The federal corruption trial against Bayou la Batre Mayor Stan Wright got underway Feb. 25 with charges he stole $27,249 from a Federal Emergency Management Agency grant intended to build long-term housing for victims of Hurricane Katrina. Wright's eight-count indictment also alleges he laundered the money to make it more difficult to trace back to him and retaliated against a former police captain who aided prosecutors in the investigation against him.
One codefendant in the case, former Bayou la Batre grant manager Janey Galbraith, was convicted for her role in the scheme last year while the charges against another, Wright’s daughter Mary Cook, were thrown out. Under sentencing guidelines, Wright faces well over 80 years in prison if convicted on all counts, but if convicted on any one, he will automatically be removed as the town’s mayor.
At trial, U.S. Assistant Attorney Maria Murphy outlined the case against Wright, primarily how he transferred two-tenths of an acre of property he owned to Cook who then sold it back to the city for 500 times its actual value. The city paid for the property from a $15.3 million FEMA grant it was awarded to implement the agency’s Alternative Housing Pilot Program. In an effort to conceal it, Cook then transferred the money back to Wright in smaller incremental payments, Murphy alleged.
According to the prosecution, Wright was not simply attempting to profit from the sale, but rather help his daughter pay off a $21,000 mortgage debt incurred after a divorce. Cook soon remarried and Wright allegedly influenced Galbraith to give her new husband a $45,000 per-year job maintaining the full FEMA property. Regarding the charge of retaliation, Murphy contended Wright removed former police captain Darryl Wilson from a federal task force and took advantage of the officer’s sick leave to have him arrested for theft, despite never consulting the town’s police chief.
Meanwhile, the defense said two other people sold property as a result of the traffic assessment and Wright’s transfer of the land to Cook was a gift. Her subsequent transfer of funds back to Wright were to pay him back for paying off her mortgage. Minutes from the City Council meeting that approved the sale showed Wright abstained from the vote, attorney Arthur Madden said. As far as the alleged retaliation, Madden characterized it as "small town politics at its worst,” suggesting Wilson was actually reprimanded for dropping the ball during a jailbreak.
"[Wright] is here because he pled not guilty to the indictment,” Madden told the jury. "The evidence will show he intended to defraud no one and he intended to take nothing.”
WITNESS SHERRY ATCHISON
The prosecution’s first witness was Sherry Atchison, a grant writer and program developer for Volunteers of America. VOA was involved with the early development of Safe Harbor but was dismissed around the time the program was fully funded. Testimony would later reveal VOA could have administered the grant for free, but the town instead awarded the work, and a $1.5 million fee, to Galbraith.
Atchison, a veteran grant writer, said conflict of interest laws in the administration of federal grants are clear: if a conflict exists, it must be resolved before the project can go forward. Atchison testified that in an informal meeting with both Galbraith and Wright, Wright mentioned the possible sale of his property, to which she immediately pointed out the conflict of interest. VOA was dismissed from the project a short time later.
The prosecution also had Atchison read portions of the sworn depositions of Wright and Galbraith. Wright insisted it was his daughter, not himself, who sold the property to the city and that the project’s engineer determined the price based on square-footage, a price consistent with the other two landowners who sold to mitigate traffic concerns.
Galbraith’s deposition indicated she was given administration duties only after VOA "went into a tailspin” when the project had to be moved to its eventual location from a previously proposed piece of property. Galbraith allegedly testified that VOA mischaracterized the development as a "slum” and tried to inflate costs for unnecessary expenses, like brick exteriors. Further, Galbraith said FEMA representatives had contacted VOA and expressed concerns about delays and missed deadlines.
Atchison refuted that testimony, saying VOA never communicated with FEMA and delays were based on environmental assessments and the fact Galbraith would not share documents.
Madden suggested VOA’s dismissal was based on timeliness, and pointed out how the organization was working independently on a separate project — a 19-unit apartment complex for seniors that took four years to complete. Madden said Bayou la Batre was seeking a plan to start construction on 100 units within six months.
FEMA WITNESSES SCHLOSSMAN AND KINDER
The prosecution also called a pair of FEMA witnesses, AHPP officer Joshua Mikhael-Schlossman and former AHPP director Randall Kinder. Both testified about the guidelines of administering federal grants, including those defining conflict of interest in the procurement process. While there are separate regulations for states and municipalities they said, conflicts of interest would void what the government considers "allowable costs.”
