Emails: Michigan moved fast on ‘well connected politically’ $25M Clare grant

• Michigan official cited political connections to speed up $25 million grant to nonprofit created by former aide of state House Speaker
• Emails show a lobbyist and another lawmaker helped steer the grant toward the former aide, David Coker Jr. 
• Health Department officially suspended the grant one day after a Bridge Michigan report

Michigan officials felt political pressure to expedite a $25 million grant for a Clare health campus championed by former House Speaker Jason Wentworth and awarded to a nonprofit run by his former aide, emails show.

“This boilerplate grantee is both well connected politically and a bit antsy, so I’m hoping to keep it moving,” Darrell Harden, a state Department of Health and Human Services grant administrator wrote to colleagues on Dec. 8, 2022.

By day’s end, the state had signed off on the grant. Within 10 days, Michigan dispersed the first $10 million to Complete Health Park — a nonprofit that former Wentworth aide David Coker Jr. created as his onetime boss was working to put the grant money into the state budget.

The email, among a trove obtained by Bridge Michigan through a Freedom of Information Act request, provides extensive detail about how the controversial project was funded with little to no oversight.

Related:

• Michigan’s records law delayed public disclosures about Clare grant
• Michigan: Double payment concerns suspended $25M Clare health campus grant
• Records: Firm of ex-aide to Michigan speaker paid $820K within days of grant
• ‘Red flags’ surround $25M health campus pushed by ex-Michigan House speaker
• Michigan paid $10M before ‘red flags’ froze ex-House speaker’s pet project
• Timeline: How $25 million deal to ex-House aide raised ‘red flags,’ faltered

Experts say it’s another example of how state government employees were left to scramble to allocate $2 billion in pet projects that lawmakers have added in the last two state budgets. 

“We’re making decisions not based on what’s best for the people of Michigan but what’s best politically,” said Steve Johnson, a Republican former state representative from Wayland who has called for drastic changes to the budget process, including more transparency. 

“How often is this occurring?”

The records show the state paused funding in April after lawmakers and staffers expressed concerns about the project, as well as Coker’s ability to oversee it.

But a “stop work” letter didn’t go to Coker until May 4, the day after Bridge Michigan published its first story raising questions about the project. 

A state inspector general is now investigating the project, including what a state health spokesperson has called concerns about possible duplicate billing. 

Records show Coker’s nonprofit paid his for-profit firm, IW Consulting, more than $820,000 just days after the grant was approved,  Bridge has reported.

Little vetting

The new records also show how MDHHS officials questioned whether it even had the capacity to oversee the project before it was funded.

In October, as officials were finalizing the grant approved by lawmakers, Harden wrote to colleagues “I don’t think I’m the right person to be overseeing the actual work and making determinations on the efficacy of a project or the outcomes of a feasibility plan.”

Most recent grants awarded through lawmaker earmarks have gone through the Michigan Department of Technology, Management and Budget. 

A health department spokesperson previously told Bridge it was "very unusual" for MDHHS to process a "grant like this."

Yet Harden remained on the project, interacting frequently with Complete Health Park employees, even citing them for doing a good job keeping the state updated on spending as late as March 21.

Yet it wasn’t until April that Harden and the department acknowledged they had learned that Coker, the former Wentworth aide, also owned a for-profit consulting firm Complete Health Park had hired to work on the project. 

"The subcontractor, by the way, we have determined is owned by the guy who is the grantee contact,” Harden told colleagues in an April 28 email.

If the state officials had done a public records search before awarding the money, they would have learned of Coker’s leadership in both Complete Health Park and IW Consulting LLC, the firm he founded in 2020.

The emails were provided to Bridge Michigan in response to a public records request for communications between Harden — the grant administrator — and MDHHS legislative liaisons Ramiro Galvan and Chardae Burton. 

MDHHS initially denied the request and refused to provide any records, citing the inspector general investigation. But Bridge successfully appealed that decision to obtain documents the department determined would not interfere with the ongoing probe.

Lynn Sutfin, a health department spokesperson, said Thursday the $25 million grant was awarded in compliance with state rules and told Bridge that oversight "involves many parties across state government."

"In situations where there is a high level of concern and additional accountability measures may be needed, additional oversight entities, such as the Office of Inspector General or the Attorney General’s office, are brought in to provide additional support and oversight," Sutfin said.

Lobbyist and lawmaker step in

Email exchanges reveal health department employees spent weeks trying to decipher what projects lawmakers intended to fund with earmarks they wrote into the state budget shortly before passage, as signed in July by Democratic Gov. Gretchen Whitmer. 

At one point, Harden told colleagues he had unsuccessfully searched Google to try to find out what entity was supposed to receive a $50,000 grant for a walk-in mental health services program. 

To determine who was supposed to get the Clare grant, the department turned to Galvan, the legislative liaison. 

He met with Wentworth's office on Oct. 6 and told colleagues that Wentworth was hoping an entity like the YMCA would have applied, according to the emails.

Instead, the department awarded the no-bid grant to Coker's Complete Health Park after separate conversations with lobbyist Karla Ruest and state Sen. Rick Outman, according to the emails. 

In a short phone call this week, Ruest told Bridge Michigan she was not lobbying for Complete Health Park. 

