Businessman in jail in case involving city loan

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A businessman who vowed to bring a vinyl manufacturing plant and more than 100 jobs into economically ravaged Flint two years ago was jailed Wednesday on charges that he diverted $1.2 million in business loans from the city.

Joseph Giacalone and business associate Daniel Robin "sucked what little blood was left in the city" by diverting the money to their own use, Genesee County Sheriff Robert J. Pickell said.

"This was a scam from the very beginning," the sheriff said.

Giacalone, 65, of Flushing was arraigned Wednesday on two counts of larceny by conversion over $20,000, a maximum 10-year felony. He was lodged in the Genesee County Jail in lieu of a $100,000 bond set by Flint District Judge Nathaniel C. Perry III.

Also Wednesday, the city's former grants manager, Alexander J. Thomas Jr., was arraigned by Perry on a count of misconduct in office, a maximum 5-year felony.

Pickell and Genesee County Prosecutor David S. Leyton said Thomas failed to monitor the project by Giacalone's Lennon-based company, OK Industries.

Robin, 55, the company's chief financial officer, also faces two counts of larceny by conversion and was expected to surrender for arraignment this week.

Thomas' attorney, Philip H. Beauvais III, said officials are launching a "political witch hunt" against Thomas, who was the interim economic development director when the loan was approved.

Thomas was gone from the city before most of the money was paid to OK Industries, Beauvais said.

Leyton and Pickell said the alleged theft occurred partly because Thomas was asleep at the switch. There was no evidence that other city officials were involved, they said.

Pickell questioned why the city would have loaned so much money to an ex-convict who Pickell said had bad credit and a bad record with the Better Business Bureau.

The sheriff's department began investigating the OK Industries loan in late 2002 when Ed Kurtz, then Flint's emergency financial manager, questioned nearly $1.3 million taken from a fund and given to Giacalone, Sheriff's Capt. Chris Swanson told Perry while swearing out a warrant request on Tuesday.

Detectives found that the applications and collateral used by Giacalone to obtain the funds were "misrepresented and inflated."

The case dates to May 2001, when Giacalone vowed to locate a vinyl manufacturing plant at a site he owned on N. Saginaw Street. He said the plant would employ more than 100 people, most of them low- to moderate-income workers, officials said.

OK Industries received about $225,000 from the nonprofit Community Capital Development Corp. to buy equipment, authorities said. It also received $877,600 in grant money paid out in a half-dozen installments, they said.

But the company has done no work at the site and made none of its scheduled payments on the loans, Leyton said.

"Not one shovel of dirt has been turned ...," Leyton said.

Giacalone's lawyer, Thomas McCombs, acknowledged that Giacalone received more than $1 million from the city but said he used the money for his business, not personal expenses.

McCombs said the criminal case stems from a federal suit filed against the city by Giacalone in U.S. District Court. The suit claimed the city was to blame for the project's failure, in part because it didn't disburse the loan money in a timely manner.

"I believe he'll be exonerated," McCombs said of his client.

Giacalone is due in court Friday for a pre-trial hearing. Perry set a May 24 pre-trial for Thomas, who now lives in Caledonia.

In 1968, Giacalone was convicted along with two other men in the armed robbery of a jewelry store. He also pleaded guilty to a gambling charge in 1969.

Giacalone was sentenced to 50 to 75 years in prison in the robbery. But the conviction was later thrown out by the state Supreme Court, and he was released from prison in 1978 after entering a plea bargain.

Seventh Ward Councilman Matt Schlinker said the City Council approved the loan thinking it would create jobs on the city's north side.

The council has since learned to scrutinize loan applications more closely, he said.

"We thought we (had) been presented a pretty good case ...," he said. "(But) everybody involved should have been more leery and concerned about whatever was backing these loans."

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© 2005 Flint Journal. Used with permission