Victor Mercado, Conspiracy, Michigan 2014

Detroit – Former Director of the Detroit Water and Sewerage Department (DWSD), Victor Mercado, 62, was sentenced to eight months in a halfway house on May 22, 2014, following a guilty plea to conspiracy charges stemming from the wide-ranging corruption scandal involving former Detroit Mayor Kwame Kilpatrick. The sentencing, announced by U.S. Attorney Barbara L. McQuade, highlights a pattern of abuse of power and illicit influence within Detroit’s municipal government during the early 2000s.

The investigation, a collaborative effort between the Federal Bureau of Investigation (FBI), the Internal Revenue Service Criminal Investigation Division (IRS-CI), and the Environmental Protection Agency’s Criminal Investigation Division (EPA-CID), revealed that Mercado, while overseeing over $2 billion in DWSD contracts from 2002 to 2008, unlawfully steered business to Bobby Ferguson, a close associate of Kilpatrick. Evidence presented in court demonstrated that Mercado, under direct orders from Kilpatrick, manipulated the procurement process to favor Ferguson, even instructing bidders to include Ferguson’s company as a condition for favorable consideration.

According to plea documents, Kilpatrick exerted significant pressure on Mercado and other city officials to prioritize Ferguson’s interests, regardless of established procurement policies, rules, and regulations. This pressure extended to Kilpatrick’s role as Special Administrator over the DWSD, a position granted through a federal consent decree related to environmental violations. This designation allowed Kilpatrick to directly award contracts, bypassing standard procedures, and placed him in charge of ensuring the wastewater treatment plant complied with environmental standards – a responsibility directly impacted by the corrupt contracting practices.

Randall K. Ashe, Special Agent in Charge of EPA-CID, emphasized the gravity of Mercado’s actions, stating that influencing the bidding process for wastewater management “can significantly endanger public health and safety.” The EPA’s involvement underscores the potential environmental consequences of the corruption, as compromised contracts could have led to inadequate maintenance and operation of critical infrastructure. The investigation revealed a disregard for responsible governance and a willingness to prioritize personal gain over the well-being of Detroit residents.

U.S. Attorney McQuade made it clear that while Mercado acted under duress from Kilpatrick, he was still accountable for his role in the scheme. “Although Mr. Mercado was acting under pressure from the mayor, he must be held accountable for abusing his position of trust and causing harm to the city,” she stated. The case serves as a stark reminder that even those operating under the direction of higher-ups are subject to criminal prosecution for their complicity in illegal activities.

The investigation and prosecution were led by Assistant United States Attorneys Mark Chutkow, Michael Bullotta, and Eric Doeh. The successful collaboration between multiple federal agencies demonstrates a commitment to tackling public corruption and ensuring accountability for those who abuse their positions of power. The sentencing of Mercado represents another chapter in the unraveling of the Kilpatrick administration’s network of corruption, with numerous other officials and contractors facing similar charges and penalties.

Table of Contents

Key Facts

Defendant: Victor Mercado
Crime: Conspiracy (18 U.S.C. §371)
Location: Detroit, Michigan
Year: 2014
Sentence: Eight months in a halfway house
Co-conspirator: Kwame Kilpatrick (former Detroit Mayor) & Bobby Ferguson
Affected Agency: Detroit Water and Sewerage Department (DWSD)

Statutes Violated: Victor Mercado was convicted under Title 18 U.S. Criminal Code, specifically 18 U.S.C. §371, which addresses conspiracy to defraud the United States. A conviction under this statute can carry a maximum penalty of five years in prison and a fine of up to $250,000. Mercado’s sentence reflects a consideration of his cooperation with investigators and the circumstances surrounding his involvement in the scheme.

Source: EPA ECHO Enforcement Case Database

Related Federal Cases