The Gongwer Blog

The Scandal, 20 Years Later

By John Lindstrom
Posted: January 15, 2013 2:34 PM

Subscribers to The Detroit News were stunned on January 15, 1993, when a front-page story detailed possibly the most severe scandal to hit Michigan state government.

That story outlined the broad details of the House Fiscal Agency, how then HFA Director John Morberg and other HFA employees used the agency’s imprest account as their personal checking account. Even the first reports on the scandal did not cover the full amount improperly used over several years, close to $2 million in total.

While the scandal was first detailed by The Detroit News, which won a Pulitzer Prize for its efforts, the best summary of its scope can be found in the sentencing opinion read by then U.S. District Court David McKeague in 1994 as he sent Mr. Morberg to federal prison (the sentencing document can be found here).

For six years, the fund was used to finance credit card payments, vacations, furniture purchases, property tax payments, social events, dental work as well as payments to HFA employees and contract workers for non-existent workers.

The scandal threatened to collapse the joint-leadership agreement reached days earlier between Republican co-Speaker Paul Hillegonds and Democratic co-Speaker Curtis Hertel.

The scandal also broke before committee assignments were finalized for the House. Beyond the criminal aspects of the scandal, one of its biggest effects was former Rep. Dominic Jacobetti being removed as chair of the House Appropriations Committee, a post he had held for nearly 20 years.

It is no exaggeration to say the scandal likely killed Mr. Jacobetti. The fire-eating “godfather” of the House was a subdued man in his final term. Though never linked to the scandal, he was depressed by how he was viewed. Health problems plagued him his last year. He won re-election by a landslide in November 1994, but was dead of a heart attack little more than two weeks later. Then-Republican Appropriations co-Chair Don Gilmer said a “broken heart” contributed to Mr. Jacobetti’s death.

The scandal also shattered a public view of state government. Before it broke, residents were confident the state was above corruption. Scandals of this sort were reported in other states, but not in Michigan, at least not since the “Purple Gang” scandal two generations earlier. With HFA workers and a state legislator, former Rep. Stephen Shepich, pleading guilty and going on trial that complacent view vanished.

In the years since, the HFA workers have vanished from view. Mr. Morberg is reportedly living in Florida, but refuses all contact with reporters. HFA analyst Warren Gregory – who spilled the beans on kickbacks involved in the scandal – died last week. Former HFA assistance director Jim Heckman, Mr. Shepich, Malik Hodari and others are also off the radar.

But the cynical realization the scandal wrought that no one and no institution can be assumed to be completely free of taint is as active and overwhelming in the state as it ever could be.

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