Scope of lawsuit against Dallemand, others broadens with new allegations, defendants

Nearly a year after filing a multimillion-dollar lawsuit over alleged fraudulent technology purchases, the Bibb County school district has filed a motion to amend its suit, saying it plans to add former Macon-Bibb County Industrial Authority Chairman Cliffard Whitby and others as defendants.

Along with Whitby, Florida attorney Harold Knowles and Macon businessman Dave Carty are to be added as defendants. New defendants also include: Progressive Property Management LLC; the Central Georgia Partnership for Individual and Community Development; Positiventures Initiative; Whitby Inc.; Integrated Technologies Consulting; and the Florida-based Knowles and Randolph P.A. law firm, for which Knowles is a managing partner.

Whitby created Whitby Inc., Central Georgia Partnership and Positiventures. He also formed Integrated along with his brother-in-law, Tyrone Lewis.

Original defendants in the lawsuit include former school Superintendent Romain Dallemand; Carty’s business partner, Isaac Culver; Culver and Carty’s company, Progressive Consulting Technologies Inc.; Comptech Computer Technologies Inc. and its president and CEO, Allen J. Stephen; Pinnacle/CSG Inc. and its president, Cory McFarlane; and former Bibb school system technology director Tom Tourand. Tourand died in July.

A copy of the proposed amended complaint, filed in federal court Friday night, also adds new allegations of money laundering and misconduct pertaining to the Macon Promise Neighborhood initiative. It also says that defendants, as recently as May 2017, took steps to create software that could be passed off as the system for which the school district paid $3.2 million in 2012.

Macon Promise Neighborhood

Macon Promise Neighborhood, a coalition of 35 nonprofit or governmental partners, applied for a grant from the U.S. Department of Education’s Promise Neighborhood program. That was a federal public-private partnership aimed at reversing the cycle of intergenerational poverty through education in 20 neighborhoods across the country.

The complaint goes on to say:

The grant was to provide up to $5 million annually beginning in 2013 to each awarded community, as long as the community was able to demonstrate matching funds equal to the federal dollars received.

The Macon Promise Neighborhood initiative received a $500,000 “planning grant” in 2011. Mercer University was to be the grant applicant, administer the grant as fiscal agent and oversee all grant activities.

Sometime between Feb. 1, 2011, and June 27, 2012, Dallemand declined to support the initiative, having his own plan — the Macon Miracle, when he was approached by a “co-principal investigator” for the initiative.

After the conversation, Whitby is alleged to have offered Dallemand a $100,000 annual bribe for 10 years to support the school district’s providing $1 million annually toward the initiative for those 10 years. Dallemand agreed.

The Central Georgia Partnership for Individual and Community Development, a nonprofit corporation created by Whitby, had bought the old Ballard-Hudson Middle School on Anthony Road from the Bibb school system for $220,000 in 2009, and a portion of the building was leased to the school system for the initiative.

There in the “Macon Promise Center,” according to plans, students could get a wide variety of services intended to help them become healthier and higher achieving. The site would be the centerpiece of the Macon Promise Neighborhood initiative, which got rolling later as the dozens of partners banded together to try to implement the concept.

On June 27, 2012, the Bibb County school board adopted a resolution agreeing to pay no more than $250,000 annually for four schools — Ingram-Pye and Hartley elementary schools, Ballard-Hudson Middle School and Southwest High School — to be included in the program.

On July 17, 2012, Dallemand gave the school system’s chief financial officer, Ron Collier, a $1 million invoice marked due upon receipt for the Macon Promise Neighborhood program. Collier had concerns about the invoice, and he said he needed more information before paying it.

Two days later, Dallemand asked Collier why the invoice hadn’t been paid. Dallemand told Collier to contact Jimmie Samuel, then president of the Central Georgia Partnership, if he had questions. Samuel called before Collier had a chance to, but he was unable to “satisfactorily respond” to Collier’s concerns. (Samuel has since died.)

