‘Suspicious’ payments went to 16 people, companies after alleged fraudulent tech sale, attorney says

Subpoenaed bank records show “suspicious” payments to 16 people or businesses in the year after alleged fraudulent technology sales to the district, an attorney for the Bibb County school district in a multimillion-dollar lawsuit said.

A lawsuit that the school district filed alleges that former school Superintendent Romain Dallemand, Isaac Culver III and his company, Progressive Consulting Technologies Inc.; former school technology director Tom Tourand; Comptech Computer Technologies Inc. and its president and CEO, Allen J. Stephen; and Pinnacle/CSG Inc. and its president, Cory McFarlane, conspired in a scheme to sell the district unneeded or nonexistent services and products in 2012.

As part of the suit, the school district has obtained 9,666 pages of bank records for Culver and Progressive Consulting Technologies Inc., according to a court document.

During a Friday hearing, Tom Joyce, an attorney for the school district, said the records show “significant payments” made by Progressive to people and companies not named in the suit.

“These payments are out of the ordinary and very large,” he said, noting that to the school district’s knowledge, the entities receiving the money didn’t work on the technology project and had no apparent reason to be paid large sums.

“We want to look into it to see what’s going on,” he said.

While some money from the alleged fraud has been traced, he said, the school district is trying to examine records to find the rest.

The school district alleges that the payments were made soon after the school district paid Ohio-based CompTech $3.7 million. The district contends that CompTech then wired the majority of the money back to Progressive, which then paid “substantially less” than what it received to another company to buy 15,000 NComputing devices — virtual desktop computers — that remain inoperable, delivered without necessary components to make them functional.

As an example, Joyce started to describe a payment made to Macon-Bibb County Industrial Authority Chairman Cliffard Whitby or his construction company, Whitby Inc., of more than $400,000. He was interrupted by other attorneys present at the hearing who objected to the detailed discussion of financial records of entities not named in the lawsuit, such as Whitby and his company, with a Telegraph reporter in the courtroom.

U.S. District Judge Marc Treadwell ultimately instructed Joyce to file a listing of the 16 entities and details about the transactions under seal for his consideration. The hearing remained open to the public.

No evidence was presented during Friday’s hearing linking the payments to the alleged fraud described in the school district’s lawsuit.

When asked by the judge, Joyce said Whitby has not objected to a subpoena submitted for his and Whitby Inc.’s bank records. Contacted this week, Whitby said he’s done business with Progressive, but he denied any wrongdoing or involvement in the technology sale at issue in the lawsuit.

An attorney for Integrated Consulting Inc., another business not named in the indictment, attended the hearing and offered to provide certain records pertaining to a transaction with Progressive to try to settle a subpoena filed by the school district seeking six years of records.

Joyce said Progressive’s bank records show a payment of $276,000 to Integrated in November 2013.

Integrated’s lawyer, Kirk Watkins, said his client, Progressive and another party agreed to a joint investment venture, and Integrated was to hold the money for the deal.

Shortly after receiving the payment from Progressive, Integrated decided not to participate in the deal and paid the money to the third partner, he said.

The deal later was aborted, and Progressive used the money to pay legal fees related to either the school district’s lawsuit or the indictment filed in June against Culver, Progressive and Culver’s business partner, Dave Carty, Watkins said.

Treadwell instructed Joyce and Watkins to try to reach an agreement about the records, although he acknowledged that a subpoena or depositions could still be sought if needed.

“Let’s go at this with a scalpel first and not with a broadax,” the judge said.

Pinnacle

Jack McLean Jr., a lawyer representing Pinnacle — a Florida construction and technology company named in the lawsuit — argued during the hearing that subpoenaed bank records of Harold Knowles, a part owner in the company, his wife, and Knowles’ law firm’s trust account should be restricted.

Without restrictions in place, financial records pertaining to hundreds of the prominent Tallahassee law firm’s clients could be made public, McLean said.

He disputed allegations that Pinnacle didn’t deliver the accounting and financial software that the school district paid for in 2012.

McLean said Pinnacle still was working in 2013 to customize the software for Bibb schools, but when the company was ready to deliver the product, the school district didn’t want it.

Arguing during the hearing, Joyce said, “We wanted our product in 2012 when we paid for it. … We paid $3.2 million. We didn’t get anything, and we want it back.”

Speaking after the hearing, McLean said documents provided as part of the lawsuit have shown that the school district paid another company about $1 million more for accounting and financial software in 2014.

He said Pinnacle had planned to deliver the software during a three-year rollout, and all money the company received for the project was used for “lawful, legitimate purposes.”

This story was originally published July 28, 2017 at 12:33 PM with the headline "‘Suspicious’ payments went to 16 people, companies after alleged fraudulent tech sale, attorney says."