Introduction
Siegelman's Big Score
Nick and Lanny, Under Siege
G.H. Construction chapters
Nick and Lanny, Under Siege II
Dana Jill/Hook Line & Sinker
Scrushy Plays the Lottery
 


 

NOTE: This first, slightly abridged excerpt describes my early difficulty in verifying a tip that the Siegelman administration planned to build two state warehouses at a cost of about $20 million; and that it had hired a newly formed company called G.H. (Goat Hill) Construction for the project. An agency called ADECA -- The Alabama Department of Economic and Community Affairs -- was overseeing the project to build a warehouse for itself and, nearby, one for the state liquor agency. G.H. Construction was secretly owned by administration friend, backer and money-supplier Lanny Young.             
          

In late March 2001, the mayor of Lowndesboro called to suggest that I look into landfill dealings by Young in Lowndes County. His description of the situation sounded interesting, and I began researching Young's landfill business and his relationships with the Siegelman administration and Waste Management.

During this asking around, I received a tip from Claire Austin, then a lobbying partner of Young's, informing me of G.H. Construction and its no-bid job to build the warehouses. The testimony referred to is from Siegelman's 2006 trial, and "Sherrod" refers to a story I'd done about a month before.  Freeman is Dewayne Freeman, the first of several people to serve as ADECA's director during the Siegelman administration. Here is the first part of the excerpt:


Claire, as she testified, first told investigators with the attorney general’s office about G.H. Construction, but they hadn’t moved on it. I don’t say this to make them look bad. Their job is to investigate crimes. The level of wrongdoing needed to justify a news story is far lower than that required to commence a criminal investigation, much less charge someone. In my business, good ole political favoritism is plenty. And that was all I saw. Nothing shown or told me by Claire indicated criminal activity. It looked like another no-bid crony contract in the Sherrod vein.

My initial attraction to G.H. Construction wasn’t its potential as a major story, but an easy one. I’d need only to determine the scope and cost of the project, report the selection of G.H. Construction in the context of the other no-bid contracts, present an overview of the Lanny-Hamrick-Siegelman relationship and, as gravy, ladle on some of what I’d learned about Lanny’s landfill business.
G.H. Construction would be a quick pop, something to buy time until I could finish the landfill story.
The first step seemed obvious enough. Call the two agencies. They’d surely confirm their plans. The alternative was declaring they were unaware of their intentions to spend millions of dollars on warehouses a stone’s throw from downtown Montgomery.

First up was ADECA, which was to be the contracting agency for both buildings. Thus began my rocky relationship with Larry Childers. Over the next two years, we would bicker like an old married couple, me insisting that records had to exist, him invariably saying otherwise, and me always – and I mean always – winning out....
Larry is baby-faced, prematurely grey, and resembles a young Captain Kangaroo. The first time I spoke to him was when I called to ask about the warehouses. “We don’t build warehouses. We issue grants,” he said, matter-of-factly.

I told him, polite as could be, that I had it on good authority that ADECA was in fact preparing to build two warehouses, one for itself, the other for the liquor board.
Couldn’t be, Larry said. ADECA doesn’t build warehouses. It issues and manages grants.
I might as well have told him that ADECA was developing a space program so Siegelman could become the first governor hurled into orbit.

Could he pass on my question to his superiors? You know, in the highly unlikely chance that ADECA had strayed from its mission?
He hemmed and hawed, said he’d ask, didn’t convince.
The next call was to the ABC board. From a straight news standpoint, that agency’s plans were a bigger story. Alabama was one of a handful of states still in the liquor business, and many wished it would get out. Scandalous or not, if the Siegelman administration was contemplating a new warehouse, it reflected a long-term commitment by the state to remain the primary source of all hard spirits sold in Alabama.

