Feds demand 8 years of Reed, mayor’s office travel and p-card records The Atlanta Journal-Constitution and Channel 2 Action News have obtained a federal grand jury subpoena demanding spending records of former City of Atlanta Mayor Kasim Reed and his cabinet. The subpoena follows investigations by the AJC and Channel 2 that revealed questionable spending during Reed's two terms. The grand jury seeks Reed's daily calendar during his eight years in office, plus purchasing card expense records for his securi
Mohammed Kasim Reed, whose boyhood dream was to lead the city of Atlanta, was leaving office as one of the nation’s most accomplished mayors — a Democrat with a national profile, who had cultivated relationships within the Obama administration for seven years.
A different outcome in the 2016 presidential election might have landed him a post in Hillary Clinton’s cabinet.
Not even a federal corruption investigation tempered Reed’s belief in his accomplishments. A few months earlier, he had boasted to an Atlanta Press Club audience that he could trounce any of the 10 major 2017 mayoral candidates if he were allowed to seek a third term.
"Not one of them could beat me," Reed said.
Now, just a year removed from the celebratory dinner, Reed’s legacy has been fundamentally revised.
Extravagant spending on staff, friends and himself has marred Reed’s claim of strong fiscal management. His most important responsibility as steward of the public’s money and trust is under scrutiny, criticism — and investigation.
The party at American Cut epitomized the excess. Taxpayers covered two-thirds of a $12,500 tab, with the swipe of a credit card from Reed's top lieutenant — Chief Financial Officer Jim Beard. Taxpayers spent another $2,300 on personalized leather portfolios, which were given to each guest that night.
Mayor Kasim Reed’s cabinet held a private dinner for 40 at American Cut in Buckhead on Dec. 18, 2017. Taxpayers picked up two-thirds of the $12,500 tab. Taxpayers spent another $2,300 on personalized leather portfolios, wihch were given to each guest that night. AMERICAN CUT
Details of the event were revealed in credit card statements and became one of dozens of stories published in 2018 by The Atlanta Journal-Constitution and Channel 2 Action News, after a complaint to the state Attorney General helped unlock city records Reed had carefully controlled.
The news organizations revealed how Reed and some in his inner circle ignored state law that prohibits using tax dollars to buy gifts or personal items; how Reed approved unconstitutional bonuses to favored employees during his last month in office; how he gave away taxpayer money in lip sync and ugly sweater contests. And the former mayor routinely used a city credit card for five-star travel and dining, as did members of his staff.
AJC stories also raised questions about runaway spending in Reed’s law department, and showed the mayor often paid exorbitant hourly rates to close associates for legal consultation.
The city hired the mayor's friends and former law partners for representation in the federal corruption investigation. Two of Reed's close associates performed legal work defending airport contract awards in which they had personal financial interests. And his law department approved millions in spending based on invoices that did not document the cases being worked on, the attorneys providing the service, or the number of hours billed.
Other revelations obliterated Reed’s claim of being Atlanta’s most transparent mayor. Text messages showed Reed’s top communications officers scheming to frustrate release of public records. Flouting one request, Reed withheld a subpoena that showed the federal investigation was looking at his administration’s handling of airport contracts.
Perhaps most shocking: Reed's law department paid outside lawyers to negotiate a secret legal settlement with Miguel Southwell, the airport general manager Reed fired in 2016 and who accused the mayor of illegally steering airport contracts to favored companies.
The true scope of the settlement was hidden from the public and City Council, which was never told of a $147,000 payment to Southwell from undisclosed sources. And there was deception in the public portion of the settlement, when City Council approved a $65,000 payment for "job placement" that actually went to Southwell's attorney.
The disclosures showed how Reed was able to shape the positive narrative about his administration by using public resources to hide sensitive political problems.
GBI agents Rocky Bigham, left, and Clinton Thomas interviewed AJC reporters Stephen Deere and Dan Klepal on Friday, March 16, 2018, concerning the city of Atlanta’s conduct in responding to open records requests. J. Scott Trubeyemail@example.com.