Regulations consider it a conflict of interest when "an employee, officer or agent of the grantee or subgrantee ... any member of his immediate family … his or her partner, or an organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award.”
Schlossman and Kinder said Cook’s sale of the property to Bayou la Batre was a violation of this regulation. Schlossman added that the Wright/Cook property could have been included in the project site, as long as the town had found another means to pay for it. It was a conflict of interest because the purchase price came from a $52,831 FEMA check the town received for right-of-way acquisition.
Madden countered the agency’s assessment, saying it was not a conflict because the mayor abstained from the City Council’s vote purchasing the property. Madden also took issue with the language of the regulations, particularly the word "participate” as it pertains to conflict of interest in procurement contracts.
"Is the word ‘participate’ defined anywhere in this document?” Madden asked.
Madden questioned why a subsequent FEMA audit found no inconsistencies or abnormalities with the grant’s administration. Schlossman said it wasn’t a full audit, but rather a simple review of financial expenditures.
"If FEMA would have been notified of a conflict of interest, or a potential conflict of interest, or anything that resembles a conflict of interest, we would have taken measures to ensure it was corrected,” Schlossman said. "I don’t know what alternatives were explored and I’d like to know what alternatives were explored.”
Kinder, who visited Bayou la Batre at least six times as the project was developing, said he only learned the mayor lived across the street during the grand opening ceremony for the first house. If he had known the mayor owned a portion of the property used to develop the project, Kinder said he would have halted it immediately.
"That would be a conflict of interest because procuring that and then determining he owned it, it wouldn’t be an allowable cost,” Kinder said. "If you want to find other funds that are not federal funds, you can do that.”
WITNESS RICHARD MITCHELL
Richard Mitchell, deputy director of the Mobile County Public Works department, testified about the history of the property. Wright bought a 9.2 acre rectangular parcel on April 18, 1997 for $29,000. In 2002, he subdivided the easternmost portion into two equal one-acre parcel which he deeded to Mary and Mindy Wright. Mindy later sold hers back, but Mary built a house on her acre. Upon her divorce, Mary incurred a debt on the property, which Wright helped her pay off.
State Road 188, or Grand Bay-Bayou la Batre Highway cuts across the southwestern corner of Wright’s property. The two-tenths of an acre on the opposite site was first deeded to Mary Cook on Oct. 16, 2007, with a noted value of $5,000. Three days later, an amended deed was recorded showing a value of $10,000. On Oct. 24, 2007, Cook sold the property to Bayou la Batre for $27,249.
Mitchell testified that the legal description on the first two deeds were erroneous and the legal description on the third deed, to the city, was different, but still erroneous. He could not testify to the valuations or sale prices. Madden asked him who had prepared the deeds and it was Bayou la Batre city attorney Misty Gray, who works for county attorney Jay Ross.
"So the county attorney screwed up two deeds,” Madden said.
WITNESS DEBORAH DOWNEY
Assistant U.S. Attorney George May took over questioning of the next witness, former Bayou la Batre City Councilwoman Deborah Downey. Downey said prior to her arrival on the City Council in 2007, the city did not have a habit of posting draft council agendas. When she brought it to Wright attention, Downey testified that Wright told her it would put too much work on the town clerk.
As she was performing financial duties in November, 2007, Downey said Wright mentioned the upcoming sale of his former property to the city, telling her his daughter needed the money for a divorce but that "it was all legal.”
Downey testified the sale was not on the draft agenda and the agenda for the Nov. 15 2007, City Council meeting did not note the property’s price or size. Downey testified that Galbraith was at the meeting, and when questioned about the legality of the sale, nodded her approval. The sale was unanimously approved.
May told the court the sale price indicated a per-acre rate of $131,000 and the project only called for .08 of an acre. Madden seized on Downey’s own intentions. Downey’s first cousins owned an adjoining 30-acre property that was also sold as a part of the project, for a price of $400,000. While Downey abstained from the vote on the sale of that property, she did sign the check, Madden showed. Downey said she wasn’t required to abstain and signing the check was simply part of her job.
On redirect, May closed by asking whether Downey ever owned her cousin’s property, or whether she received any money from it after the sale.
"Absolutely not,” Downey said.
Testimony continues Feb. 26.
