Houston Independent School District HISD, Pete Medford, Ft. Bend Mechanical, Eva Jackson, Larry Marshal Over 10 Years of Corruption in Texas' Largest School District Uncovered Houston Texas
The allegations made by Gill Ramirez follow. Inside has modified the format to make it easier to read. Inside does not maintain that Gil Ramirez allegations are true but is only printing what is available to the public from the Federal Courts. Gil Ramirez does make a strong case in the opinion of this writer.
Two of the principal defendants in this case RHJ (Eva Jackson) and Ft. Bend Mechanical (Pete Medford) got their start at Houston Community College. RHJ preceded the Spangler/Tyler administration, Ft. Bend Mechanical got its start with the Spangler/Tyler administration. According to the lawsuit RHJ was under investigation by the Education Department, here. The Houston Chronicle ran several stories concerning the investigation, here. Bruce Austin was one of the strongest supporters of RHJ. He felt so strongly about it that after the contract was taken away from RHJ and given to Ft. Bend Mechanical Bruce Austin looked into the situation and asserted enough pressure that they took the procurement from Art Tyler, here. Both HCC and Veselka (Veselka Investigation) were subpoena by Gil Ramirez. Here and here are the two responses.
Westheimer Property
Bruce Austin is the present Chair at Houston Community College, he is also the strongest supporter of the Acting Chancellor. Whether Insurance, which according to some vendors is rigged, contracts which are changed at the whim of an administrators, or buying land in flood zones and paying three times their worth (Westheimer Property). HCC has not changed much from the ways things were done when RHJ first started at HCC. It would seem to Inside that Houston Community College is where companies go to take Bribery 101 (Learn the fine art of taking bribes).
If one reads the case and the allegations one will see that bribery and corruption seem to be a common thing here in Harris County, Houston, HISD, HCC, ... Many of the companies that are listed in the exhibits do business with almost all government entities here. Linebarger Goggan Blair & Sampson LLP was a small outfit until they merged. Linebarger has a history of merging with other companies. Vince Ryan filed suit after working for them for years. Linebarger has had bribery problems in the past, here. There is one company listed that has (Karun) by it. Inside does not know if the Karun is the same person who owns ESPA (Company previously owned by Commissioner El Franco Lee). One of the persons that is named as being involved in some of the shenanigans is former HISD superintend Rod Paige. Rod Paige was an interesting choice by the Board of Trustees as he was a member of the Board when they made the decision. The Board wanted to privatize many of HISD functions which would have effected primarily African American employees. One of the hardest hits was to the personal who worked in the cafeterias. They needed an African American do the firings. Aramark was the company that received the contract. Aramark has been investigated for over billing the Federal Government and accussed of cooking the books, here.
If you have ever wondered how politicians seem to get rich while making so little money as a "public servant" this case explains it . This happens throughout the United States and way too often the elected District Attorneys, State Auditors, ... are part of the good "Old Boy" system and they ain't going to touch it. They don't use guns to steal but they steal much more than the crooks with guns, Enron anyone.
This is a case about a corrupt school board trustee and the school district who allows the corruption to continue for over a decade.
Trustee, Larry Marshall, is an elected public official who regularly abuses his position of trust by placing his own interests before those of the students and employees of the school district. As a member of the board of education he is charged with a duty of loyalty in overseeing the expenditures of local tax dollars, bond money and federal funds for the benefit of the students and employees of the Houston Independent School District. Persons or companies who dare to interfere with Marshall’s illegal enterprise is terminated, forced to resign, or no longer awarded contracts at Houston Independent School District.
Larry Marshall
Marshall Elected To School Board
Marshall is elected to serve as a member of the board of education of the Houston Independent School District in 1997. In 1999 he was first elected president of the board. Marshall’s first known attempt at improperly influencing HISD business dates back to 1999.
Marshall destroys Frank Watson for refusing to perform illegal acts
Frank Watson, a longtime employee of HISD, was the assistant superintendent of employee benefits and claims management.
In 1999, Watson receives a call from Superintendent Rod Paige requesting that Watson meet with Marshall. Dr. Paige instructs Watson to help Marshall in way any possible.
In the meeting, Marshall requests that Watson assign all employees who had not designated a primary care physician to a physicians group called Peoples First. Marshall is a consultant for Peoples First for a fee of $25,000 a year. Marshall also tells Watson at this meeting, “I’m doing a piece with some guys in North Carolina or South Carolina, and I’m not so sure that they are quite as up on his benefits stuff as you are, and we might be able to work out something with them”. Watson infers from the comment that he too could be a paid consultant if he did as Marshall instructed. Watson testifies that Marshall is very stern and pointed in his manner and tone in the meeting.
