Larry Marshall HISD Alleged HISD fee scheme detailed Houston, Texas

CHRONICLE EXCLUSIVE Alleged HISD fee scheme detailed Consultant paid trustee thousands of dollars over several years By Ericka Mellon

HISD trustee Larry Marshall voted repeatedly to award taxpayer-funded contracts to companies that hired his longtime business associate who gave him a cut of her earnings , according to court records, deposition testimony and interviews. Marshall, the Houston Independent School Districts most senior trustee, has received tens of thousands of dollars through the arrangement with consultant Joyce Moss-Clay, who also is his political campaign treasurer, records show. The partnership dates back several years, and in 2009 alone netted the elected official more than $59,000.

The payments to Marshall are at the center of an ongoing civil lawsuit that alleges a bribery and kickback scheme tainted the bidding process in the nations seventh-largest school district.

I think any taxpaying citizen would agree that its totally inappropriate for an HISD board member to receive thousands of dollars a month in income from contractors with business before the district, said attorney Chad Dunn, representing the Gil Ramirez Group. The local construction company is suing Marshall, Moss-Clay, HISD and two competing firms after losing a bid for a contract.

Moss-Clay, who is a retired HISD facilities manager, testified in a recent deposition that she paid Marshall up to 75 percent of the fees she collected from clients because he helped with the consulting work and acted as a mentor and familial brother.

Marshall, first elected to the school board in 1997, has maintained in court filings that he provided legitimate consulting services. The retired HISD administrator denied that he tried to steer school district business to certain vendors.

There is absolutely no evidence that Marshall has improperly influenced government contracts, his attorney, Jarvis Hollingsworth, wrote in a late October filing. From the outset of this lawsuit, it has been clear that Defendant Joyce Moss-Clay was doing nothing more than paying Marshall for the valuable consulting services that he was providing her.

Client list in court file

Hollingsworth characterized the lawsuit as sour grapes from a losing vendor. In an interview, he declined to answer questions about when or if Marshall knew the money came from HISD vendors. Moss-Clay testified she gave Marshall a list of the clients and his percentage of the fees with his tax forms at the end of the year. A copy of one list is included in the court file.

Hollingsworth also would not discuss why Marshall did not disclose the consulting deal on district conflict-of-interest forms. The questionnaire asks whether a trustee is an employee or agent of an HISD vendor or whether he received money from any source as a result of business done between the Houston Independent School District and any party.

Hes not violated any laws, Hollingsworth said. Hes done nothing wrong, and we think hell be cleared at the end of the day.

Moss-Clay, asked what Marshall did to earn a 65 percent cut from a construction client, testified that he was a mentor and friend, according to her deposition.

It was just my choice. And I felt it adequate for the value that he brought to me as an individual based on my experiences of the 30-plus years working with him.

Anything else? asked Kelly Greenwood Prather, the attorney questioning her.

No, she answered.

Marshall, 80, previously has said that he and Moss-Clay, 75, were longtime business associates with their own consulting companies. Details of their financial transactions recently emerged in Moss-Clays deposition, which the Chronicle purchased from a court reporting company.

In some cases, Moss-Clay said, clients paid her a monthly retainer of $2,000 or $3,000 and she gave 65 percent or 75 percent to Marshall.

Moss-Clay confirmed in the deposition that in 2009, when Marshall was president of the school board, she paid him $59,175 in shared fees from her clients. Those clients included one of the construction firms being sued, Fort Bend Mechanical, and at least three other companies that have sought or received HISD contracts.

That year, Marshall voted twice to authorize up to $3 million in business with Fort Bend Mechanical and other companies that provide air-conditioning services, meeting minutes show. Marshall also voted to renew a multimillion-dollar contract with another of the clients, Linebarger Goggan, the law firm HISD retains to collect delinquent taxes.

Moss-Clay, who retired from HISD in 1994, said her consulting work did not involve helping companies land contracts with the school district. Asked about particular clients, she said she never told them she was paying Marshall.

Moss-Clay testified that she and Marshall met regularly at her house on Sundays, but she did not keep time sheets or invoices detailing their consulting work.

The amounts paid to Marshall in other years have not been disclosed; his tax returns were filed in court under seal. The Chronicle has filed motions in the lawsuit, seeking to make more information public.

The other construction company being sued, RHJ-JOC, is among Moss-Clays longest-running clients, dating back to at least 2004, court records show.

Moss-Clay said she got a monthly retainer of up to $2,500 from RHJ, and gave Marshall up to 75 percent over the years. She helped Eva Jackson, RHJs owner, with strategy walking through answers to what if situations though Marshall was the primary coach, she said.

