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Former City of Atlanta official indicted for bribery, money laundering, obstruction and tax fraud in connection with City contracts

April 6, 2018 By Andrew Smith

According to an April 5th statement released by the Office of the U.S. Attorney for the Northern District of Georgia, Mitzi Bickers has been arraigned on 11 federal charges including conspiring to commit bribery, wire fraud, money-laundering, federal obstruction and tax fraud.  Bickers was indicted by a federal grand jury on March 27, 2018.

“City of Atlanta contracts always should go to the most qualified bidder through a contracting process that is fair and transparent,” said U.S. Attorney Byung J. “BJay” Pak.  “Instead, Mitzi Bickers allegedly conspired to use her influence as a high-ranking City of Atlanta official and later as a connected political consultant to steer lucrative city contracts to Elvin R. Mitchell, Jr., Charles P. Richards, Jr., and their companies through bribery.  The illicit arrangement netted over $2 million in bribes for Bickers and almost $17 million in city contracts for Mitchell and Richards, and has shaken the public’s trust in the city’s contracting process.”

“The actions of Bickers, alleged in this indictment, traded the public’s trust in a fair bidding process for personal gain,” said David J. LeValley, Special Agent in Charge of FBI Atlanta. “The FBI and its partners in law enforcement will not tolerate those who choose to try to influence established and proper government procedures.”

“Public officials need to be reminded of the trust and duty bestowed upon them by the taxpayers to serve the public’s interest not their own,” said Thomas J. Holloman, Special Agent in Charge, IRS-Criminal Investigation.  “When public officials and those seeking to do business with them break this trust by committing fraud, they will be charged to the fullest extent of the law.”

According to U.S. Attorney Pak, the charges, and other information presented in court on April 5th:

  • As the City of Atlanta’s Director of Human Services and after leaving employment with the city, Bickers allegedly conspired with contractors Elvin R. Mitchell, Jr. and Charles P. Richards, Jr. to accept bribe payments for herself and other public officials in exchange for the her agreement to obtain city contracts for Mitchell’s and Richards’ companies.  Both Mitchell and Richards have pleaded guilty to paying bribes to Bickers and are currently serving federal prison sentences for their crimes.
  • In 2009, Bickers worked on the mayoral campaign and began working for the City of Atlanta after the election.  From February 2010 to May 22, 2013, Bickers served as the City of Atlanta’s Director of Human Services.  Beginning in 2010, Mitchell and Richards agreed to pay bribes to Bickers to secure profitable City of Atlanta contracts for their businesses.  At times, the bribe payments allegedly were referred to as “up-front money.” In reality, Mitchell and Richards often paid Bickers when their companies actually received City of Atlanta contract work.
  • In exchange for the bribe payments, Bickers promised to represent Mitchell, Richards and their companies on matters relating to City of Atlanta contracting, even though she was a high-level city employee at the time.  Bickers also allegedly provided Mitchell and Richards with sensitive contracting information during the critical time when they were bidding on city contracts.  Between 2010 and 2013, Mitchell’s and Richard’s companies received multi-million dollar contracts with the city for snow removal, sidewalk repair and maintenance, and bridge reconstruction.
  • In effort to conceal her relationship with Mitchell and Richards, Bickers allegedly filed numerous false City of Atlanta Financial Disclosure Forms.  For example, in 2011, Bickers swore under penalty of perjury that she had no financial relationships with any outside businesses, even though Mitchell’s and Richards’ companies paid her over $650,000 in that year.  She used much of this money to purchase a $775,000 lakefront home in Jonesboro, Georgia, making a down payment of over a half million dollars.  In that same year, Bickers also allegedly claimed on her taxes that she made only $57,896 as a city employee, resulting in a $3,924 tax refund from the IRS.
  • In 2013, Bickers’ financial ties to the Pirouette Companies came to light and Bickers resigned her position with the City of Atlanta.  After her resignation, Bickers, Mitchell, and Richards allegedly continued the bribery scheme.  For example, Bickers helped Mitchell secure a multi-million dollar contract for snow and debris removal work after a snowstorm locked down Atlanta in 2014.  In turn, Mitchell paid Bickers and companies associated with her hundreds of thousands of dollars in bribes.  Bickers spent the proceeds of the bribery at stores like Gucci and on expensive vacations, home renovations, four Yamaha WaveRunners, a sports utility vehicle and an ATV.  Bickers is also charged with money laundering for purchasing an SUV and four WaveRunners with bribery proceeds from an account held by the Bickers Group, which was her political consulting company.