In response to Marshall’s demand, Watson researches and consults with in- house counsel and his supervisor on the issue. Everyone concludes that assigning the undesignated employees to Peoples First would amount to a breach a contract with another company. Watson also believes it to be an illegal act to assign an employee to a certain physician without their consent. Watson reports this information back to Dr. Paige and assumes the matter is closed.
A few weeks later, Watson receives a call from Marshall inviting him to breakfast at Buffalo Grill with Dr. Kiles, the owner of Peoples First. At this meeting Marshall and Dr. Kiles request Watson to move the undesignated employees to People First. Watson explains this would result in a breach of contract with another company.
However, Marshall and Dr. Kiles will not take no for an answer. Watson is assailed with telephone calls and meeting requests by Dr. Kiles of Peoples First, Marshall and even Dr. Paige. They are requesting that he move the undesignated employees to Peoples First. At one meeting, Dr. Kiles even offers to reward Watson personally if he makes the change. Watson continues to explain why it will breach a contract with another company if the employees are moved to Peoples First.
Shortly thereafter, Dr. Paige asks Watson to remove all marketing material for all physicians groups from the employee benefits package. Then Dr. Paige asks Watson if he would provide only the marketing material for People First in the employee benefits information packet. Watson informs Dr. Paige that it is outside of the normal procedure to provide a marketing packet regarding only one and not all of the physicians groups. Dr. Paige stares silently at Watson for a long time then leaves Watson’s office. Watson complies with Dr. Paige’s initial request to remove all of the marketing material.
Shortly after enduring the series of meetings over the Peoples First matter, Watson suffers severe chest pains and is diagnosed with heart issues.
Watson’s doctor orders him to take six months of medical leave. When Watson returns from medical leave, he learns that someone stuffed the employee benefits packets with only the Peoples First marketing material enclosed. Watson also learns his contract is prematurely and immediately terminated and his personnel file is marked as do-not-rehire.
Watson believes Marshall prematurely ended his spotless 32 year long career and slandered his reputation because Watson refused to perform an illegal act which would have subjected the school district to a lawsuit. Many years and many legal fees later HISD pays Watson a substantial settlement for the acts of Marshall.
What happened to Watson made an impression on former HISD employee Reginald Mack. Mack testifies in his deposition that he is aware of Watson’s story and believes that Watson was fired because he would not follow orders from Marshall. Mack also testifies in deposition that there is not one person he knows of at HISD who would ever speak freely about Marshall without the fear of being terminated.
Marshall assigns his Consulting Contract with CEP to Joyce Moss Clay, when New Ethics Rules are Passed
In 2000, Marshall is hired as a consultant with Nashville based Community Education Partners also known as CEP. He works with them for three years from 2000 to 2003. Records confirm that he is paid $72,000 from 2001 to 2003 for the consulting relationship. It is unknown how much he is paid in 2000.
In 2004, the school board passes a rule that trustees cannot work for school district contractors. Immediately thereafter, Marshall recommends that CEP hire his close friend and campaign treasurer, Joyce Moss Clay, to be the CEP consultant. However, Marshall continues his contact with Randle Richardson, the CEO of the company. It is not apparent from Clay’s work history how she will be of assistance to CEP as a consultant. Also, records appear to indicate that Marshall has, since 2004, received a portion of CEP’s payments to Clay.
Marshall Accepts Gifts from E-Rate Vendors Leading to Millions of Dollars of Federal Funds withheld from HISD
E-Rate is a federally funded program administered through the Federal Communications Commission. E-Rate provides millions of dollars a year of federal funds to HISD. In 2006, the FCC freezes millions of dollars a years in technology funding due to allegation of HISD’s employees and board members accepting gifts from E-Rate vendors. Marshall is one of the board members alleged to have accepted gifts from the E-Rate vendors. After five years of investigation and losing approximately $70 million dollars in E-Rate funding, HISD finally settles the E-Rate case by agreeing to pay an $850,000 fine and by agreeing to hire a full time E-Rate compliance officer to ensure that neither employees nor board members accept anything of value from E- Rate vendors.
Despite the start of an investigation into E-rate vendors in 2006, Marshall continues to meet with Scott Blakenship, a representative of two of the E-Rate vendors implicated in the well-publicized scandal involving Dallas Independent School District and HISD. Documents show that Marshall has regular breakfast meetings with Blakenship dating back years and through at least 2010. Also, Blakenship is a regular customer of Clay, who in turn pays Marshall seventy-five percent of those fees collected from Blakenship to Marshall. 2Ex. 8 and 37.
RHJ Hires Clay for $3000 a month to provide alleged Moral Support
In 2003, the predecessor company to RHJ hires Joyce Moss Clay for $2500 to $3000 a month to provide moral support to Eva Jackson, the owner of RHJ. Ex. 3, 4 and 38. RHJ is a JOC contractor in the Houston area. It is owned by Eva Jackson. The company that evolved to be RHJ was an asbestos abatement company owned by Eva Jackson’s husband. The asbestos abatement company had previous contracts for services with HISD both directly and as a subcontractor to KBR.
