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Investigative audit accuses brothers of Hurricane Laura fraud

Courtesy MGN Online
Posted at 11:05 AM, Nov 22, 2021
and last updated 2021-11-22 12:05:15-05

The investigative audit that led to the indictment of six people, including two state employees and a former prosecutor, was released today.

This past summer, two former employees of the state Fire Marshal's Office, a former prosecutor and three others were indicted in connection with a scheme aimed at improperly directing Hurricane Laura recovery money to their own pockets. The prosecution arose from an investigation by the Louisiana Legislative Auditor's Office that began at the request of the Division of Administration. That investigative audit is what was released today.

You can read it here.

Investigative auditors found that Lt. Robert McCormick, former emergency management officer for the Office of the State Fire Marshal, used his position to improperly direct state funds totaling $846,140 to companies doing business with or on behalf of his brother, Thomas McCormick, between August 30, 2020, and April 29, 2021, the report states.

The payments were for supplies, equipment rentals, catering services, and other emergency services provided during natural disasters.

In addition, auditors found that some items were purchased using Thomas McCormick’s and Lt. McCormick’s personal funds and billed to OSFM at excessive rates.

Auditors found that the companies diverted funds totaling $397,546 to Thomas McCormick’s law firm, McCormick Law Firm, LLC, as “Legal Fees,” “Legal Services,” or “Attorney Fees.” The funds then were distributed to personally benefit and/or reimburse Lt. McCormick, Thomas McCormick, and others, the audit found.

The audit report includes a letter from the attorneys who represent the McCormick brothers, complaining about the way the audit and investigation were conducted.

"We have serious concerns about the entanglement between the Legislative Auditor and the District Attorney and his agents during the investigation of this matter and both the speed with which it was indicted as well as the motives behind Mr. Clayton's velocity," the letter states, referring to Tony Clayton, who is the District Attorney who indicted the group.

The attorneys attach and reference a June 2021 letter from the Legislative Auditor to Clayton, saying the audit report isn't finished yet and that the findings could change or be adjusted, depending on what information is obtained.

"Please note we will do everything possible to accommodate your prosecutorial schedule as I am well aware of your concerns as it relates to any delays," the legislative auditor wrote. "I just want to be careful to avoid any potential "fall out" from changes in the report's wording or findings as could be the case when the other side would compare the draft report to the final report."

The McCormicks' attorneys say they found the letter "extraordinary" and indicative of the DA's "rush" to indict. The letter apparently was written in response to a standard request from the auditor for a response from the audited entity. The attorneys say they "certainly do wish to speak to you."

However, they also say that any lawyer who advised his client to speak to them in this case at this point would be "committing malpractice."

"...since the actions of the District Attorney and the Legislative Auditor during the investigation raise serious issues about both his legal immunity and your legislatively mandated independence, your office is simply not trustworthy enough to merit voluntary statements from innocent men," the lawyers write.

As our media partners at The Advocate reported in July, the McCormick brothers, who are twins, were indicted along with four others, in connection with the alleged scheme. The charges against them included money laundering, racketeering, fraud and public corruption infractions.

Robert McCormick resigned after he was suspended at the start of the investigation, the Advocate reported. The investigation also found violations from McCormick’s supervisor, as well as former reserve deputy Stacy Smith and her husband, Dean Smith, who also resigned during the investigation, the Advocate reported.

According to the newspaper, Stacy Smith was named in the indictment but her husband was not. Three West Baton Rouge Parish business owners from Westside Services, Gifts Unlimited and Emergency Logistics Solutions were also indicted and accused of playing roles in the alleged scheme at McCormicks’ direction, the Advocate reported.

Officials told the Advocate that the twin brothers used their positions and expertise to pull off the alleged scheme. Thomas McCormick is a former fraud prosecutor.

In one instance, investigators said the McCormicks bought 16,000 bottles of water for 13 cents and claimed they paid an average of $1.50 apiece, netting them some $20,000, during recovery for Hurricane Laura. The indictment lists several similar instances of them inflating the cost of ice and subcontracting base camps for U.S. Army personnel at a far lower cost during Hurricane Delta and falsifying the price of snow chains during the winter storm this past February.

The brothers skimmed money off the inflated invoices, filtered it through a web of shell companies and used their law firm to pay themselves cash disguised as “legal fees,” court records allege.