The city of Atlanta wrongly used airport funds to pay $90,000 to a consulting firm formed by former city attorney Cathy Hampton, a misstep cited by the Federal Aviation Administration as the agency launched a new investigation into allegations that Atlanta airport funds may have been unlawfully diverted to the city.
The payments to Hampton's consulting firm were not only wrongly paid for out of airport funds, but they shouldn't have been paid at all by the city. After the FAA launched an initial inquiry into potential revenue diversion last year, the money was paid back to the city and the airport revenue fund was credited.
FAA regulations prohibit the use of airport revenue for expenses other than the airport's capital or operating costs. That's aimed at preventing local governments from turning airports into cash cows by funneling money away, and ensures that federal airport grants pay for airport projects and not other uses. Sanctions for improper use of airport revenue can threaten federal grant funding or result in civil penalties.
The FAA stepped up its scrutiny of Hartsfield-Jackson in the last week by sending a notice of investigation and subpoena to the city, citing a letter in which the city "identified several invoices totaling more than $100,000 that were wrongly paid from airport funds, and that the airport had been reimbursed for the payments."
That letter, provided to The Atlanta Journal-Constitution by the city on Thursday in response to an open records request, says the city’s law department “discovered that it had erroneously approved two Paul Hastings invoices” of $45,000 each for professional services from HCG Consulting Group LLC. Paul Hastings is one of the law firms that represents the city.
Hampton stepped down as city attorney in mid 2017, but was still on the city payroll as an employee in an "extra help position," collecting vacation and sick pay for another five months, the AJC previously reported. During that time, she began billing Paul Hastings for "transition services" through her consulting company.
Hampton sent two $45,000 bills from HCG Consulting Group LLC to law firm Paul Hastings, the AJC has reported. The tax identification number for HCG Consulting Group matches Hampton’s company Hampton Consulting Group LLC.
Paul Hastings then billed the city for Hampton’s expenses.
The invoices “should not have been paid by the law department,” according to the letter from attorneys representing the city. “The law department received a refund of $90,000” last year, and the airport revenue fund was credited.
The letter, which says the city “voluntarily reviewed its files to ensure that all of the reported invoices” were correct, also cites five other payments totaling more than $25,000 in 2016, 2017 and 2018 that were incorrectly charged to the airport that should have been charged to other city funds.
Those include charges that should have been billed to the city's watershed department, including expenses related to a whistleblower complaint by former watershed manager Christopher Harris and a confidential internal investigation involving another former employee. Other legal expenses should have been charged to the city's general fund instead of to the airport, including charges related to the recount in the election of Mayor Keisha Lance Bottoms, according to invoice numbers.
The FAA also in its notice of investigation said it is looking into whether Atlanta improperly withheld documents from investigators.
The city contends it is working to cooperate while maintaining attorney-client privilege and other protections.
A memo to the city’s law department from law firm Kaplan Kirsch & Rockwell advised the city that even with a confidentiality agreement “would not prevent the FAA from disclosing the records to other federal government officials and agencies —including the U.S. Department of Justice,” which is investigating corruption at Atlanta City Hall, “or to the public.”
OUR REPORTING
AJC investigative reporters have been covering developments in the federal government’s probe of corruption at Atlanta City Hall. The AJC reported last year that Atlanta’s legal bills tied to the corruption probe totaled$7.5 million, and some money that funded law firms came from federally regulated airport funds in a manner that could violate FAA policy.
The AJC earlier this week reported a new FAA investigation into the matter raised by the AJC, which revealed that the city has already acknowledged that more than $100,000 was wrongly paid from airport funds. Public records now lay out details on those expenses improperly paid with airport money.
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