How did this government board pay for work not done? It was a matter of trust

Shortly after letters were sent to three contractors last month demanding that they repay nearly $2 million for work that Macon's Industrial Authority said was not done or not done properly, people across the community questioned how that could have happened.

How could the authority pay for work at buildings that didn't exist?

The Telegraph sat down this week with Robby Fountain, chairman of the Macon-Bibb County Industrial Authority, and Stephen Adams, the acting executive director, to discuss how the authority handles contracts and invoice processing. Attorney Kevin Brown also sat in on the interview.

"If you were the director and you say the building is torn down, I trust you," Fountain said. "You say it’s all done, the contract is satisfied, invoices are booked in. I trust you."

Cliffard Whitby, the authority's former chairman, approved all the invoices for payment. Whitby also served as executive director of the authority from spring 2015 until he resigned in August 2017, when he was indicted by a federal grand jury in a public corruption probe.

"You are putting all your expectation on your staff to ... report back to you on the work being done," Fountain said. "Hindsight is 20/20. We trusted Cliff. I mean, there wasn't an issue there to raise a red flag."

On April 2, the authority sent a demand letter to Tyrone K. Lewis at Armstead Management LLC in Atlanta and to Roosevelt Whitehead Sr., doing business as W.M. Construction in Macon. The letters 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, had been 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 the same date to Dante Prater at New Age Concept and Consulting LLC in Macon and Whitehead, alleging that the authority had paid that company about $772,000 for other construction and renovation work also not performed or completed.

"We are not saying some work wasn't done," Brown said. "We just can't identify the particular work."

The majority of the bills were for work at Allied Industrial Park off Guy Paine and Mead roads in south Macon. The 400-acre site was the location of the Macon Naval Ordnance Plant from the early 1940s to mid-1960. The authority bought the park in 1980. In 2011, it was declared a Superfund site by the U.S. Environmental Protection Agency because waste disposal operations affected groundwater and Rocky Creek, according to an EPA website.

While the authority didn't create the environmental issues in the park, as owner it was responsible for cleaning it up. So about 2014, the authority decided to begin the process of cleaning up the park.

"We had some idea it was going to be in the millions to clean it up, so the idea was to set a goal and we’ll try to find the money, " Brown said.

HIRED FOR CLEANUP

It has been a difficult property to clean up. There were up to two dozen old, dilapidated buildings, and some of them needed to be demolished, Brown, Fountain and Adams said. The military had put identifying numbers on the buildings, which were not sequential, and some numbers were missing or had changed.

"So it was very difficult for even staff to know which building numbers matched up," Brown said.

So how did the authority identify a site, if it sent someone to work on a building or tear it down?

"That was a problem," he said.

Once the authority decided to try to clean up the park, it also decided "this would be a great opportunity for the authority to get into contracts with minority vendors," Fountain said. The board decided Whitby would contact James Bumpus, at the county's Small Business Affairs office, to get recommendations for minority contractors. Three such contractors were presented to the board, and it agreed for them to do the work at Allied Industrial Park and some other locations.

"As a board, we assumed these contractors had been vetted and were certified contractors and were capable, licensed and insured, Fountain said. "We assumed that had taken place when we received the names."

An audit the authority requested after Whitby was indicted and subsequently resigned revealed that Whitby was related to the owners of two of the contractors. His brother-in-law, Lewis, is with Armstead Management, and his son-in-law, Prater, is with New Age Concept. The audit showed that Whitby violated an ethics code for not revealing those relationships to the authority. It also showed that a duplicate invoice was paid to Armstead, but the authority has since been reimbursed.

Bumpus said during a Macon-Bibb County commission meeting this week that he knew Whitby was related to the owners of two of the minority businesses he recommended to the authority, but that it wasn't his responsibility to reveal that information.

WHITBY APPROVED ALL INVOICES

It has always been one of the duties of the authority's executive director to verify that work contracted by the authority was properly done and that invoices matched up with the work. So after Whitby was named executive director of the authority, he verified that the work was done and approved the invoices for the work at Allied Industrial Park.

"It was the executive director's job to make sure the work was done" and to physically inspect the work, Fountain said.

Once invoices were approved, the finance director would make sure the amounts fell within what was budgeted for the work and would prepare the checks.

"You had invoices coming in, and you had the chairman of the authority and the executive director approving them, saying this is appropriate," Brown said. "Allied was not broken down into buildings. It is one large account. So (the finance director) didn’t have a catalog of buildings."

It's not that a lot of work wasn't done at Allied, Fountain said.

"There were several buildings that we knew had to be demolished," he said. "We all would drive out there, and you saw buildings on the ground. ... There were buildings everywhere. So as invoices rolled in, and we were obviously paying invoices, ... you physically saw buildings on the ground. That was never the question. So, at the time, we didn't see a red flag."

But the week after Whitby resigned, on the advice of its auditors to hire "a respected construction firm to forensically inspect the work" at Allied, the authority had Macon-based Warren Associates conduct the investigation. That's when the issue with invoices not matching buildings or work performed came to light.

Nick Lotito, an attorney with Davis Zipperman Kirschenbaum & Lotito, responded to an attempt to reach Whitby for comment.

"Generally, the work was completed within budget and improved the overall position of the Authority," said Lotito, Whitby's criminal defense attorney. "We believe there are a number of errors in the report (by Warren Associates) recently submitted to the Authority. We anticipate being able to show those errors."

He said lawyers would be responding to the authority about the invoicing issues.

Going forward, things are done differently now.

Starting in August, the authority has "a whole new accounting system," Adams said. "As part of the process, we have tried to rebuild it entirely."

Invoices now go directly to the operations and finance director, then are distributed to the person overseeing the work, such as the project manager, engineer, attorney or to Adams, as acting director.

Then that person has to sign off that the work was done satisfactorily, he said. Photos of any construction or demolition work are taken and attached to the invoice before checks are prepared. The new software will catch any duplicate payments to the same vendor.

"Even though we took a big hit, we still are able to do the people's work," Fountain said. "We are still able to do exactly what our mission is, which is to create jobs and increase our tax base."

This story was originally published May 3, 2018 at 5:29 PM with the headline "How did this government board pay for work not done? It was a matter of trust."