Speaking to the Birmingham City Council last month, Birmingham Mayor Larry Langford had one of his frequent flashes of hypocrisy, the audacity of which could send a calloused political observer into a fit of tongue-swallowing convulsions. The mayor was prepping the council for budget cuts, and he was lecturing them about their lackadaisical generosity to outside boards and agencies.
“The city didn’t do what it should have done,” he said. “The things you all are requiring now — you don’t just give people a $100,000 and at the end of the year they give you no accountability for it.”
The mayor’s free-styling sermon went long and hot, and in isolation, his argument was a reasonable one. When government gives grants to non-profits, those groups should be good stewards. And when they come back to the city for more funds, there should be a thorough and open accounting of what the organizations have done with the money. It’s the city’s duty to make sure money is not spent on frivolous or even illegal things. Accountability prevents waste and corruption.
The mayor should know. Again, Langford’s argument was a reasonable one, but only in isolation from his past.
And that past was on display this week in U.S. District Court. There, one of Langford’s closest friends and political allies, John Katopodis, yet another former Jefferson County Commissioner to face corruption charges, sat behind a defense table. It was his turn in a long line.
Katopodis served on the Birmingham City Council and then the Jefferson County Commission, but it is his activities subsequent to his political career that are subject to prosecution. After leaving office, Katopodis managed two non-profits, the Council of Cooperating Governments and Computer Help for Kids.
Computer Help for Kids evolved out of a project at HealthSouth called HELP e-learn. According to testimony in various civil and criminal cases, the organization was the brainchild of three men — Katopodis, Langford and former HealthSouth CEO Richard Scrushy. It began in 2000 with the goal of refurbishing old computers and distributing them to needy children. The charity drew most of its funding from the City of Birmingham, the Jefferson County Commission and HealthSouth. Federal prosecutors argued this week that Katopodis used the non-profit as “a personal piggy bank.”
“The defendant was trusted with almost one million taxpayer dollars, and he abused that trust by spending it on himself and his friends,” Assistant United States Attorney George Martin told the jury.
Katopodis faces 97 counts of wire fraud and mail fraud. Prosecutors say that Katopodis spent charity funds on trips to casinos, trips with friends to the Bahamas and Cairo, Egypt, and even to cover his personal credit card debts. One check for $4,800 to a Meridian, Miss., store called Hudson’s Dirt Cheap bore a conspicuous notation. On the memo line for the check’s purpose, it read, “TV Langford.”
(By email Tuesday, Langford’s attorney, Tom Baddley, said that Langford does not know anything about that transaction. “He has no memory of that, and has no idea what it could be for,” Baddley wrote. “You may see more of things like this, where his name may have been used.”)
A trail of bank statements augments the government’s case, but few people ever saw those records until now. Three of the charity’s directors testified that Katopodis alone had access to the charity’s financial data and, for the relevant time period, only Katopodis had signing authority on the charity’s bank account. Katopodis would often promise to show those financials to the directors, but he never did.
“He would say ‘It’s confusing,’ and he would say we would sit down and figure it out,” one of those former employees, Bob McKenna, testified this week. McKenna left Computer Help for Kids in 2007 to work for Mayor Langford.
Prosecutors had McKenna read from his grand jury testimony. “Actually, John would fly off the handle whenever I asked about the books,” McKenna read aloud. “He was like, ‘Fine, you do the goddamn books.’”
Two of Computer Help for Kids’ major sources of income asked to see those records, too. During Scrushy’s accounting fraud trial in 2005, a former HealthSouth assistant treasurer, Ken Livesay, testified that he had been told to prepare the charity’s taxes, but Katopodis would only give him “a representation of the checkbook.”
“Some of the information that I did get from him — it was clear to me that the funds were not being used for its intended purpose,” Livesay testified in 2005. “They were being used for political or personal interests.”
Livesay, who had recently extricated himself from the $2.7 billion HealthSouth fraud, did not want to get into more trouble. He asked Scrushy to remove him from the project.
Before that, in 2001, the City of Birmingham gave Computer Help for Kids $200,000 to kick-start its efforts. Less than a year later, the city attempted to audit the charity, but Finance Department officials met the same kind of resistance Livesay had encountered. City officials had meetings with Katopodis and put requests for financial documents to him directly, according to finance department memos.
