DeKalb paid inflated expenses, no questions asked

DeKalb County spent so much money on a wooden privacy fence, it could have built one four times as long, or one made of wrought iron.

But no one at the county questioned the $10,000 expense, part of a contract to rehab and sell foreclosed houses. Instead, payment went promptly to the contractor, which didn’t even submit an invoice, just an estimate.

And so it went for APD Solutions, headed by the politically connected chairman of DeKalb’s economic development arm, Vaughn Irons. Once a phony legal document allowed him to win the contract, his company was on DeKalb County’s gravy train.

APD could charge top dollar and add layers of fees without backup documentation, an examination by The Atlanta Journal-Constitution found. While the company stayed within financial bounds of its contract, at issue is the county’s weak oversight and how much taxpayers got for their money.

With only a vague reference to “construction costs” listed on one bill, DeKalb paid the company for a charge of nearly $5,000, without any papers submitted describing what those costs were.

DeKalb paid the company more than $100,000 in administrative fees, the only fee outlined in the contract, then another $17,700 for “high-level project management.” Meanwhile, one of APD’s subcontractors charged the county another $13,500 for construction site management.

“All these layers of fees are puzzling to me,” said Craig Goebel, who served as a consultant for a similar housing rehab program in Gwinnett County.

Allen Mitchell, the county’s Human and Community Development interim director, was at a loss to explain many of the charges questioned by the AJC, and it took him weeks to track down records of more than $60,000 in expenses that lacked documentation in the county’s files.

He doesn’t know why some of the expenses were approved because some employees who initially eyeballed the bills were temporary workers, brought in to help manage APD and other contractors working under the federal Neighborhood Stabilization Program, Mitchell said.

“What I do know is that each company operates differently in how they get things done,” he said.

The AJC tried to talk to Irons and APD Solutions about the irregularities. Reached by phone, Irons said he would consider the newspaper’s interview request, but he did not return any more calls after that.

Instead, an APD marketing representative, who would not give her name, said no one would speak to the AJC for this story and referred questions to DeKalb County.

Mitchell wound up defending most of APD’s expenses after he met with the company.

The appearance of high charges and lax controls shows why DeKalb’s ethics ordinance forbids government officials from doubling as government contractors, said Patricia Killingsworth, a former Board of Ethics member and a member of Blueprint DeKalb.

“People are going to be less trusting of their county when they see people in positions of power appearing to take advantage of those positions,” Killingsworth said.

Fortuitous events

APD Solutions’ smooth ride in DeKalb didn’t start out that way. When the company first bid, purchasing chief Kelvin Walton told Irons he wasn’t eligible because of his position on the county’s Development Authority board.

Within three weeks, a document mysteriously landed on Walton’s desk saying DeKalb’s Ethics Board ruled it was OK for Irons to bid. An AJC/Channel 2 Action News investigation earlier this year found the document was fake, that the Ethics Board never voted on Irons’ eligibility.

Irons says he knows nothing about the document’s origins and even hired a polygraph examiner to give him a lie detector test, which he said cleared him of any wrongdoing.

After the document showed up, APD caught another break. It managed to win a $1 million contract, even though it was the fourth-ranked bidder.

The bid committee had recommended contracts only for the first and second-ranked companies, but then-Community Development Director Chris Morris pushed to also award $1 million each to the runners-up.

Morris said she did so because the county faced a federal deadline to spend the additional money. Mitchell said the county couldn’t give the additional work to the two top bidders because they lacked the capacity to rehab more houses.

Not so, according to John O’Callaghan, CEO of top-ranked Atlanta Neighborhood Development Partnership. He said his firm could have easily taken on another $1 million in work, but no one from DeKalb asked.

“We had the capacity and had expressed interest in doing more work as their processes would allow,” he said.

DeKalb’s bid committee strongly objected to Morris’ plan, emails show. So Morris went to the Board of Commissioners, which unanimously gave its approval.

Lax on scrutiny

With contract in hand, APD had motive to spend, spend, spend.

