Johnson Controls and Terry Songy

Terry Songy was a project manager for Johnson Controls, Inc.

-- The Times-Picayune

Graft inquiry nets 6th guilty plea; Defendant accused of pocketing kickbacks

GORDON RUSSELL

January 26, 2006

A central figure in what federal prosecutors have described as a scheme to skim hundreds of thousands of dollars from a massive energy-efficiency contract let by former New Orleans Mayor Marc Morial pleaded guilty Wednesday to felony charges of conspiracy to commit mail fraud and tax evasion, U.S. Attorney Jim Letten said.

The plea bargain accepted by Terry Songy, who was a project manager for Johnson Controls Inc., the company that landed the $81 million contract, has long been in the works. When Songy and five subcontractors for Johnson Controls were charged in the fall last year, Letten indicated that all were cooperating with the government. All six have now pleaded guilty.

Songy, however, is clearly the biggest fish netted thus far in the sweeping federal probe of the energy deal. According to an indictment handed down in June, Songy partnered with three other men to loot the huge contract of more than $1 million. The group included Kerry DeCay, Morial's director of property management; restaurateur and Morial confidant Stan "Pampy" Barre´; and Reginald Walker, owner of a construction firm that won a large subcontract from Johnson Controls.

Money for nothing

Songy was the inside man at Johnson Controls, according to the indictment, while DeCay played a similar role at City Hall. The two men directed subcontractors to submit inflated invoices, which they then approved.

The subcontractors were then directed to kick back money to members of the group, the indictment says. The indictment says Barre´ grossed more than $800,000 from the deal for little or no work, while Songy and DeCay each took in at least $100,000 in illegal cash and gifts.

A summary of the case against Songy released by the government Wednesday makes clear that his decision to cooperate helped break open the case for the feds.

After Songy was approached by FBI agents, the summary says, he conferred with Michael Farris, a subcontractor on the deal who had paid him kickbacks, and the two agreed to "cooperate fully."

Songy then "disclosed and admitted his involvement in a much larger scheme than the government was aware, involving sharing kickbacks from companies being paid under the Johnson Controls contract" to the various defendants, the summary said.

"It was certainly a very important leap in the case," Letten said Wednesday. "When he came in, it advanced the ball. Clearly we consider this a very important resolution, a very important guilty plea. This is the sixth conviction in this case; it is the first person who is not a contractor; and it's the most serious offense that's been resolved so far. We're clearly working up the food chain here."

Barre´, DeCay, Walker and Julius Lips Jr., who is described as a minor player in the scheme, have pleaded innocent. They are scheduled to be tried Sept. 5.

Company not implicated

Songy was fired by Johnson Controls after company officials learned of the money and gifts he had taken from others involved in the job, representatives have said. Company officials have long said that Johnson Controls — a large, publicly traded firm — was innocent of any wrongdoing and unaware of the skimming. The government apparently agrees; in a news release issued Wednesday, Letten said that Songy had deprived the company "of his faithful and honest services."

According to the summary released by the government, Songy received payments totaling $13,900 from Farris, owner of Specialty Machine Services. That company acted as a subcontractor to Golden Hammer Construction, which in turn served as a subcontractor to Johnson Controls. Specialty Machine Services also wrote a $3,000 check to Songy's mother, the summary says.

Songy had directed Golden Hammer to approve inflated invoices from Specialty Machine to cover the kickbacks, the summary indicates. Farris and Michael Garnett, owner of Golden Hammer, are among the five contractors that have already pleaded guilty in the case. In his plea, Garnett acknowledged providing an ice maker valued at $1,388 for Songy's home.

The summary also says that in 2001, the year the contract was awarded, Songy received $8,240 in "cash and vacation benefits" from an unidentified consultant to Johnson Controls, plus $3,000 from another subcontractor, also unidentified.

Among those who served as consultants on the deal was Metairie financier Rafael "Ray" Valdes. Valdes served in an unusual dual role, working for Johnson Controls and arranging the financing for the city that allowed it to pursue the deal.

The financing contract won Valdes' firm, which also handled a number of other large-scale lease deals for the city during Morial's administration, "placement fees" of $2.1 million, far higher than industry norms, according to others in the business.

Letten would not identify the consultant. Valdes' attorney, Walter Becker, also refused to say whether his client was named in the summary.

No tax return

In 2001, Songy made cash deposits totaling $28,500 to his personal bank account, but he did not file an income tax return for that year, the summary says.

Songy, who lives in Albany, is scheduled to be sentenced April 19 by U.S. District Court Judge Sarah Vance. He faces a maximum of 8 years in prison for the two charges, but he is likely to receive a much more lenient sentence because of his cooperation.

From: The Times-Picayune, January 26, 2006, p. A-1. Reprinted in accordance with the "fair use" provision of Title 17 U.S.C. § 107 for a non-profit educational purpose.

Bibliography

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