According to Clay’s deposition, she helps RHJ apply problem solving techniques to understand why it was not awarded a contract. There are no regularly scheduled meetings, no written work product, no email correspondence, no time logs, and neither Clay nor Jackson can even give an estimate of how often in a month or a year they would meet or confer. Ex. 5 and 6. The invoices Clay mails to RHJ are the same every month and never contain any detail regarding her alleged services or time. Ex. 4. Despite the lack of information about the services rendered, RHJ mails a check to Clay every month for payment in amounts ranging from $2000 to $3000. Ex. 3.
In contrast to the lack of services Clay provides, Jackson attends social events and meetings regularly with Marshall including Dr. Abe Saavedra’s holiday party. (Dr. Saavedra was quoted in the press that Marshall’s appearance at his holiday party with Jackson was one of the things that made it clear to HISD staff that Jackson was someone important to Marshall.) Clay pays Marshall seventy five percent of all fees collected from RHJ. The fees range from $2000 to $3000 a month. Ex. 8.
Job Order Contracting Program Expanded in 2008
In late 2007 or early 2008, the board votes to hire additional Job Order Contractors (“JOC”) to supplement the current Job Order Contractor, Jamail & Smith. Job Order Contracting is a way for an organization to complete numerous, commonly encountered projects quickly and easily through long term contracts with pre-approved contractors.
The contracts are indefinite quantity but fixed price through a pricing co- efficient applied to the RS Means construction pricing manual or “bid book”. This bid book describes what each contractor can charge for individual elements of a project. For example, changing a light bulb has a certain dollar value. Obtaining a ladder, if necessary to install the light bulb, requires a certain amount of money. Weekend work requires a certain amount of money. If there something out of the ordinary not included in the bid book, A JOC contractor is required to submit 3 proposals as a “non-priced item.” The contractor then applies its pricing coefficient to each of the RS Means line items it determines is necessary to complete the project. The pricing coefficient is the difference between the RS Means standard and what the contractor is willing to charge. For example, in Alaska, where labor and materials are more expensive, an Alaskan contractor will charge, e.g., 15% more than the RS Means price. However in Houston, where labor and materials are less expensive, a Houston contractor will charge twenty five percent less (.75 coefficient) of the RS means standard.
Generally, the projects involve less than $250,000 in repairs or construction. Long term contracts with JOC contractors save time and money by eliminating a Request for Proposal and selection process for every project.
For example, when a roof would collapse from heavy rains, or an air conditioner would fail, HISD would send out a notice to the three approved contractors of the project in that region. Those contractors would schedule a site visit to prepare a scope of work and coordinate with subcontractors to review scope on the field for bids. The JOC contractors would then prepare proposals using the pre-priced RS Means process. For some reason, GRG and Horizon were required to bid against other JOC contractors but FBM maintains it never was required to bid against another JOC for work. The Request for Proposal to add additional JOC contractors is published in March 2008 and bids are due in May 2008. Plaintiff, GRG, applies to be a JOC contractor along with many other in Texas and out of state companies. Plaintiff, GRG, spends tens of thousands of the dollars preparing for the opportunity to be an HISD JOC contractor.
After the deadline to submit a response to the Request for Proposal, HISD employee and JOC selection committee member, Elvis Eaglin, sends two emails, each one minute apart, on June 5, 2006 to RHJ and FBM advising them to lower their pricing co-efficient. Ex. 39 and 40. Other contractors who have a higher pricing co-efficient do not receive the same email. The pricing coefficient is fifty percent of the scoring by the selection committee.
Despite having a low pricing coefficient and high Minority Women Business Enterprise (MWBE) score, RHJ is disqualified from consideration because of a pending lawsuit with Fort Bend Independent School District. In the lawsuit, RHJ claims it was slandered when the board publicly stated that the company was substantially over budget and over time on its work with the district and therefore its contract would not renewed. Marshall had previously attended an FBISD school board meeting to advocate on behalf of RHJ.
On November 12, 2008, HISD announces the new JOC contractors. They are Gil Ramirez Group, LLC, Horizon International, Fort Bend Mechanical (“FBM”), KBR, and Reytec/CBIC. Ex. 17. They join Jamail & Smith who is still under a six year, annually renewed contract. Gil Ramirez Group and Reytec/CBIC are Hispanic minority owned businesses and Horizon International is an Asian owned minority business. KBR is a large international corporation incorporated in Delaware. Jamail & Smith is a large Texas construction company who works in Texas and on out of state projects.