The company was hired to find foreclosed homes, buy them, spruce them up, then market and sell them. DeKalb County would reimburse all costs with federal stimulus funds, then pay APD a 10 percent administrative fee.

County officials don’t appear to have paid much attention to the bills APD submitted, the newspaper found.

In several cases, staffers signed off on invoices alone, with no backup documents attached. Or, they took flimsy documentation at face value.

In the case of the privacy fence, DeKalb appears to have approved that expense based on a two-sentence letter. Construction consultant Arthur Bright wrote that his company, Bright Communities, “shall install a privacy fence” at one home’s address for $10,000.

The letter gave measurements for pickets, posts and bracing and said the fence would have two gates, but didn’t mention the most important feature: length.

“I would never accept that,” Bob McDonough, a construction inspector who’s worked on Atlanta NSP projects, said. “It’s not a legitimate invoice. It’s a letter.”

A check of metro fencing companies found DeKalb grossly overpaid. Two companies were willing to install a fence of the same proportions for just over $1,600, labor and materials included. The highest estimate the AJC found was $2,600.

Bright didn’t actually install the fence. Instead, apparently Conley-based Foster Fence did. Its sign is still affixed near one of the gates. Neither Bright nor Foster Fence would explain the cost.

“I’m telling you, I don’t remember it at all,” Bright said, just before hanging up.

The former Community Development worker whose signature is on the bill, Barry Williams, said he doesn’t recall that expense, either.

“I would have never approved a wooden fence for $10,000,” Williams said. “There had to have been some other things with that.”

Bright’s letter says his estimate is for the fence alone.

Williams now works as a real estate development manager for the Development Authority, a job Irons helped him get after his temporary job with Community Development ended.

Williams said Irons did that because “he saw the quality of my work.” He said he never did Irons any favors.

“I would never do anything like that,” Williams said.

Expensive, subjective

Other charges got piled on as DeKalb sat back and allowed APD to run things in their own way. The company’s contract with DeKalb was vague and open-ended, as are federal HUD regulations that give local governments wide discretion on managing NSP programs.

The county doesn’t object, Mitchell said, to a subcontractor called AMG Construction charging fees ranging from $1,200 to $3,450 per house for “contractors site administrative and oversight.” That definition also fits a construction management fee, which APD was already billing at each house for a range of $1,600 to $5,000.

Tori Irvin, AMG’s site manager, said he wouldn’t speak without a release from APD.

After his meeting with APD, Mitchell explained that their additional $17,700 in construction management fees was for “high-level project management” by hired consultants, who processed invoices, inspected job sites and interacted with county.

However, O’Callaghan, of top-ranked ANDP, said he considered such administrative work to be covered under the 10 percent administrative fee. His company charged DeKalb about $1,600 to $1,800 per house for a construction manager: a man on the ground who monitored subcontractors’ work. No subcontrators charged fees beyond labor and materials.

Goebel, the former consultant for Gwinnett, said an arrangement such as APD’s is conceivable but “if it’s not in the contract, I think that’s the most puzzling part.”

APD Solutions submitted more expenses when it sold the houses, adding more than $45,000 without documentation or explanation to the county.

All proceeds from house sales went back to the county, to keep the housing rehab program going. The added expenditures were reduced from those checks back to the county.

Deborah Bailey, a closing attorney with Alpharetta-based Gilroy Bailey Trumble, said supporting documents should have been submitted with the expenses.

“This is a gray area where you can have a lot of mischief,” she said.

Bailey analyzed the settlement documents from the house sales, and said it seemed as if the seller, APD Solutions, went into the transactions without using any negotiating skills. Closing costs, broker’s fees and attorney costs could have been trimmed, she said.

The financial loser was the county.

All told, DeKalb wound up paying APD nearly $1 million to finish off and sell six houses in the Piedmont Point subdivision near Lithonia. The mostly finished houses had been sitting empty since a neighborhood developer went belly-up, suffering some damages from vandals and copper thieves.

The other company that won a $1 million DeKalb contract worked on much older homes that had been lived in before. It rehabbed and sold nine.

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