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At last, feds expected to make their cases in City Hall corruption probe

Draft indictments against officials in Mayor Bill Campbell's administration, as well as vendors to the city, were expected to be brought before a federal grand jury Tuesday, Dec. 11, and the jury's findings made public the following day, according to documents from the U.S. Attorney's Office and a source who has seen draft copies of the charges.

The indictments include allegations of illegal campaign contributions and payments to city officials that were made to influence the awarding of Atlanta contracts.

At the top of the list are Spectronics Corp. Vice President Vertis McManus Jr. and CEO Dorothy Rollins. They allegedly made "$25,000 in illegal contributions to Mayor Campbell's re-election campaign and at least $8,000 in illegal contributions to another municipal candidate," according to a document from the U.S. Attorney's Office obtained by Creative Loafing.

Many of the donations were made in the names of people who were not even aware of the mayor's race. Brian Steel, who was referred to CL as an attorney for Spectronics, did not respond Monday to telephone or fax inquiries about the possible indictments. Mum also was the word from McManus and Rollins after they were faxed a copy of the allegations.

Spectronics, a telecommunications firm, never landed contracts in exchange for its alleged largesse, but in 1999, it did receive a $105,000 re-seller fee for a contract Atlanta brokered with the Oracle Corp. City officials have never been able to adequately explain the fee, but information from the feds connects the dots. In early 1998, Oracle was advised that it "needed to partner with Spectronics if Oracle wanted to get the contracts it was seeking from the city," according to the document from the U.S. Attorney's Office.

Among those expected to be indicted with McManus and Rollins is former Atlanta Chief Operating Officer Larry Wallace, who allegedly accepted at least $19,000 from the Spectronics executives, in addition to spending money for a 1998 trip to Reno, Nev., according to the source and to information provided federal prosecutors.

Wallace left office in February. He asked for the money because he was reportedly behind on mortgage payments on a house in the Washington, D.C., area, according to the source.

Wallace could not be reached for comment, but his attorney, Bruce Harvey, has said repeatedly that there were no payments, loans or gifts accepted by Wallace from Spectronics executives. Harvey started a murder trial Monday, and did not respond to telephone or faxed inquiries concerning a possible indictment of Wallace.

Indictments against other figures are possible, and Tuesday, Atlanta's Deputy Chief Operating Officer Joseph Reid was set to enter a plea to conspiracy to accept a corrupt payment from McManus and Rollins, according to the source.

There is still, of course, the possibility that the U.S. Attorney's Office will not be able to secure indictments from the grand jury for any of these allegations. The Justice Department could delay bringing the allegations to the grand jury, but sources tell CL that that is unlikely.

Cash for contracts alleged

Campbell needed all the cash he could get his hands on in an expensive November 1997 showdown with Marvin Arrington. Campbell's campaign staff raised more than $400,000 in the span of three weeks before the run-off against the then-City Council president. Draft indictments against McManus and Rollins assert that the pair were allegedly attempting to buy influence to land city contracts in exchange for $25,000 in questionable campaign donations and other payments, the source says.

Spectronics also allegedly sought official help in settling a contract dispute with the telecommunications company MediaOne in exchange for its campaign help. During 1997, Spectronics was a subcontractor with MediaOne's build-out of the city's cable system. At the time, MediaOne owned the city's cable franchise agreement. In October 1997, McManus allegedly asked city officials to lean on MediaOne and claim that the company was not complying with the city's equal business opportunity requirements as leverage to settle a contract dispute, according to the source. MediaOne eventually settled with Spectronics for an undisclosed amount, according to documents obtained by CL.

But exorbitant and questionable campaign contributions were not the only methods allegedly used by McManus and Rollins to influence city officials, the indictments will indicate.

McManus paid $19,500 to an Athens halfway house for recovering drug abusers as part of a one-year contract with Spectronics' employee assistance program. Most of that money, however, was diverted to Reid, the deputy chief operating officer. Spectronics executives also spoke with Reid about the possibility of employment after he left office.