Clay Fired by RHJ One Week after RHJ Loses HISD Contract
Eva Jackson does not turn to Clay for moral support or problem solving techniques in response to losing the contract. Rather, seven days later RHJ terminates its consulting agreement with Clay. Ex. 18. RHJ states in its letter that it could no longer employ Clay due, in part, to “a lack of new business development”.
KBR Given $750,000 in Work without Signed Contract
With the exception of KBR, all of the new contractors execute contracts in December 2008 or early January 2009. Ex. 36. The contracts are three year contracts, subject to renewal every twelve months. KBR’s attorneys continue to negotiate certain provisions of the contract and do not reach an agreement until August 2009. Despite not reaching an agreement on the JOC contract until August 2009, KBR is awarded approximately $750,000 worth of JOC projects without a signed contract.
Marshall Pressures HISD Superintendent to add RHJ as JOC and Superintendent Resigns
Marshall is elected president of the board again in January 2009. Marshall expects Dr. Saavedra to add RHJ as a JOC contractor. Dr. Saavedra refuses to give into the pressure. Marshall advises Dr. Saavedra that he has lost confidence in him as a Superintendent.
On February 4, 2009, Superintended, Dr. Abe Saavedra announces his intention to resign in March 2010. Dr. Saavedra feels pressure from Marshall to leave much earlier in September 2009, the same month that RHJ is added as a JOC contractor.
FT. Bend Mechanical takes Marshall to Super Bowl and Hires Clay as Consultant Day Before
In 2009, Pete Medford, owner of FBM, pays for Larry Marshall and Clay’s husband to attend the Super bowl in Tampa, Florida. The game is held on February 1, 2009. Marshall fails to disclose this expensive gift by a current contractor on his Conflict of Interest Form filed with HISD and required by law. Marshall explains that he was merely attending the Super bowl game in place of Medford’s original guest, Joyce Moss Clay. Interestingly the first mention by Medford to the company bookkeeper regarding Clay’s employment is on February 4, three days after the Super bowl not before the game. Ex. 2.
The day before Medford and Marshall are attending the Super bowl together. FBM hires Clay as a consultant for $3000 a month. The contract is dated January 13 with an effective date of February 1. Clay signs the contract on February 4. Ex. 41. Clay pays 65% of her fees collected from FBM to Marshall. Ex. 8. Clay is paid $36,000 a year to allegedly facilitate FBM making less than $10,000 a year in donations to HISD schools. Ex. 41 and 42. The only work product she produces is a one page application for school principals to complete to receive donations. There is no email correspondence, no regularly set meetings, and Clay’s invoices expect payment one month in advance for her work. Ex. 5. The invoices Clay mails to RHJ are the same every month and never contain any detail regarding her alleged services or time. Despite the lack of information about the services rendered, RHJ mails a check to Clay every month for payment. Ex. 1 and 42. Clay testifies that she cannot recollect how often in a month or a year she performs work for FBM.
Ft. Bend Mechanical Employs Marshall's Grandson and HCC Trustee's Company
FBM is a local non-minority owned HVAC and construction company. In addition, FBM employs Marshall’s grandson. Further, FBM contracts with companies owned by Houston Community College Trustees or their family members. Specifically, FBM contracts with HCC Trustee Chris Oliver and companies owned by close a friend of HCC Trustee Abe Davila and a family member of HCC Trustee Yolanda Navarro Flores. HCC Trustee Oliver and FBM conveniently forgot to disclose their relationship in the Conflict of Interest forms filed with the Houston Community College until an employee with HCC discovered the relationship.Ex. 29-30 and 32-35. FBM and RHJ both regularly contract with Scott Blakenship’s new construction company, General Works. The company is operated by Scott Blakenship but owned through his wife’s name and two other women.
HISD Disorganized in Starting new JOC Program
The start of the new JOC program is much disorganized. The school district is unable to start assigning projects for at least six months on many schools which require immediate repair of life and safety issues. Some of the repairs are needed for Hurricane Ike and some are needed for the usual course of repairing buildings. The JOC contractors are paid in part by bond funds, in part by FEMA funds for Hurricane Ike damage, and in part by general operating funds for building maintenance.
Gil Ramirez Group (GRG) and Horizon Lead Charge to Improve JOC Program with Uniform Pricing Coefficient
Initially, all of the JOCs had different pricing coefficients and some of the JOCs such as Gil Ramirez Group and Horizon International are required to bid against one another to win a certain project – a procedure HISD’s own official testified is inappropriate. In response to the disorganization, delays and inefficiencies in the start-up of the expanded JOC program, Horizon International and GRG lead an effort to stream line the JOC program at HISD by submitting a lengthy written report of proposals to Willie Burroughs, one of the HISD administrators in charge of the program. One of the primary proposals is that all JOCs agree to a uniform coefficient and not waste time bidding against one another on the same project. Willie Burroughs expressed much appreciation for the feedback on the JOC program and started implementing the suggestions. By October 2009, all of the JOCs agreed to use the same coefficient.