Ultimately, between 2010 and 2015, Mitchell and Richards allegedly paid Bickers and companies associated with her over $2 million in an attempt get City of Atlanta contracts through bribery.  In this same period, the City of Atlanta paid Mitchell’s and Richards’ businesses approximately $17 million for the government contracts they secured.

In September 2015, Mitchell began cooperating with FBI’s investigation into corruption at City Hall.  On September 11, 2015 at approximately 5:30 a.m., Shandarrick Barnes threw a concrete block  reading “ER, keep your mouth shut!” through a plate glass window in Mitchell’s home.  Bickers is alleged to have played a role in this attempt to obstruct the federal investigation.  Barnes will be sentenced by District Court Judge Steven C. Jones on April 9, 2018.

Mitzi Bickers, 51, of Atlanta, Georgia, was arraigned before U.S. Magistrate Judge Russell G. Vineyard.  Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by the FBI and Internal Revenue Service Criminal Investigation.

First Assistant U.S. Attorney Kurt R. Erskine and Assistant U.S. Attorney Jeffrey W. Davis are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/former-city-atlanta-official-indicted-federal-bribery-money-laundering-obstruction-and

Filed Under: Contracting News Tagged With: abuse, bribe, bribery, bribes, City of Atlanta, DOJ, FBI, fraud, indictment, IRS, Justice Dept., money laundering, obstruction, small business, tax fraud

IRS issues new guidance on tax withholding

January 18, 2018 By Andrew Smith

The Internal Revenue Service (IRS) has released Notice 1036, providing guidance on tax withholding from employees’ paychecks under the new tax reform legislation.

The IRS is instructing employers to implement the new withholding tables by February 15, 2018.

The text of the IRS notice is available here: https://www.irs.gov/pub/irs-pdf/n1036.pdf.

Filed Under: Contracting Tips Tagged With: IRS, tax, tax withholdings

Former Atlanta purchasing chief and former MARTA manager convicted of procurement bribery and theft

January 17, 2018 By Andrew Smith

The U.S. Attorney’s Office for the Northern District of Georgia announced, in separate cases, two convictions yesterday (Jan. 16, 2018) involving contracting bribes and kick-backs within two different units of metro Atlanta government.

  • Adam L. Smith, the former Chief Procurement Officer for the City of Atlanta, was sentenced to federal prison for conspiring to accept more than $40,000 in bribe payments from a vendor who obtained millions of dollars in city contracts.
  • Joseph J. Erves, former MARTA Senior Director of Operations, was sentenced to two years, nine months in federal prison for orchestrating a false invoicing scheme that resulted in MARTA paying more than $500,000 for maintenance work that was never performed and for then funneling most of that money into his personal bank accounts.

According to U.S. Attorney Byung J. “BJay” Pak, from at least 2015 to January 2017, Smith met privately with a vendor on multiple occasions, frequently at Atlanta-area restaurants. During these meetings, Smith and the vendor discussed Atlanta procurement projects, bids, and solicitations. Often at the time of these meetings, the vendor was actively seeking contracts, projects, and work with Atlanta.  After most of these meetings, the vendor and Smith met in the restaurant’s bathroom, where the vendor paid Smith approximately $1,000 in cash. In return for the bribe payments, the vendor expected Smith to use his position and power to assist the vendor with contracting/procurement with Atlanta and to furnish the vendor with future benefits and favors when needed.

