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Eric Freedman

Eric Freedman

Journalists in Pursuit

February 15, 2013

It was a tale of two intrepid Detroit newspaper reporters in pursuit of public corruption. It was a tale of anonymous tips, hard-to-find documents, political power, greed and prosecutors following up on reporters’ stories. It was a tale of weird doings, misspent public dollars, defiant wrong-doers and eventually bad guys behind bars

And it was a tale of the Pulitzer Prize.

No, not the well-deserved 2009 Pulitzer that Detroit Free Press watchdog-reporters M.L. Elrick – now with WJBK Fox 2 – and Jim Schaefer earned for their aggressive and relentless coverage of the sex-text mail-perjury doings of disgraced Detroit Mayor Kwame Kilpatrick, his lover/erstwhile chief of staff, Christine Beatty, and his cronies and tacky relatives.

It was the 1994 Pulitzer — awarded 15 years earlier — to Jim Mitzelfeld and myself of the Detroit News Lansing Bureau for covering an embezzlement scandal involving the House Fiscal Agency (HFA). The miscreants in both cases betrayed the public trust, a betrayal that proved costly to taxpayers and to the reputation and image of Detroit and of Michigan.

I’m retelling the tale not to boast but because of the most important shared lesson that both investigations and both Pulitzers should teach a decade and a half apart.

That lesson — and one in desperate need of reinforcement in these tough economic times for newspapers and other press outlets — is the essential role of independent media watchdogs. I’ll expand on that shortly.

Just as Elrick and Schaefer toppled the mayor of Detroit and helped send him to prison – where he may return on additional charges, Detroit News coverage of the HFA scandal toppled Rep. Dominic Jacobetti (D-Negaunee), the second-most-powerful member of the state House of Representatives (after the speaker). Jacobetti was never criminally charged — his sins were those of omission and nonfeasance rather than of personal wrongdoing. But the Appropriations Committee he chaired so autocratically was responsible for overseeing HFA operations — and failed to do so. His colleagues let him keep his House seat but he was removed from the top committee post.

Ten participants in the scandal were convicted of felonies, including Rep. Stephen Shepich (D-Iron River) and HFA director John Morberg.

Our investigation began in early January 1993 – 20 years ago last month – with a tip to Mitzelfeld that some state employees were writing large checks made out to “cash” from a legislative account. He began the inquiry by asking to see canceled checks from the previous year for a variety of legislative units, including the HFA. Although the Legislature had exempted itself from the Freedom of Information Law, four of the five units promptly let him see the documents. The HFA’s Morberg initially refused, but agreed reluctantly after a week of badgering — and after Mitzelfeld reminded him that the Michigan Constitution declares all state financial records are open to public inspection.

Ironically, scrutinizing a year’s worth of cancelled checks failed to turn up a single check made out to “cash.” But what Mitzelfeld discovered was even more disturbing. Revealed were intriguing expenditures, including payments from the HFA’s “petty cash” checking account — technically, its imprest account — for personal credit card charges, payments to the IRS and direct, untaxed payments to HFA employees, including Morberg’s girlfriend.

They proved to be the tip of the iceberg as our investigation probed further and further back into the agency’s financial practices.

The day the first Detroit News story ran, Attorney General Frank Kelley seized the HFA’s records and ordered its offices padlocked. Two days later, State Police detectives showed up at Morberg’s lakefront home near Lansing to ask their own questions. Fortunately for us, Mitzelfeld was already in Morberg’s home asking follow-up questions when the detectives knocked on the door.

And questions there would be — about kickbacks, doctored financial records and expense accounts, payments for no-work contracts to Morberg’s drinking buddies, a honeymoon trip to Disney World for a cash-strapped HFA employee and other financial no-nos.

And there were some bizarre answers. Embezzled money had paid a Washington lobbyist to help the conspirators get Pentagon approval to send surplus military arms to Croatia, which was then enmeshed in the civil war that was tearing Yugoslavia apart — although no weapons ever were shipped. There was the plan to buy a landfill in the Upper Peninsula — that deal fell through. There was the plan to make a killing on the international currency exchange in Paris — but they lost lots of money. There was political influence exerted on state agencies to award contracts.

There was the bar purchased in Lansing — a bar that later went belly-up. There was the scheme to title new Yugos in Michigan so they could be sold duty-free in Western Europe without ever entering Michigan. There was even a deal to import coffee from Tanzania. All big dreams fueled with purloined public funds.

As the Detroit News pumped out article after article, authorities swooped in, often a step behind the reporters. For example, an IRS criminal investigator showed up at the Clinton County Registrar of Deeds office to trace Morberg’s real estate transactions, only to find a reporter already using the same microfilmed files. The Auditor General’s staff came in — the HFA’s books hadn’t been audited in 14 years — and ultimately reported that more than $1.8 million had been stolen, misspent or simply couldn’t be accounted for.

In addition to the 10 federal and state criminal convictions, the House restructured its policies of HFA oversight and the Legislature mandated regular independent audits for all its units. The principals served their time and went on their way. Morberg, the ring leader, spent six years in federal prison and was ordered to repay more than $800,000. HFA Assistant Director Warren Gregory, who went to federal prison for tax evasion, died in January.

Mitzelfeld swapped journalism for law, clerked for a federal judge and became an assistant U.S. attorney in Washington and Detroit. He’s now the investigative counsel in NASA’s inspector general’s office. The job of a prosecutor, Mitzelfeld once remarked, is a lot like being a reporter — but with subpoena power. As for me, I work to train the next generation of Elricks, Shaefers and Mitzelfelds.

So what do these disparate events — separated by 15 years and the 93 miles between Detroit and Lansing — mean?

They remind us of the integral role of a free and independent press and its professionals — curious, sneaky, suspicious, cynical, nosy, motivated, impartial, impassioned, rude, bulldoggish, ambitious, cruel, however you characterize reporters — as guardians of and surrogates for the public. They remind us of the role of strong and enforceable public records and public access laws that allow ordinary citizens and journalists alike to inspect government documents and attend public meetings and events. They remind us of the need to oppose politicians’ efforts to restrict that access under the guise of “national security” and “unwarranted invasion of privacy,” even in the aftermath of the Sept. 11, 2001 attacks. They remind us that we can’t always rely on law enforcement agencies to detect criminal conduct on their own, and that investigative reporting often points the police and prosecutors in the right direction.

But these are difficult times, with round after round of staff cuts and corner-cutting for the press in Michigan. Chopping reporters and editors reduces the press’s ability to fill that watchdog role.

The Detroit Free Press deserves praise for its willingness to devote the time, money and staff necessary to fully pursue the ongoing Kwame Kilpatrick corruption cases. But we can only wonder — and worry about — how much longer publishers will make such commitments.

Eric Freedman, a Pulitzer Prize-winning reporter, is associate professor of Journalism and director of Capital News Service at Michigan State University. He and Dome columnist Stephen A. Jones are co-authors of the newly published Presidents and Black America: A Documentary History (Congressional Quarterly Press).

February 14, 2013 · Filed under Freedman

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    Thank goodness someone has gone public as to what our great newspapers can do. As a former reporter and now in communications, I, for one, have thought about this issue for the past few years, once the layoffs and retirements started. It’s sad and a condemnation of our obsession for profits and shareholders’ interests vs. the right to keep our officials honest. I shake my head at the thought of these guys spending OUR money for personal gain. They never learn or, if we don’t have our investigative reporters, these politicos won’t have to worry.

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