By Tom Perkins and Violet Ikonomova
Former Detroit police chief and likely Republican gubernatorial candidate James Craig twice filed for bankruptcy while a ranking officer in the Los Angeles Police Department, federal court documents obtained by Metro Times and Deadline Detroit show.
The Chapter 13 filings from 1997 and 1998 stem from credit card debt, IRS arrearages and delinquent mortgage payments, potentially raising questions for voters about Craig’s ability to handle the state’s more than $60-billion budget. The cases seem designed to reorganize debt to prevent an impending foreclosure on a $270,000 home he and his then-wife purchased in LA’s Baldwin Hills neighborhood, according to Southfield-based bankruptcy attorney Morrie Lefkowitz, who was not part of the case but reviewed the files.
Both cases were dismissed by a judge after Craig failed to make payments on his reorganized debt. The debt may have been resolved when Craig eventually sold his home, which was near foreclosure, at a profit.
Though the documents don’t provide a concrete reason for why Chapter 13 was filed, it’s often used by those who are about to lose their home, Lefkowitz said. Documents show Craig, who was then in his early 40s, and his then-wife were about $15,000 behind on mortgage payments and owed $26,000 across about 11 credit cards, including $5,000 to Discover, $1,600 to Goodyear, and $700 to Saks Fifth Avenue.
“My guess is he wanted to catch up with the mortgage company,” Lefkowitz said. “They’re presenting a reorganization — this is who I owe, this is what I owe, this is my income, my expenses, and this is the amount of money I have to pay creditors.”
A representative for Craig, who responded after publication, stressed that the retired law enforcer paid his debts.
“Less than 24 hours after Chief Craig teases an announcement (for governor), Gretchen Whitmer sends her minions to launch a desperate nothing burger attack from a quarter-century ago," said Ted Goodman, who described himself as an "informal adviser" to Craig. "Chief Craig has since successfully managed budgets into the hundreds of millions of dollars as chief of police to the city of Detroit."
The revelation comes as Craig promises to make an “important announcement for Michigan’s future” on Tucker Carlson’s show on Fox News next week. The former police chief has been courted by state and national GOP figures to take on Democratic Gov. Gretchen Whitmer in 2022, and is viewed as a strong law-and-order candidate who could attract Black voters in Detroit, where he was generally popular as chief.
Recent polling has shown Craig and Whitmer within points of one another in a hypothetical matchup, but prospective Michigan voters overwhelmingly prefer the ex-chief to handle jobs and the economy, with a May Target Insyght poll showing him up 63 to 30 percent in that category.
“This information could sway those people,” said Ed Sarpolus, who conducted the poll. “Republican voters prefer someone strong on the economy. (Craig’s handlers) are giving the impression they didn’t vet him before they jumped on his bandwagon.”
No candidate for Michigan governor or U.S. Senate in at least the last 50 years is known to have filed for bankruptcy, said political analyst Bill Ballenger.
“This would be kind of a first,” said Ballenger. “But depending on his explanation I think it might provoke some sympathy for him; voters may say, ‘Hey, I can identify with this.’”
“If he was going around claiming he was another Rick Snyder, however — you know, ‘I’m a self made millionaire, I want to turn the state’s economy around’ — it could hurt him. But we haven’t heard that from Craig.”
Craig’s political stock and national visibility rose last summer with appearances on right-wing outlets, like Fox News and Newsmax, where he questioned the motives of racial justice demonstrators, claiming their goal was to promote “a Marxist ideology.”
It’s unclear from the documents why the couple wasn’t able to keep up with home, auto, tax and credit card payments. Court filings show Craig, who was a police lieutenant around the year 2000, and his spouse together earned about $140,000 — or $235,000 when adjusted for inflation. That was enough to cover the listed expenses and debts for them and two children, documents show. One child was Craig’s from a previous marriage; court filings show he has been married to three different women.
Aside from the credit card debt, the couple owed nearly $2,000 to the IRS; about $254,000 on their 2,100 square foot stucco home with a pool; around $14,000 on a Pontiac Grand Prix.
The December 1997 filing was dismissed soon after a payment plan of about $1,070 for 36 months was agreed upon by the Craigs and debtors. Documents show the Craigs didn’t make the first payment, though it’s unclear why.
A second case was filed months later and a similar payment plan established in April 1998, but the first payment was never made this time around either. However, property records show that the Craigs appear to refinance their home in September 1998 and borrowed $284,000.
About six months later, the Craigs sold the home for $332,000, enough to cover their debt, which appears to have ended the financial troubles.
Bankruptcies of this kind when people found themselves underwater and facing the prospect of losing their home, were more common in the 1990s, Lefkowitz said.
“Mortgage companies are now more in tune with trying to avoid people getting to that point and now offer so many programs to work things out,” he said. “You don't see that many foreclosure sales on properties anymore.”
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