Spitball Army

From the “Just when you think things related to the Birmingham city government can get no more bizarre” department, this article from al.com, in which the really salacious parts are highlighted with bold type:

Suit challenges Langford’s first computer charity
Tuesday, February 19, 2008
BRETT J. BLACKLEDGE and JOSEPH D. BRYANT
News staff writers

A charity Birmingham Mayor Larry Langford created more than seven years ago to give every child a computer faces scrutiny from a donor and federal prosecutors over its use of more than $1 million in taxpayer money, including payments on personal credit card bills, expenses for “elaborate” trips and checks written to a star of gay-porn films.

The questions about Computer Help for Kids, created in 2000 to carry out Langford’s first computer-for-every-child promise as Fairfield mayor, come as the Birmingham City Council considers an agreement allowing a new charity backed by Langford to distribute computers to students. John Katopodis, a close friend of Langford who is organizing the mayor’s initiative, faces questions in a civil lawsuit and in federal subpoenas about how he managed Langford’s first computer charity.

The civil lawsuit filed by HealthSouth Corp., which donated money and computers, questions why the first computer charity gave Langford money, paid for casino trips and handed out donated computers to friends and politicians.

Katopodis has denied misusing the money and computers given to the charity, and has filed responses in the lawsuit arguing that HealthSouth is attacking him because of claims he’s made against the company.

Documents filed in the Jefferson County lawsuit against Katopodis show nonprofit programs managing Langford’s first computer charity paid:

$30,000 to Marc Anthony Donais, also known as Ryan Idol, a star in gay adult films.

$28,000 in cash to Katopodis through checks and automatic teller withdrawals, including withdrawals at casinos.

$12,000 a year in rent for office space to a group run by Katopodis, even though Katopodis was not charged rent for the building.

As much as $10,000 to Langford, which he said went to a private charity he controlled.

Thousands of dollars to pay personal credit cards, phone bills and expenses, including Jim Burke Auto, Triumph Auto, Highlands restaurant, and airfare and hotels “to various places such as British Columbia” – all expenses that the lawsuit states “likely did not benefit” the computer charity.

HealthSouth outlined the expenditures from Langford’s computer charity in a lawsuit against Katopodis after receiving bank records from the computer operation and another program Katopodis managed.

HealthSouth, which had paid more than $200,000 to Katopodis and nonprofit programs he managed, accused him of transferring at least $170,000 from the computer charity’s bank account to another program he ran, the Council of Cooperating Governments. HealthSouth, which also donated thousands of dollars worth of computers, made the claims against Katopodis months after he sued the company in 2005 for a Southside property he said former company CEO Richard Scrushy promised to donate before Scrushy was fired.

HealthSouth also claims in the lawsuit that Katopodis handed out computers meant for poor children to friends and politicians, including Langford, former Birmingham City Council members and Jefferson County commissioners, who were able to keep the computers or give them as gifts.

Katopodis filed an affidavit in the civil case asking that it be delayed because he and his charities are under federal criminal investigation. With the request for a delay, he submitted several federal subpoeanas issued by Assistant U.S. Attorney George Martin seeking financial records for the grand jury to review. The civil trial, however, is scheduled to begin next month.

More than $1 million:
Langford’s first computer charity received more than $1 million from Jefferson County and Birmingham since it was created in 2000, county and city finance records show. The county funding increased significantly after Langford was elected to the commission in 2002, more than doubling its share to $100,000 that year and later giving at least $150,000 annually until last year. Langford sent $80,000 from his county discretionary fund as commissioner, county records show.

HealthSouth’s lawsuit gave the first glimpse into how the charity’s money was spent.

Katopodis refused to allow Birmingham’s auditors to review detailed financial records in 2002, when then-Mayor Bernard Kincaid’s staff questioned how $200,000 of the city’s money was being spent.

Katopodis declined a request last week from The Birmingham News to discuss the charity. “I’m not interested in talking to you,” he said.

