Feds Look Into Fulton Sheriff’s $2 Million Mess

Mark Davis and D.L. Bennett, Atlanta Journal-Constitution, Apr. 1

A $2 million investment Fulton County Sheriff Jackie Barrett made last year was not returned by a Wednesday deadline, touching off a federal investigation into how the sheriff invested millions in public money through a man she met at a Florida speaking engagement.

Barrett, meanwhile, vowed to “exhaust all means” to recoup the cash, even as calls for her resignation grew. She said she would not quit as the probe into her $7 million in investments headed for scrutiny by the U.S. Justice Department.

“People have a right to their opinion,” Barrett said. “I am not resigning.”

But Fulton County Commissioner Karen Handel, a frequent critic of Barrett, said Barrett cannot lead the Sheriff’s Department and should resign.

“What I see is severe mismanagement and a serious lack of judgment,” Handel said in a news conference 30 minutes after the county’s 5 p.m. deadline for return of its $2 million. “That affects a person’s ability to lead effectively.”

The county money, requested in the form of a wire transfer, did not appear as requested, said Patrick O’Connor, Fulton’s finance chief.

“What happens from here is up to the legal department,” said O’Connor. “It’s no longer in finance’s hands.”

The investigation also is in federal hands, Handel said.

“It’s been referred to the U.S. attorney,” Handel said. “We called and told them we thought there was enough information to warrant an investigation.”

County documents were boxed up and taken to the U.S. attorney’s office Wednesday, Handel said.

Federal officials could not be reached for comment Wednesday night.

Sheriff got donation

The loss of $2 million has roots in a February 2002 event in Fort Lauderdale, Fla., honoring the Rev. Martin Luther King Jr. Barrett, the first elected black female sheriff in the United States, was a guest speaker; Byron Rainner was a host.

Thirteen months later, in March 2003, Barrett invested more than $7 million in county money at the recommendation of Rainner — after the broker, his company and two business associates donated $4,000 to the sheriff’s re-election campaign.

Rainner, according to county findings, invested about $5 million through MetLife, some of it in the form of stocks — a violation of state law, according to County Auditor Skip Remter.

Rainner gave the rest to Provident Capital Investments Inc., a Hollywood, Fla., investment firm. In February, it was transferred from there to the Miami-based Royal Institute of Finance.

According to the county auditor, both corporations had existed only a few months before receiving the millions — a fact that apparently bothered auditors and some of Barrett’s colleagues. Remter first raised concerns within the county’s Auditing Department about the possible investments in March 2003, about the same time Barrett wrote the $2 million check to Provident Capital.

In an audit investigation, one Sheriff’s Department auditor termed the arrangement as “crooked from the get-go.”

Part of the $2 million — $925,000 — was used to bankroll a pharmacy operation. The pharmacy, apparently bought with Fulton money, is shuttered, dark and for rent at a Plantation shopping center.

A lawsuit filed in Broward County Circuit Civil Court lays out that expenditure.

According to the suit, filed in October by Provident Capital President Michael Zein, Rainner approached Zein in March 2003 with a business deal. Rainner, said Zein, claimed he had a “substantial sum” of cash from the Fulton County Sheriff’s Department that he could lend to Provident. Any profit Provident made from lending that money to other businesses would be split evenly between Rainner and Zein, the suit says.

Zein agreed, and in March his corporation received $2 million. A check signed by Barrett, payable to Provident, is dated March 26, 2003.

At Rainner’s direction, the suit says, Zein lent $925,000 through Provident Capital to Lancelot James, president of XPress RX Pharmacy of Plantation. Rainner told Zein the pharmacy could guarantee the loan because it had a contract with two big customers — Jackson Memorial Hospital in Miami and the Fulton County Sheriff’s Department, named in court papers as the “Fulton County Prison System.”

The deal with the hospital and Fulton County never materialized, according to the suit, and XPress gave Zein back $250,000 of the money he lent to the pharmacy.

Now Zein is suing Rainner, James and the pharmacy corporation for the remaining $675,000, plus interest and a $15,000 penalty, alleging breach of oral contract, fraud and unjust enrichment.

More than $1 million of the $2 million that Barrett sent to Provident remains unaccounted for.

