It’s been a long time coming.
The investigations and court proceedings in a six year long case involving over $6 million stolen from a local school system are finally over.
On Monday, multiple defendants in the Floyd County Schools RICO investigation took negotiated guilty pleas for their participation in a racketeering conspiracy to defraud the school system.
“After today’s guilty pleas, we have successfully recovered almost all of the $6 million in stolen funds,” Floyd County District Attorney Leigh Patterson said.
The brunt of the sentence fell on the person police identified as the mastermind of the operation.
Floyd County Superior Court Judge Jack Niedrach took the recommendation from the DA’s office and sentenced Derry Richardson to 20 years in prison, followed by 20 years on probation.
“With the recent delays forced on the judicial system by COVID-19, coupled with a certainty of more appeals if the cases continued, we could not reasonably expect to try this case before 2022,” Patterson said, citing an expected massive backlog of cases. “Instead of the case continuing onward and being delayed indefinitely — these pleas provide finality and closure for the community.”
Richardson used his position as maintenance director of the school system to create inflated, and in some cases completely fraudulent, invoices for both construction and maintenance projects. He pleaded guilty to RICO charges at the hearing Monday.
Richardson’s attorney, Amanda Clark Palmer, said her client started cooperating with police early on in the investigation.
“He has a lot of regret for what he did,” Clark Palmer said.
Many of the lighter sentences for Derry Richardson’s co-defendants were a result of him taking full responsibility for his acts, she said.
There’s still a question about how much restitution Richardson will be ordered to pay. Over the next two weeks, Richardson will be going over invoices with investigators to determine how much he is culpable for in this case.
“We’re trying to come to an agreement,” Clark Palmer said.
During that time he will remain at home. On Aug. 10 at 8 a.m., he will report to the jail to begin his sentence.
Dwayne Richardson, Jimmy Richardson, Lisa Richardson, Rodney Holder, Charles Raiden Sherman, Russell Burkhalter, Sam Tucker and Harry Bailey all entered negotiated pleas to RICO-related charges Monday morning. David Fielder earlier pleaded guilty to his part.
“Plea agreements and negotiated sentences are basically a compromise between the state and the defendants,” Niedrach said.
He added that going to trial involves a degree of risk — both to prosecutors and defendants — and if taken to trial there was a likelihood he would have imposed greater sentences on each of the defendants.
“The evidence here is very disturbing,” the judge said. “It’s hard to imagine what $6 million would have meant to the Floyd County Schools, especially during the time of the Great Recession.”
Most of the defendants who pleaded guilty Monday morning were sentenced to either home confinement or probation. Several of them will be required to pay fines or restitution to the county schools.
All of the defendants — except Derry Richardson — were allowed to place their plea under the First Offender Act. That means, essentially, if they successfully complete their sentences their records will be clean.
A hearing for Robert Watson, who had medical difficulties, will be held at a later date. His attorney told the court he intends to plead guilty.
Several of the defendants cooperated with the investigation and through their efforts to assist showed their culpability to be even greater than police originally thought.
This was the case with Harry Bailey who did business with the school system through his business RomCom.
“When I interviewed Mr. Bailey, he admitted to the theft and went back through his invoices and doubled the amount (we suspected had been stolen),” Floyd County police Maj. Jeff Jones said. Jones was the lead investigator alongside FCPD Chief Mark Wallace.
During testimony, Jones told Assistant District Attorney Luke Martin that another, now deceased, codefendant who worked for Richardson would send invoices for items to Bailey to purchase from Amazon. Bailey would make those purchases and then add 10% for RomCom.
Jones: Mr. Bailey didn’t receive anything for himself. Everything went back to the business.
Martin: So, Mr. Bailey provided significant assistance with the investigation?
Jones: Yes, he did.
The charges against Sam Sprewell and David English were dropped by the DA’s office. Sprewell has agreed to present a statement concerning ethics violations and permanently surrender his educational credentials, Patterson said.
“We are pleased with the result for Sam,” said his attorney J.J. Seifert. “The dismissal was the right result under the circumstances.”
English paid back money for work not done and had been victimized by others who used his company to commit crimes, his attorney Brian Steel said. He said English’s company, Southeastern Security Professionals, had been ready and willing to do the work they had been paid for.
“David English has always maintained and will always maintain his complete innocence,” Steel said.
Part of the plea negotiations included a stipulation that all the defendants would withdraw from pending appeals and waive future appeals, ADA Emily Johnson told the court.
Thousands of hours have been spent in the investigation and prosecution of this case.
The Floyd County Police Department became involved in the investigation in October 2014, when the school board relayed information from a concerned citizen about fraudulent purchases involving Derry Richardson.
The school system conducted an audit and noticed a large number of tools were purchased but unaccounted for.
“Invoices were able to give details showing several defendants and codefendants were committing crimes,” Jones said in the hearing.
Jones said they first interviewed Robert Watson, who was able to detail the actions of several others who were later arrested.
The scheme began while Derry Richardson was at Johnson Controls Inc., a company that did various construction work for the school system. He moved over to the school system in the mid-2000s and eventually became maintenance director for the system.
But, Jones said, he continued to use his contact at JCI to conduct the largest thefts.
“He was conducting a scheme on the local level and on a corporate level with JCI,” Jones said.
Looking further into the conspiracy, Jones said they discovered the scheme generally involved subcontractors who would provide an inflated invoice for work done. In other cases, the school system paid for work that was not done at all.
As the school system’s maintenance director, Jones said, Richardson was completely in control of who was hired for subcontracting work.
Then the subcontractors would pay Richardson, who would take the largest cut of the fraudulent profits, Jones said, and then pay them off.
“Derry Richardson was the leader of this entire operation,” Jones testified.
Investigators interviewed over 500 people in connection with the investigation and went over thousands of invoices.
“It was an unbelievable amount of work,” Jones said.
Most of the defendants were arrested in 2016, with others arrested later. The criminal case was stalled while a civil case, which was completed in 2018, went through the process of recouping the stolen funds.
In a settlement that was outside of a civil case involving the thefts, Johnson agreed to pay the Floyd County Board of Education $2.3 million and provide services and equipment for two years. The total value of the settlement was estimated at $2.7 million.
Floyd County School Board Chair Tony Daniel said the board wanted to thank all of the investigators, prosecutors and support staff who worked to build the case over the past few years.
“I’m glad there some closure to this,” Daniel said. “This citizens of Floyd County are ready for this to be done.”