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Flint Water Crisis: Michigan AG Pursues Felony Indictments Against Former Emergency Managers

Published: December 21, 2016
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By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as writes occasional travel pieces for The National.

We’ve become all too inured over the last several years to seeing the obviously guilty walk away from one corporate or public policy crisis after another, with nary a slap on the wrist.

Against that backdrop, I see some wee cause for optimism in yesterday’s news from Flint, Michigan, of all places–  a place usually not synonymous with optimism, especially as it has recently endured its water crisis.

As reported today by the Detroit Free Press in this article:

Michigan Attorney General Bill Schuette’s criminal investigation of the Flint water crisis moved a step closer to the highest levels of state government Tuesday as he brought felony charges against two former emergency managers who reported to former Treasurer Andy Dillon and were appointed by Republican Gov. Rick Snyder.

Schuette, who also charged two former City of Flint public works employees Tuesday, would not say how far the investigation would go, only that it will follow the evidence and nothing is off the table.

“We are closer to the end than we are to the beginning,” he told reporters.

Charges Brought

Schuette charged Darnell Earley and Gerald Ambrose, both former Emergency Managers, with multiple 20-year felonies– conspiracy and false pretences charges– for failing to protect Flint citizens from health hazards caused by contaminated drinking water. I should emphasize that both managers were appointed by Governor Snyder, under the authority of the state’s emergency management law.

Schuette also announced that Earley and Ambrose, along with ex-City of Flint executives Howard Croft and Daugherty Johnson, also face felony charges of false pretenses and conspiracy to commit false pretences arising from the roles they played in arranging bond issuances to pay for a portion of a water project described in greater detail below.

The latest criminal charges are the third round of criminal charges brought in this investigation by Schuette, who has also previously filed a round of civil law suits against two water supply engineering firms, Veolia and Lockwood. Schuette has thus far filed a total of 43 criminal charges against 13 current and former state and local officials since the start of his investigation, and has interviewed approximately 200 witnesses.

Several current and former state employee previously criminally charged are today scheduled to appear for a court hearing  in Flint, according to this account in the Detroit News. The criminal charges arise from the alleged failure of these government workers to perform their respective roles in protecting public health. Those scheduled to appear are Stephen Busch, Patrick Cook, Michael Glasgow, Corrine Miller, Nancy Peeler, Michael Prysby, Adam Rosenthal, Robert Scott and Liane Shekter-Smith, according to the Detroit News.

Schuette’s Summary of What Went Wrong

To those readers new to this story, allow me to quote at length from Schuette’s summary of what went wrong:

The false pretenses and conspiracy to commit false pretense charges against Earley and Ambrose are based on the Defendants gaining authorization to borrow millions using the alleged reason of an environmental calamity.

Without the funds from Flint, the Karegnondi Water Authority (KWA) Pipeline would have to be mothballed. However, as a bankrupt city, Flint needed the Michigan Department of Treasury’s approval to get loans.

Emergency Manager Earley’s attempts to get funds in January and February of 2014 were rejected because the City was in receivership, had a $13-million deficit and no credit rating. State law banned the City from accumulating any more debt.

However, the Defendants allegedly used the Home Rule City Act emergency bond clause, created to deal with cases of “fire, flood, or other calamity,” to borrow the tens of millions required to pay for Flint’s portion of the KWA. The clean-up of a troublesome lime sludge lagoon – holding by-products of water treatment – became the vehicle to get a state waiver for the bonds.

To make the situation even worse, tucked inside the 15-page Statement of Purpose for an upgrade of Flint’s Water Treatment Plant system was a one-paragraph requirement that bound the city to use the Flint River as an interim water source, and the Flint Water Treatment Plant as the sanitizing and distribution center.

The Flint Water Treatment Plant, however, was not ready to produce safe, clean water to the citizens of Flint. Regardless, the Defendants mandated the City to use the Flint Water Treatment Plant as part of the deal to get the ability to issue bonds.

Defendants Croft and Johnson allegedly pressured employees of the Flint Water Treatment Plant to get the plant in working order before April of 2014, the scheduled date for re-start. When the deadline closed in, rather than sound the alarm, the defendants allegedly ignored warnings and test results and shut off the pipes pulling clean water from Detroit, and turned on the Flint River valves.

