Atlanta

Investigation: Contractor received millions during 2014 snowstorm

By Richard Belcher, WSB-TV and Aaron Diamant
By Richard Belcher, WSB-TV and Aaron Diamant

ATLANTA — A local contractor at the center of a City Hall bribery scandal earned millions during one of the city’s most vulnerable times and paid bribes for city contracts at the same time, a Channel 2 Action News investigation found.

E.R. Mitchell is one of two contractors who've confessed to paying bribes to get city contracts.

A Channel 2 Action News / Atlanta Journal-Constitution investigation found Mitchell got an extraordinary windfall during a winter storm and someone at the city agreed to pay far more than Mitchell’s competitors were asking.

Federal prosecutors accused E.R. Mitchell of spending $1 million to bribe city officials in order to secure construction contracts.

“There are situations when the city is on an emergency footing, and I think the snow events count as such,” Atlanta Mayor Kasim Reed said during a news conference two weeks ago.

Channel 2 investigative reporter Richard Belcher questioned Reed about the emergency spending the day his office released 1.4 million documents related to the bribery investigation.

Of particular interest were the contracts awarded to Mitchell, who had already pleaded to federal charges of bribery and money-laundering.

Mitchell's company hit the jackpot during the February 2014 snowstorm.

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The city spent a total of $8.1 million for emergency services during and after the storm. Mitchell's Cascade Building Systems raked in nearly $5.3 million of the total – 65 percent of the city's storm-related emergency business.

Reed said a quick response was critical.

“I wasn't thinking about anyone trying to engage in fraud or theft or stealing. Because at that time we had a different crisis,” Reed said.

But we now know that within days of the weather crisis, Mitchell made illegal banking transactions of $38,000 and paid someone a $150,000 bribe.

“We looked at the prices submitted by Mitchell and other companies during the storm,” Reed said.

Mitchell wasn't the low bidder on any of them. His price for a front-end loader was 99 percent above the lowest quote.

His price for a single-axle dump truck – 214 percent higher.

And his price for a tandem axle dump truck was 51 percent higher.

We didn't know the numbers during the mayor's news conference, but the mayor said we should not call Mitchell's emergency contracts "no bid work."

“It's not as if somebody just picked up the phone and starts selecting individuals,” Reed said.

Reed's office said companies for emergency work are selected by a department -- in this case public works -- then the emergency need is certified by the purchasing director.

So far the city has refused to say who gave final approval for the 2014 spending with Mitchell.

MAYOR REACTS TO SUBPOENAS

Reed took to the Atlanta radio waves Wednesday to respond for the first time over the two high ranking city officials became targets of federal grand jury subpoenas in the quickly growing pay-to-play scandal.

First was former Human Services director, Mitzi Bickers. And then Adam Smith, the city’s top purchasing agent, was fired Tuesday.

“What I've made clear is we're going to follow the facts wherever they go and we're going to prosecute any individuals who are engaged in criminal activity to the fullest extent of the law," Reed said on V103's Ryan Cameron morning show Wednesday. “I'm very disappointed and frustrated. Not only for myself but for the city of Atlanta and for my team.”

They were the mayor's first public comments since he fired the city's chief procurement director Tuesday, the same day the FBI suddenly hit the city with a subpoena and seized Smith's city-owned computer and phone.

"I'm not going to comment on what happened. What I will say is he was relieved of his duties. So I’m not going to describe what happened," Reed said.

Until he was fired, Smith, oversaw tens of millions of dollars in city contracts every year.

Less than two weeks ago we asked Reed if Smith might be a target in the City Hall bribery investigation.

"Adam Smith works for the city of Atlanta. I do not know if he's been questioned by the FBI," Reed said at the time.

And while it's still unclear whether agents have questioned Smith, the feds have not arrested him.

Channel 2 investigative reporter Aaron Diamant had hoped to question Reed himself about Smith’s firing, but he canceled a public appearance Wednesday afternoon.

A text message from a staffer said the cancellation was so Reed could prepare for Democratic National Committee meetings starting Thursday in downtown Atlanta.

Cox Media Group

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