By ANDREA POTEET
Sunday Times Newspapers
ALLEN PARK – A federal investigation into the city’s failed movie studio venture has expanded.
City councilors hesitated during their regular meeting Tuesday to call what began as an “inquiry” by the U.S. Securities and Exchange Commission in 2011 an “investigation” but did say the scope of the inquiry had expanded, including interviews with former city officials, and voted to retain a law firm to handle the case.
“I’m not sure if ‘investigation’ is the right terminology,” City Attorney Chris Forsyth said. “But I will say that the initial inquiry was basically the Securities and Exchange Commission asking four questions and that now that is expanded. They are now seeking more information from the city. Not to split hairs, but whether it’s an investigation yet, we don’t know.”
The SEC sent a letter in February 2011 to the city seeking answers to four questions regarding its failed deal with Unity Studios which ended in the fall of 2010 after a year when owner Jimmy Lifton vacated the property, which the city bought for $25 million in 2008.
The letter asked questions about whether the city gave money to Lifton to influence his decision to set up in the city, whether the city overpaid for the property, and whether the city misled investors in a bond measure to pay for the complex.
Audits performed after the Unity deal ended found the city overpaid by as much as $4 million for the property.
The city responded to the SEC inquiry in February and heard nothing from the commission save for followup questions in August 2011 until a letter from the SEC recently informed the council that it may request documents and interview former city officials.
Interim City Administrator Dave Boomer said Tuesday that within the week prior, several former city officials had already been questioned.
“In the last week, they have already contacted previous members of this administration,” he said. “They are pushing forward with the investigation at a fast pace.”
The city council voted that night to retain Rochester-based Miller Law Firm, which responded to the original inquiry in 2011.
“They will only come into play as the SEC initiated it,” Councilman Bob Keenan said. “They will not be on the offense; they will be on the defense.”