LANSING, Mich. (Michigan News Source) – In September 2024, Michigan’s Board of Ethics (BOE) received a detailed 41-page fully sourced complaint from Tedda Hughes, a Michigan resident and law enthusiast.
The complaint to the BOE by Hughes, supported by extensive documentation, alleges significant ethical violations and conflicts of interest involving two high-ranking executives appointed by Governor Whitmer to the Michigan Economic Development Corporation (MEDC) – Randy Thelen, CEO of The Right Place Inc., and Tom Lutz, a board member of the Michigan Strategic Fund (MSF) – as well as several union officials and affiliated organizations. Thelen and Lutz have both argued that the claims are unfounded.
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In a prior demonstration of her commitment to ethical oversight, Hughes filed complaint with the BOE in September of 2023 to have them investigate Deborah Mikula, a Michigan Arts and Culture Council member, who was found to have violated state ethics rules by failing to recuse herself from voting on grants for organizations she was connected to, including the Michigan Library Association, where she serves as executive director.
At the time, according to a Detroit News report, Hughes expressed hope that the review would lead to broader scrutiny of state agencies’ conflict-of-interest procedures, criticizing the system’s repeated failures. However, according to the Hughes September complaint, that does not look to be the case.
Ethical storm brewing: Hughes targets Whitmer appointees and union affiliates in latest BOE complaint.
The September allegations from Hughes read like a script for a political drama: appointees allegedly using their dual roles as grantors and grantees to funnel millions into their organizations, all while taxpayers are left footing the bill. From alleged quid-pro-quo transactions to opaque financial dealings, the complaint underscores how Hughes believes that public officers have been operating with one hand in the public till and the other firmly in their own cookie jar.
The BOE had initially scheduled the allegations for review during its December 5th meeting. However, the meeting was canceled due to the expected unavailability of the Chair at the time.
Millions at stake as well as ethics and accountability issues.
Around the same time that the BOE meeting was supposed to take place, Michigan Democrats moved swiftly during the lame-duck legislative session to authorize millions of dollars in continued funding for the MEDC’s grants and corporate incentive programs – an effort that reportedly became a top priority for Governor Whitmer according to a source close to the situation.
A complex web of grants and governance.
The allegations from Hughes’ complaint and supporting documents that she provided extend beyond ethics violations and conflicts of interests between just a handful of people.
The source who sent Michigan News Source the information says that the complaint and accompanying documents appears to expose a “complex web of alleged embezzlement between unions, political organizations, SuperPACS, nonprofits, Governor Whitmer’s campaign and taxpayer funding flowing through the MEDC.”
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The Hughes complaint, although highlighting alleged misdeeds of Whitmer appointees Thelen and Lutz also includes two other Whitmer appointees: Stephen Pontoni, a registered lobbyist as well as Executive Director of the nonprofit Michigan Association for Justice and President of the Two Peninsulas Research Group; and Jennifer Root, an active registered lobbyist and a leader within the Michigan Service Employees International Union (SEIU) and appointee to various councils including Whitmer’s Growing Michigan Together Council.
Hughes’ complaint also sheds light on on a broader network of unions, nonprofits, and political organizations tied to what is alleged to be unlawful activities including what Hughes says amounts to ethic violations, inappropriate conflicts of interest and unlawful contracting/public fund expenditures at MSF and MEDC.
The complaint claims that taxpayer-funded grants have been awarded to entities with overlapping leadership and interests, raising concerns about compliance with Michigan’s ethics and contracting laws. While officials like Thelen and Lutz disclosed their affiliations and recused themselves from certain votes, the complaint asserts that these actions do not fully address the deeper legal and ethical issues.
According to the complaint, Michigan law prohibits public officials from participating in contracts that directly or indirectly benefit themselves or their employers and Hughes argues that the current practices within the MEDC and MSF undermine these legal standards.
Randy Thelen and Tom Lutz in the spotlight.
The two key individuals central to Hughes’ allegations are Randy Thelen, CEO of The Right Place Inc., and Tom Lutz, a board member of the Michigan Strategic Fund (MSF), which oversees MEDC funding. Hughes has accused them of violating prohibited conduct in the Ethics Act listed under MCL 15.342 which outlines standards of conduct for public officers and employees.
Mr. Thelen, CEO of The Right Place Inc., a nonprofit economic development corporation, joined the Michigan Economic Development Corporation’s (MEDC) Michigan Strategic Fund (MSF) Board in spring 2023. For background information on the organization, the Right Place secured over $175 million in grant funding and a Renaissance Zone designation valued at $540 million from the MEDC for the Gotion project through SOAR (Strategic Outreach and Attraction Reserve) whose funds are managed by the MEDC and MSF.
According to the Hughes complaint, one of the things she points out occurred in July 2024 when Mr. Thelen voted to extend taxpayer funding to Gentex, a company specializing in advanced technologies, primarily in the automotive and aerospace industries
Hughes told Michigan News Source, “Gentex CEO is the president of the board at the tax-exempt economic development corporation called the Right Place Inc where he determines the Right Place Inc’s executive director, Randy Thelen’s, salary. Randy Thelen was appointed to the MEDC MSF board in April 2023. In the following months he disclosed conflicts of interest and recused himself dozens of times. Thelen voted in July 2024 to renew millions in Gentex’s MSF funding despite the fact that the MSF Act prohibits funding organizations which have been found to falsify records. The SEC fined
Gentex $4 Million in February 2023 for falsifying records. Thelen neither recused himself, nor did he admit his conflict of interest, nor did he tell MSF that Gentex had falsified records.”
Hughes complaint also outlines how while serving on the Michigan Economic Development Corporation’s (MEDC) Executive Committee, Tom Lutz’s employer, the Michigan Regional Council of Carpenters and Millwrights (MRCC) and its subsidiaries received $10 million in grant funding from the MEDC. During this 18-month period, Mr. Lutz’s salary from the MRCC nearly tripled according to Hughes. Information in the complaint also includes MRCC contributions to “Whitmer for Governor” and the nonprofit “Two Peninsulas Research Group” which Stephen Pontoni is the president of.
Hughes explained, “Union and nonprofit leaders from tax-exempt MRCC, SEIU, and MEA/NEA, Michigan Civic Action Fund, and the Michigan Association of Justice run a shell nonprofit called Two Peninsulas Research Group. Their tax-exempt organizations have given TRPG millions in union funds and nonprofit funds although TPRG lacks any record of filings with the IRS (990s/8871s) or even a website. These same people hold government appointments on numerous policy-making commissions while their other tax-exempt organizations enjoy millions in grants every year from those same commissions. As governor appointed commissioners, these folks have a front row seat to all program grants. They participate in determining the terms and recipients of the grants they solicit. They evade taxes in a three-fold manner, while regular citizens pay the difference for them. Of course, these nonprofit and union leaders donated heavily during the elections of the top offices in the state. They did this while also running the inauguration nonprofit Michigan Transition 2019 and other organizations together including TPRG, Progress Michigan, Michigan Made Great, etc. The unions and nonprofit leaders also used union and nonprofit funds to pay their SuperPac Justice for All Michigan.”
Look for part 2 tomorrow: Whitmer Appointees Fire Back at Explosive Ethics Allegations
Supporting documents:
Thelen ethics complaint notice
Hughes statement to Dept. of Labor
Lutz evidence
Thelen grants
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