But he and Langford discussed the charity in depositions and court papers filed in the HealthSouth case. Katopodis has argued that all of the expenses questioned by HealthSouth were for the computer charity, or for maintenance and renovation of the office space used in HealthSouth’s building. He said during a February 2006 deposition that the computer charity and his Council of Cooperating Governments shared expenses and money because they shared a purpose.

“The disparity between those who have computers and those who do not in the south creates a significant economic lag,” Katopodis said in his deposition. “And distributing computers to the disadvantaged community and throughout the south to children who do not have access to computers is an investment in the economic health, future health of our region.”

Abbott raises questions:
Katopodis’ role in Langford’s latest computer charity raised eyebrows last week, when Councilwoman Valerie Abbott questioned during a City Council meeting the “accountability and veracity” of those leading the efforts to buy the new laptop computers and distribute them to Birmingham students. Abbott said Langford’s current plans for the computer charity include some of the same people, including Katopodis, who handled his first effort.

“In your personal life, you would not pay a contractor money for something that he didn’t do and then give him more money for the next time,” Abbott said. “That just doesn’t make sense.”

Records show that some of the same people who were involved in the computer charity now under scrutiny also are involved in the new nonprofit Langford has created, the Birmingham Education Initiative.

Katopodis and Robert McKenna, who now works for Langford and previously handled finances for the first computer charity, are helping create the new nonprofit. Barbara Shores Martin, of the Jefferson County Office of Senior Citizens Activities and a board member of one of Katopodis’ charities, was named secretary-treasurer to the new nonprofit board. Lawson State Community College President Perry Ward, who helped Katopodis renovate his charities’ office space with college workers and students, is the nonprofit board’s president.

Member concerned:
One member of the new nonprofit created by Langford sent Katopodis an e-mail last week raising concerns about controversy surrounding the first computer charity.

“While I have the utmost trust in both you and my friend and leader, Mayor Langford, recent media accounts and City Council deliberations are casting a negative light upon foundation efforts,” Miles College President George French wrote. “As I am certain you can appreciate, Miles College can not afford even the appearance of impropriety alluded to in media accounts.”

French, in his letter, said continued controversy would result in his resignation from the new board.

Birmingham City Council President Carole Smitherman said Monday she’s concerned that questions raised in 2002 about how city money was used by Katopodis haven’t been fully addressed.

“My question is why wasn’t this pursued the same as other contracts when money was let out for city funds and no funds were accounted for,” she said. “I really want to see a copy of the audit.”

Langford’s administration will make certain city money given to the nonprofit will be used appropriately, said Deborah Vance, his chief of staff.

“Every expense that they make has to have the mayor’s staff approval. We can actually deny the expense,” she said.

Langford and Katopodis gave testimony during depositions in the HealthSouth lawsuit, and both filed affidavits in the case. Langford said he received between $5,000 and $10,000 from the computer charity – he said he couldn’t remember how much – as payment for a loan his scholarship fund provided the group. He said federal investigators asked him about the payment, but there was nothing improper about it.

“No, because I had loaned them some money,” Langford said in his September testimony.

Sidestepped questions:
A HealthSouth lawyer asked Langford if he would be concerned to learn that the computer charity he helped create spent money “for elaborate trips that were not related to” the nonprofit’s work, including casino trips.

“No such documents have been presented to me,” Langford answered. “It’s hypothetical, and I can’t answer it.”

At another point, the HealthSouth lawyer asked Langford if it would concern him to learn that the computer charity’s money was “being used to pay a pornographic star.

“Pay what?” Langford asked.

“A pornographic star,” the lawyer responded.

“I’d have to learn more about what you’re talking about,” Langford said.

