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Ex-contract chief pleads guilty in Atlanta corruption case

September 4, 2019

ATLANTA (AP) — A man who helped control contracting for the city of Atlanta pleaded guilty Wednesday to federal crimes in connection with his efforts to hide his consulting activities with businesses seeking contracts from the city.

Larry Scott, who resigned last week from his post as director of the Office of Contract Compliance, pleaded guilty to wire fraud and filing false tax returns before U.S. District Judge Steve Jones.

The 54-year-old Scott is the sixth person to plead guilty in a probe of city government corruption under former Mayor Kasim Reed. Significantly, Scott incorporated Cornerstone U.S. Management Group in 2011 with Reed’s sister-in-law, Crystal Reed. The ex-mayor’s brother, Tracy Reed, in 2013 became the registered agent for the consulting company, which prosecutors said advised vendors seeking government work across the Atlanta region. The Georgia Secretary of State’s office dissolved Cornerstone in August for failure to register.

U.S. Attorney Byung J. “BJay” Pak declined to comment when asked whether Scott had used his city position to steer contracts to favored vendors, or whether Cornerstone’s clients are under investigation. As director of contract compliance from 2014 until he resigned, Scott was supposed to help make sure businesses owned by women and minorities got a fair shot at city business

“He was in the position to influence a lot of things, particularly in the area of procurement,” Pak told reporters at a news conference following Scott’s plea.

The wire fraud charge stemmed from Scott electronically submitting ethics disclosure forms to the city that failed to list his outside employment or income. In at least some of the years, Pak said Scott listed income from a third job, which Pak said was an important element pointing to Scott’s criminal intent.

In charges filed Tuesday, prosecutors said Scott received more than $221,000 from Cornerstone between 2012 and 2017. Scott admitted to not disclosing the income on his tax forms in 2015, but Pak said he filed tax returns omitting the income in multiple years.

The crimes can carry up to 21 years in prison, but Pak said Scott is likely to face 2 years to 30 months in prison under federal rules that suggest sentence ranges. Prosecutors agreed to recommend the lower end of that range in exchange for Scott’s cooperation, and said they could file a motion seeking a further reduction.

“He is cooperating and we are following up on any information he provides to us,” Pak said.

Scott will be required to pay back taxes to the IRS, and Pak said he could also be required to repay his salary to the city, an amount that totaled $530,000 over the years in question.

Scott is preliminarily set to be sentenced on Nov. 25.

Others who have pleaded guilty include former Chief Procurement Officer Adam Smith, Reed’s deputy chief of staff, two construction contractors and a man who tried to intimidate one of the construction contractors to keep him from talking to federal investigators.

Longtime City of Atlanta vendor Lohrasb “Jeff” Jafari faces a 51-count indictment accusing him of bribing Smith, plus charges of tax evasion and money laundering. He has pleaded not guilty.

Former city director of human services and political consultant Mitzi Bickers is accused of soliciting and accepting payments to help steer lucrative city contracts to two construction contractors and their companies. She has pleaded not guilty.

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Follow Jeff Amy on Twitter at http://twitter.com/jeffamy.

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