Who Knew and When Did They Know It?

Now, dear readers, I should confess at this point, that I’ve not been following the twists and turns of this sordid story very closely.  But I will venture that I don’t think those indicted yesterday were able to pull off their alleged shenanigans while keeping the whole matter a closely-guarded secret.  Turning to the Detroit Free Press again:

“So many people knew that that plant was not ready — and yet it was done,” said Andrew Arena, the former special agent in charge of the FBI in Detroit, and now Schuette’s lead investigator. “That’s the thing that shocked me.”

The question is how far up the state chain of command did this knowledge extend?  And that makes the key test of whether my cautious optimism is misplaced– and that instead this is yet another case of legal misdirection, chasing small fry when the ultimate decision makers get a free pass– if Schuette continues to follow the evidence right up the state chain of command– potentially extending as far as Governor Snyder himself.

At least on what we can see from the outside, Schuette seems to be building a slow, methodical case. The managers just indicted could presumably turn on political masters in order to save their own skins. In fact, If convicted of all charges, Earley and Ambrose are looking at spending the next  46 years in prison, while Croft and Johnson would get off with a mere maximum of  40 years, according to The New York Times in  this piece.  That reality provides plenty of incentive to cut a plea and serve up anyone those indicted can.

Flint Mayor Karen Walker apparently concurs,  with the New York Times reporting, “She said she saw the charges as an indication that the investigation may reach still higher.”

It’s at present too soon to tell who Schuette’s ultimate targets are– that will ultimately involve not only an assessment of the legal situation but raw political calculation as well. Thus far, he’s holding his cards close to his chest and not revealing more than he has to.

To return to the Detroit Free Press:

At least one member of Snyder’s cabinet, Department of Health and Human Services Minister Nick Lyon, has already been publicly identified as a target of the investigation, though Schuette has denied there are any targets other than those who are charged and no charges were announced Tuesday against Lyon.

Flawed Emergency Management System

I’ll close by pointing out one problem that’s well-known to those who’ve been following this issue more closely: the way the Michigan’s emergency management system remove key decisions from democratic control and places these in the hands of managers who are effectively insulated from accountability.  According to the New York Times:

The claims also reopened a longstanding debate in Michigan over the state’s emergency management provision, reviving questions about whether the system removes power and control over local issues from those residents who come under state oversight.

Michigan is not alone in using “systems of state oversight for fiscally troubled municipalities and other local government entities,”– and in fact,  approximately 20 states employ some form of such systems, according to the New York Times. But the  Flint water crisis has spotlighted the particular flaws in the  Michigan system.  During Governor Snyder’s term of office, he’s appointed emergency managers in several Michigan cities, including Benton Harbor, Detroit, Flint,  and Hamtramck.

As the New York Times elaborates:

For years, governors here have appointed emergency managers as a way to efficiently cut debts and restore financial stability in the most troubled cities. But residents of some majority-black Michigan cities, including Flint, argue that the intense state-assigned oversight disenfranchises voters, shifts control from mostly Democratic cities to the state’s Republican-held capital and risks favoring financial discipline over public health.

Mayor Karen Weaver said that she was thankful Flint was now getting this level of “accountability,” but that the entire episode revealed a fundamental flaw of state-ordered oversight in any city. “That’s what was missing when we had an emergency manager,” Ms. Weaver said. “Our voice was taken.”

Bottom Line

Post hoc criminal charges are an inadequate– albeit long overdue– way of redressing the harms the water crisis has imposed on Flint residents.  Ultimately, this crisis probably would not have occurred if citizens had a way of exerting more effective democratic control over decision makers– and the state’s emergency management law had not thwarted such accountability.

Indeed, again turning to the New York Times:

Melissa Mays, a Flint resident and activist on the city’s water crisis, said it was a significant step that the state-appointed managers would be held to account. “The biggest thing for us is to see the emergency managers on there because for the longest time we were told they were untouchable.”

Yet although legal remedies are inadequate, if Schuette’s investigation is assiduously pursued– wherever it might lead– this is the best hope on offer that Flint residents will receive some form of justice, however imperfect, for the harms done to them.

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