In the case involving the Metropolitan Atlanta Rapid Transit Authority (MARTA), beginning in 2010, according to the U.S. Attorney’s office, Erves retained three different vendors purportedly to perform maintenance projects for MARTA. From approximately June 2010 to December 2016, Erves had fake invoices prepared on behalf of the three vendors for more than 40 maintenance projects for which no work was performed.  Erves then used the false invoices as bases to authorize payments to the three vendors.  In many cases, Erves personally approved payments to the vendors knowing that the vendors had not performed any work for MARTA.  After receiving payment, the three vendors funneled most of the money they received from MARTA into Erves’s personal bank accounts.  Subsequently, Erves used the money deposited into his accounts to pay personal expenses, such as multiple purchases at high-end department stores and the purchase of a Porsche 911.  Based on Erves’s authority and representations, MARTA paid the three vendors more than $500,000 for maintenance projects where no work was actually performed.

Smith, 53, of Atlanta, GA, was sentenced to two years, three months in prison, three years of supervised release, ordered to pay $44,000 in restitution, and a $25,000 fine.  On September 25, 2017, Smith pleaded guilty to conspiratorial bribery.  According to press reports, there is an ongoing investigation of matters related to the Smith case by the U.S. Attorney’s Office, the Federal Bureau of Investigation,  and the Internal Revenue Service.

Erves, 53, of Lithonia, GA, was sentenced to two years, nine months in federal prison, and ordered to pay $522,825.45 in restitution.  Erves also previously pleaded guilty (on August 24, 2017) to one count of Federal Program Theft.  The Federal Bureau of Investigation and the MARTA Police Department are continuing an investigation of this case.

Sources:

Statement from the U.S. Attorney’s Office regarding the Smith case: https://www.justice.gov/usao-ndga/pr/city-atlanta-s-former-chief-procurement-officer-adam-smith-sentenced-federal-prison 

Statement from the U.S. Attorney’s Office regarding the Erves case: https://www.justice.gov/usao-ndga/pr/senior-marta-executive-sentenced-federal-prison-causing-marta-pay-500000-work-never

Filed Under: Contracting News Tagged With: abuse, City of Atlanta, FBI, Federal Program Theft, fraud, IRS, MARTA, theft, U.S. Attorney

2 San Diego contractors sentenced in DoD scam

December 18, 2017 By Andrew Smith

Two San Diego defense contractors were each sentenced Thursday to 15 months in custody for conspiring to commit wire fraud and file false claims, and making false statements on their federal income tax returns.

Jeffrey Harrington, 55, and Michael Mayer, 63, admitted to fraudulently obtaining money from the U.S. government by making false claims to the Department of Defense for payment on items that the defendants knew had not been sold to the Navy, but which had been substituted with other, unauthorized products.

As part of the sentence, three of the companies owned by Harrington and Mayer — San Diego-based Veteran Logistics, Industrial Xchange and Boston Laser Technology — were ordered to forfeit over $1.4 million and pay a $1 million fine for their roles in the offenses, according to the U.S. Attorney’s Office.

Keep reading this article at: https://timesofsandiego.com/crime/2017/12/14/2-san-diego-contractors-sentenced-in-department-of-defense-scam/

Filed Under: Contracting News Tagged With: abuse. tax evasion, fraud, IRS, Navy, non-conforming parts, parts

Man pleads guilty to obstructing justice in Atlanta contracting corruption investigation

November 7, 2017 By Andrew Smith

Shandarrick Barnes has pleaded guilty to obstructing justice in the federal corruption investigation involving City of Atlanta government.  The defendant threw a concrete block through the window of E.R. Mitchell’s home, and placed dead rodents on his porch and elsewhere hoping to thwart his cooperation with federal law enforcement.

“Barnes threw the concrete block through Mitchell’s dining room window to get him to ‘shut up,’” said U. S. Attorney Byung J. “BJay” Pak.  “Instead, that violent act made Mitchell even more resolute in his cooperation with federal law enforcement.  Barnes now faces a significant prison sentence because he decided to obstruct a federal investigation.”