Katopodis testified in his deposition that Donais, the adult-film actor, was paid to help the Council of Cooperating Governments and the Computer Help for Kids programs, both of which were handling money and expenses for Langford’s computer initiative. Donais, a former Playgirl Magazine centerfold, has starred in seven gay adult films. Katopodis pointed out in his testimony that Donais also has appeared in plays in New York City.

“He’s a businessman and had been working as, had done several off-Broadway productions and had been writing a play,” Katopodis testified. “I don’t know what else he was doing, you know.”

Donais received $5,000 from the computer charity and $25,000 from the council, according to court filings. “He’s very good at working on computers,” Katopodis testified. “He’s very adept at computers. But at the time he was working at the Council, he didn’t work on computers.”

Under further questioning, Katopodis said Donais worked for the computer charity without any formal training in that area.

“He repaired computers. He, as I say, helped us, he traveled helping to try to set up computer programs in other areas among disadvantaged communities,” Katopodis said.

Rent-free building:
Katopodis also explained the $1,000 a month he collected from the computer charity as rent for a building that HealthSouth allowed him to use rent-free. He said the payments covered utilities, maintenance and other expenses in the building shared with several other charities he helped manage.

“We were paying the bills on the utilities we had to have, for example, a high-speed Internet line at the warehouse so that the technicians could download drivers and other things for the computers we had,” he said during his deposition.

When a HealthSouth lawyer pressed for details about what the computer charity was paying for if there was no rent owed, Katopodis said the $1,000 monthly payment covered the cost of operating the donated building.

“The labor associated with that. The general upkeep of the, the cleaning of the building, the, you know, other associated with the operation,” he said.

Katopodis said computers were given to politicians and some people they recommended. “We normally did not like to do that,” he said.

County commissioners received computers to hand out in their districts, he said. “We wrote them letters and sent them the computers and said distribute them. But, no, we didn’t say to whom did you give this.”

Denies personal use:
Katopodis also said in his deposition and in other court filings that he never took money from the charities for his personal use. He said he received reimbursement for expenses and was not compensated. The computer charity’s 2004 tax records, however, show Katopodis received $2,500 that year as compensation.

Katopodis argues HealthSouth filed the civil case against him because company officials were angered by his lawsuit demanding property earlier promised by Scrushy.

“These claims have been asserted as a retaliatory measure to vex, harass and annoy this plaintiff and the charities with which he is affiliated,” Katopodis’ lawyers argued in an unsuccessful 2006 motion to dismiss the HealthSouth case.

The controversy surrounding the computer charity should send a strong message to city officials, and serve as a lesson not to turn over taxpayer money to nonprofits or other programs that are not accountable, said Etta Dunning, who served as the city’s internal auditor under Kincaid’s administration.

“If you don’t have someone designated for these folks to make a report to, you’re asking for trouble. The public money is certainly not going to be watched and safeguarded,” Dunning said.

I have tried to explain to people outside of Birmingham the reasons why the populace – or, at least, the people that I come into contact with – have had grave concerns about the future and stability of the city since Larry Langford moved to Birmingham (after entering the election for mayor…try describing that scenario to savvy citizens and watch their faces contort in disbelief!).  It’s not like we didn’t have problems before last November’s election.  It’s just that the majority of the voters decided that it would be best to put the future of the metropolis in the hands of someone currently under investigation by the Feds, and with a notorious reputation for driving businesses into disaster and dissolution while keeping his nose clean.

The loud publc stance that Mr. Langford has taken of not speaking to The Birmingham News has, frankly, made him look arrogant and officious, as if he has something to hide.  The News is subsequenly free to report whatever it hears about the situations emanating from city hall – popping out of the building like so much popcorn overflow – as long as they include the tiresome fact that the mayor has no comment (or, more accurately, “declined to be interviewed for this article”).

Today’s news really takes the cake for seedy drama.  The HealthSouth case that began years ago seems never-ending.  It is viral and serpentine, and every week unveils a new twist.

Sign me up for a subscription to the magazine serialization, when it inevitably begins.