WHITE COLLAR ROBBERY?

When a deal looks too good to be true, it probably is.

LAST AUGUST, YVONNE GONZALEZ WAS ATTENDING A STUdent’s funeral when she received an urgent telephone page. Manuel Zulaica, a total stranger, said he had a crucial matter to discuss, immediately.

That afternoon, a highly agitated Zulaica arrived at Gonzalez’s office with a pile of documents and a contused tale about paint, primer, chemicals, and bribes. “My family is in danger,” he said in his rapid-fire Spanish.

Gonzalez had trouble following Zulaica’s story, except that it was somehow connected to his role as a subcontractor on a portion of an energy contract that Matthew Harden had first urged on the school board in August 1995.

In an exercise of what Bill Keever calls “creative financing,” Harden outlined a program he said would allow the district to install energy-saving systems at absolutely no cost to die district. Over lime, the work would supposedly pay for itself. The board accepted his proposal, and in January 1996, let contracts to two bidders, Honeywell and Johnson Controls.

Last June, when the trustees began to hear of problems with the work, board president Kathleen Leos pulled the contracts and payments were suspended. At that point, the district owed the two companies approximately S27 million, money that was guaranteed through a series of loans.

Leos subsequently learned that the contracts were structured in such a way that compensation was not tied to project completion. Johnson Controls, for example, had been paid $4,240,608 for one phase of its contract before finishing any work at all.

Then came the reckoning. In an eight-hour, closed-door briefing last Sept. 17. attorney Marcos Ronquillo informed the trustees that their unrecoverable costs could run as high as S50 million.

“”Whoever wrote that contract was a genius and buffaloed the entire school board,” says trustee Lynda McDow.

Honeywell spokesmen dispute that the district is bound to lose money on the energy contracts. They insist the deals cannot be fairly judged until the expected energy savings are realized over the coming 10 years. Thomas Kelly, the Honeywell project manager, says that the work is proceeding on schedule.

One segment of the overall project has generated even more serious charges, that Harden and his friend Michael Henderson may have received million-dollar kickbacks.

in March 1997. Harden urged, and the board agreed, that a so-called Building Envelope Improvement project be added to the Honeywell contract. Part of this $8.3 million program would be to seal schools against possible air leakage. Another seemingly unrelated portion involved graffiti removal.

Leos says Harden insisted that Honeywell subcontract the BEI to American General Supplies of DeSoto, which signed a $6.3 million contract to do the work.

AGS president Theodis Simmons, a retired Army captain who says he was trained in covert operations, and led a combat unit in the Gulf War of 1991,isproudofone further distinction: In 1994, AGS was named [he school district’s first “Minority/Woman Business Enterprise Contractor of the Year.”

Simmons lives near Harden and Henderson in DeSoto. All three frequent a nearby private recreational facility operated by a group called the Regular Fellows Club. He insists that although he knows both men socially and professionally, neither of them had anything to do with AGS winning the contract. Simmons claims that his first contact with Honeywell was a chance meeting with Honeywell contract engineer Ron Tarbutton that ultimately led to the contract. Thomas Kelly supports Simmons’ story.

When he won the work, Simmons was already doing business with Zulaica, a graffiti-removal specialist from Chicago. Zulaica moved to Dallas to set up his own local company. Zee Cleaners, and to form a partnership with Simmons called OR A-REM, short for graffiti removal.



AT THE TIME OF HIS FRANTIC PHONE CALL TO GONZALEZ, Zulaica had just sued AGS, claiming business that should have been channeled to him was being improperly handled by AGS alone. Zulaica’s attorney, Steve Sanderfer, discovered that Simmons kept no financial records for GRA-REM, although he cashed checks made out to GRA-REM and deposited them into AGS accounts.

Sanderfer declined to allow an interview with Zulaica. But a source familiar with what Zulaica has apparently told federal investigators recounts that when Zulaica asked Simmons where S3 million or more of the BEI contract money had gone, the AGS president answered that he had to pay $1 million in kickbacks to Harden and Henderson, allegations that resurfaced in a court document filed by Leos’ attorney.

Simmons denies paying kickbacks and making the statement to Zulaica. Harden and Henderson deny receiving kickbacks. Thomas Kelly at Honeywell says that so far all monies associated with the AGS seem adequately accounted for. According to Simmons’ attorney. Keith Cummiskey, the FBI has scheduled and postponed several appointments to review AGS records.

“If these guys really thought there was evidence of two million-dollar kickbacks.” observes Cummiskey, “they would have descended in the dark of night with a subpoena and seized those documents.”

As for the lack of GRA-REM documentation, Simmons pleads ignorance. “I was new in business,” he says. “Il was the first type of partnership 1 ’d ever had. It was a learning process.” Simmons does have photocopied invoices and checks that show Zulaica received $197,768.07 through GRA-REM before the Honeywell contract was signed and $318,225 in payments afterward as a subcontractor to AGS.

But Kathleen Leos is convinced there are serious, undisclosed problems with the energy contracts. “The lawsuits against me had more to do with keeping [those] contracts in place than anything else,” Leos asserts.

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