If you had a $388 million school construction project, would you want to turn it over to a couple of “dumb asses” who “did lousy work and produced lousy designs,” and who drove costs up by many millions of dollars?
Not so fast – your answer might depend on who’s getting a taste of those millions.
That was the case for state Rep. Joe Deshotel and Carrol “Butch” Thomas, former superintendent of Beaumont Independent School District, who gave job after job to a few men who repeatedly failed to perform those jobs, often getting the district sued in the process.
A recently released audit of Beaumont ISD’s $388 million bond project found evidence that Thomas planned from the beginning of the process to inflate the budget by roughly $72 million. Much of that extra money went to a few hand-selected contractors chosen not for their competence, but for their close ties to Thomas and Deshotel, a Beaumont Democrat.
‘HRE did not complete the work’
Beaumont’s 2007 bond election had grave consequences for the district.
It was obvious to then-board members Mike Neil and Tom Neild that much of the money sloshing around was being misappropriated, but the fact that they’re white, while the board majority and most of the district’s top administrators were black, inflamed racial resentments in the community.
The fighting died down after the state seized control of the district in 2014, and the district’s finance director and comptroller were convicted of embezzling millions, while an assistant superintendent was sent to prison for stealing federal funds and altering standardized test scores.
The 2,700-page audit by Weaver LLP doesn’t implicate any of the board members for anything worse than blindness.
The auditors recommended criminal charges and/or lawsuits be brought against several of Thomas’ people, although Jefferson County’s district attorney, Democrat Bob Wortham, sat on the completed audit for more than a year before deciding not to file charges.
“The auditors determined that all of the funds subject to the audit were spent for school district projects,” Wortham claimed in a statement.
In other words, unlike the three officials who’ve been convicted, nobody named in the audit actually wired district money directly into a personal account. Thomas’ people were getting paid for official work; the problem, according to the audit, is that often they didn’t actually do the work.
The district attorney’s office has also said that the statute of limitations has expired for many potential charges. Those periods would be mostly either 7 or 10 years from the date a crime was committed.
The auditors focused heavily on 2009 and 2010, completing their investigation in October 2015. The audit itself wasn’t released until last month.
In it, the auditors continually point to Thomas as the driving force behind a half-dozen bond-related debacles. His main minion was a former chief-of-staff for Deshotel, Eric Boutte.
Boutte’s company, Healthy Resources Enterprise Inc. (HRE), employed just himself, his brother Alcide, and a secretary, but pretended to have 23 employees, auditors were told.
Boutte and company are the “dumb asses” in question, the description belonging to a project manager who’d been forced to hire them by Thomas.
Thomas made sure Boutte got a piece of the action on just about every school built with bond money, even though he rarely if ever actually got the work done, according to the audit.
In his first go, as contractor for the reconstruction of hurricane-damaged Smith Middle School, Boutte stiffed a company called Envirotech that he had hired to actually provide workers, prompting a job-site walkoff where police were called when unpaid workers started ripping out electrical wiring they’d installed. (Side note for those who’ve been following this saga: the electrician Boutte called in to fix that damage was none other than Calvin Walker).
Naturally, the unpaid workers filed a claim on the performance bond the contractor was required to buy, but that just uncovered another scam: Boutte had paid $412,000 for a phony bond from an unlicensed broker who would later be convicted of fraud for the sale.
So then the district was on the hook, and had to pay Envirotech directly to settle a lawsuit.
Boutte wasn’t Thomas’ only middleman on the Smith Middle School job. He had a project manager, John Elamad, who got $1.2 million out of the gig. Elamad certified that HRE had finished the Smith renovation, even though he knew the workers had quit.
“Elamad’s representation that HRE completed the work under its (HRE) contract cost the District at least an additional $569,000,” the auditors write. “Furthermore, Elamad represented to BISD that HRE was due the contingency of $1,057,863 in their contract. We have not found any documentation to support this payment yet have found several documents that clearly state that HRE’s contract included costs they submitted for Change Orders.”
When auditors pressed Elamad on why he had approved paying the district’s million-dollar contingency, he claimed that the construction company had put up the million dollars.
The district had to bring in another company to finish the Smith job (although Thomas even made sure that Boutte got a sub rosa cut of that action, according to the audit.)
The auditors concluded that “HRE did not complete the work” on Smith Middle School that they were “paid for in the amount of $19 million.”