Meanwhile, GRG finally starts receiving projects in June and July 2009. GRG wins the majority of projects after receiving the winning bid. The CMPA (project manager for the JOC program) who for a short time oversee the project awards for the JOC contractor, determines that GRG’s estimates are the best value to the district. Based on this determination, GRG wins most of the projects on which it submits scope of work and estimates. GRG is receiving over a million dollars in projects monthly. GRG receives routine praise for the quality and timeliness of its work.
FEMA Funds Pay for JOC Contractor School Repairs
In September 2008, Hurricane Ike caused serious damage to schools and buildings owned by the school district. HISD applied for and received much needed FEMA funds to make hurricane damage repairs using JOC contractors in 2009. The JOC Contractor program is overwhelmed with Life and Safety repairs at schools according to an email from Richard Lindsay, Chief of Business Operation and head of the JOC program for HISD.
JOC Contractors Required to Return Two Percent of Bond Money to General Fund
JOC contractors are expected to pay 2% back out of money received from HISD as payment of their invoices. Some of the payments are from bond funds. The two percent fee is then refunded to the general operating funds. Thus, HISD is using bond funds for the general operations of the school district. Bond funds must be used for the purpose described in the bond issuance, not for general operating funds for the school district.
RHJ Settles Lawsuit with FBISD and Added as HISD Contractor outside of HISD's Policies and Procedures
In May 2009, RHJ resolves its lawsuit with Fort Bend Independent School District. After resolution of the lawsuit, Marshall arranges for RHJ to meet with Richard Lindsay in order to be added as a JOC contractor although the selection process for the 2008 JOC program was closed in November 2008. In response to Marshall’s request, the administration submits an agenda item to the August 2009 board meeting recommending RHJ as a JOC contractor. Ex. 19. The board approves it. The contract commences in September 2009 and is up for renewal three months later in December 2009.
In contrast to RHJ’s special treatment, another construction contractor, Heery International, who is disqualified for consideration for general construction jobs in 2008 due to a lawsuit with De Kalb Independent School District is never reconsidered when its lawsuit resolves.
GRG Loses Projects after RHJ added; Ramirez told he should pay Bribe
Shortly after RHJ is added as a JOC contractor, GRG stops receiving calls about new projects. GRG makes several inquiries about the decrease in projects but no one is able to provide an explanation.
In this same time frame, Gil Ramirez, Jr. attends lunch with Ricardo Aguirre, a sub-contractor to ABM Janitorial, a nationwide janitorial company incorporated in Delaware. ABM Janitorial has a multi-million dollar contract with HISD. Aguirre owns Accel Building Maintenance. Aguirre explains to Gil Ramirez, Jr. that if GRG wants to keep its contract with HISD, GRG needs to hire Clay as a consultant for approximately $2500 to $3000 a month, and she in turn pays Marshall. Clay will not actually perform services for the money she is paid. She is simply “the bag lady”. Marshall will then use his influence as a long time board member to obtain or protect the contract. Aguirre further explains that he uses money received from ABM Janitorial to pay Clay for Marshall’s influence to protect ABM Janitorial. Ex. 8 and 37.
In Aguirre’s deposition, he refuses to answer many questions regarding his acts to improperly influence Marshall citing his Fifth Amendment right to not incriminate himself.
Marshall’s personal calendar indicates that he meets with Aguirre three times in 2008 and twice in 2009 and one time in 2010. Also, Accel Building Maintenance is a customer of Clay. According to her bank account records and a spreadsheet produced by Marshall, Clay pays Marshall seventy five percent of the money collected from Accel. Ex. 8 and 37. Gil Ramirez, Jr. refuses to pay Clay or Marshall any money. From September 2009 thereafter, GRG receives almost no new projects.
Medford Family donates $58,500 to Marshall's Campaign, $25,000 of it is not reported
In the fall of 2009, Marshall is in a heated campaign to keep his board of education seat. Also, the first annual renewal of the JOC contract is approaching. In addition, FBM has now invested over $27,000 in Clay as a consultant. Ex. 42. In June 2009, the Medford family starts making campaign contributions to Marshall. On June 18, 2009, the family contributes $7500. On September 29, 2009, Medford contributes $15,000. On November 7, 2009 Medford contributes another $25,000. Ex. 22 to 26. This check is deposited into the campaign account but never reported in accordance with state law. On November 19, 2009 Medford makes another contribution of state law. On November 19, 2009 Medford makes another contribution of state law. On November 19, 2009 Medford makes another contribution of $3000. On February 25, 2009, after Marshall wins his seat in a run-off, Medford donates $3000 and then another $5000 on June 24, 2010. While reviewing documents at FBM’s offices, Plaintiffs’ counsel observed a check from FBM to Medford reimbursing him for his “political contribution” to Marshall; the reimbursement check from the company has since disappeared although all of the employee and owners files were received by the copy company. Such reimbursement is in violation of state law because it involves a corporate campaign contribution and has the effect of disguising the identity of the original donor. See TEX. ELEC. CODE §§ 253.001, et seq. FBM Management may also be held responsible as a general partner of a limited partnership pursuant to Texas Business Organizations Code 152.153.
