Former Atlanta mayor may have violated campaign laws

Credit: WSBTV Videos

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Mayor again? Kasim Reed talks City Hall corruption, crime, another run to lead Atlanta

Credit: WSBTV Videos

AJC EXCLUSIVE: Kasim Reed allegedly used funds for personal use

Former Atlanta Mayor Kasim Reed appears to be under federal investigation for allegedly using campaign funds to make personal purchases of jewelry, resort travel, lingerie and furniture, The Atlanta Journal-Constitution has found after comparing details disclosed in a recent court ruling with the former mayor’s campaign disclosure reports.

The ruling shows prosecutors are trying to compel grand jury testimony from the attorney for a local politician’s campaign who helped produce the campaign’s financial disclosures. That person seems to be Jeremy Berry, who worked as Reed’s campaign attorney before taking the job as Atlanta’s city attorney in 2017.

The court document doesn’t name Reed or Berry, but The Atlanta Journal-Constitution has matched — to the penny — one of the questionable purchases listed in the ruling to an expense on Reed’s 2017 campaign finance report.

Attorney Scott Grubman confirmed Tuesday that Berry was questioned by federal authorities.

“Mr. Berry received a subpoena to testify as part of the government’s ongoing investigation,” Grubman said in a statement. “Importantly, Mr. Berry has been assured numerous times, including as recently as [Tuesday] morning, by the U.S. Attorney’s Office, that he is not a subject of the investigation, but is simply a witness.”

Reed, who last month launched a historic new mayoral campaign for a third term, did not respond to a list of questions submitted by the AJC. But in an interview last month with Channel 2 Action News, Reed insinuated that he has been cleared of any wrongdoing.

“The Justice Department under William Barr has looked into every aspect of my life for more than three years and took no action,” Reed said. “I wanted to be mayor since I was 13 years old. I would never ever [have] broken my mother’s heart by taking money from somebody.”

A spokesman for the U.S. Attorney’s Office also declined to comment.

Reed’s campaign has fought a subpoena seeking Berry’s testimony on the grounds of attorney-client privilege. And the court case has played out over the past seven months.

Prosecutors first issued a subpoena to the attorney on Nov. 25, but released him from it after he agreed to an interview.

Two months later, prosecutors again subpoenaed Berry to testify before the grand jury — which led to the campaign arguing that Reed’s communication with his lawyer was protected under the attorney-client privilege.

The campaign first asked U.S. District Judge Leigh May in Atlanta to invalidate the subpoena. But May declined to do so, meaning the attorney had to appear before the grand jury. The politician then asked the 11th U.S. Circuit Court of Appeals to throw out the subpoena.

But the federal appeals court refused to do so. In a ruling issued late Friday, a unanimous three-judge panel ruled that attorney-client privilege does not protect statements between a client and his lawyer if those statements conceal or further a crime.

Except for Friday’s 25-page opinion, the entire matter is under seal. No filings by federal prosecutors or lawyers representing the politician are available to the public.

The alleged crime being investigated is wire fraud, said the ruling, written by Judge Barbara Lagoa. The judge made note that the court is taking no position “on whether the evidence proffered by the government here would be sufficient to establish guilt beyond a reasonable doubt.”

But she also wrote that prosecutors have “satisfied its burden of establishing a prima facie case of wire fraud ... at the grand jury stage.”

In her ruling, Lagoa cited a filing by federal prosecutors who said that when initially interviewed, the politician’s lawyer told authorities he reviewed campaign bank account statements and draft campaign disclosure forms. He also provided draft forms for review and approval by the candidate, the ruling said.

Federal prosecutors also wrote that the attorney said “he repeatedly saw expenditures from the campaign bank accounts that appeared to him to be obviously personal in nature, as opposed to being legitimate campaign expenditures,” according to the 11th Circuit ruling. The lawyer also said “these were not isolated incidents.”

The campaign can now ask the full 12-member appeals court to reconsider the three-judge panel’s decision. It can also appeal Lagoa’s ruling to the U.S. Supreme Court.

Furniture allegedly delivered to mother’s home

Prosecutors allege the candidate used campaign funds to make at least five personal purchases between 2011 and 2017.

One of the purchases, for $1,234.47, was from an online retailer and was listed on a disclosure form as “office supplies,” the court document says. Prosecutors allege that the furniture purchased by the campaign was shipped directly to the candidate’s mother.

An AJC review of Reed’s campaign finance reports found a purchase on Feb. 1, 2017, for that exact amount from the online retailer Overstock.com. The reason for the expenditure listed on Reed’s campaign finance report is “office supplies.” The purchase was made at a time when Reed was not actively campaigning for public office.

The ruling was updated Tuesday to remove the amount of the furniture purchase, after the AJC began asking questions of the Reed campaign and the U.S. Attorney’s Office. It appears to be the only change made to the document.

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A federal court ruling appears to show former Atlanta Mayor Kasim Reed is under investigation for alleged wire fraud.

A federal court ruling appears to show former Atlanta Mayor Kasim Reed is under investigation for alleged wire fraud.
Caption
A federal court ruling appears to show former Atlanta Mayor Kasim Reed is under investigation for alleged wire fraud.