Two new investigations of the Reed administration were launched as a result of AJC and Channel 2 reporting. The Georgia Bureau of Investigation probed alleged open records violations, and the Federal Aviation Administration opened an inquiry into potentially improper use of airport revenues to pay outside lawyers.
While the epilogue to Reed’s legacy is still being written, the federal corruption investigation moved ever closer to Reed and his inner circle in 2018. Subpoenas sometimes followed news stories, and sought documents on spending and travel by Reed and top cabinet officials.
As the year draws to a close, the man who was once one of the highest profile mayors in the country has all but disappeared from public view. Reed was a no-show at the state Democratic Party convention, and endorsed no one for office in a year that Stacey Abrams nearly made history in her campaign to become the country’s first black female governor.
And the sharp-tongued politico who relished sparring with the media now does so only through a spokesman.
Reed declined to be interviewed for this story, as he did for nearly every other over the past year. But in numerous statements the former mayor brushed aside questions about his administration’s conduct by repeatedly citing the city’s growth and positive balance sheet under his leadership.
“Atlantans benefited from eight consecutive balanced budgets, zero property tax increases, zero water rate increases, nine consecutive credit-rating increases, more than $200 million in cash reserves and a 37 percent reduction in crime,” said one such statement, issued through Reed’s personal spokesman.
All of the disclosures about Reed over the last year amount to a stunning fall from grace, said Richard Hyde, chief investigator for the law firm Balch & Bingham who worked in a similar capacity for two attorneys general and the state’s Judicial Qualifications Commission.
"Kasim Reed's downfall is a real tragedy because he has such a great future as a leader in our state and in our nation," Hyde said. "But this is how he'll be remembered, regardless of whether he gets indicted or not. He'll be remembered as the bonus mayor. He'll be remembered as the credit card mayor. And that's a real shame."
Disclosures about how Kasim Reed governed emerged in public records obtained by the AJC and Channel 2 in 2018. Follow the reporting trail:
Text: ‘We can hold whatever we want’
During his eight years as mayor, Reed regularly polled residents and wore his popularity like a bullet-proof vest against criticism.
What the public didn’t know was how tightly his administration controlled the release of information in an attempt to quash negative stories before they could be published.
Ironically, that tendency opened the door to much of the damaging information that came to light in 2018.
Text messages obtained and published this year gave the public — and law enforcement — an unvarnished, behind-the-scenes view of Reed’s top spokespeople scheming to frustrate requests for public information.
Press secretary Jenna Garland instructed a Watershed spokeswoman in 2017 to "be as unhelpful as possible" and "drag this out as long as possible" before releasing embarrassing water bills that documented overdue accounts for Reed's brother and several council members, including mayoral candidate Keisha Lance Bottoms.
Garland ended the conversation by instructing the spokeswoman to “provide the information in the most confusing format available.”
Text messages between former Atlanta press secretary Jenna Garland and a Watershed manager in 2017, obtained by the AJC and Channel 2 Action News in 2018, urged the manager to delay release of public records to Channel 2.
In March, five days after the text exchange was published in the AJC and aired on Channel 2, Georgia Attorney General Christopher Carr's office asked the GBI to launch the first-ever criminal probe into potential violations of the Georgia Open Records Act.
It was a development that helped prompt Mayor Bottoms, who had pledged a new era of transparency during her campaign, to adopt a sweeping ordinance that distanced the mayor's office from overseeing public records requests.
Swept up in the GBI probe was a decision by Reed’s law department to hide legal invoices related to the federal corruption investigation in billing from unrelated cases.
The AJC requested the invoices in 2017. Reed's law department responded by directing its outside counsel to create "composite" documents meant to mimic actual legal invoices but strip out the billing for the other matters. The city then passed off the documents as authentic invoices, in an apparent attempt to hide the co-mingled billing.
The AJC discovered the deception in February 2018, after noticing some of the invoice amounts did not match expenditures listed in a database of city spending.
Both of those stories became part of a 10-point complaint filed with the attorney general, alleging the Reed administration fostered "a culture of political interference" with open records requests dating back two years.
After the complaint was filed, the AJC learned of another text message exchange from 2017 that further bolstered the allegation.
In that instance, Reed's communications director Anne Torres improperly sought to delay release of an employment contract for a newly hired cabinet official.
