Former Stonecrest mayor pleads guilty to federal fraud charges

Jason Lary is charged with scheme to pilfer federal COVID-19 relief funds
210415-Stonecrest-Stonecrest Mayor Jason Lary holds a press conference at city hall on Thursday, April 15, 2021. Ben Gray for the Atlanta Journal-Constitution

Credit: Ben Gray

Credit: Ben Gray

210415-Stonecrest-Stonecrest Mayor Jason Lary holds a press conference at city hall on Thursday, April 15, 2021. Ben Gray for the Atlanta Journal-Constitution

Jason Lary, fresh off stepping down as the founding mayor of Stonecrest, exited an elevator Wednesday morning at the federal courthouse in Atlanta ready to plead guilty to fraud charges.

As he hobbled out, using a cane to maintain his balance, he muttered that he was ready to face “the guillotine.” He would be the one to flip the switch and deal the final blow to his tenure as mayor and potentially his freedom.

The 59-year-old Lary — who helped create DeKalb County’s newest and most populous city about five years ago — entered into a plea deal on charges related to a scheme to steal more than $650,000 in pandemic relief funds.

Lary pleaded guilty to wire fraud, federal program theft and conspiracy to commit federal program theft. The FBI and prosecutors from the U.S. Attorney’s Office have accused Lary of defrauding the federal CARES Act program, taking money from needy small businesses and churches and using the funds to cover personal tax liabilities and pay off a lakehouse mortgage.

According to the details of the plea deal read in court, Lary agreed to cooperate with government agents, provide records and testify at future trials. In return, prosecutors recommended a lighter sentence, taking Lary’s declining health into account.

A sentencing hearing was set for May 2. Lary was allowed to remain out of jail on bond.

The now-former mayor’s attorney, Dwight Thomas, declined to comment after the hearing.

The three charges do not carry a minimum prison sentence; the maximum sentence is 35 years and three years on supervised released. In addition, the judge may order Lary to pay restitution to the victims and abandon any property used in the scheme.

Prosecutors said they’ve already seized four bank accounts used by Lary and his co-conspirators.

Lary announced earlier this week he would step down as mayor and enter retirement, but he credited that decision to his multiple battles with cancer — not his impending guilty plea. Lary told The Atlanta Journal-Constitution before his court hearing that his health prognosis has not improved amid his third battle with cancer.

He resigned effective 10 a.m. Wednesday, an hour before he walked into the federal courthouse and changed his previous plea of not guilty.

The former mayor has been tied to multiple financial scandals during his five years in office, including misusing his city-issued purchasing card and authorizing improper contracts. However, federal investigators got involved when questions were raised as to how Stonecrest used and disbursed its $6.2 million in Coronavirus Aid, Relief and Economic Security Act funds.

The $2.2-trillion stimulus package, often called the CARES Act, was signed in 2020 by President Donald Trump to provide relief to struggling residents and local governments amid the COVID-19 pandemic. An internal investigation in Stonecrest found a potential kickback scheme was baked into the city’s CARES Act program, which brought the feds to town.

Prosecutors said Lary concocted the scheme as early as May 2020, well before the city received a dime of CARES Act funds. The funds he stole were used to pay off tax liabilities spanning the past five six years, and to pay off the mortgage on his home off Lake Wildwood near Macon.

The city improperly entered into a contract with Municipal Resource Partners, a nonprofit founded in May 2020, to pick CARES recipients and write checks. The company, founded by the former city attorney for Stonecrest, was paid a hefty 8.5% fee — or $510,000 — to disburse the funds.

The FBI said Lary recruited Municipal Resource Partners’ CEO, opened its bank accounts and ensured the wife of the city’s economic development director would be hired as its bookkeeper. Lania Boone, 60, faces a conspiracy charge for her alleged role in the scheme.

The businesses that applied for financial relief were asked to spend 25% of their grant award to market their business through one of three companies. Those companies, which did not provide marketing services, were all connected to Lary. In state business records, the addresses listed for two of those companies are property owned by Lary’s real estate company.

Prosecutors said Lary helped decide where relief funds were directed, including an unsolicited $150,000 grant award to his church. In return, the church was asked to give $50,000 to one of the companies. Lary allegedly told the church the funds would assist with home repairs for people who could not afford them due to the pandemic, but prosecutors said he actually used the money to pay off various tax liabilities.

Prosecutors also found that $108,000 of relief funds were used to pay off the mortgage on a lakefront home owned by Lary, while another $7,600 was used to pay college tuition and rent for Boone’s son.

In public, Lary continued to praise the program despite the fraud accusations, and he’s continued to defend the employees who oversaw it. Those employees, including Boone’s husband Clarence, were fired and replaced in April 2021 once details of the alleged scheme came to light.

With the mayor’s seat now vacant, Stonecrest will have to hold a special election to fill the rest of Lary’s term, which will last through the end of 2023. City leaders said they’ll discuss special election options during their Jan. 10 work session.

In a statement, Stonecrest councilmembers said they “anticipated” that Lary stepped down as mayor to plead guilty to his federal charges. They added that the, “The Mayor’s responsibilities are largely ceremonial, thus we do not expect that this adjustment will have a significant impact on day-to-day operations.”

Our reporting

The Atlanta Journal-Constitution has covered the allegations against Lary and his alleged abuse of the Stonecrest’s CARES Act program throughout 2021, and was the first news outlet to obtain the internal investigative report into the alleged kickback scheme. Since then, the AJC has published more than two dozen stories diving into the allegations, the structure of the alleged scheme and the investigation’s fallout.