“The initial review of the records left many unanswered questions,” then-Finance Director Folasade Olanipekun wrote. “Without further review and supporting documentation of the questionable transactions, we do not feel we are able to form an opinion on whether the funds were used according to the City’s agreement.”
The city never funded Computer Help for Kids again. Seven years before Langford lectured the Birmingham City Council about the need to hold non-profit boards and agencies accountable, the City of Birmingham held accountable a non-profit Langford co-founded. Yes, the irony is thick, but this was only the beginning.
Computer Help for Kids lost its first big sponsor, the City of Birmingham, in 2002. A year later, in 2003, it lost its second major donor, HealthSouth, after federal investigators exposed the massive accounting fraud there. However, the organization quickly found a new enabler — the Jefferson County Commission.
County funding for Computer Help for Kids began in 2002, a few months before Langford took office as a county commissioner. After Langford became commission president, though, the county became an easy and steady source of cash. Between 2002 and 2007, when Langford left to become mayor of Birmingham, Computer Help for Kids received about $800,000 from the county.
On the witness stand this week, one county administrator testified that Langford took a “particular interest” in Computer Help for Kids. Langford recommended its funding for commission approval. He asked county staff to expedite payments. And on at least two occasions he had the county checks delivered to his office.
In the courtroom, prosecutors and county witnesses detailed the regular payments to Computer Help for Kids. Some payments were as little as $10,000. One was as large as $150,000.
Unlike Birmingham, Jefferson County did not ensure the funds were being used appropriately. Of course, the county had Computer Help for Kids sign contracts. Within 60 days of receiving payment, outside organizations are supposed to file reports detailing how the funds were used, but Computer Help for Kids did not comply with this requirement. According to a report issued last week by the Department of Examiners of Public Accounts, Computer Help for Kids received two payments totaling $150,000 in 2006 and 2007, but the county never received the reports.
The county trusted non-profits to report their expenses accurately, a county administrator, Gail Marcus, testified this week. The county did not have a system to monitor for fraud, she said.
“Was there any way the county followed up on that?” Martin asked about non-profit funding.
“We did not have anything set up to do that,” she said.
First, the city of Birmingham balked at the organization’s funding requests. Second, a HealthSouth treasurer testified that the charity’s books were in such bad shape that he feared going to jail if he prepared the taxes. Third, federal investigators subpoenaed documents related to the charity and interviewed potential witnesses.
“You don’t just give people $100,000 and at the end of the year they give you no accountability for it,” Langford told the council last month, but with Computer Help for Kids, that’s exactly what he did year after year after year.
In 2007 Langford became mayor of Birmingham, and within weeks of taking office he pitched a plan to buy cheap laptops for school children. Katopodis became the de facto point person for implementing the plan, despite the fact that the federal investigation into Computer Help for Kids was already public knowledge, having been reported in the media.
However, a civil lawsuit between Katopodis and HealthSouth over a building in Southside ginned up enough raw scandal to force Katopodis off the project. Depositions and discovery in that lawsuit exposed what hadn’t been seen before — the credit cards, the casinos, the trips abroad. But the shocker was that Computer Help for Kids had employed a former gay porn star, Marc Anthony Donais, known in his previous work as Ryan Idol.
At the time, a colleague from another paper said to me, “We can write about dirty bond deals all day long and nobody cares. But you put ‘gay porn star’ in a headline, and suddenly you’ve got everybody’s attention.”
The scandal threw the new mayor off balance and nearly ended the laptop for students program. Katopodis became a political liability for the mayor and he faded again from the public spotlight until his indictment in October 2008.
Everyone on the council dais knew most of these things a month ago, when mayor said to the council, “You don’t just give people a $100,000 and at the end of the year they give you no accountability for it.”
This story is indicative of the sickness affecting our local political culture because of what happened next ...
In a parallel universe someone on that dais would have challenged the mayor. Someone would have asked him just who he thought he was lecturing them, preaching about accountability. At the very least, a couple of them could have rolled their eyes or let slip a muffled chuckle. But none of that happened. No one called Langford on it.
In Birmingham politics such obvious hypocrisy has become so commonplace that it escapes notice. Corruption is expected and tolerated. Outrage is safely quarantined to talk radio and Internet message boards. Something here is very wrong.
