Are we on the road to a settlement with Heery Mitchell?

road-to-moneyThere is ‘talk’ of a settlement between DeKalb Schools and Heery Mitchell in the news media as well as the rumor mills. Since this case has been pending for so long, we thought we would share some history on the subject for those of you who are new to the schools or who may have forgotten the issue.

We have always tried to post only the facts and hard copy information on the Heery Mitchell vs DeKalb schools case. We ‘hear’ a lot of stories, rumors, theories, etc, but we really try to stick to the facts as we gain access to them.

That said, the fact is that this case came to be in 2007 after Pat Pope and Crawford Lewis, with the approval of the Board of Education, fired Heery Mitchell, the construction management company over SPLOST school projects. Heery then filed a $500,000 claim for invoices owed plus another million for ‘damages’ against the $600 million of work completed over the years. Crawford Lewis then hired a consulting firm, Neilsen-Wurster/Marsh to do a study to determine how to respond. The study cost taxpayers $3.6 million. The results recommended that DeKalb Schools counter-sue Heery for somewhere between $85 and $120 million. This range was calculated by looking at the budgets of a handful of contracts, determining what was considered over-billing, and then using that as a multiplier for damages against all the projects completed by Heery. This was all researched and reported by Jim Walls at Atlanta Unfiltered several years ago.

The original DSW blog also posted some of the testimony of Pat Pope and Crawford Lewis from their depositions in the Heery case. Heery’s claim is that Pope and Lewis connived to fire Heery and replace them with their own insiders, allowing Pope’s husband Tony Pope to continue billing the school system for architecture work.  Lewis recently agreed to testify against the Popes in a plea deal. The Popes were both convicted of racketeering and other crimes and are awaiting sentencing.  Heery continues to claim these criminal charges are key to their case; the school system disagrees and claims the two cases are not related.

Pat Pope and Crawford Lewis’ pretrial testimony (2008)

Heery-questions-popes-marriage-and-resume

Heery-questions-Lewis-plans-to-hire-Pope

We also like to stick to the highly reliable reporting conducted by the very expensive legal newspaper, “The Daily Report”. These articles are written by lawyers for lawyers and contain a lot of factual information from the courts. The Daily was very gracious in the past and allowed the original DSW blog to repost several of their reports in full, with permission.

The first repost from the Daily was called, So, how is the civil case between DCSS and Heery Mitchell coming along?

Later, an update was filed at the original DSW blog as, And the Winner Is… Why – the lawyers, of course!

Some key points and quotes from The Daily Report:

–King & Spalding is representing the school system in the civil case and claim that the criminal charges have nothing to do with their civil suit. They also say that Heery Mitchell is using the criminal lawsuit to deflect attention from their own poor job of managing $1 billion of construction.
–Heery Mitchell’s attorney, Mark Grantham of DLA Piper stated that the criminal charges show that Heery Mitchell’s termination may have actually been due to the school administrator’s scheme to engage in criminal conduct.
–The Heery International v DeKalb County School District case has 1,053 docket entries that include depositions sought or taken of Lewis, Reid, Pope and Moody. The sealed deposition of Reid, is 7 inches thick.
–Included in the indictment is an attempt by Lewis to stall the criminal probe because he feared the criminal probe investigation might damage the school system’s defense in the Heery/Mitchell suit.
–The HM contract was terminated in February 2007.
–Some of the projects Heery/Mitchell were accused of mismanaging are now part of the criminal case against Lewis, Reid, Pope and Moody. They include the McNair Cluster Elementary School, the Mountain Industrial Center and the Miller Grove projects.
–The indictment and pleadings by Heery/Mitchell show that Reid’s hiring coincided with an overhaul of vendors involved in the school system’s construction program.
–In 2006, Lewis asked the school board to vote to replace an auditor that had given Heery/Mitchell a glowing report the previous year, telling the board the move was “an emergency,” according to the plaintiffs.
–MGT of America in a May 2005 audit reported that “an overall on-time and within budget completion in the face of a nearly 20 percent funding shortfall is evidence of the professionalism and experience of the Heery/Mitchell Joint Venture.”…”The [school system] is to be commended for hiring a competent agency representative,” MGT concluded.
–Lewis wanted Rubino & McGeehin of Bethesda, Md., to become the new auditor, and its 2006 report was highly critical of Heery/Mitchell, although it did not accuse the companies of fraud.

Update on the legal costs:

After much public outcry and bad PR experienced by King & Spalding for earning millions off the backs of the school system’s general operating budgets, slated for educating children, a new contract was negotiated in July, 2009 with King & Spalding by Josie Alexander, one of DeKalb Schools’ in-house counsel. The contract stated that King & Spalding would cease billing on the case and instead operate under a contingency contract. However, the fine print of the contract states that if the school system loses, or if King & Spalding is not happy with the outcome, then the firm would go back and bill the school system for accrued hours. Also, the school system would continue to pay expenses outside of the firm’s legal fees such as consultants along the way. That contract was challenged by Heery’s attorneys as giving power to veto a settlement to King & Spalding.

