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Two charged with three-year-long embezzlement scheme in Michigan
Kevin Gunn, 64, of West Bloomfield, and John Gibson, 54, of Detroit, were both employed with Wayne County when they allegedly solicited vendors who had contracts with the road division to buy generators from local retailers on behalf of the county.
DETROIT (FOX 2) - Two men from Metro Detroit have been charged with conspiracy and embezzling $1.7 million Wayne County funds intended for the department's roads division.
Suspects from West Bloomfield and Detroit allegedly purchased close to 600 generators and other power equipment tools that were then sold for personal profit. The scheme, according to a complaint filed by the U.S. Justice Department in the Eastern District of Michigan, had been going on since 2019.
Kevin Gunn, 64, of West Bloomfield, and John Gibson, 54, of Detroit, were both employed with Wayne County when they allegedly solicited vendors who had contracts with the road division to buy generators from local retailers on behalf of the county.
In an effort to conceal the scheme, vendors would falsify their invoices that were submitted to the department and instead list items that the vendors were authorized to sell under their contracts with the county.
According to a federal complaint unsealed Tuesday, once Gibson and Gunn had their hands on the generators, they resold the generators at significantly-reduced prices on Facebook Marketplace and pocket any money they made in the process.
According to the complaint, they also bought lawnmowers, chainsaws, and backpack blowers in addition to the generators.
Wayne County Executive Warren Evans said his office had been assisting in the investigation and upon discovery requested assistance from both the sheriff and prosecutor, as well as the FBI and state Attorney General's office.
"I take public corruption very seriously and will pursue every avenue to fully prosecute these employees and vendors," Evans said. "Disciplinary hearings for the two employees arrested this morning are scheduled for this afternoon with their union representatives. Immediate termination is expected based upon the gravity of the offenses. There are no county elected officials or executive appointees implicated in the investigation. As this is an open investigation, I am unable to provide additional details."
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Gunn is the manager of the Bridge Unit within the Wayne County Roads Division and has been employed with the county for 34 years. Gibson is a foreman at the agency and has worked for the county for 20 years.
Wayne County gets about $20 million a year in federal funding for its road construction.
According to the complaint, the Wayne County Sheriff's office got a tip in March 2021 about an unusual increase in purchases of generators by a party designated Vendor A, which was acting on behalf of the county.
That same day, Gunn ordered the purchase of 14 Honda generators, which were paid for by another party designated Vendor B, who also had a contract with the county. Instead of invoicing the county for the generators it invoiced the county for items that were authorized under the contract.
After the purchase, two men in a black Dodge pick-up truck with an attached U-Haul trailer picked up the generators. The truck was registered to an individual who is now cooperating with the justice department.
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A search warrant executed later that day by the sheriff's office recovered the generators that were purchased by Vendor B, as well as $40,000 in cash from a safe. From there, the county learned an outline of the fraud scheme, which was detailed to police by the cooperating individual, who was a roads division employee.
With the individual's consent, officers conducted surveillance while a payment of $4,500 in cash was made to Gunn.
Federal authorities reported another instance of the scheme on June 16 when Gibson was spotted loading several generators into the bed of a truck. They were paid for by Vendor A on behalf of the county. Gibson was later spotted taking the generators to a private residence where they were unloaded into a large metal shipping container.
Both men face charges conspiring to commit and committing federal program theft, wire fraud, and money laundering. They face decades in prison and fines worth hundreds of thousands of dollars.