On July 20, 2012, Dallemand called Collier at home before work and told him the school board president wanted to know why the invoice hadn’t been paid. He also asked if he needed a new chief financial officer. Collier did not pay the invoice.

Though not mentioned by name in the complaint, Tommy Barnes was board president in 2012.

Five days later, Collier received a second invoice for $1 million to be paid to Central Georgia Partnership for the Promise Neighborhood initiative.

Despite receiving a letter from Dallemand telling him to pay the invoice by the end of the next day, Collier still refused, saying in a July 26, 2012, letter that he couldn’t “in good conscience write the check” because he believed it would violate state law and the state Board of Education’s rules and regulations.

On July 27, 2012, the school board president signed a lease for space in the old Ballard-Hudson school, agreeing for the board to pay $575,000 rent to the Central Georgia Partnership for 10 years.

A few months later, on Oct. 18, 2012, the board followed Dallemand’s recommendation and voted to approve a memorandum of understanding, agreeing to pay Central Georgia Partnership $1 million to customize the interior of the building and up to $325,000 annually for 10 years for costs and services incurred as part of Macon Promise Neighborhood program.

The school district paid $1 million to the Central Georgia Partnership on Oct. 30, 2012.

In the complaint, the school district contends that the school board would not have approved the memorandum of understanding or paid Central Georgia Partnership $1 million had it known that Dallemand had been bribed to support the Macon Promise Neighborhood program or that Dallemand had accepted bribes before the board’s vote.

Suspicious payments

The school district previously has contended that the defendants participated in a series of fraudulent acts, including racketeering, wire fraud and mail fraud, in a scheme to sell the district unneeded or nonexistent services and products.

Culver, Carty and Progressive Consulting Technologies Inc. were indicted this past summer on fraud charges stemming from the sale of 15,000 NComputing devices — virtual desktops — to the school district in 2012. The devices were delivered without key components to make them functional.

In a separate indictment, Whitby, Knowles, Posiventures Initiative LLC and the Central Georgia Partnership for Individual and Community Development were accused of conspiring to bribe Dallemand.

The school district’s amended complaint includes many of the allegations included in the indictments.

It also alleges that seven people and entities were paid by Progressive Consulting in the year after the school district paid more than $3.7 million to CompTech for the NComputing devices.

According to the suit:

CompTech wired about $2.1 million to Progressive Consulting on Dec. 24, 2012, three days after the company had received the school district’s payment. Progressive then paid $1.7 million to NComputing Inc. to pay for the NComputing devices.

Ohio-based CompTech also sent Progressive Consulting a $1.5 million check on Jan. 3, 2013, from money received from the school district.

CompTech, which also has an office in Warner Robins, kept just $78,260 of the initial $3.7 million.

In the year after receiving proceeds from the school district’s payment, Progressive Consulting paid Culver $238,300 in eight payments; Carty more than $1.1 million in 33 payments; Progressive Consulting’s operating account $130,000 in four payments; Progressive Property $523,000 in five payments; Positiventures one payment of $100,000; Whitby Inc. one payment of $73,126; and Integrated Technology one payment of $276,000.

Integrated’s lawyer has said his client was a partner in an investment venture with Progressive and had agreed to hold the money. Integrated backed out of the deal and returned the money.

Nonexistent software

The school district also has alleged that it paid $3,247,200 to Pinnacle in 2012 for Proscenium software it never received and that the district contends the Tallahassee, Florida, construction company didn’t have the capability to produce.

In the amended complaint filed Friday, the school district alleges that Pinnacle paid California-based Redstone Investments $35,000 in 2013 for Progressive Consulting to obtain a license for Dynastysoft.ASP Enterprise software.

Then, Progressive Consulting, Culver, Carty, Pinnacle, McFarlane and Knowles unsuccessfully tried to convert the Dynasty Software into an accounting and financial software package they could pass off to the Bibb school system as the Proscenium product, according to the suit.

