Warren contractor takes plea deal for bilking Detroit demolition program

The owner of a Warren-based contracting company owes the city of Detroit $1.2 million in restitution for conducting a scheme to defraud a federal program connected to Detroit demolition contracts and leaving dozens of sites contaminated, Michigan Attorney General Dana Nessel said Tuesday.

David Holman, 48, of Metamora pleaded no contest Monday to false pretenses, between $1,000-$20,000, a felony, allegedly for conducting a scheme to fraudulently bill the federal Troubled Asset Relief Program (TARP) and the city of Detroit more than $1 million related to house demolitions, Nessel said.

Holman is the owner of Den-Man Contractors, which between 2017 and 2019, was awarded more than $12 million in demolition contracts with the city, made possible by federal dollars in the Hardest-Hit Fund. The contracts made Den-Man responsible for backfilling the sites of demolished properties with dirt from approved sources and the company was entitled to bill the city for the acquisition price of clean dirt.

Den-Man claimed to have paid for dirt used at the sites and sought and received reimbursement from the Detroit Land Bank Authority for expenses. The dirt in many instances was obtained at no cost and in all Den-Man received $1,148,513 in fraudulent reimbursements, Nessel's office said.

Prosecutors allege Den-Man's workers backfilled demolition sites in Detroit with unapproved dirt that was environmentally contaminated.

The demolition sites where the material was used as backfill are being tested for environmental quality. Detroit has incurred more than $3.5 million in costs to test and remediate the Den-Man sites. Of about 200 sites, 87 properties have failed testing standards for contaminants and 51 residential properties remain untested, Nessel said.

Holman’s plea follows a sentencing agreement that he serve a term of probation, complete 100 hours of community service and pay $1.2 million of the restitution to the city on or before his sentencing date in April.

Last year, Nessel charged Holman with 12 felonies and MacDonald with 11 felonies including conducting a criminal enterprise, a 20-year felony, for fraudulently billing the city for backfill material and for using unapproved backfill material containing potential contaminants at residential locations in Detroit.

He's the second defendant to plead in the case following a guilty plea from David MacDonald, 51, of Howell in January.  MacDonald was employed by Holman to lead the company’s demolition program. MacDonald pleaded guilty to the same felony charge and accepted the same sentencing agreement.

Both MacDonald and Holman are liable to Detroit for more than $4 million in total restitution, Nessel said.

The investigations were conducted by the Department of Attorney General, the Detroit Office of Inspector General, and the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), a federal agency tasked with preventing and detecting fraud, waste and abuse in the federal funds appropriated by Congress through the Emergency Economic Stabilization Act and the Consolidated Appropriations Act of 2016.

“This scam was not only an attack on public funds and the City of Detroit, but upon vulnerable neighborhoods now left plagued with contaminated lots; all to line the pockets of greedy criminal contractors,” Nessel said.

MacDonald will be sentenced by Judge Keifer Cox in Wayne County Circuit Court on March 15.

Melissa Bruce, SIGTARP principal deputy inspector general, said the investigations originated from the reviews of Detroit's Hardest Hit Fund compliance requirements.

"Contractors are required to adhere to all contracts, State and Federal laws and regulations and must use safe and approved backfill materials and substantiate backfill costs which are critical to ensuring TARP funds are properly spent for the public’s safety and per program requirements," Bruce said.

srahal@detroitnews.com

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