DETROIT (WXYZ) — Detroit Mayor Mike Duggan refuses to disclose how a non-profit set up “to promote the City of Detroit’s turnaround” has spent $750,000 since 2014.
His decision, allowable by the IRS, stands in stark contrast to a 2013 promise Duggan made while running for mayor, vowing that he would have “no part in a secret fund when I’m elected.”
But in 2014, shortly after Duggan took office, the Detroit Progress Fund was created to “assist the Office of the Mayor on expenditures necessary to conduct the business for the City but for which there are no funds available in the City budget.”
The fund summarizes its expenses in broad categories, like spending more than $16,000 last year on “meals,” nearly $34,000 on “community outreach” and more than $41,000 on “travel.”
Fund administrator Abbey Dinsmore, who is also a fundraiser for Duggan's mayoral campaign, says the Progress Fund has been used for things like flying in job candidates from out of state and helping put on an annual dinner during Ramadan.
“We are following the law, we are disclosing everything the IRS requires that we disclose to the IRS,” Duggan said when questioned by 7 Investigator Ross Jones earlier this month.
Unlike many similar non-profits, the Detroit Progress Fund discloses its donors quarterly or bi-annually. But expenses have remained a secret and, as Duggan points out, the IRS doesn't require funds to disclose them publicly.
History of controversy
Duggan is hardly the first Michigan politician to be associated with a non-profit 501(c)(4) like the Progress Fund. Over the years, a number of elected leaders have come under fire over how their non-profits spent money.
Former Detroit Mayor Kwame Kilpatrick insisted his Kilpatrick Civic Fund was in complete compliance, saying in 2001: “We’ve done all the paperwork, followed every rule, every regulation from the IRS.”
But reporters and eventually federal prosecutors would reveal that the Civic Fund was used to pay for things like Kilpatrick’s lavish family vacations, golf clubs and even yoga lessons.
Ex-Governor Rick Snyder said his NERD Fund was acting above board, saying in 2012 that “there’s nothing that exciting about it. We’re just following the rules and moving ahead.”
But the fund was ultimately closed after reporters learned it was paying Snyder’s top aide, Rich Baird, a salary of $100,000 from donors who were unknown.
Former Wayne County Executive Robert Ficano ran into trouble with his non-profit, the Wayne County Business Development Corporation, when it was revealed by 7 Action News to have paid his economic development czar a secret $75,000 annual bonus, paid in part by county contractors.
“Government doesn’t always run best on ‘trust me,'” said Peter Henning, a former federal prosecutor who today is a law professor at Wayne State University.
“That’s the key to government is transparency,” he said. “That we know this much is coming in and here’s what it’s being spent on.”
'Erodes confidence in government'
Henning isn’t alone in cautioning public officials from using secret funds as an extension of government. Duggan himself spoke out against them in 2013 when he was a candidate for mayor.
In an interview on Channel 7, Duggan was asked specifically about non-profit funds that got Kilpatrick, Snyder and Ficano into trouble.
“You’ll notice in this campaign, I did not create one of those funds,” Duggan said. “I had advisers telling me, let’s create secret funds where you don’t know the donors. I said absolutely not, I’m not going to participate in that. I think it erodes confidence in government, and I’m going to have no part in a secret fund when I’m elected.”
Earlier this month, Duggan was asked by 7 Action News about his change in heart.
“I didn’t change my mind,” Duggan said. “The issues were raised about people not disclosing their donors. We have disclosed our donors from the beginning,” he said.
“As you know, these funds have been abused, from Kilpatrick to Ficano to Snyder for how they've been spending money,” said Channel 7’s Ross Jones. “And the question is, if you have nothing to hide, why not show us exactly how it’s being spent?”
“There has been no suggestion of anything wrong,” Duggan said.
Close ties to Mayor
The Detroit Progress Fund is overseen by a board of five, but neither Duggan nor the fund's spokesman will say who selected the board members. All of them have ties to Duggan or his campaign.
Jonathan Quarles is the chairman of the Progress Fund’s Board. In 2014, he was appointed by Duggan to the city's Economic Development Corporation board.
Trunetta Roach, the Progress Fund’s treasurer, is the wife of Duggan’s spokesman John Roach. Campaign records show that she's donated $1,000 to Duggan’s campaign.
Attorney Thomas Bruetsch also sits on the board. In 2013, he represented Duggan in his fight to stay on the mayoral ballot. He's also donated nearly $2,500 to Duggan’s campaign.
Board member David Katz is one of Duggan’s longtime friends, having worked with him since his days in Wayne County government. Katz donated more than $10,000 to Duggan’s campaign.
In addition to serving on the Progress Fund’s board, Tatiana Grant also worked to help get the mayor elected. Records show that her company, Infused PR, has been paid more than $43,000 by Duggan’s campaign.
Fund spokesman Mario Morrow called the board “very competent people” and said their past history with Duggan doesn’t influence their judgment.
“They all seem to be pretty close to the mayor,” said Channel 7’s Ross Jones.
“This is a small town,” Morrow said.
Contact 7 Investigator Ross Jones at ross.jones@wxyz.com or at (248) 827-9466.