I was put through to staff attorney Bob Hill. He sounded genuinely perplexed when I asked him about ABC’s plans for a new warehouse. “I’m not aware of any project,” he said.
Bob said if there was such plan, he would know about it. As the board’s lawyer, it was his job to draft or at the very least review all its contracts. Then as now, I believe that Bob, a short, easygoing man in his 60s, was telling the truth. He really didn’t know. As I would come to see, the plans to build and finance the warehouses were to an amazing degree concealed from merit system employees, the so-called bureaucrats who remain in place administration after administration.

When I called Larry back a day or so later, the response was the same. Grants, not warehouses. He seemed to waffle when I asked if he had passed my question up the food chain.
I concluded my first trip to Montgomery since Claire’s tip with an unannounced visit to Larry’s office. I introduced myself and asked if he’d learned anything about the warehouses. Larry said he remained unaware of any plans for new warehouses. That wasn’t a definitive no, so I asked if the director was in.

I was able to ask this with a straight face, as I didn’t yet know that Nick Bailey almost never darkened ADECA’s halls. He had been elevated from “state budget officer” to ADECA director in May 2000, after Freeman returned home drunk from a night out and got in an ugly row with his family. His wife called the police. Though the charges were dropped, Freeman’s political career was over. He was out at ADECA, and Bailey in, though not really.

Larry said Bailey wasn’t available, so I asked who served as ADECA’s number two man. Chris Pitts, said Larry. The name rang a bell from my Lanny studies. Pitts, who is black, had written black leaders in Lowndes County on Lanny’s behalf, urging them to cease blocking his landfill.

I took the elevator a few floors up and entered Pitts’ office. I told him I was all but certain that ADECA was planning to build a pair of warehouses, but that Larry had indicated otherwise. Did he know anything about this?
Pitts, unconvincingly, said he did not. But if there was such a project, the folks at ADECA’s surplus property division would be the ones to know. Surplus property is a little-known ADECA sub-agency that warehouses all manner of used state and federal government merchandise before it’s sold at auction.
I asked Pitts if he could call over there.
I sensed reluctance, but recognition that he couldn’t very well say no to what was, after all, not an unreasonable request. So he called, and soon I was talking with Shane Bailey, who was – and by then the connections were piling up so fast I needed a chart – Nick Bailey’s younger brother. 

The Siegelman administration had bypassed the merit system of using competitive means to employ state employees and made Shane, at 28, director of the surplus property division.
After a pause, Nick Bailey’s brother said that, yes, his division was overseeing a project to build the two warehouses, for itself and the ABC board.
Confirmed, finally. What a pain in the rear that had been.

NOTE: Later in the chapter I describe how I learned that G.H. Construction had submitted false bills to essentially steal more than $90,000 from the state; that I presented this evidence to the administration; and that they were unable to explain the bills or provide work product supporting them. Throughout this period I was repeatedly requesting a copy of G.H. Construction's contract, and was told, time and time again, that it could not be located. I argued that the as-yet unsigned contract should be a public record at that point because payments had been made pursuant to its terms. The following excerpt is from the end of the, "Goat Hill Construction" chapter. The afternoon in question is April 26, 2001, after a meeting about the warehouse project with Nick Bailey and others. 

Mabry is Henry Mabry, the state Finance Director at the time; Rip is Rip Andrews, the top assistant to press office director Carrie Kurlander Blount Parrish is the investment banking firm led by Bill Blount.


Late that afternoon I sent an e-mail not just to the press office but Mabry and Siegelman as well. I complained about the administration’s continued failure to provide the G.H. Construction contract and other records and summarized what I intended to report in Sunday’s paper. I made particular note of the rush to sell the bonds. I had, as I told them, become aware that the administration was racing to sell the bonds before publication of our story. And then:

“I put the source’s tip in the back of my head and didn’t think too much of it until today, when Nick opened the meeting by apologizing for his cell phone ringing, and explaining the apparently frantic attempt to sell the bonds that was going on. I should have thought to ask then what was on my mind: Why Friday? What’s the rush? Why not, say, next Wednesday?

