A bond underwriter seeking business with the city of Birmingham says that an acquittal he received from a federal judge eight years ago in Miami was a full exoneration of public corruption charges brought against him there, but a closer look at U.S. District Judge Donald Middlebrooks’ acquittal judgment reveals that Calvin Grigsby’s interpretation of the order is generous, to say the least. In fact, Judge Middlebrooks dismissed the charges against Grigsby and two other defendants largely on a technicality, but not before he blasted the defendants for greed and public corruption.
“The Government has presented substantial evidence of greed and public corruption, the placement of private interests over those of the public,” Middlebrooks wrote. “Accountability was non-existent; financial controls were ignored and indeed disdained.”
Grigsby, who once led the largest minority-owned investment banking firm in the country, has pitched the Birmingham City Council on putting him in charge of at least part of a $142 million bond deal, which will finance $53 million in new projects and pay $25 million toward existing projects, including the Railroad Reservation Park downtown. The remaining $64 million will refinance old debt.
Last week, the council seemed pleased enough with his proposal to postpone the bond deal until Grigsby could have an audience with the city.
But Grigsby has had a troubled past. In the late 1990s, he was indicted twice in the Southern District of Florida on federal charges. In one case, in which he was later acquitted by a federal jury, he was accused of participating in a kickback scheme to receive bond business. In another, he was accused of misusing public money for extravagant expenses, including paying bar tabs, docking fees for his yacht, contracts for public officials in other states who had given him bond business, and campaign contributions to public officials in other states as well as a sizeable contribution to the Democratic National Committee.
In the business arrangement at the Miami Port, Grigsby’s company, Fiscal Operations, was under contract with the county to run the cranes at the port. Under the agreement, Fiscal Operations accepted fees from stevedoring companies for use of the cranes. Fiscal Operations then took a fee of $150,000 per year plus incurred expenses from the money before passing the remainder of the funds to Miami-Dade County.
During the trial, prosecutors described how Grigsby and two others had inflated the incurred expenses with extravagant costs, including consulting contracts and campaign contributions to various politicians who had supported bond business for Grigsby’s firm.
In one instance, Grigsby had directed money from the crane company to pay $15,000 for consulting work by California Assemblyman Don Perata. In California, Perata has been a long-time political ally of Grigsby and has helped steer hundreds of millions of dollars worth of bond work to Grigsby’s firm. In 1999, the California Fair Political Practices Commission fined Perata more than $10,000 for not reporting revenue from consulting work, including the contract with Fiscal Operations. However, the minor scandal does not seem to have affected Perata’s political fortunes. Today he serves as pro tem of the California Senate.
However, defense attorneys in the case argued that the funds continued to be private money until they were handed over to Miami Dade County, and hence the defendants could not be found guilty of misusing public funds. Judge Middlebrooks accepted the argument and dismissed the charges, but not before using this order to castigate the port system for apparent greed and corruption.
“It is evident that misconduct went beyond these Defendants to past and present elected and appointed officials who viewed the Port of Miami as a place to obtain under-the-table loans, political contributions, jobs for relatives and friends, and favors of all kinds,” Middlebrooks wrote. “The Defendants, as well as politicians of every stripe, used Fiscal Operations, Inc. and its collection of crane user fees as a punch bowl, into which they could dip at will.”
In an interview last Thursday, Grigsby cited the order as an exoneration of the accusations against him. He called the case a political prosecution and insinuated that the government’s motives were racial.
Indeed, the acquittal kept Grigsby out of jail, but Middlebrooks approved of the case, as it shed light into a political payola scandal.
“While its legal theory with respect to the ownership requirements is flawed, the prosecution served important values,” Middlebrooks wrote. “The disinfectant of a searching inquiry and public trial is in itself an antidote for public corruption. Much of what happened at the Port could have been prevented by financial controls and oversight. Those who sought benefits and favors to which they were not entitled should examine their behavior and be held accountable by the public.”
On Tuesday, the Birmingham City Council is scheduled to hold a special-called committee of the whole to consider how the bond deal should be structured.
Check back at Mixed Media as updates will continue, and read a more extensive story this Thursday at Bhamweekly.com
— Kyle Whitmire
