New charges are filed in schools' case

Former Macomb County Sheriff's Inspector Ronald Lupo was indicted Thursday, making him the newest defendant in an ongoing federal case charging that 10 former officials defrauded two school districts out of at least $3 million.

Raymond Michael Contesti, a former superintendent of Clintondale Community Schools, also faced new charges in the superseding indictment filed by U.S. Attorney Jeffrey Collins in U.S. District Court in Detroit.

The new counts are among 40 the federal government has brought in the case. Other defendants include John Gardiner, former East Detroit Public Schools superintendent, and William J. Hudson Jr., construction manager for Hudson Construction Inc. Federal authorities already have charged that Hudson obtained construction work with East Detroit and Clintondale schools by offering top school officials bribes and free construction work.

The new charges focus on the activities of Contesti and Lupo and allege that they conspiredwith Hudson Construction as recently as the spring of 2002.

The original June indictment alleged that between 1990 and 2000, the defendants used overbilling, kickbacks, submission of fraudulent invoices, bribery, the funneling of campaign contributions and initiation of recall efforts to put school money into their own pockets. Federal prosecutors say school contracts were awarded to vendors who inflated invoices then performed personal favors for officials or their family members.

The new indictment alleges that Lupo and Contesti opened a business called L&C; Consulting Inc., which, according to the indictment, "purported to provide consulting services to companies doing business with Clintondale Community Schools and other entities." Lupo, who ran for county sheriff in 2000, and Contesti are close friends, according to the indictment.

Lupo and Contesti are charged with conspiring to extort more than $500,000 in cash and free services from Hudson Construction. According to the indictment, the men asked to receive "a percentage of all profits" Hudson Construction "received from contracts" that Lupo and Contesti arranged for the East Detroit and Clintondale school districts.

Among the services allegedly extorted was free construction work on their homes, the documents state. Federal authorities raided Lupo's home in July.

The men are charged with accepting $80,000 from Hudson Construction in four $20,000 payments.

Lupo is also charged with making a false statement to federal authorities. Prosecutors allege that in the spring of 2002, Lupo told Hudson that if anyone asked about construction improvements on Lupo's Shelby Township home, Hudson should tell federal authorities that Lupo paid three payments totaling $3,050, which, according to the indictment, "Hudson knew to be false."

Lupo and his attorney, Henry Scharg, and Contesti could not be reached for comment. Contesti's attorney, David DuMouchel, said he had not seen the indictments and therefore could not comment.

"I have never known Ronald Lupo to be anything other than kind and polite," said Macomb County Sheriff Mark Hackel, Lupo's opponent in the 2000 election. "He never did anything wrong or inappropriate when he was in the department."

Contact NANCY A. YOUSSEF at 586-469-8087 or youssef@freepress.com.