Detroit, MI - On Monday, March 4, 2024, David Holman, 48, of Metamora, pled no contest to one felony count of False Pretenses, $1,000-$20,000, for conducting a scheme to fraudulently bill the federal Troubled Asset Relief Program (TARP) and the City of Detroit over $1,000,000 related to house demolitions, announced Michigan Attorney General Dana Nessel.
Holman’s plea accompanies a sentencing agreement requesting he serve a term of probation, complete 100 hours community service, and pay $1.2 million of the restitution to the City of Detroit on or before his sentencing date in April.
Holman is the second defendant to plea in this matter, following a guilty plea from David MacDonald, 51, of Howell, in January in connection with the same criminal scheme. MacDonald pled guilty to one felony count of False Pretenses, $1,000-$20,000, alongside a sentencing agreement he serve a term of probation, complete 100 hours of community service and pay restitution.
Both MacDonald and Holman are liable to the City of Detroit for over $4 million in total restitution.
The investigations into Holman and MacDonald 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.
In 2023, the Attorney General charged Holman with 12 felonies and MacDonald with 11 felonies including Conducting a Criminal Enterprise, a 20-year felony, for fraudulently billing the City of Detroit for backfill material and for using unapproved backfill material containing potential contaminants at residential locations in the City of Detroit.
Holman owned Den-Man Contractors and employed MacDonald to lead the company’s demolition program. Between 2017 and 2019, Den-Man was awarded over $12 million in demolition contracts with the City of Detroit, 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 that dirt.
Den-Man repeatedly claimed to have paid for dirt used at these sites and sought and received reimbursement from the Detroit Land Bank Authority for those expenses. The dirt in many instances was obtained at no cost, the reimbursement sums fictitious, and in all Den-Man received $1,148,513 in fraudulent reimbursements.
Furthermore, the unapproved source of backfill material is considered environmentally contaminated. Den-Man knowingly obtained the dirt from sources that did not comply with the terms of the contract or the requirements of the State of Michigan and could have potential environmental contaminates. The demolition sites where this material was used as backfill are presently being tested for environmental quality. The City of Detroit has incurred more than $3,500,000 in costs to test and remediate the Den-Man sites. 87 of those properties have failed testing standards for contaminants. 51 residential properties remain untested.
“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,” said Nessel. “I appreciate the investigative efforts of the SIGTARP team, the Detroit Office of Inspector General, and those of my department’s prosecutors for bringing this destructive scheme into the open, and its operators to justice.”
"The defendants’ acknowledgment that they committed False Pretenses was the result of the investigative and prosecution partnership between the Michigan Department of Attorney General, City of Detroit Office of Inspector General, and the Special Inspector General for the Troubled Asset Relief Program, whose assigned investigative teams of agents and attorneys secured this outcome,” said Melissa Bruce, SIGTARP Principal Deputy Inspector General. “These investigations originated from the reviews of the Detroit HHF demolitions, to ensure that there was compliance with the program contractual 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.”
“It is important to send a message to all City of Detroit contractors that they must adhere to the contractual requirements, including substantiating all backfill costs and using approved backfill materials,” stated City of Detroit Inspector General Ellen Ha. “I would like to thank the Michigan Department of Attorney General as well as SIGTARP for working with us in holding contractors accountable.”
“We appreciate the work of the Attorney General in pursuing accountability for those failing to meet the standards of the program,” stated Conrad Mallett, Corporation Counsel for the City of Detroit.
MacDonald will be sentenced by Judge Keifer Cox in the 3rd Circuit Court on March 15th.
Holman will be sentenced by Judge Mariam Bazzi in the 3rd Circuit Court on April 12th.