“Rip has on several occasions sought to sway me from running the story on Sunday, using the argument that if I wait until the bonds are sold, then all the contracts and such will be public record and I’ll ‘have everything.’ I haven’t decided whether or not my story will reflect those requests on the part of the administration to hold the story until after the bond sale, but am considering doing so.”


Bonds are of course sold to investors. A seller of bonds, same as a publicly traded company, must disclose risks to securities bearing its name. What might happen if investors learned that the contractor overseeing the project they were funding had already submitted fraudulent bills? Might they cut and run?

Could I do it over again, I’d be more businesslike, more judicious in my choice of words and phrases, less of a smart-aleck. But I wasn’t and here it is, where I connected their refusal to provide the contract to their rush to sell the bonds:

“I’m led to believe there’s only one copy (of G.H. Construction’s contract) and that no one can find it or something like that. I take that explanation as an insult to my intelligence. Since I have no other choice but to accept this explanation -- this being Alice’s Wonderland -- I’ll play along and assume there’s just one copy. Now, I propose a novel solution: Stick it on a copier and make another copy. To clarify – maybe that’s been the problem – I don’t actually need the ORIGINAL, but a COPY OF THE ORIGINAL.
So I ask: Is the failure to provide this public record motivated in part to keep me from writing the story by Sunday, or to prevent readers, and possibly investors in the bonds, from learning things which might possibly appear unfavorable to the people running this bond deal, and by extension, raise doubts about the bonds themselves?

From talking to Rip, I believe he would call it a conspiracy theory. I present it merely as a question that I’m hoping will be answered.


The purpose of the e-mail was to pry free the G.H. contract. I wasn’t trying to kill the bond issue and the warehouse project. Couldn’t imagine such an outcome. It was, then, with amazement that I read a fax sent us the next morning and dated the day before – written, it would seem, within hours of reception of my e-mail.
It was a one-page memo from Mabry to Bailey, as ADECA director, and to ABC boss Randall Smith. Siegelman was cc’d. The chief bits are as follows:

After considering financial questions raised by The Mobile Register in relation to this project, I am ordering that all work on the project by G.H. Construction and others cease until an independent review of this matter can be completed.

Former Chief Justice C.C. “Bo” Torbert, Jr., has agreed to conduct this independent review on behalf of my office. All financial records relating to this project should be delivered to Judge Torbert with all deliberate speed so that he may begin his review as soon as possible.


G.H. Construction, the warehouse project, the $393,870 fee that was to be Blount Parrish’s upon the sale of the bonds -- that and more, vaporized. And before we’d written the first word.

NOTE: The above is the end of the chapter called, G.H. Construction. What follows is a slightly abridged version of the start of the next chapter, called, "The Warehouse Stories." It describes, among other things, the start of the investigation into the Siegelman administration. Beginning in 2002 and continuing to this day, Siegelman and his supporters have blamed Leura Canary(and later, Karl Rove and others) for pursuing Siegelman for political reasons. In May 2001, when the investigation began, Canary had not yet been named U.S. Attorney in Montgomery. She had no role whatsoever in the decision to open the investigation.
Vaughan is Roland Vaughan, at the time the president of Sherlock Smith & Adams, the firm that designed the warehouse site and was to oversee construction because G.H. Construction, though due more than $2 million for the job, was deemed incapable of the task and was not to be permitted to work on the project for which it was to be paid that princely sum.




“We’ve received several requests to open an investigation into the matter of G.H., or Goat Hill, Construction.”
-- Attorney General Bill Pryor, on May 1, 2001, announcing the start of what became not just an investigation into Lanny Young’s company, but much else as well.

“Finally, I want to thank the Mobile Register for bringing this issue to my attention. Public officials and the press often seem at odds, but both serve the public in different ways. It’s the job of reporters to uncover problems and find things that are wrong. When they do, it’s the job of elected officials to solve the problems, and set things right. That is exactly what I am doing today.”

-- From statement issued by Siegelman on May 4, in conjunction with release of the report on G.H. Construction deal by former Alabama Supreme Court Chief Justice C.C. “Bo” Torbert Jr.

