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“[T]he pleas would send a message about the price of dishonest government in a city whose moribund economy owes in part to its reputation for sleazy business dealings.”
-- The Times-Picayune
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“Yes, I'm Guilty” Say Two Morial Cohorts
Barré, DeCay Admit to Conspiracy, Fraud Charges
GORDON RUSSELL and FRANK DONZE
January 15, 2007
A yearslong federal probe into a conspiracy by key associates of former Mayor Marc Morial to skim more than $1 million from city contracts took a sudden and stunning turn Sunday with guilty pleas from the two most important remaining defendants.
With the case set for trial on Tuesday, political operative Stan "Pampy" Barré, a restaurateur, and Kerry DeCay, the city's former director of property management, entered an all-but-vacant federal courthouse Sunday morning to admit lead roles in a scheme to loot a massive energy-management contract awarded by Morial in the twilight of his eight years in office.
The collapse of Barré's and DeCay's defense, two days before trial, followed the defection late Friday of fellow defendant Reginald Walker, a construction company owner. Earlier, eight other defendants had pleaded guilty and agreed to testify for the government, among them Terry Songy, an employee of Johnson Controls Inc., the Milwaukee-based company that Morial hired under the terms of a 20-year, $81 million contract to help the city save money on energy bills.
Barré and DeCay pleaded guilty to charges of conspiracy, mail fraud and obstruction of justice, which carry maximum cumulative sentences of 20 years in prison and restitution of up to twice the value of goods and money that they obtained in the scheme.
Their acquiescence makes it unlikely that they will receive maximum penalties. Sentencing for the two, as well as Walker, is set for April 18 before U.S. Judge Carl Barbier. The trial of the remaining defendant, glass and door company owner Julius "Jay" Lips Jr., was postponed by Barbier at the request of prosecutors, who want to reassess the case in light of the guilty pleas.
The government believes a new trial centering on Lips — who is accused of playing a minor role in the conspiracy, giving a $2,600 glass dining table to DeCay in exchange for a contract and then lying to investigators about it — could be completed in a day.
Prosecutors made clear in their summaries of the proceedings against Barré and DeCay that the probe is not over, however. The documents say that Barré used his "connections or perceived connections" to Morial to demand contracts he didn't deserve. They also name other Morial insiders, including businessman Robert Tucker, lawyer Roy Rodney and financier Rafael "Ray" Valdes, claiming they were paid large sums of otherwise unearned money because of their relationships with Morial, now president of the National Urban League and living in New York City.
The probe, which at one point led to federal agents breaking down the door during a raid on the French Quarter home of Morial's brother, Jacques Morial, had spawned lively debate as to whether Morial was the ultimate target. The talk only increased when Morial's uncle, investment banker Glenn Haydel, who is now in prison, pleaded guilty to bilking the Regional Transit Authority of $540,000. Haydel's wife, Lillian Haydel Smith, is also awaiting sentencing for unrelated offenses in connection with her brokering of school system insurance.
While U.S. Attorney Jim Letten has tried to discourage the media from focusing on Morial and his possible exposure, he made clear Sunday that the former mayor looms large in the mind of federal prosecutors. For perhaps the first time, Letten took a public swipe at the former mayor, saying that the defendants in the Johnson Controls case drew their power to land or control public contracts from their association with Morial.
Still, he cautioned reporters not to read too much into the government's mention of Morial in its summary of the charges to which Barré and DeCay pleaded guilty.
"This should not suggest either that anything will be forthcoming or will not be forthcoming in the future," he said. "It simply states a fact that is critical to our case, and that is: These guys got their juice from trading on their associations with the former mayor. That was critical to the leverage that they influenced. Now, I'd ask you not to draw any further inferences from that. But simply stay tuned."
Star witness appears
Barré and DeCay had steadfastly maintained their innocence since their indictment in June 2005. As recently as a few days ago, Barré was expressing confidence in his odds of avoiding conviction.
But everything changed Friday, when Walker pleaded guilty and agreed to testify about his cohorts' roles in the scheme. With his plea deal, Walker was poised to become a second star witness for Letten's office, which already had wrung guilty pleas from Songy, the former Johnson Controls project manager, and a half-dozen more marginal players.
Attired in dark suits, Barré, 61, and DeCay, 47, maintained their composure as they stood before Barbier to offer their pleas and answer a series of questions establishing that they fully understood their rights and the potential penalties they face.
