to go to prison. But when they get out, they're still going to need to eat and have a place to live and take care of themselves," she said. "I can understand that."
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