“Attempts to subvert justice, whether through intimidation of witnesses or by any other means, will not be tolerated.  The FBI will expend any resources necessary to ensure that those who seek to obstruct criminal investigations are held accountable for their actions.  This plea by Shandarrick Barnes is evidence of the FBI’s commitment to protect those willing to cooperate with law enforcement’s efforts to improve their communities,”

“Individuals who obstruct justice will be held accountable for their actions. Intimidation of witnesses is never acceptable,” said James Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation.  “This investigation was complex and multifaceted, and it underscores the reason we are committed to working with our law enforcement partners to dismantle any and all public corruption schemes.”

According to U.S. Attorney Pak, the charges, and other information presented in court:

  • In late July 2015, special agents with IRS and the FBI approached E.R. Mitchell for an interview relating to an ongoing investigation into corruption at the City of Atlanta.
  • During the meeting, agents discussed corruption allegations as well as potential tax improprieties.
  • Shortly after the IRS and FBI agents approached and interviewed him, Mitchell informed others that federal law enforcement had spoken with him and was asking questions.
  • Mitchell was interviewed on September 2, 2015, by the U.S. Attorney’s Office and FBI and IRS agents and confessed to regularly paying “up-front money” for City of Atlanta contracts.
  • On September 8, 2015, Mitchell returned to the office and completed a second debriefing with prosecutors and agents.
  • On September 11, 2015 at approximately 5:30 a.m., Shandarrick Barnes threw a concrete block with the words “ER, keep your mouth shut!” written on the side, through a plate glass window in Mitchell’s home.  When Mitchell emerged from the house to see who had thrown the block, he saw that dead rats had been placed on his porch, car and in his mailbox.  The police and FBI were summoned to the scene and law enforcement obtained security footage from the subdivision.  The video revealed a car that appeared to match Barnes’ vehicle left the area minutes after the block was thrown through the front window.  Further investigation by agents suggested that Barnes was involved.
  • On July 13 and August 17, 2016, Barnes was interviewed by the FBI and IRS.  During the interviews, he admitted he threw the concrete block through Mitchell’s window.  Barnes specifically acknowledged that he was aware of the IRS tax investigation into Mitchell and others and that agents had asked about Mitchell’s taxes as well as payments Mitchell made to businesses associated with Barnes’ employer.  He was well aware that Mitchell was actively cooperating with agents.  He said he was livid and his decision to throw the brick through Mitchell’s window was motivated by his desire to hinder Mitchell’s communication with agents concerning possible tax violations.  He said he felt that Mitchell’s communications to federal law enforcement would negatively affect his employer’s businesses.  Barnes was concerned that the communication with agents was detrimental to obtaining other business that he and others were actively seeking at that time.

Sentencing for Shandarrick Barnes, 41, of Atlanta, Georgia, is scheduled for February 7, 2018.  This case is being investigated by the Federal Bureau of Investigation.  Assistant U.S. Attorneys Kurt R. Erskine and Jeffrey Davis are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/man-pleads-guilty-obstructing-justice-city-atlanta-corruption-investigation

Filed Under: Contracting News Tagged With: bribe, bribery, City of Atlanta, corruption, FBI, investigation, IRS, local government contracting, obstruction, scandal, tax improprieties, U.S. Attorney

Fraud indictment returned in connection with technology sale to Bibb County school district

June 19, 2017 By Andrew Smith

The U.S. Attorney for the Middle District of Georgia has announced that an indictment charging Isaac J. Culver, III, age 47, Lizella, Georgia, Dave Carty, age 48, Macon, Georgia, and their business, Progressive Consulting Technologies, Inc., with conspiracy to commit wire and mail fraud, ten counts of wire fraud, one count of mail fraud, and conspiracy to launder the proceeds of unlawful activity was unsealed on June 14, 2017.

The charges against Culver, Carty, and Progressive Consulting Technologies, Inc. stem from the sale of 15,000 Ncomputing devices to the Bibb County School District in 2012.   Culver and Carty were arrested and made their initial appearances in the U.S. District Court on June 14th.  They were released on $15,000 bond for each man.