Sutfin, the health spokesperson, contradicted Ruest, telling Bridge that the lobbyist was communicating "on behalf of" Coker's nonprofit, Complete Health Park.

"It is not uncommon for lobbyists to serve as liaisons between the department and external organizations/grantees," Sutfin said in a Thursday email. 

An Oct. 10 email shows Ruest contacted the state on behalf of an unnamed "client" who she said was working on the Clare wellness center project and hoped to "break ground yet before the winter."

"I would love to schedule a zoom with you and my client that is working on this project to discuss this further and answer any questions you may have," Ruest wrote to MDHHS officials.

Ruest, who is also an Ingham County commissioner, did not return several calls and messages on Wednesday asking follow-up questions.

Outman then spoke with Galvan, a conversation that prompted the state to "start moving" the grant along, according to an Oct. 18 email that MDHHS senior policy executive Erin Emerson sent to Ruest, a lobbyist who previously worked for the health department.

Outman, the state senator, "provided guidance on the legislative intent of the boilerplate language and who was to be the intended recipient of the funds," Sutfin said Thursday.

Outman, a Republican lawmaker from Six Lakes who helped craft the health department budget last year and represented Clare at the time, denied intentionally steering the grant toward Coker's nonprofit. 

The lobbyist Ruest and Coker had both contacted him about the project, Outman told Bridge Michigan on Wednesday, but he assumed Coker was just reaching out as a constituent and local supporter, he said.

"I honestly never thought (Coker) was intimately involved with it," Outman said. "I just thought he was advocating for  something that would be good for his area."

While he did discuss the project with MDHHS, Outman said he still thought the grant would ultimately "go out to bid" through a competitive process.

"I'm actually disappointed in this because the people who are really paying the price for it is the residents of Clare County who could have had a quality (wellness center), and maybe they still can," he said. "The money's there, so maybe they still can get something out of it."

Red flags reach leadership

More than three months – and $10 million – into the grant, top leaders at MDHHS began to focus on red flags raised by state Sen. Roger Hauck and Rep. Tom Kunse, a Clare Republican whose family in January sold $3.5 million in land to Coker’s nonprofit but had since questioned the project.

"Considering there was no bid and the notable conflicts, Rep. Kunse and Sen. Hauck are trying to get ahead of any potential backlash," legislative liaison Chardae Burton wrote in a March 24 email to senior chief deputy director David Knezek, a Democratic former state legislator and current Wayne County Commissioner. 

Recapping concerns raised in a meeting with Hauck and Kunse staffers, Burton also noted "hefty salaries" being paid with the grant money and noted a departmental shortcoming: "A Medicaid program" seemingly ill equipped to oversee a "capital project," which is "not our area of expertise."

Hauck had asked the state to stop the grant until they could gather more information, and MDHHS senior policy executive Erin Emerson had told the lawmakers she would "involve the Inspector General as a next step," according to Burton's email summary.

Two weeks later, on April 7, Knezek emailed colleagues requesting any documentation about the Clare health park project and ordered employees "take no further action" on the grant.

Knezek and Burton met again with Hauck and his staff on April 12, Knezek said in an email to Inspector General Alan Kimichik that outlined concerns about the project.

In the April meeting, Hauck warned that Coker had "never built anything" before, had already drawn a considerable salary "with no dirt dug" and suggested the state try to "squeeze out Coker and get someone else to complete the project," Knezek wrote.

Hauck also raised concerns about the involvement of Anthony Demasi, a Coker business partner who had recently been indicted on federal fraud charges on allegations of stealing the identity of employees at a separate nonprofit that Coker had hired to help market the Clare health park.

Demasi has pleaded not guilty. In April, he  sued Coker and his IW Consulting, alleging he was not fully paid for work he did on the Clare health campus project.

By that point, in mid-April, nearly $10 million had been paid out on the project, Knezek reminded Kimichik. "You noted on 4/6 that one of your investigators visited the proposed location on this project and it appeared to be that no work had been completed," he added.

A Bridge Michigan report in early May appeared to prompt Knezek to issue a formal "stop work order" officially halting the project.

While discussing a draft response to Bridge questions for an article, Harden noted the MDHHS statement "seems to indicate that we've implemented a stop work order” but said "that's just not true.”

In a response email, Emerson noted ongoing discussions about the grant that included MDHHS leadership, the governor's office and the department's Office of Internal General. 

A day later, on May 4, she told colleagues Knezek had requested the stop work order.

"Please note that this is being issued to assure further work is ceased while OIG continues to review this matter," Emerson wrote. "Once their review is complete, this will be re-evaluated."

Political connections

Hauck did not immediately respond to a voicemail on Wednesday but previously told Bridge he believes Coker had played up his political connections while seeking to win the $25 million grant award.

Kunse, the lawmaker whose family sold $3.5 million in land to Coker’s nonprofit shortly after he took office in January, said Wednesday that Coker had never bragged about his political connections during their interactions.

But Kunse grew skeptical of the project after finalizing the land sale in January, when emails show his office first reached out to MDHHS for information about the grant.

Kunse told Bridge he has not heard any updates on the Office of Inspector General investigation or personally been contacted by investigators.

The community could still benefit from the type of health and fitness park originally proposed by Wentworth, Kunse said. But "if some of the allegations (about Coker’s early spending) are true, it would be very concerning.”