Barré, the longtime proprietor of Pampy's, the popular 7th Ward eatery on North Broad Street, maintained customary flair by winking at a familiar face as he walked into court and greeting another bystander with his trademark salutation, "Where y'at, baby?"
When Barbier asked Barré whether he fully understood the criminal charges he had agreed to plead to, Barre replied, "Yes, I'm guilty."
DeCay, who received a kidney transplant about a year ago, spent a portion of his time before the judge outlining the daily regimen of "44 pills" he is required to take, as well as the medical device he uses to manage sleep apnea.
Both DeCay and Barré left the commentary to their lawyers, who kept their remarks brief.
"Mr. Barré regrets that he has troubled other people and he will accept whatever punishment he gets," said Jack Martzell, Barré's lawyer.
Arthur "Buddy" Lemann, DeCay's normally colorful attorney, was subdued.
"My client decided it was in his best interest and in the best interest of his wife and young daughter to end this ordeal by 'fessing up to his wrongdoing and asking the court for mercy," Lemann said.
Outside the courthouse, Letten and his first assistant, Jan Mann, said they thought the plea deals by DeCay and Barré reflected the overwhelming nature of the government's case.
They said they hoped the pleas would send a message about the price of dishonest government in a city whose moribund economy owes in part to its reputation for sleazy business dealings.
Letten said the convictions "laid bare . . . the type of corruption which has gutted this city and has kept this city from attracting and keeping industry and business and has made this city, I think, in large measure what it is today."
The convictions, Letten said, should also put the lie to allegations — made most recently by Lemann, and in the past by Morial supporters, including a group of clergy — that the federal investigation was rooted in racial or political bias. Letten, a Republican and a career federal prosecutor, was appointed to his post by President George Bush. Morial ran as a Democrat. The defendants who were to have faced trial on Tuesday were African-American, with the exception of Lips, who is white.
"I hope this puts to rest what were the ill-considered, inappropriate, unprofessional and inflammatory comments by defense counsel who, in order to get a few cheap points, claimed during the pendency of this case that this investigation, this prosecution was politically and racially motivated, which it was certainly not," Letten said. "The citizens can see now that this investigation was backed up by powerful evidence of abject corruption."
Mann, the lead prosecutor on the Johnson Controls case, said investigators hope to use the time saved by the cancellation of the trial — and the cooperation promised by Barré, DeCay and Walker — to pursue further leads in the case.
"There were some areas that we wanted to investigate after the trial was over," she said. "So, now we have some time on our hands when we thought we were going to be in court. And with their cooperation, we hope to go some other places with it."
She reserved some stinging words for DeCay and Morial, though she did not name either. Both, she suggested, had been derelict in their duties as public officials.
Of DeCay, Mann said: "We have a public official who was more concerned with what he was going to get out of the deals than getting the best deal for the city," which wound up costing the city millions.
Without saying how much involvement she thought Morial had in the deals, she said that "politicians ought to hire honest people, and they ought to refuse to reward their friends when they don't deserve contracts."
She added: "Companies ought to not have to come to New Orleans and pay off friends of politicians to get contracts. That's not the way it's supposed to work. And the politicians, if they find out their friends are doing it, they ought to say, 'I'm not going to hang with you any more if that's the way you're going to operate.' They ought to tell the contractors: 'No one has influence over me; it's who's the best person to get the job.' "
More indictments?
The summaries of the government's cases against DeCay and Barré offer some clues to the "other places" Mann said she hopes to take the investigation.
The only people mentioned in the summaries who have not been indicted are Morial, Rodney, Tucker and Valdes.
It was Valdes who brought the Johnson Controls deal to City Hall and also arranged financing for the city, netting about $2.1 million in fees.
Tucker served as chairman of the RTA during Morial's tenure in office, and also was one of the mayor's closest advisers.
Rodney functioned as the closest thing to an in-house lawyer for members of Morial's inner circle, helping to incorporate businesses for members of the group and serving as counsel for the Morial-led political organization, LIFE. City-related work included serving as a lawyer for the Housing Authority of New Orleans.
The case summary says that Rodney shared in the proceeds from a $10,000-per-month fee Barré received from Walker in exchange for helping Walker land a city recycling contract. The prosecution has characterized the fee as a kickback.
