Michigan inked $25M grant without vetting ex-aide to House speaker, ex-convict

• Michigan did not seek bids before it awarded a $25 million grant to a former aide to House Speaker Jason Wentworth
• Neither principal in the project had experience building a big medical complex
• One was a former funeral worker; the other was indicted for bank fraud one day before the grant was finalized

Michigan officials awarded a $25 million grant to a nonprofit created by a former legislative aide without vetting his qualifications or those of a proposed principal who spent time in prison for fraud, a Bridge Michigan investigation has found.

If officials had done a background search, they likely would have learned that project manager David Coker, a local Republican leader, had never overseen anything like the sprawling health and fitness campus he secured taxpayer money to build in Clare.

Another web search would have shown Anthony Demasi — listed as a program manager on the state grant application — is a disbarred attorney who was convicted of defrauding investors of millions of dollars in Chicago and sentenced to 60 months in prison in 2010.  

Related:

• Timeline: How $25 million deal to ex-House aide raised ‘red flags,’ faltered
• Michigan paid $10M before ‘red flags’ froze ex-House speaker’s pet project
• ‘Red flags’ surround $25M health campus pushed by ex-Michigan House speaker

And just one day before the state health department finalized the grant agreement for the $25 million Clare project in December, Demasi was indicted on new federal bank fraud and identity theft charges.

Through it all, Demasi told Bridge Michigan, his criminal past was not a secret, even though the grant agreement with the state required background checks for all workers on the project with access to “client” information.

“I mean, that's the first thing you (get) when you Google my name,” Demasi told Bridge.

Now, the state has suspended remaining payments on the project, citing “red flags,” and current and former lawmakers are airing suspicions about how it ever got off the ground.

The state health department in March paused the deal and ordered an investigation by its office of inspector general, but not before awarding nearly $10 million to Complete Health Park. 

That nonprofit was created by Coker one month before his former boss, then-House Speaker Jason Wentworth, included the grant in a 2022 budget deal. The nonprofit used state grant money to pay $3.5 million for 70 acres partially owned by Wentworth’s successor in the Legislature, Rep. Thomas Kunse, R-Clare.

Kunse now is among the critics of Coker’s leadership on the health and fitness facility, which is one of 140 pet projects totaling roughly $1 billion that lawmakers approved. Flush with federal stimulus money, the projects fund everything from parks and museums to roads in lawmakers’ districts.

Former state Rep. Steven Johnson alleged that legislators used the grants to help political friends — and staffers at state agencies knew not too look closely at qualifications of grant recipients.

"We need to figure out where this money is going," said Johnson, R-Wayland.

"What I've seen is a lot of grifting,” he added, referring to the grant process during the 2022 budget talks.

Demasi has made a similar allegation: In a lawsuit filed in 55th Circuit Court in Clare County, his firm claims that Coker and Wentworth pushed the project and sought to "skim off" money from the government grant "for their personal gain and benefit."

Coker declined to discuss the litigation. Wentworth, R-Farwell, called Demasi’s claims that he had sought personal enrichment "absolutely garbage," "ridiculous" and “false.”

Demasi has not supplied proof of the Wentworth allegation in court, where he alleges Coker paid him only $37,500 on a $300,000 contract to work on the fitness complex project before firing him after he was indicted in December.

Demasi has made similar claims in interviews with Bridge but has not provided documentation despite repeated suggestions he would.

Records show that Coker’s nonprofit has already paid $823,000 in state grant money for “other expenses” to IW Consulting, a separate for-profit firm founded by Coker in 2020.

A grant agreement shows Coker also intended to pay $13,000 to State Advising LLC, a separate for-profit consulting firm he founded but said he has since handed off the firm to his daughter. 

A state health department spokesperson, Lynn Sutfin, told Bridge the “full extent of David Coker’s relationship with State Advising, LLC and IW Consulting did not become clear until March 2023.” 

A former Clare County GOP chair who serves on the county Road Commission, Coker worked for Wentworth between 2019 and 2020 after stints as a financial adviser and funeral home trainee. 

Coker acknowledged to Bridge it’s unclear what his qualifications were to justify leading a $25 million development.

“You know, I don’t know the answer to that,” he told Bridge earlier this month, going on to tout his “ability to bring a team together.”

“Somebody had to make the nonprofit. It doesn't make itself.”