Each of the charges against Culver, Carty, and Progressive Consulting Technologies, Inc. carry a maximum possible sentence of 20 years imprisonment. The fine on the conspiracy to launder the proceeds of unlawful activity carries a maximum fine of $500,000.00 or twice the value of the property involved in the transaction, whichever is greater.  The other charges carry a maximum possible fine of $250,000.00 each.

The indictment is only an allegation of criminal conduct. Each person is presumed innocent until and unless proven guilty in a court of law.

This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service.

Copy of the indictment is here: Indictment 06.14.2017

Source: https://www.justice.gov/usao-mdga/pr/indictment-returned-fraud-connection-technology-sale-bibb-county-school-district

Filed Under: Contracting News Tagged With: abuse, conspiracy, DOJ, FBI, fraud, indictment, IRS, Justice Dept., waste

Why the U.S. government hates the idea of independent contractors

June 6, 2017 By Andrew Smith

Say your business is doing well, and you to need to hire some extra workers.

But you may be terrified of all the obligations that go along with adding a person who must be treated as an employee. So you would prefer to add someone who can rightly be treated as an independent contractor. Good idea!

Unfortunately, the government hates the idea of independent contractors, and the IRS has skirmished with businesses for decades about the so-called worker classification issue. Here’s what you need to know about the subject.

Worker classification matters

When a worker is classified as an employee of your business, you generally must withhold federal income tax and the employee’s share of Social Security and Medicare taxes from the worker’s wages. Your business must then pay the employer’s share of Social Security and Medicare taxes, pay federal unemployment tax, file federal payroll tax returns, and follow lots of burdensome IRS and Labor Department rules. You may also get socked with state and local unemployment and worker compensation taxes and have to comply with even more rules and regulations. Dealing with all this stuff can cost thousands of extra dollars a year for each employee.

On the other hand, independent contractor status is beneficial to a business because you don’t have to worry about employment tax issues, and you don’t have to provide expensive fringe benefits like health insurance, retirement plan contributions, and paid vacations.

Keep reading this article at: http://www.marketwatch.com/story/why-the-us-government-hates-the-idea-of-independent-contractors-2017-05-23

Filed Under: Contracting Tips Tagged With: DOL, Form SS-8, independent contractor, IRS, worker classification

Second construction company owner to enter guilty plea for bribery in connection with City of Atlanta contracts

February 9, 2017 By Andrew Smith

Charles P. Richards, Jr., of Tucker, Georgia, was arraigned Wednesday, Feb. 8, 2017, on conspiratorial bribery charges for paying over $185,000 to obtain City of Atlanta contracts.

“From approximately 2010 to August 2015, Richards conspired with E.R. Mitchell to buy lucrative construction-related contracts with the City of Atlanta,” said U.S. Attorney John A. Horn. “Contractors who willingly participate in a pay-to-play contracting system subvert the process for those who try to compete fairly and ultimately undermine the public’s trust in government.”

On Jan. 25, 2017 Mitchell, owner of E.R. Mitchell Company and several subsidiaries, pled guilty to paying over $1,000,000 to an yet-to-be-named individual in exchange for City of Atlanta contracts.

“The arraignment of Mr. Richards illustrates once again that providing bribes in order to obtain government contracts, be it city, state, or federal, can land you in the defendant’s chair as easily as for those accepting the bribes. The FBI continues to work diligently with its various law enforcement partners and federal prosecutors in identifying, investigating, and presenting for prosecution all individuals engaged in these types of criminal public corruption schemes that undermine the legitimate and established practices of government,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.

“The citizens of Atlanta must be able to trust that government officials will perform their duties in the best interests of the communities they serve,” said Veronica Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation. “Charles Richards Jr. undermined the process of fair and open competition when he conspired with others to pay bribes in exchange for securing lucrative contracts with the City of Atlanta. Today’s announcement demonstrates our commitment to work in a collaborative effort to promote honest and ethical government at all levels.”