Interestingly, the current monthly budget submitted for the December, 2013 Board meeting shows $596,653.68 for payments to King & Spalding so far in FY14 (which began in June) through October 31, 2013. It is unclear to us if the school system has yet again negotiated a newer contract with King & Spalding in order to clear the way for a settlement.

Read these blog posts for even more info >>

The Heery/Mitchell Backstory

More money down the rabbit hole

K&S will remain on schools case: More on the story

+++

In addition, just recently, former Board member Don McChesney posted a blog post on the subject, LAWYERS, LEMMINGS, AND LEGAL FEES. In it, he links to some enlightening information, including the fact that current Board member, Marshall Orson, who defeated McChesney in the last election, received a $500 campaign contribution from Daniel Falstad, an attorney at DLA Piper, Heery’s law firm in the case. He also points out that Orson sits on a community advisory board with a vice-president of Heery International. These items are a bit disturbing.

McChesney also links to a report stating that on April 2nd, Judge Stanley Birch, a special master assigned to the case eliminated the majority of Heery’s claim against the district and dismissed the idea that the Heery case was related to the pending matters of Dr. Lewis and Ms. Reid. Judge Birch later reduced DeKalb’s claims to $33.5 million. We have never actually seen an accounting, documentation or testimony regarding the charges of over-billing by Heery but there is a June, 2013 report by the AJC available online about the special master’s statement, Judge dismisses major claims by both sides in Heery lawsuit. The article states:

Heery had sought about $12 million on that false termination claim, said [King & Spalding’s] Robert Khayat Jr., one of DeKalb’s lawyers. The company’s only remaining claims are for unpaid bills for service amounting to less than half a million dollars. DeKalb’s exposure there is mitigated by another ruling in which Birch determined that Heery double-billed DeKalb and must repay nearly $300,000.

Birch’s decision against DeKalb is the far more costly one. DeKalb claimed Heery breached its duty to the school system by failing to save money through bulk purchases. Khayat said Birch announced in court that he will soon issue a written order dismissing those claims, which DeKalb estimated were worth $45 million to $81 million, according to an analysis by the school district’s financial expert. The school district’s remaining claims are worth $33.5 million at most, according to the analysis.

The combined effect of all the rulings may have been costlier for DeKalb “in terms of dollars,” Khayat said. But, he said, Heery has little to win now, and is mostly on the defensive: “We still have a whole lot more left than they do.”

David Rubinger, a spokesman for Heery, said the company will appeal the adverse rulings.

The court developments come amid a renegotiation of the contract between DeKalb and Khayat’s firm, King & Spalding. Interim Superintendent Michael Thurmond said DeKalb was paying nearly $100,000 a month in court costs while the lawyers had amassed $30 million in unbilled fees for their time — money that was to come out of any settlement or judgment and limit DeKalb’s potential winnings.

King & Spalding agreed to write off those accrued fees and to also assume the ongoing court costs. In exchange, DeKalb had to give up the right to recoup the $12 million it has paid so far in court costs.

Stay tuned. It’s beginning to look like this case may soon be settled in the $30+ million range, according to the special master’s estimate. That would put another big hurdle behind us as we move forward toward reinstating accreditation.  [Next up: The teacher’s pension lawsuit]

+++ The civil case Heery International v. DeKalb County School District, is No. 07CV2532 and is before DeKalb Superior Court Judge Clarence F. Seeliger.

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This entry was posted in Board of Education Meetings, Crawford Lewis, Criminal / RICO Trials, Don McChesney, Friends-and-Family, Heery Mitchell Civil Case, School Construction, Uncategorized and tagged , , , . Bookmark the permalink.

3 Responses to Are we on the road to a settlement with Heery Mitchell?

  1. concernedmom30329 says:

    Actually, 7.5 million…

    http://www.ajc.com/news/news/local-education/school-superintendent-negotiates-settlement-in-exp/nb89X/

    From AJC…
    he DeKalb County schools superintendent has negotiated a settlement in a long-running lawsuit that has cost the school district about $18 million.
    Superintendent Michael Thurmond told the AJC Monday that Heery International, Inc., a former construction manager for the district, has agreed to pay $7.5 million to end the legal fighting that has been going on in DeKalb Superior Court since 2007. DeKalb has spent $6.5 million on legal fees and about $12 million more on other case-related costs.

    Rest of article at link…

  2. Curious says:

    Nice! Net loss of more than $10 million.

  3. H.A. Hurley says:

    Mr. Thurmond and HIS BOE literally gave away the money, our money, kids’ money and teacher’s money. The Unethical Shysters who bled the system dry are laughing all the way to their off-shore accounts, the attorneys and private PR guys are rubbing their money-stained hands, while the schools are at a 30 year stand-still…void of adequate books, technology, supplemental materials, building updates, portables with mold, no teacher raises, furlough days galore, and low…low…low test scores & high…high…high teacher turnover.
    M.y. G.o.d.! More money was needed to right this vessel, but our milk toast Super with his milk toast BOE walked away. No urgency or passion to FIX DCSS!
    EVER!
    Pathetic!
    Thanks Gov. Deal, you could not have found a more wimpy, uninterested, dispassionate, uninvolved, care less, sharecropper whining story teller, to try to save DCSS. Good Job!

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