We naturally had to report Mabry’s memo, meaning I had to write a story explaining that a project the public didn’t know about was being canceled because of a story that hadn’t yet been written. We quoted the memo and summarized the warehouse project and the findings to be reported in detail in the next day’s paper.

Carrie told readers the state expected to build the warehouses, though possibly without G.H. Construction. She said the bond sale was cancelled in part because Nick “had some tremendous discomfort because your questions could not be answered.”

To which I did not add: “Actually, Nick’s discomfort wasn’t due to a lack of answers, but a failure on the part of the reporter to fall for them.”

The warehouse deal smelled in many ways, but the silver bullet was the $90,058 payment to CDG. There was just no explaining it away. At the last minute, a final effort was made. The administration sent a courier to Mobile to deliver a stack of paper three pounds heavy but practically speaking, weightless. The cover page declared it to be the, “Engineering Report: Proposed Warehouse Building Site,” by CDG Engineers. The document was composed almost entirely of pages yanked off the Internet, a bundled together glop of state laws and geological information unrelated to the North Ripley site.

I called Carrie and, part bluff, told her I wasn’t buying it and wouldn’t be mentioning it in the story. She didn’t put up fight, as she would have had the report been genuine. To my knowledge it was never again offered, such as to law enforcement, as evidence of actual work done by CDG.

It’s rare for a story to establish beyond question that a crime has been committed. Our Sunday story did that. It didn’t prove bribery, since that would have required access to banking records, but theft from the state. That was plenty.

Here are the opening paragraphs of the story that started the investigation into the Siegelman administration. There’s one error – reporting the bond sale at $16 million, rather than $20.7 million. That was their fault for failing to provide me with the correct numbers and the documents.

Tomorrow morning, officials in the Siegelman administration were to meet with members of the Montgomery Downtown Redevelopment Authority, a passel of lawyers and investment bankers with the firm of Blount, Parrish & Co. 

The purpose: To sign the many documents required for the proposed sale that day of more than $16 million in bonds to investors. The proceeds of those bonds were to finance construction of two massive state warehouses on a 256-acre site just north of downtown Montgomery.

That meeting has been canceled. The bond deal, which almost certainly will go through at some point in the future (it never did), is on indefinite hold.


The reason involves questions raised by the Mobile Register about a fledgling two-man company, G.H. Construction of Montgomery, chosen by the state to act as “construction manager” over the project, state Finance Director Henry Mabry stated when he halted the project Thursday evening…
Though Mabry cited concerns about the entire project, the primary factor in his decision involved questions about two bills -- one for $90,058 submitted by G.H. Construction on behalf of CDG Engineers and Associates of Andalusia; and another, for $5,200 by Denton, Ponder & Edwards, a Roanoke, Ala., accounting firm. 
“As of right now, we do not have a work product document, nothing,” Siegelman spokeswoman Carrie Kurlander said of the CDG bill. “There may be a perfectly reasonable explanation for that. That’s exactly what we hope Judge Torbert will find.”


Like many of my Siegelman stories, it demanded considerable space, as there was much to tell. Readers had to be introduced to the warehouse project, Lanny Young, CDG, our discovery of the two boundary surveys, the administration’s failed efforts to explain it away, and much else. There was, for example, the omnipresent Ellis Brazeal. I had called him to ask about CDG since he was listed as the firm’s lawyer in the dubious bankruptcy filing by Lanny’s landfill company, and CDG wasn’t returning my calls.

“My understanding is that they’ve done substantial work on the (warehouse) project and that there is substantial work ongoing at this point,” Brazeal told readers.

I couldn’t let that go uncontested. Brazeal’s statement was followed thusly: “Asked for comment on Brazeal’s claim that CDG is presently doing substantial work on the project, Vaughan and state officials repeated earlier statements that they’re unaware of any work by CDG on this project, ever.”