According to U.S. Attorney Horn, the charges, and other information presented in court, Richards serves as the owner and/or principal of the construction companies C.P. Richards Construction Co., Inc., and C.P. Richards & Associates, Inc.

In an effort to obtain construction-related contracts with the City of Atlanta, according to the Justice Dept., Richards and defendant Elvin R. Mitchell, Jr. conspired to pay an individual to obtain government contracts. From approximately 2010 to August 2015, Richards paid over $185,000 to an individual in exchange for City of Atlanta contracts, believing that some of the money would be paid to city official/s who exercised influence over the contracting process.

According to the U.S. Attorney’s office, Charles. P Richards, Jr., 64, will plead guilty on Feb. 16, 2017, before the U.S. District Court Judge Steve C. Jones.

This case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.  First Assistant United States Attorney Kurt R. Erskine and Assistant United States Attorneys Jeffrey W. Davis, and Jill Steinberg, are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/second-construction-company-owner-charged-conspiring-pay-bribes-city-atlanta-contract-0

See the initial Justice Dept. announcement in this case at: https://www.justice.gov/usao-ndga/pr/construction-company-owner-charged-paying-over-1-million-bribes-city-atlanta-contracts

Filed Under: Contracting News Tagged With: bid rigging, bribery, conspiracy, construction, corruption, fair and open competition, FBI, influence, IRS, Justice Dept. DOJ, pay-to-play, state and local government

FAR Council finalizes rule imposing restrictions on contracting with companies with felony convictions and delinquent tax liabilities

October 27, 2016 By Andrew Smith

The FARThe Federal Acquisition Regulation (FAR) Council — comprised of the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) — recently finalized a rule that imposes significant restrictions on federal agencies in contracting with corporations that have federal tax liability or a recent federal felony conviction.  The final rule implements requirements created by the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (the CFCAA) and imposed by a December 4, 2015 interim FAR rule, which we wrote about previously.

The rule applies broadly to all DoD, GSA, and NASA procurements, and requires contractors to report any unpaid federal tax liabilities and to represent whether they have been convicted of a felony criminal violation within the previous twenty-four months.  In addition, for certain contracts in excess of $5 million, contractors must also certify that they:

  1. have filed all federal tax returns in the past three years;
  2. have not been convicted of a criminal offense under the Internal Revenue Code; and
  3. do not have any outstanding, unsatisfied federal tax assessments.

The rule imposes new requirements on procuring agencies as well: if a corporation discloses any tax delinquencies or felony convictions, the agency may only contract with it after first determining that suspension or debarment of the corporation is not necessary to protect the government’s interests.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/10/far-council-finalizes-rule-imposing-restrictions-contracting-companies-felony-convictions-delinquent-tax-liabilities/

Filed Under: Contracting News Tagged With: conviction, DoD, eligibility, FAR, federal contracting, felony, GSA, IRS, NASA, tax liabilities

IRS falls short in tracking tax-delinquent contractors

August 18, 2016 By Andrew Smith

Pay TaxesDespite past admonitions, the Internal Revenue Service still has a ways to go in preventing the award of agency contracts to firms that owe back taxes, an agency watchdog has found.

“The IRS tax check process was not effective in identifying tax-delinquent contractors,” wrote the Treasury Inspector General for Tax Administration in a report dated July 20, 2016 but released last week. The IG called for “significant improvements” to the process.

In a sampling of 73 awards among 336 contracts of $250,000 or more from September 2012 through August 2014, auditors found that 21, or 29 percent, “did not have evidence that the contracting officer performed the required tax check on the winning bidders.” What’s more, contracting officers handling all 73 contracts documented no tax checks on competing bidders.

Keep reading this article at: http://www.govexec.com/oversight/2016/08/irs-falls-short-tracking-tax-delinquent-contractors/130723

Filed Under: Contracting News Tagged With: back taxes, FAR, IG, IRS, OIG, responsibility, tax, tax evasion, Treasury Dept.

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