In court, Assistant U.S. Attorney Trevor Wilmot said Lary is accused of defrauding businesses and churches who received COVID-19 relief funds from the city out of more than $650,000. Prosecutors say Lary then used the money to cover his own tax liabilities — and to pay off the mortgage on his lakehouse.
Lary — in a dark suit and pink tie, using a cane to walk — pleaded not guilty to the charges Wednesday but waived his right for the case to go before a grand jury. The case will instead proceed to the courtroom of U.S. District Court Judge Thomas Thrash using a “criminal information,” not an indictment, as the charging document.
BJay Pak, the former U.S. Attorney for Atlanta, said that’s a clear indicator that a plea deal is coming. Lary’s attorney, Dwight Thomas, confirmed as much.
”He accepts full responsibility,” Thomas said, “and there won’t be a jury trial.”
»Read the full charging document at the bottom of this story.
Pak said prosecutors would likely recommend a sentence that includes prison time. Lary, though, would be able to request lenience based on factors including his age and his ongoing battle with prostate cancer.
Lary was released on his own recognizance and ordered not to discuss the case with anyone but his attorney and his family. The mayor, who has repeatedly denied any allegations of wrongdoing to The Atlanta Journal-Constitution, declined to comment after his court hearing and did not respond to additional inquiries later Wednesday.
When asked if Lary would resign, Thomas said the mayor remains “very proud of the city of Stonecrest and does not intend to be a distraction from its growth and development.”
But he clarified that no decision has been made about whether Lary — the founding mayor of the southeastern DeKalb County community that became a city in 2017 — will step down.
“It is very troubling when an elected official, someone sworn to protect the community they serve, violates that oath by stealing relief funds intended to aid their community during a global pandemic,” Chris Hacker, Special Agent in Charge of the FBI’s Atlanta office, said in a news release. “The allegations against Lary and Boone indicate an abuse of a position of trust and blatant disrespect for the law, which will not be tolerated by the FBI.”
Profiting off the pandemic
The funds in question were part of a $2.2-trillion stimulus package, the Coronavirus Aid, Relief and Economic Security (CARES) Act, that President Donald Trump signed in 2020 to provide relief to struggling residents and local governments amid the COVID-19 pandemic.
DeKalb County received about $125 million in CARES funding and later distributed a portion of those funds to local municipalities. Stonecrest received about $6.2 million. Questions about how the city disbursed that money began to surface earlier this year.
The Stonecrest City Council approved an internal investigation, which was conducted by City Attorney Winston Denmark. On April 12, he released a bombshell investigative report that found strong evidence the funds had been misused in an apparent kickback scheme by city employees. The report led to several employees being fired and replaced this spring.
Lary has repeatedly praised the program and has continued to defend the employees who oversaw it. He held a virtual roundtable hours before the investigative report was released and said he’d take responsibility if anything went wrong.
“If something has gone awry or folks aren’t pleased about what has happened, you can blame it on me. Not anybody else. Not the team, not the folks that worked the opportunity, not the people who distributed the money,” Lary said during the roundtable. “You put it squarely on my shoulders as mayor, and I’ll take whatever it is that comes our way. This is the job, that is the position and that is the leadership sense that I have.”
The report found that 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 a former city attorney for Stonecrest, was paid a hefty 8.5% fee — or $510,000 — to disburse the funds.
Municipal Resource Partners was paid more than $2,000 for each check they wrote to a small business. In a news release, federal prosecutors said Lary “allegedly worked behind the scenes to assist MRPC, including by recruiting its CEO, opening its bank accounts and ensuring that Lania Boone would be hired as MRPC’s bookkeeper.”
The businesses that applied for financial relief were asked on an application form if they’d be willing to allocate 25% of the grant to market their business through one of three companies. Those companies were all connected to Lary, the city employees who oversaw the CARES program or Municipal Resource Partners. 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 decided where the 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 those three companies. Lary allegedly said the funds would assist with home repairs for people who could not afford them due to the pandemic, but prosecutors said the money was used by Lary to pay off various personal tax liabilities.
Lary is also accused of giving a $50,000 check to another church with the caveat that they contribute $4,500 to one of the three companies. The church was told it would be for pandemic-related rent assistance, but Lary allegedly used the funds to pay off his own property expenses and his dues to the Georgia Campaign Finance Committee.
The owner of Wrap City Vinyl, which received a $60,000 grant, said they were asked to perform a “vinyl wrap” on two vehicles owned by Lary’s sons in addition to the 25% check they wrote to one of the three so-called marketing companies.
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.
Calls for resignation or removal
State Sen. Emanuel Jones (D-Decatur) called for Lary to be removed from office in April, once the details of the internal investigation were released. He repeated that call Wednesday.
“It’s critical that we get him out of office. I’m hearing that he has no intention of stepping down,” Jones told the AJC. “I’m going to ask the mayor that he do the honorable thing and resign.”
Jones added that he’s reached out to Gov. Brian Kemp’s office to call for the governor to suspend Lary if he does not resign immediately. State law allows the governor to appoint a special commission to investigate — and potentially recommend suspensions for — public officials who have been indicted on felony charges.
A criminal information is a type of charging document but is not an indictment. Yet Jones said he believes they’re of equal importance, giving the governor the power to take action. The governor’s office told the AJC they have not received an indictment in this incident, so it’s unclear whether any action is forthcoming.
Stonecrest has a special-called meeting scheduled for 6 p.m. Wednesday to discuss the city’s budget and information technology contract. It’s unclear whether Lary will be present or whether the charges will be discussed by other city leaders.
In a joint statement, the five councilmembers said it’s a “solemn time in Stonecrest’s history” and they wish the mayor and his family “the best as they face these challenges.”
“At the same time, the City of Stonecrest is committed to maintaining integrity in government and we fully support the U.S. Attorney’s efforts to ensure that justice is carried out,” the statement continued. “Because Stonecrest adopted a Council-Manager form of government earlier this year, the Mayor’s role is largely ceremonial. Therefore we anticipate that this development will cause minimal disruption to city operations.”
The mayor’s attorney, meanwhile, said he wouldn’t expect a resolution of the criminal case to come until sometime next year.
The Atlanta Journal-Constitution has covered the allegations against Stonecrest’s CARES Act program throughout 2021. The AJC was the first news outlet to obtain the internal investigative report in April and report its details. Since then, the AJC has published nearly two dozen stories diving into the allegations, the structure of the alleged scheme and the investigation’s fallout.