Feds will take over lawsuit against HISD vendors
The federal government has filed to take over a civil lawsuit to recover tens of millions of taxpayer dollars from computer vendors accused of lavishing Houston school district officials with generous gifts in exchange for hefty contracts.
The suit accuses Texas businessman Larry Lehmann and former Houston company Analytical Computer Services of scheming to get inside information from HISD officials and to rig the competitive bidding process for federal technology contracts dating back to 2002.
The alleged freebies included trips to Las Vegas, excursions on a yacht, tickets to Houston Texans games in a luxury suite, cash loans and pricey meals.
Lawsuit filed in 2005
The action by the U.S. Department of Justice, filed last week, is the latest move in a multiple-year investigation into corruption involving HISD technology deals. The federal intervention stems in part from a whistleblower lawsuit filed in 2005.
"The federal government is taking action to clean up corruption and cronyism that at least during the 2002 to 2005 time frame was rampant in HISD," said Houston attorney Travis Crabtree, who represents the whistleblowers. "Hopefully with this action it will deter our current (HISD) administration and future administrations from thinking that things that were going on back then are acceptable."
The Houston Independent School District is not named as a party in the lawsuit. The U.S. Justice Department's suit does not name a specific monetary amount, but it is seeking repayment from the vendors for the tens of millions of dollars paid to the technology vendors, plus fines.
The district, however, had its federal technology funding known as E-rate frozen until agreeing this year to pay an $850,000 penalty and to hire a compliance officer to monitor questionable deals.
The E-rate program allows schools that serve mostly low-income children to apply for federal funds to buy discounted internet service and other technology.
The lawsuit, which calls for a jury trial, says Lehmann admitted in a deposition in November 2008 that he made two loans to Laura Palmer, HISD's then-associate superintendent of technology, for $60,000 and $6,750. He also confessed, the suit says, to offering a loan to former HISD employee William Edwards to help him buy a plane. Edwards declined the money.
In addition, the suit accuses Lehmann, through his company Acclaim, of paying for luxury suites and tickets to sporting events to entertain Palmer, unnamed HISD school board members and Steve Kim, then-HISD's network operations member.
Palmer and Kim, who no longer work for HISD, and Lehmann could not be reached for comment Wednesday.
The Houston Chronicle reported on many of the gift-giving allegations in July after obtaining a memo from HISD under the state's public-information law.
Among the allegations in the lawsuit, which centers on the time period 2002 through 2005:
Analytical Computer Services is accused of footing the bill for tickets and expensive meals for Palmer and "several HISD trustees," who are not named.
Palmer and Kim received trips on a 46-foot motor yacht dubbed "Sir Veza" from Frankie Wong, Lehmann's business partner. Wong, who owned Houston-based Micro System Engineering, is in prison after being convicted in 2008 of bribing Dallas ISD's chief technology officer, Ruben Bohuchot, in exchange for E-rate contracts. Bohuchot also was sent to prison.
No HISD officials have faced criminal charges in connection with the case.
Kim and Palmer, plus other unnamed HISD employees, attended the 2004 Super Bowl in Houston as a guest of Wong and Analytical Computer Services. The Houston Chronicle has reported that HISD's former chief business officer, Cathy Mincberg, received tickets from Hewlett-Packard, which did business with the other companies.
Kim got three trips to Las Vegas — plus steakhouse meals, night club outings and hotel bills - paid for by Wong and H-P. He allegedly got a trip to Miami, too.
In November, Hewlett-Packard agreed to a $16 million settlement with the U.S. Department of Justice over the whistleblower lawsuit in HISD and a similar one in DISD. At that time, the government announced its intent to intervene in and take over the suits. It filed the formal paperwork last week.
The Houston whistleblowers are Dave Richardson, an insurance company owner, and Dave Gillis, a former FBI agent, according to their attorney. Under the False Claims Act, they get a slice of any settlement. From H-P, they got $796,280, according to the Justice Department.
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