From October 28, 2009 to July 1, 2010, there are eleven checks totaling $24,322.13 written from Marshall’s campaign account to either “cash” or “Larry Marshall” which are not reported on his campaign finance reports for this time period. This is a violation of Texas Election Code §§253.001 and 253.003. FBM made an illegal corporate campaign contribution in the amount of $25,000 to Marshall's campaign. See TEX. ELEC. CODE § 253.094. Eva Jackson is also a political donor to Marshall.
Marshall failed to disclose the campaign contribution on the Candidate/Officeholder Campaign Finance Report in violation of the Texas Election Code.See TEX. ELEC. CODE §§ 253.001 & 253.003.
Each of the payments to Clay (transferred in part to Marshall) and each of the political donations to Marshall described herein were intended to encourage Marshall to take official action in favor of the payor. These payments were intended to be bribes.
Administration Recommends Renewing all JOC Contracts up for Renewal
In late 2009, the administration prepares a recommendation to the board to renew all existing JOC contractors’ contracts for another year. As of this time, all of the existing JOC contractors had agreed to use the same pricing co-efficient for their work.
JOC Contracts Not Renewed but Millions of Dollar of Life Safety Projects still Incomplete
In December 2009, GRG learns from Richard Lindsay that its contract is expected to be renewed at the January 2010 board meeting. The agenda item recommending the renewal is submitted as Agenda Item F-3. A few days before the meeting, Item F-3 is withdrawn. Ex. 20. There is no public explanation given for why the agenda item was withdrawn. Neither GRG, nor any of the other contractors, based on and information and belief, ever received a letter from HISD informing the contractor of a problem with performance. The JOC contract required performance issues to be raised by HISD in a detailed process which never occurred with GRG.
As of January 15, 2010, after the agenda item to renew the existing JOC contracts is removed for unexplained reason, HISD has only Jamail & Smith under contract to perform millions of dollars of life and safety repairs that are still needed, according to an email from HISD employee Travis Stanford of the Construction and Facilities Maintenance Department. Although, Jamail & Smith is the only company actually under contract, Gerwin, an auditor of the construction department, misinforms the administration that RHJ is still under contract and should continue receiving projects. 4This is incorrect. RHJ’s contract had terminated in December 2009 along with the other JOC contractors but RHJ nevertheless starts receiving projects. In addition, RHJ somehow gains access to estimates and scope of work reports GRG had previously prepared and submitted to HISD for projects that were not awarded to them and uses GRG’s work product as its own. Ex. 43.
New JOC Request for Proposal is Posted in February 2010
In February 2010, HISD releases a new Request for Proposal for Job Order Contracting. All of the contractors submit responses including Jamail & Smith and RHJ although they are considered still under contract with HISD.
A selection committee is formed. The pricing coefficient is once again made the most important selection criteria and given fifty percent of the weight for the scoring process. This is inconsistent with the administration’s previous policy decided six months earlier for all of the JOCs to have a uniform pricing coefficient for projects.
Selection Process for 2010 JOC Contract is Problematic
On April 12 and 13, 2010, the selection committee concludes, based solely on rankings determined in large part by pricing coefficients, that Jamail & Smith, KBR, RHJ, and FBM should receive a new three year JOC contract. Two of the four committee members disagree with the results because Jamail & Smith had an unacceptable financial review and a very low Minority Women Business Enterprise Score. Ex. 44. Elvis Eaglin advises the two committee members that Jamail & Smith will be selected regardless of the unacceptable financial review because of its high ranking due to the pricing coefficient. Ex. 44.
In addition to including the pricing coefficient as the most important factor, the scoring by the selection committee is suspect because RHJ is given very high marks on past experience and history with the school district although, at that time, it had only completed one JOC project for HISD. Also, KBR is given high marks on past performance rating although it took eight months of a 12 month contract to negotiate contract provisions.
On April 12 and 13, 2010, the selection committee concludes, based solely on rankings determined in large part by pricing coefficients, that Jamail & Smith, KBR, RHJ, and FBM should receive a new three year JOC contract. Two of the four committee members disagree with the results because Jamail & Smith had an unacceptable financial review and a very low Minority Women Business Enterprise Score. Ex. 44. Elvis Eaglin advises the two committee members that Jamail & Smith will be selected regardless of the unacceptable financial review because of its high ranking due to the pricing coefficient. Ex. 44.
