Fraud judgements against Burtka, Waidelich vacated; city meets to restructure bond debt

Sunday Times Newspapers

ALLEN PARK — Judgements were vacated Nov. 7 against against two city officials charged with fraud regarding $31 million in bonds sold to purchase the failed Unity Studios property.

Meanwhile, city officials spent most of a special meeting Thursday evening discussing restructuring those bonds in closed session, leaving more questions from some residents than answers.

When council members returned from the hour-long session, they unanimously approved proceeding with the recommendation by attorney Brian Lefler of the Robert W. Baird and Co’s. direction in the bond restructuring. Only, city officials were the only ones privy to what that recommendation was.

Prior to the closed session, the council voted to put citizen’s comments at the beginning of the meeting, then proceeded into closed session, citing their ability to do so via an emergency manager and Federal Communications Commission ruling.

Resident Robert Turner asked if the meeting pertained to the vacated charges against former Mayor Gary Burtka and former City Administrator Eric Waidelich. He said the “deer in the headlight” look from some officials told him it did.

Burtka and Waidelich were charged with using misleading and outdated budget information to lure Allen Park investors into a failed movie studio, named Unity Studios.

Burtka was ordered on Nov. 6, to pay $10,000 according to the Securities and Exchange Commission, which investigated the matter. Both were ordered to not participate in any municipal bond offerings. Without admitting or denying the allegations, both consented to the final judgment of inappropriate behavior.

The orders were vacated — or set aside — on Nov. 7 by Avern Cohn, judge for the United State District Court for the Eastern District of Michigan, citing his sentences were “improvidently entered.” This often means the court acted rashly and didn’t consider other information, according to one attorney not associated with the case.

The matter will be discussed later in a status hearing with court officials and the attorneys.

“Some people are going to be irritated by that,” said one city official after the meeting, but claimed the issue won’t impact the city.

City Administrator Karen Folks said the meeting had nothing to do with the court’s Nov. 7 decision regarding the two former members.

“That issue has nothing to do with the city,” Folks said. “We’re very pleased to put that issue behind us and move on.”

Folks said she knew nothing about the vacated sentences.

“How do we restructure bond debts in closed session?” Councilman Dennis Hayes asked at the meeting.

Lefler said he asked to have the motion drafted.

Lefler said it was best to discuss the restructuring in closed session as to not put the council and city at risk, again. The motion was unanimously passed to enter closed session.

(Tereasa Nims can be reached at 313-584-4000.)