Federal corruption probe reaches into Atlanta law department

The federal corruption investigation into Atlanta City Hall has opened an unexpected front: The city’s own law department.

The Atlanta Journal-Constitution has learned prosecutors have requested records to determine if there was a financial relationship between former City Attorney Cathy Hampton and the private law firm that guided the city’s response to numerous federal grand jury subpoenas. The firm, Paul Hastings LLP, has earned millions over the past decade handling some of the city’s most sensitive matters for both former Mayor Kasim Reed and his successor, Keisha Lance Bottoms.

VIDEO: Previous coverage of this issue

The investigation started in 2015.

A Jan. 24 email from the U.S. Attorney’s office to the city outlines four areas under review that focus on whether there were payments from the firm to Hampton, the city’s former top lawyer and one of Reed’s most powerful cabinet members during his two terms in office.

The request from federal prosecutors asks that the city turn over records related to Hampton’s departure from City Hall in May 2017, along with six of the firm’s invoices billed to the city law department. It also seeks records of any payments to a consulting company Hampton founded years ago and of any work she performed for Paul Hastings on matters where Hastings billed the city.

The new line of questioning places the federal spotlight on some of Reed’s closest legal advisers, some of whom have continued to advise Bottoms.

“There’s a lot we don’t know,” said Esther Panitch, a local criminal defense attorney and legal analyst. “And there’s a lot I think we are going to find out.”

The invoices were the subject of AJC articles last year that examined the city’s payments to the firm. In an arrangement legal experts called unusual, the city paid the firm $2.2 million for vague, unspecified legal work described in invoices as “litigation consultation” and “legal research.”

Two of the invoices from 2017 sought by prosecutors contain payments totaling $100,000 for “outside professional services.” The invoices don’t identify who the firm hired or the nature of the services, a lack of specificity that is odd for a large international law firm, according to Peter Henning, a law professor at Wayne State University in Detroit.

“It always comes back to the old Watergate line: Follow the money,” said Henning, who specializes in white collar criminal cases. “You need to find out where did the funding come from and was it properly approved. If it wasn’t, there are a variety of federal statutes that could have been violated.”

Additionally, the city used airport revenue to pay the law firm, which could create more problems between the city and the Federal Aviation Administration. The FAA is investigating the city’s use of millions in airport funds to cover legal fees related to the three-year federal inquiry.

FAA auditors are scheduled to arrive later this month for a detailed audit of city spending at Hartsfield-Jackson International Airport.

The AJC contacted Hampton by phone and she declined to comment after the newspaper provided the email from the U.S. Attorney’s office seeking information about potential payments to her or her company.

A spokesperson with Paul Hastings law firm did not comment when contacted by phone this week.

William Whitner (at podium) argues his case involving the state’s tax credit scholarship program, before the Georgia Supreme Court on Monday. BOB ANDRES /BANDRES@AJC.COM
Photo: Bob Andres/The Atlanta Journal-Constitution

Invoices were unusual

The city’s contracting process has been the focus of a sprawling federal investigation that has resulted in five guilty pleas and two indictments. But the questions about Hampton and the city’s private lawyers are a new line of inquiry that the AJC learned about through public records requests.

Four of the bills sought by prosecutors were $25,000 flat-rate invoices for work described only as “Legal Research” invoices.

Experts told the AJC the invoices raised questions partly because the city could not produce an agreement, known as an engagement letter, that details the scope of the work to be executed by private attorneys, a requirement under city guidelines.

After the story was published in October, the U.S. Attorney’s office requested an interview with Paul Hastings partner William K. Whitner, who submitted the bills, according to emails obtained by the AJC.

Whitner has close ties to the current mayor and her predecessor. Whitner served on the search committee that led to Hampton’s appointment as city attorney in 2010. Hampton then retained Paul Hastings, a firm that once also employed Reed.

Headquartered in Los Angeles, Paul Hastings employs nearly 1,000 attorneys in 22 locations around the world, including Atlanta where Whitner is based. Since 2010, the firm has earned $11 million from the city for a range of cases with hourly fees of up to $950.

