Saturday, September 18, 2021

Former fraud prosecutor accused of scamming Louisiana in hurricane relief efforts

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At least six people — including a former fraud prosecutor and two state Fire Marshal’s Office employees — are accused of defrauding Louisiana of more than $800,000 to profit off the state’s hurricane relief efforts last year.

A West Baton Rouge Parish grand jury on Friday indicted Thomas McCormick and his brother Robert McCormick, both 47, as well as five others on several felony charges, including money laundering, racketeering, fraud and public corruption infractions.

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The scheme involved sending fake bills for items bought through a web of westside businesses and shell companies during emergency declarations amid a busy and disastrous hurricane season in 2020, according to the indictment. The costs for items needed for statewide emergency declarations were falsely inflated on invoices that were sent to the state for reimbursement as early as this March.

“This is a horrible, criminal enterprise scheme that took place against the citizens of Louisiana during one of the worst storms,” District Attorney Tony Clayton said Friday.

Robert McCormick had also worked for the Louisiana State Fire Marshal’s Office, and authorities say he used his duty of gathering materials and supplies for emergencies to approve the fraudulent payments. His twin brother, Thomas, is also a former state fraud prosecutor.

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Officials said the pair used their positions and expertise to pull off the alleged scheme.

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.

The plot was discovered when the Louisiana Legislative Auditor began investigating the money trail in May at the request of the governor’s office. The probe unearthed evidence of fraud.

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If it wasn’t for the office and the governor’s request to investigate, Clayton said: “We would have never known about this.”

The State Fire Marshal’s Office said Friday an investigation, which is still underway, found Robert McCormick and two others named in the indictment violated policy. Robert McCormick resigned after he was suspended when the probe began.

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.

“We were angered and frustrated to be informed that our agency’s genuine effort to help the people of Louisiana, during one of the most challenging years in this state’s history, was allegedly taken advantage of,” the fire Marshal’s Office said Friday.

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 brothers, along with others, were arrested following Friday’s grand jury hearing and were booked into the West Baton Rouge Parish jail.

It wasn’t immediately clear if a bond was set. Efforts to reach them and others named the indictment were unsuccessful Friday evening.

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