"We can hold whatever we want for as long as we want," Torres wrote in the text.
Damaging subpoena on airport contracts withheld
The revelations prompted Bottoms’ nascent administration to begin releasing documents that had been withheld or delayed by the Reed administration.
Those documents included credit-card statements for Reed and his cabinet, payroll records, outside legal bills — and an explosive 2016 federal subpoena asking for information about lucrative airport contracts awarded to the mayor's political supporters, and financial records for three cabinet members.
Reed’s abrupt firing of airport chief Miguel Southwell in 2016 cost taxpayers millions of dollars in outside attorneys fees and resulted in a secret settlement that Reed withheld from residents and City Council. The dispute also led to a federal subpoena for airport concessions records tied to two firms with close ties to Reed. Reed withheld that subpoena, too. KENT D. JOHNSON / AJC
Withholding the subpoena showed Reed’s determination to keep damaging political information from the public. State law required disclosure, after the AJC and Channel 2 requested all such documents related to the investigation.
As the AJC and Channel 2 prepared a story on the subpoena in May, Reed issued a statement claiming he was justified in withholding the document because it was “unrelated to the federal bribery investigation.”
In fact, the subpoena was issued in the name of the federal grand jury considering the City Hall corruption case. Among the 10 points of information sought: the “ranking and/or re-ranking” of companies competing for a $12 million annual contract to manage a billion-dollar airport construction program; and records related to airport concessionaires run by two firms with close ties to Reed.
Reed also kept the subpoena secret from City Council, which approved four multi-million dollar contracts without knowing they were part of the federal investigation. It was finally released by the Bottoms administration, after the AJC learned of it from a source and specifically named it in an open records request.
Millions spent on outside attorneys
Reed repeatedly pledged full cooperation with federal agents working on the corruption investigation, no matter where it led.
The AJC revealed for the first time in 2018 what that cooperation looked like — at least $7.5 million spent on legal bills from hundreds of attorneys at three firms.
The legal invoices included billing from white collar criminal defense attorneys at Reed’s former law firm who charged hourly rates of $900.
During Reed's last four years in office, the city paid $2.2 million to the Paul Hastings LLC, where Reed began his law career, for services only vaguely described on invoices as "litigation consultation" and "legal research."
An exact accounting of how much public money has been spent in response to the corruption probe is nearly impossible because outside lawyers were directed to conceal their billing in unrelated matters, which also hid the spending from City Council.
Reed's law department also violated its own policies by sometimes hiring outside firms without formal letters of engagement detailing attorneys' fees and scope of work. Some of the arrangements ignored conflicts of interest.
Vague, unorthodox billing could wind up costing Atlanta millions in future airport grants. After the AJC reported Reed's law department used airport revenues to pay some of the legal bills, the FAA opened an investigation into whether the city engaged in revenue diversion in violation of federal regulations.
Reed billed taxpayers $7,605 for airline tickets for himself and three bodyguards to attend the McGregor-Mayweather fight in Las Vegas in August 2017.
A visit to Las Vegas, ‘The Money Match’
In August 2017, the boxing world was abuzz over “The Money Match,” a unique fight between mixed martial arts champion Conor McGregor and undefeated, eleven-time world boxing champion Floyd Mayweather Jr.
Las Vegas was buzzing too.
Celebrities arrived in Vegas on private jets from the world over, for the fight at T-Mobile Arena. Reed and three Atlanta police officers on his protection unit came in on Delta flights with airline tickets purchased at the last minute for a combined cost of $7,605 — courtesy of Atlanta taxpayers.
The AJC first reported on the trip in May. At that time, Reed would not say what official city business he was tending in Las Vegas that weekend, or if he and his team went specifically for the boxing match. After the story published, Channel 2 reporters found footage of Reed and a group of people walking through a FOX Sports live shot in a backstage area of the arena on Fight Night.
It wasn’t the first time the AJC and Channel 2 found personal expenses and other questionable purchases on credit card statements.
Reed reimbursed the city $12,000 on March 9, just a few weeks before his statements were released to the AJC. The documents were requested under the Georgia Open Records Act in Fall of 2017, but not released until two months after Bottoms took office.