In 2015, while chairing the Atlanta Fulton County Recreation Authority board, Whitner supported hiring Mayor Keisha Lance Bottoms, who was then a city council member, as the executive director of the recreation authority. The position paid Bottoms $135,000 on top of her $60,000 city council salary.

Bottoms, who was elected mayor in December 2017, and her administration declined to answer questions about whether Whitner and Paul Hastings were still providing legal services to the city.

In a November email, Whitner told City Attorney Nina Hickson that the firm had stopped handling the federal investigation for the city. Court records show the firm is still listed as counsel in at least one other case unrelated to the federal investigation.

Former Atlanta City Attorney Jeremy Berry told the AJC that the city intentionally concealed legal work related to the bribery investigation in an unrelated case to prevent employees from finding out if they were targets. WSB-TV
Photo: The Atlanta Journal-Constitution

Issues with redactions

Hampton resigned her position as the city’s top lawyer two years ago, but remained on the city’s payroll for several months using up vacation and medical leave, according to records reviewed by the AJC.

Four of the six Paul Hastings invoices sought by prosecutors are dated after her resignation as city attorney, but while she was still being paid by the city, records show. The invoices do not identify specifics about the payments. However, prosecutors have listed the invoice numbers as the fourth item in the Jan. 24 email request to the city. The other items in the email specifically mention Hampton, including any payments the firm made to her.

The firm addressed the bills to Jeremy Berry, Hampton’s successor as city attorney, who resigned last year.

Berry said he had no knowledge of any payments from the law firm to Hampton.

“Had the possibility of such a relationship been presented to me by others, or if I had suspected one myself, while I was City Attorney I certainly would not have approved any related work or payments that could have been deemed improper,” Berry said in a statement.

In responding to federal authorities earlier this year, the law department obscured the nature of Whitners’ services to the city — despite repeated requests from a top prosecutor to release the information.

An email exchange in February between the city and assistant U.S. Attorney Jeff Davis, the chief public corruption prosecutor in the U.S. Attorney’s Office in Atlanta, indicates the city blacked out descriptions of work that Whitner performed in the invoices, a practice known as redaction.

It’s unclear why the city blacked out the information.

“The United States requests unredacted copies that show the ‘description’ of work under WKW,” Davis wrote on February 27.

Three months earlier, the AJC had obtained the same invoices from the city, which redacted just one word in a dozen descriptions of Whitner’s work. The invoices say Whitner analyzed documents, met with former city employees and was debriefed after witness interviews, among other legal work.

A spokesman for Bottoms would not say why the city law department had decided that the information was protected from disclosure only after federal investigators began asking for it.

A news story, which was published on AJC.com in late June, details how the city paid three law firms more than $7 million to respond to federal subpoenas from a grand jury investigating corruption at Atlanta City Hall.
Photo: The Atlanta Journal-Constitution

FAA investigating as well

For several years, the city has spent lavishly on outside legal counsel. An AJC article in June revealed the city had enlisted the legal services of more than 100 lawyers at three firms, including Paul Hastings, to respond to the corruption investigation. Bills sometimes exceeded $350,000 per month and were often paid out of airport revenue.

Federal aviation regulations prohibit the use of airport revenue for expenses unrelated to an airports’ operations and capital expenses. Violating those rules can put at risk millions of dollars in federal grants that help the airport.

In July, the FAA opened an investigation into the city’s use of airport revenue to pay legal fees.

Last month, the FAA notified the airport’s management that its auditors would conduct an additional review of seven years’ worth of financial records at the airport. The agency is sending a team of financial compliance analysts from Washington D.C. who begin work on Monday.

In a letter sent to the city’s airport manager last month, the agency said the review would examine a variety of financial transactions, including attorney’s fees.

“We will require access to all unredacted legal invoices paid from Airport accounts,” the letter said.

READ THE INVOICES

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