The summary says that Tucker and Valdes, meanwhile, each received fees from Johnson Controls worth $273,000 that were awarded strictly on the basis of their "influence and perceived influence" with Morial. Tucker also received a $90,000 contract for project management.
Barré requested a similar contract, and received one, upon hearing about the deals landed by Valdes and Tucker, the summary says.
Tucker called the prosecution's assertion, which is signed by Barré, "totally false."
"I was not paid for my influence," Tucker said Sunday. "I was compensated for services rendered, as were other professionals."
Walter Becker, Valdes' lawyer, said he had no comment Sunday.
Eddie Castaing, Rodney's lawyer, said he did not want to comment until he had a chance to read the plea agreements and the case summaries filed by the government.
Barré seen as ringleader
In its summary of the case, and in previous court filings, prosecutors portrayed Barré, who held no official position in the Morial administration, as the ringleader of the scheme to loot the Johnson Controls contract, the largest let by Morial.
Barré took in more than $800,000 in fees and kickbacks but did little or no work, prosecutors have said. DeCay received about $100,000, according to a government news release.
DeCay, whose friendship with Barré dates to 1980s, when both began serving as deputies to another member of the extended Morial political family, Orleans Parish Civil Sheriff Paul Valteau, comes across in various court filings as a subordinate who took his instructions from Barré. "DeCay deferred to Barré on whatever Barré wanted done," the summary says.
For instance, while all of the work performed by Johnson Controls was supposed to reduce the city's energy costs, DeCay told the contractor that he wanted it to perform some nonenergy work, the case summary says. Those jobs — improvements to the Municipal Auditorium and the Theatre of Performing Arts — were done solely for the benefit of Barré, the exclusive food and beverage concessionaire for the two buildings, the document says.
Barré was able to steer the $2.5 million subcontract for that work to Moss Creek Development, the construction firm owned by Walker, a longtime friend. Not only did the work by Moss Creek benefit Barré directly, he and the others involved, including Songy, DeCay and Walker, conspired to inflate invoices to overstate the value of the work. Barré then directed Walker to pay him kickbacks, the summary says, some of which he split with DeCay and Songy.
"Barré told Walker that if they were ever questioned about the payments they would say they were consulting fees," the summary says. "The money was not for consulting but rather was paid because Reginald Walker was concerned that he would not get future business if he did not pay off Barré," according to the summary.
The case summary makes clear that the Johnson Controls contract isn't the only one investigators believe was abused by Morial's inner circle.
The summary notes that in a parallel case, Walker — who had no experience in recycling or trash hauling — was given a portion of the city's recycling contract through the primary vendor Browning-Ferris Industries. The deal was worth $20,000 per month, for which Walker initially "was performing no work," the summary says.
Barré told Walker he had gotten him the contract and requested that Walker share the money with him, the summary says. In turn, Barré split the $10,000 monthly fee with Rodney, a partner with Barré in numerous ventures, as laid out in an agreement between the two that prosecutors released in a court filing last week.
While the case summaries portray Barré's skimming of the Johnson Controls deal as limited to the Moss Creek subcontract, DeCay admits to having shaken down a number of other subcontractors, with Songy's help.
Songy and DeCay received kickbacks or gifts from Specialty Machine Service, Golden Hammer Construction, National Contractor Services and G&M Electric, the summary says. Those gifts ranged from the $600 pool pump G&M Electric gave DeCay to the $30,000 in cash that both received from National Contractor Services.
The owners of all four of those companies, along with two others, have already pleaded guilty to felony counts. They were expected to testify for the government in the trial of Barré and DeCay.
Copyright 2007, The Times-Picayune
Publishing Corporation
From: The Times-Picayune, January 15, 2007, p. A-1. Gordon Russell can be reached at grussell@timespicayune.com, and Frank Donze at fdonze@timespicayune.com. Reprinted in accordance with the "fair use" provision of Title 17 U.S.C. § 107 for a non-profit educational purpose.
Followup
While Barré and DeCay were in federal prison, their cases were still being appealed. The lower court had ordered Barré's monthly pension of $2,495 to be siezed for restitution, but the Fifth Circuit ruled that only 25% of his pension can be used toward restitution, claimed to be $881,511.
- "Barré gets break in ruling on pension; But cohort may lose all of his benefits," The Times-Picayune, New Orleans, September 22, 2010, Metro, p. 1.
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