ATLANTA (AP) - A man who was tasked with ensuring equal opportunities for those seeking contracts with the city of Atlanta was given a two-year prison sentence Tuesday for failing to disclose outside consulting work and not reporting some income to tax authorities.
Larry Scott was director of the city’s Office of Contract Compliance and resigned shortly before he pleaded guilty in September to charges of wire fraud and filing false tax returns.
Scott, 55, was also ordered to pay about $124,000 in restitution Tuesday - $75,000 to the city of Atlanta and about $49,000 to the IRS. Three years of supervised release will follow his prison time.
Scott was the sixth person to plead guilty in a long-running federal investigation into corruption at City Hall during the administration of former Mayor Kasim Reed, who was term-limited when he left office in January 2018.
Notably, Scott incorporated Cornerstone U.S. Management Group in 2011 with the ex-mayor’s brother and sister-in-law, Tracy and Crystal Reed. Prosecutors said it advised vendors seeking government work across the Atlanta region.
Scott had worked for the city since 2002, leading the Office of Contract Compliance beginning in November 2014. That office aims to promote equal opportunities for all seeking business with the city, particularly businesses owned by women and minorities.
U.S. Attorney Byung J. “BJay” Pak declined to say whether Scott had used his city job to steer contracts to particular vendors, or whether Tracy Reed or Cornerstone’s clients were under investigation.
Scott’s lawyer, Stephen Murrin, told the judge his client has otherwise lived an “exemplary life,” rising from modest means to a high-ranking position.
Tracy Reed, his good friend and fraternity brother who recommended him for his original job with the city, fell on hard times and in 2011 asked him for help establishing Cornerstone because of his skill with computers, Murrin said. Reed asked Scott to stay on as bookkeeper and he drew a salary of $1,000 to $5,000 a month but had no involvement with the company’s everyday workings, Murrin said.
Scott told the judge he didn’t think twice when his close friend asked for help. Though he was paid tasks he did for Cornerstone, he never considered it another job, he said.
“I had no nefarious intent,” he said. “I simply wanted to help my friend.”
Scott wasn’t involved in any pay-to-play scheme and wasn’t involved in broader corruption at City Hall, Murrin said. That is evidenced, he said, by the fact that Scott didn’t get a cooperation agreement from prosecutors.
Prosecutor Jeffrey Davis told the judge this was “another chapter of the disheartening tale of corruption in the city of Atlanta.” While Scott has otherwise lived a good life, he broke the law and cheated a system he was supposed to protect, Davis said.
Outside employment and income disclosures are meant to avoid conflicts of interest and the appearance of impropriety, Davis said. Scott’s conduct “shatters the very delicate trust between the city of Atlanta and its citizens.”
The wire fraud charge resulted from Scott’s electronic submission of financial disclosure forms that didn’t list his connection to Cornerstone. Prosecutors said Scott received more than $221,000 from Cornerstone from 2012 to 2017.
The false tax returns charge centers on 2015, when prosecutors say Scott earned approximately $156,000 - roughly $99,000 from the city and about $57,000 as Cornerstone’s business manager - but claimed he made just over $101,000 on his federal income tax return. The charge only covers one year, but prosecutors say Scott submitted false tax returns for multiple years.
U.S. District Judge Steve Jones said Scott’s actions weren’t an oversight, that he knowingly and repeatedly failed to disclose his outside employment and report his income to tax authorities.
“You’re not a bad person, Mr. Scott,” the judge said. “But what you did was serious and it was intentional and it was deceptive.”
Davis and Murrin both asked for the two-year sentence, three months below the lower end of a range provided for by federal sentencing guidelines.
Pak said the corruption investigation continues. Others who have pleaded guilty include former Chief Procurement Officer Adam Smith, Reed’s deputy chief of staff, two construction contractors and a man who tried to intimidate one of the construction contractors to keep him from talking to federal investigators.
Longtime City of Atlanta vendor Lohrasb “Jeff” Jafari is accused of bribing Smith, as well as tax evasion and money laundering. He has pleaded not guilty.
Former city director of human services and political consultant Mitzi Bickers is accused of soliciting and accepting payments to help steer lucrative city contracts to two construction contractors and their companies. She has pleaded not guilty.
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