An examination of Reed’s city credit card use during his last three years in office found the mayor spent more than $300,000. Half of that happened during Reed’s last year in office, when he spent $61,000 in airfare; $25,000 for hotels; and $10,000 on chauffeured car service. The $151,175 in charges to Reed’s card in 2017 exceeded his salary of $147,500.
Reed reimbursed the city $12,000 with six checks on March 9, just a few weeks before his credit card statements were released to the AJC. The documents were requested under the Georgia Open Records Act in Fall of 2017, but not released until two months after Bottoms took office.
Jim Beard, the city’s chief financial officer and the man entrusted with enforcing fiscal controls on Reed and others, was an even bigger spender, charging more to his card than the mayor. He also wrote a big check to taxpayers after the AJC requested his statements.
Beard repaid $10,277 in April, for his stay at the luxurious Shangri-La Hotel in Paris the previous year. Beard said he was in Paris for "due diligence on certain street furniture and other concepts under consideration" by the city.
Deputy CFO: ‘No behavior change’ seen
Each of the nine officers on Reed's protection unit also had credit cards. Their charges show the less glamorous side of working for Reed. The officers routinely used the cards to pay for fast food and dry cleaning, usually for the mayor or his family. They also used them to pay for numerous one-night hotel stays in Atlanta.
A police union representative said the mayor had turned highly-trained officers into errand boys, at a time when the understaffed department was reeling from attrition and morale issues.
Officer Craig Cooper swiped his card to book a flight to Nassau, Bahamas, for Reed’s young daughter, and used it to pay an airline charge for Reed’s wife on the same flight. Reed repaid the city contemporaneously for those charges — part of about $30,000 he repaid within a month or two of charges being made on the card.
City policy clearly states that the credit cards can only be used for official city business, and that personal purchases are prohibited.
After all that spending was exposed, federal prosecutors issued subpoenas asking for credit card documents for Reed, the officers in his protection unit and his entire staff.
Deputy Chief Financial Officer John Gaffney said in May that his department was powerless to stop inappropriate card use.
"We would flag charges and give him the opportunity to repay, and in many cases he did," Gaffney said. "We do our best to change behavior, but that's all we can do. There was no behavior change."
Reed’s final act in office was a parting gift to selected members of his staff — and an $800,000 bill to taxpayers.
On Dec. 29, 2017, four days before the mayor left office, CFO Beard signed off on checks for bonuses to members of Reed's executive team and police officers on his protection unit. For rank and file employees, Beard approved checks to winners of raffles, ugly sweater, lip sync and door decorating contests held at two holiday parties.
The cash giveaways were stunning public expenditures in which the amounts were increased so taxpayers — not the individual employees — paid the taxes.
Atlanta City Council President Felicia Moore called it unconscionable, while Reed justified his decision by again saying the city was in great financial shape and his employees helped make that possible.
"It just reminded me of someone having money and throwing it in the air and letting everybody catch it," Moore told the AJC in April.
Reed later told lawyers investigating the legality of the bonuses that he assumed Human Resources Commissioner Yvonne Yancy asked Robert Godfrey, the city’s expert in employment law, if the bonuses were legal.
She never did.
Instead, Yancy relied on a five-year-old memo, written by an attorney who was a member of her Human Resources staff, that incorrectly stated the mayor’s office had complete jurisdiction on all matters of compensation.
Reed’s administration dolled out cash prizes and bonus checks to selected staff as he left office. Five senior staffers received $21,000 each, which covered taxes. They are clockwise from top left: Candace Byrd, Jeremy Berry, Yvonne Yancy, Daniel Gordon and Jim Beard. CITY OF ATLANTA / AJC FILE PHOTOS
And so the bonuses marched forward. Five of Reed’s top cabinet officials, including Beard and Yancy, each received $21,000 checks — enough to cover taxes on $15,000 bonuses.
Thirty-seven others got bonuses of either $10,000 or $5,000, which after taxes cost the public a combined $459,000.
The details of how to make the transactions work were left to Beard. It was handled sloppily, with off-cycle payroll checks being hurriedly cut before the end of the year. A few people received duplicate checks, which were eventually returned.