Bids, land appraisals not required

Coker pitched the project to the state as an effort to combat high rates of poor health among Clare County residents. It was to include a pool, fitness areas, athletic courts, fields and medical offices. A centerpiece of the initial phase: a 24-lane bowling alley, documents and interviews show.

A spokesperson for the Michigan Department of Health and Human Services told Bridge Wednesday the department followed state guidelines on the Clare health complex contract. 

But the award appears in direct conflict with a requirement for competitive bidding on spending over $50,000.

The state told Bridge:

• The bulk of the $10 million spent so far, $5.4 million, was paid by the state to building contractor FED Corp., which is expected to build the initial facility. But the state had no role in choosing the firm. Coker signed a contract with the Gladwin company in July 2022, Lynn Sutfin, a spokesperson for the health department told Bridge. That was about a month after the Legislature created the grant, yet three months before Complete Health Park even applied for the money from the state health department.
• The state did not require Coker and Complete Health to supply an appraisal before agreeing to pay $3.5 million for land for the project from Kunse — Wentworth’s successor — and his partners. The land is part of a larger parcel that was last purchased for $1.1 million in 2005.
• Instead of seeking multiple applicants for the grant, state officials identified Complete Health Park as the likely intended recipient based on conversations with legislators, including Sen. Rick Outman, R-Six Lakes. Outman this week declined comment on his role in the grant but told Bridge he would discuss it "at a later date... whenever all of this starts to go forward."

Johnson said the health department’s decision to ask a legislator about the grant, rather than seek bids, shows the state was more interested in pleasing lawmakers who control the state budget.

"The fact that is even in their mindset is the problem. It means it's happened before. This is not a process that just started,” he said. “The departments are part of it. They know it's part of the game.”

A one-time ‘whiz kid’

In February, Coker fired Demasi as a subcontractor on the Clare project after Demasi was indicted by a federal grand jury in Detroit on six counts of bank fraud and aggravated identity theft. 

Prosecutors allege he applied for credit cards under the names of three employees at his Beta Sole Foundation, which raises money for scholarships. Demasi has pleaded not guilty to the charges, which carry penalties of up to 30 years in prison and a $1 million fine.

In a dismissal letter, Coker told Demasi he had also recently “become aware” about the 2010 Chicago conviction.

But Demasi told Bridge that Coker, who lives just a few doors down from Demasi’s parents in Clare, has long known about that conviction.

"He's known me forever. He knows all about it," Demasi told Bridge.

Demasi grew up in Clare, earned a law degree at Georgetown University and moved to Chicago in the early 2000s. By his mid-30s, he was running two of the city's "hottest" nightclubs — Reserve and Crescendo, according to The Chicago Tribune, which in 2010 dubbed him "the whiz kid of Chicago Way."

"For a kid who came from Michigan knowing absolutely nobody, to become a big-shot nightclub impresario in just a few years, it's obvious that (Demasi) understands how the city works," Tribune columnist John Kass wrote in 2010, as “smooth-talking Demasi” faced sentencing there.

Federal authorities allege Demasi used $4.7 million in investor money to fund local nightclubs, pay off his personal gambling debts and run a Ponzi-like repayment scheme through a failed investment firm, Tsunami Capital. He later wore a wire to help the FBI investigate others.

In a courtroom speech at his 2010 sentencing hearing, Demasi apologized to those he "hurt financially" and described a battle with addiction, according to a transcript. 

He also reminisced about growing up in Clare, where he told a judge his family had talked about "values, beliefs, and helping each other" more than money, which had become a bigger focus in Chicago.

Trouble followed after he was released from prison and returned to mid-Michigan.

Court records in Isabella and Clare counties indicate banks, credit card companies, credit unions, retailers and landlords have gone to court alleging Demasi failed to pay his bills. In July 2021, a Flint credit union sought to repossess a $48,000 boat he bought and in 2022 four credit card companies sought a total of $17,401 that they claimed he failed to pay.

Demasi told Bridge that "nearly all" his debts have been paid, including full repayment of the boat loan.

As of 2019, he still owed $3.1 million for restitution in the Chicago fraud case after paying $840, according to court records, which show Demasi had returned approximately $1.9 million to investors before a federal judge ordered to pay $3,151,341 as part of his sentence.

Demasi’s background didn’t prevent Michigan from awarding a $25 million grant to Complete Health, which listed him as a program director on an official state grant application.

The Chicago conviction is public information and was flagged by Mid Michigan College in Clare County after it hired Demasi in May 2019 through an employment firm.