Yet after this debacle, Thomas continued to use HRE on project after project, usually in a smaller role, with the contractor hiring somebody else to finish the work HRE wasn’t doing.
‘Just additional expenses’
According to the audit, Thomas started planning early to ensure there would be plenty of money to slosh around, helped by Parsons Commercial Technology Group, which is best known for a college campus boondoggle in Fort Worth in which construction costs reached $1,476 a square foot.
The bond proposal Parsons drew up for voters in 2007 was for $295 million worth of projects, which included $32 million for design and unexpected expenses, plus $72 million for inflation.
Neil and Neild had always thought that inflation figure was bogus, not that the district gave them any satisfaction. But this audit supports their view.
The district claimed the inflation figure was to cover the five-year length of the project, but actually, all $72 million “was allocated to specific construction projects consummated between March 2009 and March 2010, a one year period and not the five year period Parsons represented.”
What’s more, there was “almost no inflation” for the period, auditors found. And, “there were 39 budget reallocations totaling $69.3 million from the $72 million inflation amount. These budget reallocations occurred between March 2009 and March 2010.”
“Tom (Neild) and I were demanding to know how we had $72 million worth of inflation. They say it was just additional expenses,” Neil says now, but it’s clear Thomas wanted to put “money in his friends’ pockets.”
Some of those reallocations were deceptive but legitimate-ish. For example, the auditors demonstrate that Thomas knew from the beginning that a football stadium meant to bear his name was never going to cost the $29.8 million that voters and the board were told. There was another $14 million in “inflation” money that would need to be reallocated to get the job done; the real cost was known from the early planning stages.
The auditors found other do-nothing or do-little jobs, often in the guise of a set-aside for a minority-owned business. An architect named Andre Lewis was cut in on one contract; a manager told auditors “that Lewis did ‘absolutely nothing’ as a consultant to Daniels for these projects.”
Under a four-year, $10,000-a-month contract for a safety coordinator, BISD got the services of Alcide Boutte for half a year, although he had no training in the field. A job superintendent saw him conduct just one safety inspection in that time.
Thanks to architect Lamar Urbanovsky, a former chancellor of the Texas State University System, the auditors learned of Deshotel’s role in the operation.
Urbanovsky’s employer, LANWalton, was in the running with Parsons to manage most of the projects under the bond.
“According to Urbanovsky, Deshotel advised him that he would need African-Americans on his team to get the job and in particular, Eric Boutte with HRE out of Houston, Texas,” the auditors found. “Urbanovsky stated when he contacted Boutte about being part of LANWalton’s proposal, Boutte demanded a ‘pre‐agreement’ which would guarantee HRE a fee for showing up at the proposal presentation. Urbanovsky declined to give HRE this fee.”
Urbanovsky did agree to include Boutte, but the night before his presentation to the district, Boutte called him and said “LANWalton would never get the job and LANWalton was nothing but window dressing for bidding purposes.”
After the presentation, “(a)round 11:30am, on his return to Austin, Urbanovsky received a telephone call from Boutte stating they got the job. At this time, Boutte asked if Urbanovsky was going to dump Boutte after they got the job. Urbanovsky also received two separate calls from Deshotel asking if Boutte was going to be dumped. Urbanovsky advised both Boutte and Deshotel that Boutte was still included in the proposal.”
That night, assistant superintendent Willis Mackey called Urbanovsky and told him “that LANWalton would not have been selected had Mackey not backed them. Mackey told Urbanovsky he needed to hold open two positions on LANWalton’s payroll for ‘local costs’ for staff to represent ‘us,’” the auditors write. “Urbanovsky has no idea who these individuals or companies could be but believed one was a former County Commissioner or Judge who got Mackey his job with the District.”
Urbanovsky expressed some doubts about putting the two on the payroll, and also declined a meeting with Mackey the next morning, a Saturday.
The next week, Thomas decided to go with Parsons instead.
The auditors conclude “LANWalton was not selected because it questioned Mackey regarding the costs of the two parties Mackey demanded be placed on LANWalton’s team.”
Parsons was ultimately fired after struggling to handle contracts, payroll and record-keeping.
Deshotel denied Urbanovsky’s account to a local newspaper, saying that he “certainly wouldn’t have said that they had to have” Boutte, but he might have recommended him.
Jon Cassidy reports for the Texas Bureau of Watchdog.org Contact him at [email protected] and follow him on Twitter @jpcassidy000.