The proof is hanging on the wall at the Jefferson County courthouse. Portraits of former county commissioners hang in the map room, just outside the commission chambers. That lineup might be more appropriate art at the post office or on America’s Most Wanted. For perspective’s sake, it’s worth reviewing one more time.
Jefferson County contracts now include a new line prohibiting pass-through funds, thanks in part to crimes Germany committed. He allocated public funds to non-profits and then directed those agencies to direct funds to his family, girlfriends and himself. In 2006, a jury in U.S. District Court found him guilty on charges of conspiracy and misappropriating public funds. He is currently serving a three and half year sentence at the federal prison camp at Maxwell Air Force Base, outside Montgomery.
For years, the thing most people mentioned when they talked about McNair was his daughter, Denise, who was killed in the 16th Street Baptist Church bombing in 1963. Specifically, people commented on how McNair rarely spoke of the tragedy and did not leverage it for political gain. For the most part, he didn’t have to. The city’s guilt did that for him.
McNair resigned from the county commission suddenly in 2001. It soon became apparent why. As the commissioner in charge of the Environmental Services Department, he oversaw the first phases of a massive court-ordered sewer rehabilitation project. As a federal investigation and prosecution would reveal, McNair accepted $140,000 in bribes from sewer contractors in exchange for no-bid repair work. In 2006 he was convicted in U.S. District Court of bribery and conspiracy. In 2007, he later pleaded guilty in a related case. He has been sentenced to five years in prison, but has not yet served any of that time.
After the 2002 election, White took over as the commissioner in charge of the Environmental Services Department, and according to federal prosecutors, White picked up where McNair left off. In 2008, a federal jury in Montgomery convicted White on charges of conspiracy and bribery. Prosecutors said White took the bribes from a sewer contractor in exchange for county sewer contracts. White successfully argued that the change of venue to the Middle District of Alabama had been inappropriate, and United State District Judge U.W. Clemmon granted White a request for retrial. Since then he has changed lawyers twice, and has not yet been retried.
Buckelew probably takes the record for selling out the cheapest. On trips to New York to meet with Wall Street analysts and investment banks, Buckelew accepted gifts from an investment banker — designer shoes, a purse and a day at the spa. When prosecutors questioned her about the gifts before a federal grand jury, Buckelew lied. Later, last year, she agreed to plead guilty to one count of obstruction of justice. She is cooperating with federal investigators and her sentencing has been delayed until after the trial of Mayor Langford.
When federal officials arrested Langford last December, it took no one by surprise. Earlier in the year, the Securities and Exchange Commission sued Langford, Montgomery investment banker Bill Blount and lobbyist Al LaPierre. Both the criminal indictment and civil lawsuit accused Langford of participating in a bribery scheme with Blount and LaPierre. The indictment accuses Langford of accepting more than $230,000 in bribes from Blount with LaPierre as the conduit. Much of the money, prosecutors say, paid off credit at retail stores, where Langford bought expensive clothes. In exchange Langford directed lucrative bond business to Blount’s investment firm, Blount Parrish. Many of the interest rate swaps negotiated during Langford’s tenure have backfired, costing the county hundreds of millions of dollars in addition to unnecessary fees to investment banks. Langford is scheduled to go on trial Aug. 31.
Correlation or Causation
It’s difficult to tell which is more perilous: serving on the Jefferson County Commission or being governor of Illinois. Six former commissioners are either in prison, awaiting sentencing, or under indictment and awaiting trial. Never mind the five sewer department officials who have been convicted or pleaded guilty.
There is something very wrong with our political culture here. The problem is pervasive and it threatens to send local government into an abyss. While suffocating under unpayable debts, the county government is not yet financially bankrupt, but it is bankrupt in the public trust. And yet a political lethargy among voters and potential candidates prevents the kind of action and involvement necessary to reverse the damage. The problem is self-perpetuating.
This isn’t just a Birmingham problem. In fact, if we take a step back we can see this isn’t merely a Jefferson County problem, either. The two-year college scandal and the convictions of two former governors have shown that political corruption exists throughout the state and in abundance. The problem is systemic. It’s a problem worth identifying. And it’s a problem worth solving.
In a periodic series throughout the summer, Birmingham Weekly will examine the causes of political corruption in Alabama and seek out potential solutions.
War on Dumb is a column about political culture. Write to firstname.lastname@example.org