The other four purchases flagged by prosecutors and allegedly made with campaign donations — $4,259 at a vacation resort; $2,079 in jewelry; $1,003 at a Caribbean resort; and $179 for lingerie — were not disclosed on any of the campaign finance reports, according to court records.

If Reed is the subject of the investigation, it won’t be the first time federal prosecutors have scrutinized his spending.

The Reed administration has been the subject of a years-long federal corruption probe of Atlanta City Hall. That investigation included a subpoena for credit card statements of taxpayer backed cards issued to Reed, his security detail and his chief financial officer, who is currently under indictment on fraud and weapons charges.

The subpoena for the credit card documents came after an AJC investigation found what appeared to be personal purchases made with the cards. That included one of Reed’s bodyguards using his card to pay for airfare to Nassau for Reed’s wife and daughter in 2015.

Reed used his own credit card to cover $1,500 in hotel charges on what appears to be the same trip. Reed was also in Nassau in 2014, when he proposed to his former wife, according to newspaper stories at the time.

The court documents regarding the campaign investigation do not give a date or specific city related to the spending on the “vacation resort” or the “Caribbean resort.”

Reed jumped into the wide-open mayor’s race June 10, just days after Mayor Keisha Lance Bottoms announced she would not seek reelection. He immediately became the frontrunner because of his name recognition and fundraising ability.

Reed has said both that he takes responsibility for the federal investigation and that he could not have foreseen the corruption. He has also said in multiple interviews that he is a “better man” today than he was during his first two terms in office, and that if elected he will install tough ethics policies for his team.

In an interview with the AJC, Reed said he has cooperated “in every way” with federal investigators.

“When they have questions they contact my counsel and ask whatever questions they have,” Reed said. “And what I have done is what I said I would do since it started: cooperate in every way. I understand they have a job to do.”

Staff writer Chris Joyner contributed to this story.


Why this story matters

When former Atlanta Mayor Kasim Reed announced he was seeking a historic third term on June 10, his candidacy raised questions as to whether he and his campaign could rebuild trust and confidence with some voters due to the ongoing federal corruption investigation of his administration. The probe ensnared several members of his team, including bribery convictions against his chief procurement officer and a deputy chief of staff. Reed’s chief financial officer is currently under indictment for fraud and weapons charges.

In May, Reed was asked by Channel 2 if he was under investigation by the federal government. Reed said: “The Justice Department under William Barr has looked into every aspect of my life for more than three years and took no action,” Reed said. “I would never ever [have] broken my mother’s heart by taking money from somebody.”

Reed’s opponents seeking to run City Hall have made the corruption probe a campaign issue.

How we got the story

Earlier this week, The Atlanta Journal-Constitution obtained a ruling from 11th U.S. Circuit Court of Appeals that appeared to show that Reed was under federal investigation for allegedly using campaign funds to make personal purchases, which is illegal.

In the ruling, a judge found that prosecutors have “satisfied its burden of establishing a prima facie case of wire fraud ... at the grand jury stage.”

The ruling did not name Reed by name, but the documents contained details about an online purchase of furniture by Reed’s campaign that the AJC was able to confirm.

When the AJC began asking questions about the purchases this week, the details that allowed the newspaper to link the purchases to Reed’s campaign were removed from the ruling by the court.

Grand jury proceedings are conducted in secret to ensure that witnesses provide full testimony and to protect the reputations people who may be the target of an investigation but are not charged, among other things.

Why publish this story

The AJC has decided to publish this story because this investigation into Reed’s campaign is of urgent public interest considering his bid to become Atlanta’s next mayor. The AJC is committed to providing information that allows our readers to make informed decisions about who should lead our communities and our state.

Timeline of guilty pleas and indictments from the federal corruption investigation of Atlanta City Hall:

1/25/17: Contractor Elvin “ER” Mitchell pleads guilty to bribery charges.

2/16/17: Contractor Charles “CP” Richards pleads guilty to bribery charges.

9/25/17: Former Atlanta Chief Procurement Officer Adam Smith pleads guilty to accepting bribes.

11/6/17: Former city employee Shandarrick Barnes pleads guilty to trying to intimidate a federal witness.

3/27/18: Former Atlanta employee and Mayor Kasim Reed political consultant Mitzi Bickers is indicted on 11 counts of bribery, money laundering, wire fraud, filing false tax returns and tampering with a witness.

1/10/19: Former Atlanta Deputy Chief of Staff Katrina Taylor Parks pleads guilty to accepting bribes.

5/5/19: Contractor Jeff Jafari is indicted on 51 counts of bribery, tax evasion and witness tampering.

9/4/19: Former Atlanta Contract Compliance Officer Larry Scott pleads guilty to wire fraud and filing false tax returns.

5/1/20: Airport contractor Hayat Choudhary pleaded guilty to paying bribes.

6/19/20: Former Atlanta Watershed Commissioner Jo Ann Macrina is indicted on charges of bribery, conspiracy to commit bribery and aiding or abetting the preparation of false tax returns.

9/16/20: Former Atlanta Chief Financial Officer Jim Beard is indicted on eight counts of wire fraud, theft from the government, possession of machine guns, making a false statement and obstructing federal tax laws.