In addition to including the pricing coefficient as the most important factor, the scoring by the selection committee is suspect because RHJ is given very high marks on past experience and history with the school district although, at that time, it had only completed one JOC project for HISD. Also, KBR is given high marks on past performance rating although it took eight months of a 12 month contract to negotiate contract provisions.
On April 26, 2010 at 8:16 a.m. there is a meeting held between HISD employees Elvis Eaglin, Stephen Pottinger and Robert Fazakerly. By the afternoon of April 26, the four contractors (KBR, Jamail & Smith, FBM and RHJ) who had been internally selected, but not announced publicly or submitted for board approval, were asked to agree to a single uniform pricing coefficient. Within hours all four companies agreed to use the same pricing coefficient. HISD employee, Mark Miranda states in an email at 4:42 pm on April 26 to Elvis Eaglin, “It sounds like you were able to get them all to agree on a single coefficient? I was suppressed (sic) it was done so fast. What coefficient did they get down to?” Ex. 45. However, the next day Elvis Eaglin circulates an email to five other HISD employees attaching summaries of the ranking criteria still based on fifty percent weight on the pricing coefficient. Ex. 45 and 46. The email requests that the top four ranked companies be submitted as an agenda item at the May 2010 board meeting for board approval.
On May 13, 2010, based on the administration’s recommendation the board approves KBR, Jamail & Smith, RHJ and FBM as new contractors. Ex. 21. When the previously selected JOC contractors, Gil Ramirez Group, Horizon International and Reytec/CBIC, inquire as to why they were not reselected and why the number of JOC contractors were reduced from seven to four, HISD new Chief of Business Operation, Issa Dadoush, (replacement for Richard Lindsay resigning on February 28, 2010) explains that the four selected are the top ranked companies based on the selection criteria which included fifty percent weight on a pricing coefficient. There is never an explanation offered as to why the number of contractors was reduced from seven to four.
The suspicious HISD bid process has even been questioned by the new, current Superintendent of HISD, Terry Grier. Superintendent Grier stated publicly, at a recorded meeting, "I have seen a procurement department made up of independent folks rate bids from a variety of different companies across the district to do a lot of different work, and then I've seen staff -- just for whatever reason -- pull names off of a list and put other names back on a list, (with) no rhyme or reason except, quite frankly, influence where influence has no business coming from."
On May 5, 2010 a nearly $16,000 generator is delivered to the home of Joyce Moss Clay by FBM. The size of the generator is more than necessary for the size and needs for her home. Two different versions of an invoice from FBM to Clay have been produced by each party. The unaltered version of the invoice shows that FBM did not charge for the installation of the generator. Clay testifies in her deposition that she chose to buy a $16,000 generator from FBM despite the fact that she is part owner of her son’s Houston area heating, air conditioning and ventilation company because her son does not sell generators.
In September 2011 during the course of subpoenaing documents, GRG discovers a file labeled “ Joyce Home” among the documents made available for inspection by FBM. In the file there are invoices from Reed Crane & Rigging and Crawford Electric to FBM for the installation of a generator at Clay’s home. Ex. 27 and 28. There is no invoice from FBM to Clay in the file.
The timing of the generator gives rise to a reasonable inference that providing free installation of a generator to Clay is a favor to Marshall. Marshall owes Clay for taking a risk by being the conduit through which bribes are paid. FBM’s favor to Clay is really a favor to Marshall. Ex. 47.
On April 30, 2010, four days after RHJ learns from Elvis Eaglin that it is one of the four JOC contractors to be awarded a new contract, RHJ re-hires Clay as a consultant for $2000 a month.
After losing its primary construction contract, Gil Ramirez Group is unable to recover. It had placed nearly all of its effort and money into succeeding in the HISD JOC contract. GRG believed at the time it signed the JOC contract, it would receive three years of work from HISD. Three years would have been a minimum since earlier HISD JOCs had been retained for much longer. Also, GRG counted on the HISD JOC contract to gain more business. As an HISD JOC contractor you are automatically pre-approved to be hired by many smaller school districts in the southeast Texas area. In addition, due to HISD’s size, it is excellent experience to help a contractor to obtain work with other large school districts around the state and nation.
GRG lost project awards starting in September 2009, failed to have its contract renewed, and was not selected as a JOC contractor in 2009 because it refused to pay bribe to Marshall by hiring Clay for an illusory consultant position. FBM and RHJ both paid the bribes to Marshall and he used his influence as the long serving and intimidating board member to manipulate certain employees to his paying customers obtained or kept their contracts. Most of Marshall’s income during the critical years is from these bribes. Ex. 8, 9-16 (sealed), 31 (sealed) and 37. RHJ’s abrupt firing of Clay a week after not obtaining the JOC contractor in 2008 is further evidence of the tight link between payments to Marshall via Clay and the customer’s expectation to be rewarded with a contract from HISD. Also, Marshall’s continued efforts to oppose or water-down HISD ethics policies is further evidence of Marshall’s intent. GRG’s plans to obtain JOC contracts in Texas and out of state were stopped because GRG refused to pay a bribe to Marshall.
