What’s next for Stonecrest after reports of misspent relief money?

This is a screenshot of Stonecrest's City Council meeting on March 22.
This is a screenshot of Stonecrest's City Council meeting on March 22.

Credit: City of Stonecrest

Credit: City of Stonecrest

City calls special meeting in wake of bombshell investigative report

Roughly a week after an investigative report detailed allegations of a kick-back scheme involving pandemic relief funds in Stonecrest, the City Council will hold a meeting to discuss what happens next.

The five-member council announced a special meeting for 7 p.m. Tuesday, where they’ll discuss authorizing the city attorney and staff to take actions recommended in the report. The agenda packet for Tuesday’s meeting doesn’t give more details, but City Attorney Winston Denmark suggested several next steps in his bombshell report.

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Those included launching an external audit of the city’s Coronavirus Aid, Relief and Economic Security (CARES) Act program; voiding improper contracts; calling on law enforcement for further investigation; and attempting to recover some funds.

“The City of Stonecrest must have the political will to take remedial steps, including adopting the recommendations of this Report, to ensure a fidelity to the law, fiscal transparency, and good government for the citizen-taxpayers of this City,” Denmark’s report concluded.

The internal investigation found strong evidence that city employees had used Stonecrest’s $6.2 million allotment of federal CARES Act funds to enrich themselves and business associates. In the wake of the investigation, eight city employees contracted through private staffing company Jacobs Engineering were fired, and Mayor Jason Lary is facing calls to resign.

Those implicated in the report have declined to comment, denied any wrongdoing or could not be reached. Lary said he wouldn’t resign and has pushed back on the accusations.

In a press release Monday morning, Lary announced he’d be taking medical leave from City Hall to deal with a recurring cancer diagnosis. He said it will be his third cancer treatment in the past two years.

ExploreStonecrest mayor responds to allegations; will take medical leave

Denmark recommended the council demand improperly spent funds be returned to the city or be repaid by Jacobs. The Dallas, Texas-based company is conducting its own investigation into the city’s CARES Act spending and released a statement that called its former employees’ actions “abhorrent.” New Jacobs employees have taken their place.

“Based on the multiple, serious violations of state and federal law as well as established City policies, we recommend that the City put Jacobs on notice that the City intends to assert claims against Jacobs based on its contractual liability and common law vicarious liability for the actions of its employees and subcontractors — actions which have exposed the City to liability and caused the City monetary damages,” Denmark’s report said.

Tuesday’s agenda also includes a resolution to change who is authorized to write checks for the city, which Councilwoman Jazzmin Cobble said is in response to the recent city staff changes.

The last item on the agenda is a discussion of a “supplementary” investigative report that the city’s attorney said has more information on allegedly improper payments made to marketing companies.

The story so far: Stonecrest received $6.2 million in federal pandemic relief funds from DeKalb County. Questions were raised after the city contracted with a newly formed nonprofit to disburse those funds to small businesses. An internal investigation began, and its results were released last week, finding widespread mismanagement and improper contracts that resemble a kickback scheme.

What’s next?: Stonecrest City Council will meet Tuesday night to discuss next steps, including an external audit of the program and tracing where the money was spent.

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