Michiganders were stunned to see The Detroit News front page on January 15, 1993. It revealed that the Michigan House Fiscal Agency (HFA) was involved in a corruption scandal. The scheme was slick and covered up so well that those who participated in it, never worried about it being exposed to the public.
The story alleged that HFA director John Morberg, along with several of his staffers, used the agency's bank account like it was their own. While many were shocked by what was found, it would soon become clear that there was more to the scheme. What The Detroit News article did was open the faucet to what would come next.
According to Gongwer, the scandal soon ballooned to major figures in the House. A deal had been reached by Republican co-Speaker Paul Hillegonds and Democratic co-Speaker Curtis Hertel to share the Speaker's role but the new scandal threatened to derail the relationship between the men.
Especially as more information was found. Morberg was the one who got caught leading the scheme to use the agency's funds but he was not the first one to do it. The scheme had been in place for more than six years before the article hit the press.
Various people used the fund to pay things like property taxes, credit card bills, and dental work. Each person who used the money was employed by the agency, though there were also a few members of the House that also got involved in the embezzlement.
There were also allegations that contracts were created but the work never existed.
Investigating The House
As the pieces kept coming and more revelations were made, the public's view of the government turned sour. Confidence in politicians plummeted. Two major forces came together in the hopes of not only catching the bad guys but also reversing the public's perception.
Democratic state Attorney Gen. Frank J. Kelley and Republican U.S. Atty. John Smietanka joined forces to investigate what happened. Spartan News (Michigan State University's newspaper) reported that the men formed a task force to find out just how far the corruption went and who was responsible for it.
The task force brought together several law enforcement agencies. Among other departments, the State Police, FBI, and Internal Revenue Service all worked together to follow the money and unravel the plot. It didn't take them long to find out that there was more going on than they thought.
Rep. Stephen Shepich was another figure in the scandal. Not as central as Morberg but still a big figure and one that the task force decided was important to bring charges against. They began to piece together some of his involvement in the scheme.
He used funds from the HFA to pay for his travel expenses, Gongwer reported. Most of the trips that were paid for with the money were personal trips. Investigators followed the paper trail and figured that they had enough evidence to start charging people with the crime.
Then another big-name Michigan politician became mixed up in the scandal. Rep. Dominic Jacobetti, the longest-serving congressman in the state's history, was alleged to have been a part of the scheme. However, he was never charged with anything relating to the crime, according to Spartan News.
The Associated Press reported that despite not being charged with anything, Jacobetti was removed from his position as a member of the powerful Michigan House Appropriations Committee. Something that curtailed the power he had attained.
Charges Brought
Things moved fast with the investigation and charges came in fast and furious. Court papers show that Morberg was charged with racketeering, conspiracy, and tax crimes. He was sentenced to six and a half years in prison.
During his sentencing, the judge said that he believed it should be a longer sentence. In his opinion (via Legal.com) this scheme went on too long for a short or easy sentence:
"In the Court's opinion, the lengthy duration and the extremely repetitive and frequent nature of the criminal acts which underlie the racketeering charge are factors which were not adequately taken into consideration by the guidelines and which militate in favor of an upward departure. The presentence report reveals that defendant Morberg misappropriated some 1.114 million dollars from the HFA over the course of nearly six years. According to the report, defendant essentially used the HFA as his private bank, and the agency's cash imprest fund as his personal checking account."
Shepich pleaded guilty to receiving fraudulent travel reimbursement. As part of the deal, he avoided prison time but was forced to resign as a member of the House. He served his district for just over a year before leaving his seat.
The task force never brought charges against Jacobetti. However, despite winning his re-election bid by a large margin, the public still viewed him as someone who enabled the scheme to go on. The stress took a toll on his health. Two weeks after his victory, the representative died of a heart attack.
It wasn't just scandal and misery that the scheme brought. The Detroit News article that brought it to light went on to win the Pulitzer Prize in journalism for the paper and its reporter.
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