Oh, wow, this one smells. Stinks to holy hell, it does.
Larry Scott, the former director of Atlanta's contract compliance office, was caught in one whopper of a conflict of interest, one that will send him to the slammer for probably a couple of years.
Scott’s day job with the city was to be a gatekeeper or even a referee to make sure “small, minority, female and disadvantaged” firms got a fair shot at doing business with the city.
But he also had an outside hustle as the business manager of Cornerstone U.S. Management Group, a company set up to get such firms past that same gatekeeper. Him. And his partner in this business was Tracy Reed, the brother of the guy who happened to be mayor while this operation was in full bloom.
Yes, smelly, so let me put a clothes pin on my nose as I type.
Scott, a longtime city bureaucrat, pleaded guilty Wednesday to wire fraud and a tax violation and promised to cooperate with the feds, who have been burrowing into corruption at City Hall for at least four years.
What Scott helped set up was the ultimate audacious conflict of interest (even by Atlanta standards) that reeks of all sorts of possible skulduggery. Did preferred firms get inside information to help craft winning bids? Were bogus disadvantaged firms given, in essence, a Good Housekeeping Seal of Approval so they could qualify for city business?
That is left to the imagination — and to investigators.
After the guilty plea, U.S. Attorney BJay Pak held a press conference. I noted to Pak that Scott had been in the proverbial catbird seat. There he was, helping to run a company that tried to get minority firms in the door while also being the city official who decided whether that door should open up.
“You can draw that conclusion. He’s in a position to influence a lot of things, particularly in the area of procurement,” Pak said.
Scott’s job “was designed to help groups that were historically disadvantaged,” Pak said. “You can’t have people with conflicts of interest like this with compromised positions exercising power of discretion.”
Tracy Reed has not been charged with anything, and I did not hear from him after reaching out. Nor has Kasim Reed been accused of any wrongdoing. The feds have subpoenaed all sorts of documents concerning the former mayor.
I've long contended that Kasim Reed was a bully and lived large on the city dime. But he knew that if he stayed clean while mayor, he'd be in line for a high-paid career afterward. With the scrutiny on his office, Hizzoner would have been stupid to have operated illegally.
Steve Murrin, an attorney who represents Scott, said the feds first came to his client a couple of months ago. He said his guy spoke honestly with investigators several times before hiring him.
Murrin admits his client didn’t report income for tax purposes, nor did he report to the city, as mandated, that he worked in an outside firm with connections to the city.
“Except for the bad smell, the bad look of it, Larry was a good employee,” said Murrin, who doubts that Scott pushed through improper contracts.
“There’s no big, sexy cooperation with any big official in the Reed administration,” said Murrin. “There’s not a lot of ancillary associations. This is just Larry. Larry doesn’t know anything about allegations of the former administration.”
Previously, Adam Smith, the city's former head of purchasing, and Katrina Taylor-Parks, Reed's former deputy chief of staff, pleaded guilty to federal corruption felonies. Also, two construction company execs pleaded guilty.
Scott and Tracy Reed's business venture kicked off after Tracy ran into problems with his city job. Cornerstone Management started doing business after Tracy resigned as a contract compliance officer in November 2011. Tracy Reed ended up in hot water after a couple of incidents in which he was caught driving with a suspended license, including driving city vehicles.
In December 2011, a month after Tracy Reed’s exit from the city, Scott opened a business bank account for Cornerstone Management. The money started flowing in. And why wouldn’t it? The firm had the city’s contract compliance director and the mayor’s brother. Prospective contractors probably saw the business as buying an insurance policy.
Over the next five-plus years, Scott earned $220,000 as the company’s business manager, including more than $50,000 a year in 2014, 2015 and 2016. And remember, all the while he was earning almost six figures a year with his city day job, the one with conflicting duties.
But in 2017, Scott's moonlighting dried up. That was when it came out that the feds were investigating a culture of pay-to-play bribery at City Hall.
Now, consulting firms helping small, minority, female and disadvantaged businesses are not necessarily a bad thing. There are, like, a zillion rules and regulations, and any small minority business trying to make a go of it in the world might need a Sherpa to negotiate the red tape connected to that alphabet soup maze of programs — AABE, APABE, HABE and FBE.
The ugly thing here is that cases such as this corrupt a process built upon noble intentions. To wit, giving the little guy, the disenfranchised, the outsider, a break.
Yeah, I know. Insiders for years have gamed this process, which has gotten fat and bloated. But there is still a patina of good.
I called Matt Maguire, an attorney who has battled the city for years in contracting cases, to ask him if he was surprised by this case.
Not really, he said, adding, “It’s amazing to me that nobody squealed about this. How does this go on for years?”
In any entity, “you’re going to get some bad apples,” he said. “But Atlanta has more than its fair share of bad apples.”