Asked in a deposition what services she expected of Moss-Clay, Jackson said, I expected her to provide me with moral support. Jackson said she personally had a mentor kind of relationship with Marshall but did not know he was receiving fees.

Lobbying alleged

An October court filing alleges that Marshall lobbied HISD staff on behalf of RHJ, accompanying Jackson to a meeting with district officials shortly after the company lost its 2008 bid for a coveted contract. Marshall, according to the filing, said the purpose of the meeting was just to find out why RHJ did not land the deal. In an interview, Jackson said she did not recall the meeting.

Jackson temporarily severed ties with Moss-Clay in a letter dated Nov. 19, 2008 a week after the school board awarded that construction contract to other companies, court and HISD records show.

The board, including Marshall, later approved hiring RHJ, in August 2009, after the company resolved a lawsuit with the Fort Bend school district. (RHJ had sued the district alleging breach of contract.)

Former HISD Superintendent Abelardo Saavedra told the Chronicle that he had reservations about RHJ in part because Marshall appeared to fa- vor the company, once bringing Jackson to a private Christmas party at Saavedras home.

Marshalls attorney has argued that it was a factual impossibility that Marshall could influence contract awards because he had only one vote on the nine-member board.

Saavedra, however, said sitting trustees in general have a lot of power. They can influence other board members. They can influence staff that might be weak and cannot stand the pressure.

Moss-Clay testified that Fort Bend Mechanical which, like RHJ, has a job-order contract with HISD paid her up to $3,000 a month to coordinate a donation program to HISD schools. She said she gave 65 percent of her fees to Marshall.

Pete Medford, the own-er of Fort Bend Mechanical, testified that he didnt know about the arrangement with Marshall.

HISD said in a written statement that after extensive discovery and numerous depositions, absolutely no evidence exists that Mr. Marshall, or anyone else, influenced the awarding of Job Order Contracts.

As JOC contractors, the companies are on call to do repairs, renovations and minor construction for HISD without the district having to solicit bids on each project.

Check not reported

The Medford family is among the largest donors to Marshalls political campaign. Documents uncovered in the lawsuit show that Marshall did not report a $25,000 check that Medford wrote to his campaign in November 2009. State law requires school board members to file reports disclosing donations.

Marshall said in an earlier interview that Moss-Clay, his campaign treasurer, made an innocent mistake in not listing the check. She said the same in her deposition.

Acie O. Phillips Jr., the president of a local company that for years coordinated HISDs efforts to hire minority construction contractors, said in an interview that he hired Moss-Clay twice to recruit businesses and identify education trends. He said he paid her $3,500 in 2007 and $15,000 in 2009.

Moss-Clay said in her deposition that she met Phillips primarily through Marshall and that she shared the fees Phillips paid her with Marshall.

That was never presented, Phillips said in an interview. In fact, had that been presented to me, I wouldnt have entered into an agreement with Joyce because I recognize that as a conflict.

Linebarger spokesman Joe Householder said Moss-Clay has served as a consultant for the last three or four years and came recommended by Marshall and others. He said the firm did not know Marshall was receiving fees, as Moss-Clay testified.

In January 2011, Marshall made a motion to ex-tend Linebargers contract with HISD from one year to three years, meeting minutes show. The school board approved the deal on a split vote. Its not clear if Moss-Clay was paying Marshall in 2011.

Being a public servant has certain duties and responsibilities, said Philip Hilder, a former federal prosecutor and white-collar criminal defense attorney. Simply put, as a public servant you cant take money or something of value directly or indirectly for a promise to do something. If you do, that would constitute bribery. Even if theres not a quid pro quo, it could still be viewed as an illegal gratuity.

Ethics policy changes

Marshall has argued in court filings that his consulting work had no influence on contract awards.

Prior to 2004, HISD policy permitted Marshall to work directly for HISD vendors. But that year, the school board passed a new ethics policy, touted as the strictest in Texas, banning the district from contracting with companies in which trustees have a financial interest. Marshall voted for the stricter policy.

The new rules meant he could no longer serve as a $3,000-a-month consultant for Community Education Partners, a national company that ran the districts alternative schools.

Moss-Clay testified that she later started consulting for Community Education Partners, at the recommendation of Marshall though she did not share those fees with him. ericka.mellon@chron.com

HISD trustee Larry Marshall, left, talks with Pete Medford, owner of Fort Bend Mechanical, at the groundbreaking ceremony for renovations at Worthing High School on March 21. Melissa Phillip / Houston Chronicle