This house on 12209 Whithorn in Detroit was among the properties transferred to a firm owned by Macomb County resident Carlos Powell. (David Coates / The Detroit News)
Detroit— A businessman who borrowed $10 million from a Detroit pension fund to buy foreclosed homes had transferred some of the properties to an alleged international heroin dealer's company, The Detroit News has learned.
The property transfers were discovered by federal drug agents during a raid two years ago, according to a search warrant application reviewed by The News.
Agents found property records indicating a company headed by Detroit businessman Abner McWhorter had transferred two dozen houses to a firm headed by Macomb County resident Carlos Powell, who was indicted in January and accused of heading a large-scale drug ring.
The link is the latest fallout from a failed deal that led to McWhorter's suicide, an international manhunt and a search for $5 million in missing pension fund money.
"It's another twist of a crazy story," Police and Fire pension board Trustee George Orzech said.
The search warrant describes a connection between one of the largest drug busts in Metro Detroit history and a failed pension fund deal involving McWhorter and his company, Paramount Land Holdings.
McWhorter business partner George Kastanes, who is wanted by federal investigators after fleeing to the Caribbean in March, told The News a federal prosecutor asked him questions about the properties during a grand jury appearance in January.
Learning the houses had been transferred to Powell's company "surprised me a lot," Kastanes told The News during a phone interview while holed up at a resort on the Caribbean island St. Kitts.
It is unclear why McWhorter was transferring the houses and what his relationship was with Powell. It also was unclear how and if the homes purchased with pension fund cash were being used by Powell.
The size, scope and profits of Powell's alleged drug ring would rank him among the most prolific drug dealers in recent Metro Detroit history, according to federal investigators.
During the drug probe, federal agents have raided multiple locations in Michigan and Florida and seized more than $21 million in cash, 66 pounds of heroin, 26 pounds of cocaine, 1,000 pounds of marijuana and a fleet of exotic vehicles.
During a November 2010 raid of Powell's home in Washington Township, U.S. Drug Enforcement Administration agents found copies of property records transferring approximately 26 Detroit houses to an Eastpointe company, Grand Towers Inc., according to the search warrant.
The president of Grand Towers was Powell, 37, according to state business records.
Paramount's former lawyer, Ben Gonek, could not explain the connection between Paramount and Grand Towers.
"I have no idea," Gonek said Wednesday. "The first I've heard of Powell's name is today."
Powell's attorney, N.C. Deday LaRene, declined comment on any connection between the two companies.
"I just don't think it's appropriate for me to discuss anything about Mr. Powell's affairs with you," LaRene said.
A spokesman for the DEA declined comment Wednesday.
McWhorter, 41, committed suicide in August amid accusations he was involved in a Ponzi scheme that defrauded the pension fund.
The property records were quitclaim deeds transferring Paramount's title to the homes to Grand Towers, according to the federal search warrant application.
The quitclaim deeds found by drug agents were never recorded with the Wayne County Register of Deeds. The deeds were dated Jan. 11, 2008.
That's almost two weeks before the pension fund approved loaning $10 million to Paramount.
The homes were initially purchased by one of Kastanes' companies, Interstate Investment Group, in fall 2007, the businessman said.
The homes were purchased in anticipation of the pension fund loaning $10 million to Paramount, Kastanes said.
"I would not have agreed to have the houses actually deeded out without payment having been received," Kastanes wrote in an email to The News.
McWhorter reimbursed Kastanes for the homes after the pension fund approved the loan, Kastanes said.
A pension fund spokesman declined comment.
The homes are spread across Detroit. Many are in disrepair.
The properties are a fraction of the more than 1,400 foreclosed homes in Metro Detroit purchased as part of the pension fund deal. Instead of being refurbished and resold, many of those homes are facing foreclosure — or demolition.
In May 2011, the pension fund sued McWhorter's company and 17 related parties, alleging McWhorter was involved in a Ponzi scheme that defrauded the pension fund.
The pension fund alleged Kastanes and his wife helped perpetuate the fraud and diverted loan money. The Paramount deal went into default last year, McWhorter committed suicide in August, and the pension fund is trying to recover money from the $10 million deal.
Kastanes and his wife allegedly pocketed as much as $5 million from the deal and are spending the cash on overseas business ventures and island hopping in the Caribbean, pension fund lawyers said in a court filing last month.
Kastanes said he and his wife fled the United States in March to avoid arrest warrants and they are wanted by federal agents for failing to comply with subpoenas related to a bankruptcy filing.
George Kastanes said he didn't flee with any pension fund money and is not a thief.
He's broke, Kastanes said.
"I wish that I indeed did have $5 million," Kastanes wrote in an email to The News.
From The Detroit News: http://www.detroitnews.com/article/20120503/METRO01/205030402#ixzz1tnoM71gY

















