Senior Atlanta official pleads guilty to fraud charges after abrupt resignation

ATLANTA — Another senior city official pleaded guilty Wednesday afternoon to charges related to the federal corruption investigation into Atlanta City Hall.

Larry Scott pleaded guilty to wire fraud and filing false tax returns, Channel 2's Aaron Diamant has learned.

Scott, who ran a critical part of the city's procurement operation, resigned suddenly last week after a visit from the FBI. Scott’s name was not previously mentioned in early stages of the Atlanta corruption investigation.

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He spent 17 years with the city, nearly all of it as the senior official in the Office of Contract Compliance. He became director in 2014. Contract compliance is supposed to ensure that businesses owned by women and minorities get their fair share of city contracts. To date, the corruption investigation has not appeared to focus on the Office of Contract Compliance.

But the weekend before last, Channel 2 Action News learned that FBI agents came to Scott's home to question him. We are told he submitted his resignation to the city almost immediately after that visit.

The charging documents say Scott started a consulting firm in 2011 “…for businesses seeking contracts in the Atlanta-metropolitan area and elsewhere.” In court Wednesday, Scott admitted he took nearly a quarter-million dollars in income from that business, Cornerstone, over six years without disclosing it to the city or the IRS.

“We can’t have people who have conflicts of interest like this, who are compromised position exercising powerful discretion. That’s the worst part of it,” U.S. Attorney B.J. Pak said.

Scott’s guilty plea is the latest of six in connection with the yearslong federal corruption investigation of Atlanta City Hall under former Mayor Kasim Reed.

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Company documents we pulled from the Secretary of State’s website show Scott organized Cornerstone with Crystal Reed, the former mayor’s sister-in-law. Those records also show Tracy Reed, Kasim Reed’s brother, served as the company’s registered agent.

“Every time there’s something new we get a tiny step up or a step closer to Mayor Reed,” said Karen Morrison, with GSU College of Law. “We’re talking about orbits, and you can’t really get much closer than family. That’s about as close to the mayor as you can possibly get without being the mayor himself.”