After a community member raised concerns about Demasi, college official Lori Fassett told Bridge she did a Google search, which “(provided) everything I needed to know.”

Demasi was allowed to finish the semester and his contract terminated in December, Fassett said.

 “I can assure you if I had the background check in May, 100 percent he would not have been hired for that semester,” said Fassett, the associate vice president for human resources at the college.

Demasi disputes the college’s account, saying he taught for three semesters. He also said received high reviews from staff and students. Board meeting records indicate he was hired May 13, 2019, and left Dec. 21, 2019.

‘I never handled any money’

Given his past conviction, Demasi told Bridge he can understand people questioning his initial involvement in the Complete Health Park project.  

But, he said this week, “the only thing I did with this project is work hard on it. I never handled any money."

Demasi’s role with Complete Health was no secret — he authored the feasibility study given to the state Health Department on Nov. 9, and he was listed as program director on the application submitted Nov. 30.

The contract was awarded and signed by Coker and the state on Dec. 15. The first checks were disbursed Jan. 4. Demasi was not actually a program director, according to Coker, who has called him a subcontractor hired specifically to consult on paperwork associated with the grant. 

Yet the state health department’s handling of the Clare grant appears to be an anomaly because it often issues requests for proposals on grants.

Since July 2022, when the $25 million budget allocation for the Clare health project was signed into law, the department has issued press releases announcing requests for proposals for at least 13 other grants, including support services for substance abuse treatment centers and a feasibility assessment for a cancer study in Flint.

Even though Coker previously worked for him, Wentworth has distanced himself from his former aide, telling Bridge this week that Coker "was fired from my office prior to being speaker.”

He declined to explain why Coker was terminated, citing legal reasons.

Wentworth said he still supports the concept of a health park and encouraged state officials to seek bids.  An October 2022 email obtained by Bridge shows Wentworth's budget director told a legislative liaison for the health department that Wentworth was "interested in a competitive bidding process to select the best team to move the project forward."

The Wentworth staffer also asked MDHHS to share a copy of the Request For Proposal when it was ready to share publicly. 

The state did not seek other applicants.

“My role in this project is clear and limited: I worked to secure the budget appropriation for this much-needed health campus in Clare,” Wentworth said Thursday in a statement. “I had no role in determining who received the grant to build the project and have not been involved since.”

State Rep. Roger Hauck, R-Mount Pleasant, said Coker was not qualified to manage a major project. 

"I even asked the guy, have you ever built anything? He said no but... he had a line for everything."

Hauck said he went to state officials, along with Kunse, whose real estate firm sold the land to Coker’s Complete Health Park for $3.5 million, to raise questions about the deal. 

It was after those conversations with lawmakers, apparently, that state officials decided to “pause” the grant, although Sutfin, the spokesperson, declined to identify what “red flags” it discovered after awarding nearly 40 percent of the $25 million grant.

"If we wouldn't have called them into my office to tell them what the hell was going on here, (the state) would have ended up giving this guy $25 million," Hauck said of Coker. 

A ‘risk of favoritism’

Lawmakers from both parties have used the budget process to award money to pet projects for years.

As Bridge has reported, there’s the $35 million in grants since 2017 — including $15 million in the 2022 budget deal — to extend utility lines in Washtenaw County that would benefit a real estate business owned by the GOP’s former chair, Robert Schostak. He, along with his family, have donated hundreds of thousands of dollars to Republican candidates, including $40,000 to Wentworth’s leadership fund in 2022.

And Democrats pushed for grants as well, including $5 million in 2022 for a program promoting skilled trades backed by union carpenters. Within months, the carpenters’ union had donated $350,000 to key Democrats, including Gov. Gretchen Whitmer and legislative leaders.

Legislative earmarks can be used to support good projects, but bypassing "the normal process" for awarding contracts or grants introduces a "risk of favoritism" or somebody "doing stuff outside the norm," said former state Rep. Dave Maturen, R-Vicksburg.

"We have people sitting in Lansing everyday making laws and processes for people to follow," Maturen said. 

"And it just seems to me when you shortcut the process that is prescribed — either statutorily or through the bureaucracy — to make sure there are checks and balances, there's always a chance that it may not be done appropriately."

Editor’s note: This story was updated at 11:45 a.m. May 22 with additional comments from Anthony Demasi to clarify his restitution payments, debts and employment at Mid Michigan College, information that came to light after the article published.