Shelby terminates contract with its engineering company

By: Kara Szymanski | Shelby - Utica News | Published July 22, 2019


SHELBY TOWNSHIP — Shelby Township terminated its contract with its engineering company July 16 after the company’s owner was convicted of bribing officials in Washington Township.

The Shelby Township Board of Trustees unanimously decided to terminate engineering company Fazal Khan & Associates.

Fazzulah Khan, who owns Fazal Khan & Associates in Sterling Heights, recently was convicted of four counts of bribery for paying off two Washington Township officials.

Khan, 58, of Troy, was accused of paying a $10,000 bribe to Washington Township Supervisor Dan O’Leary, who was a whistleblower working with federal investigators; offering a land deal to the late Steven Hohensee, the former Washington Township public works superintendent; taking Hohensee on a two-day fishing trip to Frankfort, Michigan, in September 2014; and giving him $1,000 to spend at the Little River Casino.

The alleged bribes, which all occurred in 2014, were allegedly part of an effort to gain the township engineering contract over another firm.

A former employee of Fazal Khan & Associates, Stacy Cerget, testified in court July 9 that some Shelby Township officials may have been involved in receiving money as bribes too.

She named officials in other communities and Shelby Township Supervisor Richard Stathakis and Clerk Stanley Grot as possibly being involved. Both Stathakis and Grot have denied having done so.

During the Shelby Township Board of Trustees meeting July 16, the topic was discussed in detail. Stathakis had the item added to the agenda so that discussion could be held.

“I wanted this in open session. Undoubtedly, board members, all of you by now have heard that a federal jury returned a verdict against the principal of Fazal Khan & Associates for charges involving criminal conduct. Mr. Huth, as I understand it, it is in our current contract with Fazal Khan & Associates, it does permit us to take action tonight to terminate it,” said Stathakis.

Township Attorney Rob Huth elaborated on the actions the township could take.

“Chairman, Mr. Supervisor, and board, if the board is seeking to take action, I would be willing to discuss a motion; maybe for discussion purposes, I can do that now. The board may consider a motion pursuant to the contract termination clause in the contract with Fazal Khan & Associates to terminate the contract and to seek proposals for a new contract engineer,” said Huth.

In response to the recommendation by the township attorney, Trustee John Vermeulen made a motion to terminate the contract.

“I move to terminate the contract. I think it’s important to remember that all of us on this board took a duty to uphold the Constitution. Part of that is innocence until proven guilty. Mr. Khan was put on trial, and a jury of his peers had voted guilty on all four felony counts, and for that reason, I think that we have no other choice but to rescind the contract. I know that I have not taken any money from Mr. Khan or his engineering firm. I think that this guy has got to go. It’s in good government that we have to terminate this contract and we have to seek out other entities,” said Vermeulen.

Trustee Lynn Wilhelm seconded the motion by Vermeulen.

Grot directed the discussion to Huth regarding why the township was hesitant in terminating the contract.

“I know there was some discussion from the floor that we kept this guy here for the duration. Can you (Huth) inform everyone why you advised us not to fire him?” said Grot.

The attorney had previously recommended that the body be cautious about making any premature moves because of past negative outcomes.

“Frankly, the township has had history with respect to terminating vendors, and although the circumstances were not the same, the township did terminate another vendor who had been indicted,” Huth said. “The vendor sued the township. We went to trial in Macomb (County) Circuit Court. Two-week trial. The jury sided with the township and said that the indictment warranted justification for termination of the contract.

“Then a year later, the court of appeals took oral arguments, heard the case, and rather remarkably did not send it back to trial court for a new trial, just reversed and entered a $550,000 judgment against the township for terminating. Yes, there were differences in that case and this case, but principally, it was essentially the same issue: whether indictment alone stands to allow for a termination of a vendor.

“This board did discuss this issue after the indictment. We looked at the indictment at one of these board meetings, and the bottom sentence of the indictment says along the lines of ‘an indictment is not evidence of guilt,’ and I think that’s the Justice Department and the government’s way of saying that there will be a trial later, but it can be challenging to use the indictment as the sole purpose or cause for terminating a vendor,” said Huth.

Stathakis stressed during the meeting that he knew nothing about the issue and that he did nothing wrong.

“I have no idea what this Stacy Cerget is talking about. All I know is that I have done nothing wrong, and all my dealings with Fazal Khan have been business-related. So I’ve always said you can’t believe everything you hear, but you can repeat it,” said Stathakis.

Grot said he testified under oath and said it was a misstatement of facts.

“Yes, there were allegations against me made in court against a disgruntled employee from Fazal Khan & Associates. I don’t know what this person has or had in mind that she brought up my name. The very next day, I testified under oath to dispute everything that person said, because it was a misstatement of fact. When I came here, there already was an engineer here in Shelby Township,” said Grot.

“She claimed that she saw me coming in and out of the office multiple times taking envelopes,” Grot said.

The board agreed to terminate the contract and seek new proposals for new engineering firms. The board may also establish a committee for engineering firm proposals.

As for current projects in the township, Huth said the date of termination of the contract with Fazal Khan & Associates is approximately Sept. 16, and the township might have a new firm in place by that date.