The complaint goes on to say:

Pinnacle never held the license for the Dynasty Software, but in 2013 Knowles wrote to the school district trying to get possession of the software for which Pinnacle had been paid, complaining that the school district’s “lack of transparency was unfair.”

Dallemand had been offered a $500,000 bribe from Knowles, Whitby and Pinnacle to push through the purchase of Proscenium Software from Pinnacle.

Between February 2013 and May 2014, Progressive Consulting, Culver, Carty, Redstone and ZDK Softworks — a Bibb County software company — made various unsuccessful attempts to convert the Dynasty software into a product Pinnacle could pass off as the Proscenium Software.

Kevin Bradley, a lawyer representing ZDK, said his client was unaware that the product was being designed for the Bibb County school system or of any wrongdoing.

ZDK was hired by Progressive Consulting to upgrade an existing product, and they delivered a working product, Bradley said.

“ZDK has done nothing wrong,” he said

Reached by phone on Monday, Jack McLean, an attorney for Harold Knowles, in noting that Friday’s development in the case is simply a motion to amend the lawsuit, said he would formally respond to the motion in court.

“They made their allegations that they’re surprised. They’ve had five, six years to look at this and any and all theories they could have come up with by now,” McLean said. “It just seems to be adding more expense and cost to litigation, but we will defend ourselves and respond appropriately.”

Robert A. Luskin, a lawyer representing Progressive Consulting and Culver, said Monday that he was still “in the process of reviewing” the developments in the case “and we’ll address it when the time comes.”

According to the lawsuit:

On Feb. 25, 2014, Knowles wrote again to the school district, saying “Pinnacle has always stood ready (and stands ready) to deliver the School District the product it purchased.”

About two months later — 16 months after the school district paid for the software — the modified Dynasty software was tested, but according to an email to Culver from Redstone’s CEO, the testing was a “disaster” and everything was lost.

On May 5, 2017, six months after the school district filed its initial lawsuit, the district asked that Pinnacle produce the software that it had paid for within 30 days for inspection and testing.

A little more than two weeks later, McFarlane — Pinnacle’s chief executive officer — emailed Redstone and offered to pay for the company to install the Dynasty software on a laptop computer along with any remnants or parts of the failed attempts to modify the software.

“Defendants McFarlane, Knowles and Pinnacle hoped to demonstrate the software to (the Bibb County school district) and represent to BCSD, this court and Middle District of Georgia jurors that whatever Redstone/Dynasty installed on McFarlane’s computer was actually the ‘Proscenium Software’ for which BCSD paid Pinnacle,” the school district’s attorneys wrote.

Redstone replied that the installation could be accomplished if upgrades were made and quoted a price.

McFarlane then asked Redstone, “Can I pay you to Private label it for me? I want to call is (sic) ‘Pinnacle Proscenium School Management System’ and our client will be ‘Bibb County School District’.”

Redstone refused, though, saying it had sold the Dynasty software license to Progressive Consulting and not to Pinnacle.

“This is going to be a legal issue,” the company wrote. “(Progressive Consulting) is the legal entity I dealt with. Using the source outside (Progressive Consulting) is strictly prohibited.”

Redstone wrote that McFarlane could either market the software as a division of Progressive Consulting or buy another license for Pinnacle.

To date, the school district hasn’t received the software or seen a demonstration. The Proscenium software website was deleted after an investigation was launched by the Georgia attorney general, an audit of purchases, calls for an investigation by a Macon-Bibb County commissioner and numerous Telegraph articles.

Discovery in the lawsuit is set to continue through March 27, 2018.

Dallemand has pleaded guilty to filing a false tax return and is set to be sentenced in 2018.

This story was originally published October 9, 2017 at 10:02 AM with the headline "Scope of lawsuit against Dallemand, others broadens with new allegations, defendants."