Sunday, April 14, 2024

Indictment: State hurricane relief worker, former prosecutor defrauded Louisiana taxpayers

by BIZ Magazine

By William Patrick | The Center Square

A Louisiana grand jury has indicted six individuals accused of defrauding taxpayers of nearly $825,000 in hurricane relief aid, with the scheme emanating from within the state government.

The 10-count criminal indictment describes twin brothers Robert and Thomas McCormick as leading a corrupt enterprise that began in the aftermath of Hurricane Laura and lasted for eight months.

Robert McCormick worked as an emergency management officer in the Office of the State Fire Marshall and was tasked with purchasing hurricane relief supplies for damaged communities.

Thomas McCormick is a former state prosecutor who once touted his anti-fraud record while unsuccessfully campaigning for a judgeship in the 18th Judicial District — the same district where he was indicted Friday.

The brothers are said to have funneled hundreds of thousands of dollars in taxpayer relief funds to several shell companies that were overbilling the state for relief services and materials. They are accused of money laundering, racketeering, filing false documents and malfeasance while in public office.

District Attorney Tony Clayton called the alleged scheme “an egregious act.”

“It happened when we were suffering one of the worst storms in the history of the state,” Clayton told reporters outside of a West Baton Rouge Parish courthouse.

Hurricane Laura was a Category 4 storm that caused widespread destruction in coastal, western and central Louisiana. Sustained winds were in excess of 145 mph, the strongest since the Last Island Hurricane in 1856. Gov. John Bel Edwards declared a state of emergency in August 2020.

Clayton said the state Legislative Auditor’s Office discovered potential wrongdoing earlier this year and notified his office shortly thereafter.

“They went under cover and they monitored it,” Clayton said.

“Where there’s smoke there’s fire. And once we started looking into it there was a fire and it was really burning,” an assistant prosecutor added.

According to court records, three companies were involved: Gifts Unlimited L.L.C., Westside Services L.L.C. and Emergency Logistics Inc.

Bernard Christmas and Ava Richardson, also indicted, were listed with the Louisiana secretary of state as the sole members and officers of Westside Services and Gifts Unlimited, respectively.

Thomas McCormick’s law firm was a listed agent for Emergency Logistics, which applied for a state vendor’s license three days after incorporation.

The indictment asserts the three companies operated at the direction of Thomas McCormick and they “submitted fictitious invoices” upon which “fraudulent payments” were authorized at the direction of Robert McCormick while he served in his emergency management position.

In one instance, the brothers are said to have used their personal funds to purchase large amounts of water at 13 cents a bottle, only to sell them at $1.50 a bottle to the state.

Since procurement rules forbid vending contracts with family members, the water was sold through Gifts Unlimited and Westside Services. Invoices were submitted on nine separate occasions with a total estimated markup of 587%.

The 34-page indictment also accused the brothers of continuing beyond Hurricane Laura and into the aftermath of Hurricane Delta, the record-tying fourth named superstorm to hit Louisiana last year.

The indictment said state fire marshal and state treasury records show Westside Services was paid $145,280 to provide a base camp for U.S. Army Reserve personnel in Baton Rouge in anticipation of Hurricane Delta, but the district attorney’s office said the invoice was inflated by $47,295.

“Furthermore, a portion of the funds received by the McCormick Law Firm, Thomas McCormick were used to pay the personal expenses of both Thomas and Robert McCormick, including credit card payments, car notes, tuition, and other items,” the indictment states.

Once taxpayer funds were received by the companies, at least 31 checks were issued to the McCormick Law Firm with all but five indicating legal fees and legal services. Christmas, however, told investigators that legal services never were performed.

Clayton said Thomas McCormick was able to orchestrate the events because he knew how to manipulate the system.

“It’s because of his knowledge that he thought he could pull this off,” Clayton said referring to the accused former prosecutor.

The state Fire Marshall’s Office said in a statement that an internal investigation is ongoing and that Robert McCormick had resigned while on administrative leave in lieu of termination.

“We continue to review internal controls while we stand in support of the efforts of 18th Judicial District Attorney Tony Clayton, as well as the Louisiana Legislative Auditor’s Office, who initiated an investigation in May at the request of the governor’s office,” the statement said.

The brothers were arrested Friday afternoon. A bond hearing is expected early this week.

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