Industrial Authority demands $2 million from contractors, saying work not done, completed

The Macon-Bibb County Industrial Authority is demanding repayment of about $2 million it paid three contractors for work it alleges the companies did not do or complete.

In some cases, there are no buildings where work was reportedly done.

The businesses have been asked to repay the money by Friday.

It appears that Cliffard Whitby, the former chairman of the Industrial Authority, approved most, if not all, of the invoices for payment. Whitby resigned in August 2017, shortly after he was indicted by a federal grand jury in a public corruption probe.

The authority sent a demand letter on April 2 to Tyrone K. Lewis at Armstead Management LLC in Atlanta and to Roosevelt Whitehead Sr., doing business as W.M. Construction in Macon, which said that numerous invoices in 2015 through 2017 for "certain construction and demolition work purportedly completed at various property owned by the Authority," totaling more than $1.1 million, were paid in full by the authority, but that the company never performed or completed the work.

The authority also sent a similar demand letter on April 2 to Dante Prater at New Age Concept and Consulting LLC in Macon and Roosevelt Whitehead Sr., doing business as W.M. Construction in Macon, alleging that the authority had paid the company about $772,000 for other construction and renovation work also not performed or completed.

The repayment letters came to light Thursday after attorney Lester Miller sent out a statement with copies of the letters he had obtained through an Open Records Act request. Miller, who is president of the Bibb County school board, is an announced candidate for the Macon mayoral race in 2020.

A release from the authority Thursday afternoon said that the issue of "potentially improper distribution of Authority funds to these contractors" came to its attention in August, following Whitby's resignation. It asked for an audit, which found the "billing irregularities."

"The goal of the work to be done under the (request for proposals) was to accomplish needed repairs, demolitions and rehabilitations to Authority properties hopefully utilizing local and minority vendors," the statement said. "The contractors in question were paid from the Authority's own funds for internal projects unrelated to any economic development projects with private industries or prospects."

When the annual audit was presented to the Industrial Authority in December, it showed that Whitby had violated government ethics codes because he did not disclose to the authority that his relatives were officers of the companies doing business with the authority. He did not disclose that a brother-in-law was an officer of Armstead and that an officer of New Age is Whitby's daughter, according to the audit report.

The contractors had been identified through the Office of Small Business Affairs in 2015, the authority's statement said.

In December, the authority sent a letter to W. M. Construction and Armstead Management LLC demanding reimbursement to the authority of about $77,000 for an invoice that was "erroneously" paid twice by the authority in 2016. That money was repaid, said Kevin Brown, the authority's attorney.

The audit, prepared by Clifton, Lipford, Hardison & Parker, found "certain deficiencies in internal control ... that we consider to be material weaknesses."

According to the authority's statement, the auditor recommended that the authority retain "a respected construction firm to forensically inspect the work for which the Authority" had been invoiced and paid. Warren Associates conducted the investigation, and it was completed in March.

"This has been an ongoing process since the departure of the former chairman, and we will continue to thoroughly evaluate information and evidence as it becomes available," authority Chairman Robby Fountain said in the release.

Nick Lotito, Whitby's criminal defense attorney, said in December that Whitby made "no effort to conceal" the fact that officers of the companies were related to him.

Some buildings didn't exist

In the April 2 letters, the authority said Warren Associates "determined that a significant amount of work invoiced by (W.M. Construction) and New Age was never performed. Indeed, in some instances, the buildings where the work was purportedly performed did not even exist."

Bills from W.M. Construction and Armstead included:

▪ Invoices in December 2015 totaling $94,450 were paid for construction work at Allied Industrial Park at Building 4 and $94,650 at Building 5; $97,250 for work in January 2016 at Building 8; $48,700 for work in February at Building 10; $87,300 for work in March 2016 at Building 11; and $67,900 for work in May and June at Building 12. However, none of these buildings existed at the time, the letter said.

▪ Invoices in December 2015 totaling $97,750 for the demolition of Building 6 in Allied Industrial Park. Not only was it not demolished, no work was done there.

▪ Numerous invoices from late 2016 and early 2017, totaling $333,800 were paid for excavation and demolition work for structures, excavation of sidewalks, driveways and foundations of a ball field at Allied. However, the authority and Warren Associates determined that no buildings at the ball field were demolished other than an ammunitions building that was included in other invoices paid by the authority.

▪ An invoice from January 2017, totaling $36,585 was paid for repairs and servicing of a system and for interior repairs to systems and modifications to electrical, plumbing, HVAC and flooring at 400 Poplar St. The authority and Warren Associates determined that the work was not done by Armstead.

▪ An invoice from July 2017 for $36,458 was paid to Armstead for restoration work and electrical repair at the Air National Guard building, but it was determined no work was done there.

Bills from New Age Concept and Consulting included:

▪ Invoices from May 2016 and January 2017 totaling $60,470 was paid for electrical and plumbing work at Building 105A at Allied Industrial Park, but it was determined that no work was completed on the building.

▪ Five invoices from 2015 and 2016 totaling $132,760 for roof, electrical system and plumbing repairs at Building 106/106A at Allied, but no work was completed and "the systems and roof to be repaired were untouched by New Age."

▪ Invoice from January 2017 for $28,650 for renovations at Building 6A at Allied , but the work was not completed.

▪ Invoice from May 2017 for $17,300 for electrical system repair at Building 5E at Allied, but the building does not exist.

▪ Thirteen invoices from 2015 and 2016 totaling $504,851 for mostly demolition and disposal work at property owned by the authority known as Airport North and Industrial Highway Properties. However, the work invoiced could not have been performed because the authority didn't own the properties at the time of the invoice, and the authority found that the work was actually performed by another contractor hired and paid by the authority.

▪ Invoice from January 2017 for $27,650 for plasterboard repairs to the ceiling and wall at 400 Poplar St., as well as interior repairs to the electrical, plumbing, HVAC and flooring. But none of that work was completed by New Age.

An attempt to reach Whitehead, Lewis and Prater was unsuccessful.

The Industrial Authority said in its release that "this information has been provided to federal and state law enforcement for further investigation. ... (And the authority) has taken proactive steps to protect and prevent similar events from occurring again and is in sound financial position."

Information from Telegraph archives was used in the story.

This story was originally published April 12, 2018 at 12:06 PM with the headline "Industrial Authority demands $2 million from contractors, saying work not done, completed."