Reid helped establish the recovery house, Strong Day Recovery Residence, in 1991, according to Richard Williams, the president of the board of directors for Strong Day. Williams says federal authorities spoke to him about the payments from Spectronics, but says he was not coerced to make the payments to Reid, then an assistant to the mayor, because he viewed them as repayment for unpaid work Reid did in setting up the program.

"He was the backbone of us coming together as an organization," Williams says. "I would not have worked for free."

Reid was not in a position to approve or deny contracts, but he allegedly exerted influence on the contract processes in City Hall as well as Spectronics' dispute with MediaOne, according to information obtained by CL from the U.S. Attorney's Office.

Wallace, however, had much more power. In June 1998, during the competition for Atlanta government Y2K contracts, Mayor Campbell and Wallace were leaving for a mayors' technology conference to be held in Reno, Nev. The feds have been told that before the trip, Wallace was allegedly given a wallet filled with $100 bills, the source says. McManus supplied the gift. Campbell also received a present, but it is unknown what he received, according to information provided the U.S. Attorney's Office.

During the second week of October 1998, the feds investigated a $19,000 payment made to Wallace by Rollins, the source says. An official with a bank in south Atlanta helped Wallace with the transaction, according to the source. To avoid the necessity of filling out a Large Currency Transaction report -- an IRS notification of any transaction of more than $10,000 - the bank official allegedly used three separate tellers, according to documents obtained by CL.

During the period in question, Spectronics was competing with a number of local technology companies for Y2K-related work with the city, according to the source, and the money allegedly given to city employees was supposed to help the company secure that work.

Spectronics appeared on a list of six preferred minority contractors kept by Commissioner of Administrative Services Herbert McCall. But there was internal conflict between Wallace, who wanted Spectronics to land the work, and McCall, who favored American Computer Technology (ACT), the source says. ACT is owned by Samuel Barber. CL obtained a copy of a July 22, 1998, phone message left with a city official that points to this conflict.

Federal investigators also have a copy of the message, according to the source. In it, McManus is calling from a number in Liberia where his company has done business.

"I just got a message from Marjorie Mitchell," McManus states in the message. "Looks like we've got a real problem with Sam. I am going to have to call mayor tomorrow. It appears that whatever we thought re: understanding [sic] that is not the case. I feel that I have lived up to my commitments. I don't know what is going on [with] Herb and Sam."

Marjorie Mitchell says she is a low- ranking employee with Oracle Corp. She is based in the Atlanta area and referred questions about her involvement with McManus and the federal investigation to Oracle. Oracle spokeswoman Jennifer Glass declined comment saying that the company has been cooperating with investigators and is not a target.

ACT won at least one hefty Y2K contract but was paid for only a portion of the work it performed. ACT sued the city in March to recover a $3.5 million settlement brokered by Wallace. Barber says his 15-year-old company was asked to perform work for the city on an emergency basis and brought in nationally known information technology companies to work as subcontractors on the project. He says he doesn't remember if federal investigators asked him about the Y2K contracts, though he has acknowledged speaking with the feds.

"Nobody ever did any favors for us down there," Barber says about Atlanta government. "We did some hard work, and we didn't get paid."

While Spectronics didn't land the Y2K work, it did receive the re-seller fee in the Oracle deal.

Kevin Ross, the mayor's former campaign manager, was the attorney in the Oracle deal. Neither he nor his attorney, David Geneson of Hunton & Williams, returned phone calls from CL.

As for McManus, this isn't his first brush with official corruption. He told a federal court in Louisville that he paid a local alderman $56,000, while the city was negotiating a contract with a company with which Spectronics was doing business, according to news reports from 1998. Also, a Vertis McManus has a federal 1982 fraud conviction for bilking the city of Benton Harbor, Mich., out of about $20,000. McManus did not return phone calls in reference to the Y2K contracts or the fraud conviction.

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