At some point — the timing is not clear — Barrett apparently became concerned about the investment with Provident Capital and asked that the money be returned.

Provident responded July 22, 2003, by sending Fulton County a $200,000 check as partial repayment. It bounced.

On Feb. 11, another financial organization, the Royal Institute of Finance, wrote the sheriff, telling her it had taken fiscal control of the $2 million investment she’d made with Provident 11 months earlier. Twelve days later, on Feb. 23, Barrett wrote to Provident, inquiring about the status of her investment.

“Please send a listing of all authorized signers on this account,” she wrote.

It is not known whether she heard back.

MetLife returned most of the $5 million Rainner had invested with the insurance company on March 18. A statement accompanying the check notes the account had $5,344,601 before a $30 sales charge and $363,370 withdrawal charge were taken out. A deposit slip dated March 22 shows it going into a Sheriff’s Department account at the Bank of America.

Officials are not so confident that will be the case with the money invested with Provident Capital.

On Wednesday, Handel said she spoke with Stephen Finta, the lawyer for Provident, who said the company didn’t have the money to repay Barrett.

Now, said Handel, she wonders if the cash will ever come back.

“We don’t know if, or to what extent, there has been criminal activity,” she said.

Staff writers Richard Whitt, Michael Pearson and Steve Visser contributed to this article.

Fulton Sheriff Under Fire

Barrett Cites Budget Woes for Jail Problems

WSB-TV Atlanta, Mar. 8

ATLANTA — The chairman of the Fulton County Commission suggested Monday that bad management—not inadequate funding—is to blame for the recent inadvertent releases of three prisoners from the Fulton jail.

Karen Handel made her comments even as Sheriff Jackie Barrett was planning to temporarily send some inmates to other counties after declaring a “state of emergency” at the county jail.

“To simply stand up and every time an inmate escapes to cry ’Oh I need more money’“ is unacceptable,” Handel said, adding that Barrett needs to “lay on the table what the real issues are and what is the proposal to address them.”

The Fulton County Jail has seen a number of problems recently, including an escape Friday and the unintentional release of two suspects earlier in the week.

Barrett is expected to announce that sheriffs in other counties will offer cells to house Fulton County inmates, said Barrett spokesman Lt. Clarence Huber.

Huber said Clayton and DeKalb counties have agreed to help, but Clayton officials could not confirm arrangements. Mikki Jones, a spokeswoman for DeKalb Sheriff Thomas Brown, told The Atlanta Journal-Constitution no official talks had been held.

Barrett declared the emergency condition after Friday’s escape by Ulycees Johnson, 27. Johnson and all the earlier escapees were recaptured.

Among the prisoners mistakenly released was one accused of committing rape while on the loose. The two released last week were recaptured within days.

Huber said Barrett believes overcrowding is one of the reasons for the jail’s problems in the last year, during which at least eight inmates have been mistakenly released. The jail has 2,900 inmates, 700 more than its official capacity.

One of the reasons for the rising workload, Huber said, is the city of Atlanta’s decision to shift cases involving violations of state law to the county court system. That has meant more work for the jail since January 2003. In that time, the number of prisoners booked at the jail increased 24 percent, Huber said.

And while Barrett fired three employees and announced a “zero tolerance” policy for staff mistakes after the latest accidental releases, in a statement Saturday she said budget cuts play a large role in the jail’s problems.

More than 180 jobs have been cut at the jail to trim the budget in the last two years, according to the Sheriff’s Department.

But Handel called Barrett’s funding claims a “deft political maneuver” to deflect attention from another escape.

“Every time an elected official gets in trouble for not doing their job well, they claim they don’t have enough money,” Handel said.

Handel said the budget for Barrett has grown from $74 million in 2001 to $81 million this year.

“I am absolutely convinced this is not a money issue,” Handel said.

Atlanta Mayor Shirley Franklin said Sunday she would be skeptical of any effort to ask the city for more money to support the county jail. City property owners already support the jail through county taxes, she said.

Franklin also noted the city lost $11 million a year in sales tax money shared among the county and its 10 cities in part because Fulton officials wanted to keep a larger share to pay for the jail and other services.