Yancy also decided some of her staff deserved cash gifts. She left city employment a few days after personally handing out 11 checks at a combined cost of $84,000. The holiday party prizes added another $55,000 to the tab. Other prizes, like iPods and Falcons tickets, were given away in the raffles and are not included in that cost.
Several cabinet members gave back their bonus money after it all became public. About $89,000 was eventually returned.
Separate investigations — one by an outside law firm, the other by the city's auditor and chief ethics officer — were launched after stories by the AJC and Channel 2. Both investigations found the bonuses and prizes violated city ordinances and the Georgia gratuities law, which says governments must receive "substantial" benefit from public expenditures.
The city's internal investigation said the contest prizes "were inappropriate and raised ethical concerns." It also found that Beard abused his authority as CFO by issuing himself a bonus check.
Yancy engaged Godfrey — the compensation lawyer — with text messages the same day that the AJC published a story about the bonuses.
“Am I correct that it’s not illegal?” Yancy asked.
“Not illegal but in conflict with the gratuities clause of the Georgia Constitution,” he responded.
From trials to sentencings: ‘This has been a very painful process’
Over the past three years, the federal investigation has zig zagged all over city government operations — from sidewalk and snow removal contracts to guilty pleas and indictments of high-ranking members of Reed’s staff.
Deputy Chief of Staff Katrina Taylor Parks likely will be sentenced in 2019 for accepting bribes. And Rev. Mitzi Bickers, a political consultant who helped Reed win the mayor's office in 2009 and then served as a key liaison with the public, is expected to go to trial next year on bribery charges.
Prosecutors added an additional bribery charge in October, alleging Bickers illegally tried in 2014 and 2015 to win contracts in Jackson, Miss. The AJC and Channel 2 reported as far back as February 2017 on Bickers' political connection to Jackson officials suspected of contract steering.
Federal prosecutors in Atlanta have not tipped their hand about where the investigation is heading next, but additional FBI agents and IRS auditors were added to the case over the summer.
Mitzi Bickers, who served as Mayor Kasim Reed’s director of human services and is seen here with attorney Drew Findling, waived her appearance Monday on a charge of conspiracy to commit bribery related to contracts she sought in Jackson, Miss., in 2014 and 2015. BOB ANDRES /BANDRES@AJC.COM
Richard T. Griffiths, president of the Georgia First Amendment Foundation, said his organization’s hope is that the changes to the city’s new transparency ordinance will prevent the kind of secrecy Reed practiced. That would be a meaningful outcome after three difficult years of investigation, he said.
"This has been a very painful process for the city," Griffiths said. "What we hope comes out of it is that the city sets up a long-term process that can be a model for the rest of the state."
Harvey Newman, professor emeritus at Georgia State University’sAndrew Young School of Policy Studies, said there’s not much chance of the investigation causing long-term damage to the city. Atlanta, he said, has always been a “brash city moving on to the next project that will attract attention to the city, and there’s not much that can impact that.”
Two big ones are in the queue: The Super Bowl comes to town in February; and the $5 billion Gulch development, which promises to redraw the downtown skyline, is expected to break ground next year.
“Nobody’s going to talk about our politics over the blimp shots of the city during the Super Bowl,” Newman said.
But the impact on Reed’s carefully sculpted image has been noticeable, said Hattie Dorsey, a resident of the Old 4th Ward who was the founding president of the Atlanta Neighborhood Development Partnership.
“I had great expectations when Mayor Reed was elected,” Dorsey said. “I don’t know if the office changes people, but it seemed to change him.”
Reporter Stephen Deere contributed to this story.
The Atlanta Journal-Constitution published more than 75 stories in 2018 that revealed how the administration of former Atlanta Mayor Kasim illegally withheld public records, improperly spent $800,000 on employee bonuses and cash prizes, used city credit cards for personal expenses and spent millions on outside attorneys with little oversight. More than $121,000 was refunded to Atlanta taxpayers from senior city officials who returned bonus awards or reimbursed improper credit card charges as a result of the AJC's reporting. More information: http://ajc.com/cityhall/