HISD has yet to conduct an audit or investigation into Marshall’s acts of receiving payment from HISD contractors and using his influence to obtain or renew existing contracts. HISD is aware of the 2009 spreadsheet showing the payment of sixty five to seventy five percent of fees collected by Clay from HISD contractors: Scott Blakenship, Accel Building Maintenance, Linebarger, AO Phillips, Karun Sreema and Fort Bend Mechanical. HISD has several years of Clay’s bank account information which shows deposit slips identifying HISD contractors and immediate payment to Marshall with the account code for the HISD contractors listed in the memo section of the checks to Marshall. Ex. 37. HISD fails to take action despite paying hundreds of thousands of dollars for legal services to defend Marshall in this lawsuit.
HISD is refusing to take action because any employee who would speak up puts their job at risk as Reginald Mack and Frank Watson learned. In a recent deposition, former HISD employee Reginald Mack testifies, “I don’t think anybody that’s employed by the district would be willing to speak freely about Larry Marshall or any other items unless they were ready to not work at HISD any more.”
In summary, Houston Independent School District actions amount to aiding and abetting Marshall in corruption when it fails to take action against him. As a result, GRG’s JOC contract starting in September 2009, four months before the renewal date, was terminated for failing to pay a bribe to Marshall and without due process from HISD. In addition, GRG’s existing JOC contract was not renewed as well as GRG was not selected in the 2010 rebidding process.
HISD now attempts to bootstrap a preliminary audit report of the 2008 JOC selection process as its explanation for not renewing the JOC contracts in January 2010. This audit report is done by John Gerwin, an auditor for the construction and bond office for HISD. The same John Gerwin who oversaw and advised the 2008 JOC selection committee.
Gerwin testifies in his deposition that he is angry that the administration failed to add only FBM and KBR as contractors but also added three minority owned contractors (Gil Ramirez Group, Horizon International and Reytec/CBIC) to the expanded JOC program. Gerwin explains in his deposition he believes that the MWBE program is defined by drawing a line around the globe so that “Africa was below the line, India, some of the Far East. I don’t know…[E]veryone that is below that line is protected, and everybody above that line is not. That’s what it boils down to.” Despite his purported outrage over three additional minority owned businesses being added by the administration to the JOC program in November 2008, Gerwin does not start an audit of the selection process until August 2009, the same time period RHJ is being added as the seventh JOC contractor.
In Gerwin’s “audit,” he performs all of his investigation in one day according to his report and he concludes that his selection process is fine but that the addition of the three minority owned contractors to the JOC program lacks appropriate documentation. The audit is marked “preliminary” so that it does not have to be made public. (Mack testifies in his deposition that the preliminary audit game is often played at HISD.) Gerwin’s audit is inherently flawed because he audited his own work, and is therefore not independent. In addition, the preliminary audit results are available for months but the decision makers in the administration, Richard Lindsay and Willie Burroughs, continue to recommend renewal of the existing JOC contracts. There is no mention of the audit findings in their discussions about renewing the current contractors. Further, Issa Dadoush, Richard Lindsay’s replacement in April 2010 and who is in charge of the final approval of the JOC contractors, testifies in his deposition that at the time of the second JOC award in May of 2010 he had never heard of the audit or even read the audit. Further, in rebidding the JOC contracts in 2010 there is no discussion about how the audit findings should be incorporated into the process to avoid the alleged problems of the first bidding in 2008.
The true purpose of the audit is not because Gerwin is outraged that three minority owned businesses were added as JOC contractors in 2008 but so that the number of JOC contractors can be reduced from seven to four. The less JOC contractors, the more projects for each contractor under the JOC program. Former HISD bond office employee, Reginald Mack, testifies in his deposition that Gerwin has a “standard practice” of producing audit reports containing known misstatements of fact to achieve a goal to fire someone. Mack testifies that the audit reports are designated preliminary and never final in order to avoid disclosing them to the public and actual scrutiny. Mack believes these audit reports are used at the request of higher ups to achieve their stated goals.
HISD’s efforts to rely on a doubtful and dubious preliminary audit report to defend its decision to withdraw its recommendation to renew the JOC contracts is evidence of its continued support to cover up and protect Marshall’s undue influence. HISD should be strongly pursuing an investigation to uncover the truth and rid the district of corruption. HISD’s past and continued failure to act amounts to an agreement to participate in the RICO enterprise.