Former Cobo Civic Center Contractor Sentenced for Making False Statements on His Tax Returns

March 4, 2010 - Karl Kado, 69, of West Bloomfield, was sentenced today to three years of probation as a result of his guilty plea to one count of making false statements on his tax returns before United States District Judge Marianne O. Battani, United States Attorney Barbara McQuade announced. Kado was also ordered to pay restitution in the amount of $146,874.39, a fine of $30,000 and ordered to perform 20 hours of community service per week for a period of one year. At the time of sentencing, Kado provided two checks totaling $146,874.39 for his tax due and owing, including interest, to the Internal Revenue Service.

McQuade was joined in the announcement by Maurice Aouate, Special Agent in Charge of the Detroit Field Office of the Internal Revenue Service and Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation.

Kado is the owner of Metro Services Organization, Inc., which held exclusive electrical and janitorial contracts at Cobo Hall. Kado’s guilty plea was based on his and his company’s failure to declare approximately $270,000 in cash income from 2002 and 2003. The cash was generated by Rachel’s Corner, Kado’s sundry store in Cobo Hall. One of the reasons that Kado did not declare the cash income was that he used it to make illegal payments to former Cobo Civic Center Director Efstathios Louis Pavledes and other persons in connection with his exclusive contracts at Cobo Hall.

Kado was facing of maximum sentence of up to 18 months in prison, however, due to his substantial assistance in the investigation and prosecution of others, the government requested the court to impose a sentence of not more than six months, along with a monetary fine.

United States Attorney McQuade said, “Public corruption is among this office’s highest priorities. We will not only hold those public officials accountable who accept bribes, we will pursue those who offer and pay the bribes.”

"Income derived from any source, cash or otherwise, must be honestly reported on tax returns," said IRS Criminal Investigation Special Agent in Charge Maurice Aouate. "We should not expect the honest taxpayer to foot the bill for those who hide income from the IRS."

The investigation of this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorney R. Michael Bullotta and Assistant U.S. Attorney Mark D. Chutkow.