A week after Michigan Gov. Jennifer Granholm declared the city of Ecorse to be in a state of financial emergency, the Federal Bureau of Investigation arrested the mayor and city controller on charges of public corruption.

Mayor Herbert Worthy and Controller Earl Hollenquest were charged with conspiracy, bribery, and fraud in connection with an alleged kickback scheme related to a public works contract.

The government alleges the officials took kickbacks from Michigan Municipal Services LLC, which was hired in 2007 to take over the public works department after Worthy laid off the department’s 60 employees. The criminal complaint also says the officials allowed MMS to inflate its charges to the city.

The arrests came after Granholm declared Ecorse, a suburb of Detroit, to be in a state of financial emergency stemming largely from a $9 million deficit and late financial filings. Last week, Worthy said the city would fight the state’s move to appoint a fiscal manager to take over.

The criminal complaint says the owners of MMS —  one of Worthy’s largest campaign contributors — paid up to $40,000 to him so that their company would be selected for a $3.1 million public works contract. The company was formed two days after Worthy was elected.

The FBI alleges the company inflated its charges by hundreds of thousands of dollars and that Hollenquest received cash and a Lexus automobile to ensure that the invoices would not be challenged. The controller allegedly showed the owners of MMS how to falsify their bills.

Worthy and Hollenquest appeared in U.S. District Court in Detroit and released on bond. Hearings are set for Oct. 16.

Ecorse was the first city in Michigan to go into receivership, which it entered in 1986 and exited 13 years later. 

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