I slept in Monday and was awakened mid-morning by a call from Tim Fuhrman, then the number two man at the FBI’s Mobile office. Fuhrman said that some Montgomery-based agents and Jack Brennan, a much-respected former FBI agent then with the attorney general’s office, wanted to talk to me. Soon. As in that afternoon.
He said it was clear from Sunday’s story that I’d gathered all manner of records. The FBI wanted to move fast and it would save them a bunch of time if they could talk to me and copy those records. If it was okay with me, he would tell them to get in the car and come on.

I knew Tim, if not well, and liked and trusted him. But I’d never had a request like that, and it came with me in bed, groggy with sleep.

Pluses: The chance to meet with FBI agents, get a first-hand taste of how they operate, and, what the heck, get my ego stroked by a bunch of pros wanting my stuff. Also, did I have an obligation as a citizen to provide investigators with evidence of a crime if I possessed it?

Minuses: I wasn’t supposed to actively participate in the prosecution of someone I was writing about.
But: Reporters can and should try to develop a rapport with prosecutors and investigators. There’s almost no such thing as a national political scandal story that doesn’t cite un-named, “Justice Department sources,” and such relationships inevitably involve some give and take.

Was I on the verge of developing such sources for what promised to become a criminal investigation into the Siegelman administration? And if so, wouldn’t this benefit our readers by availing me of information and insights?
Tell them to come on, I said. I’d meet with them.

And started having second thoughts after coffee and a shower. I arrived at work and knew I had one option. Tell Paul Cloos, my editor. I suspected he would scotch the meeting on the grounds cited above. If not, and the meeting went ahead, I’d at least have covered my ass.

Paul was against it and I made no attempt to change his mind. I called Fuhrman, apologized, and said I couldn’t meet. He tried to change my mind, and I sought refuge in the reporter’s trick known as “blame the editor,” the most common variant being, “I hate to have to ask this next question, but my editor says I have to.”

The meeting, which I would have enjoyed, was off, the advantage being I could focus on the next day’s story. The night before I called Torbert to get a sense of what he was thinking. He said that on Friday, shortly after his appointment, the administration had provided him with all manner of documents. Among them: The G.H. Construction contract, located, he said, at Blount Parrish.

Soon as we said our goodbyes I was e-mailing Carrie. I told her what Torbert told me – that the contract had been found, and at Blount’s office, where I’d been telling them to look for weeks. I told her I expected to be provided, immediately, with a copy of the contract.

The next morning she delivered a response: The administration would not be releasing the contract – not now, not ever.
Not ever? As in, never ever?
Like hell!


---------------------------------------


I’m not fond of the old saying, “Never pick a fight with people who buy ink by the barrel,” though will acknowledge some truth to it.

As on this occasion. It was time to pour a few barrels on their heads.

The refusal of government agencies to turn over records bothers me more than the activities I’m seeking to uncover. I recognize that Lanny Young’s theft from the state is a worse act than the administration’s decision to hide, lie about and withhold the G.H. contract. But it’s the denial of records that makes my blood boil.
We needed the contract. They could deny us, but at their peril.

The purpose of the next day’s story was less to provide new information as to warn readers that if their paper couldn’t get its hands on the contract, they would never learn the truth about G.H. Construction. Their paper was trying, but their governor was playing keep away.

We reported that the contract had been found late Friday, “where the newspaper had suggested the state look in the first place: with a firm handling bonding for the project.”

Here is some of what followed:
Siegelman spokeswoman Carrie Kurlander said Monday that the administration was truthful during the past weeks when it reported, almost daily, that it couldn’t locate the G.H. contract in any form ... Kurlander was reminded that the Register had suggested several times that the Blount firm be contacted, since it seemed logical that the investment banking firm handling the bond sale would have the proposals or contracts involving G.H. Construction.

Asked Monday why the administration hadn’t contacted Blount, Parrish to locate the records for the Register, but had done so for Torbert, Kurlander did not respond. 

I didn’t take pleasure in putting Carrie on the spot. She was an innocent in this. But she was the governor’s spokesperson and well compensated for it. If they were going to stick her out there to get run over, that was their call, not mine.




 

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