Fifth defendant named in alleged MDE bid-rigging scheme

A fifth individual has been indicted in an alleged bid-rigging scheme involving a former prominent figure within the Mississippi Department of Education.

Along with Cerissa Neal, the former executive director of the Mississippi Department of Education’s Office of Educator Quality (2013-16), and three others, Memphis attorney Errol Harmon faces charges for allegedly perpetuating the scheme that defrauded the state out of over $650,000.

According to the indictment, Neal conspired with Harmon, Joseph Kyles, David Hunt and Lambert Martin to defraud the state through bid-rigging, false quotes, and altering purchase orders for personal gain by awarding contracts and purchase orders at inflated prices and directing them to co-conspirators and their businesses.

According to U.S. Attorney Mike Hurst, Harmon’s role in the scheme was to “receive money from Joseph Kyles and convey that money as payments to Neal.  In multiple instances, Kyles gave cash or wrote a check to Harmon.  On or about the same day, Harmon then wrote a check to Neal for substantially the same sum and caused that check to be delivered to Neal.  In this manner.”

Harmon is charged with conspiracy, bribery and interstate transport in aid of bribery. Neal is charged with conspiracy, wire fraud, money laundering and bribery.

Following last week’s announcement of the indictment, State Auditor Shad White noted that this case has been under investigation since 2017. State Superintendent Dr. Carey Wright explained that it was MDE that alerted the auditor’s office to the alleged illegal activity.

“The Mississippi Department of Education (MDE) is pleased to see legal action being taken against the individuals who are alleged to have defrauded the MDE and the State of Mississippi. We reported this suspected activity in October 2017 to the Office of the State Auditor (OSA) when we discovered evidence that a former employee may have violated state procurement laws. At the time of the discovery, we conducted an immediate, internal audit of all business transactions in which the former employee was involved and provided the audit results and all related records to the OSA. We are eager to continue to assist the investigation through to its conclusion,” she said.

A detailed description of the scheme was provided by the U.S. Attorney’s Office:

“The indictment alleges that Neal, using her position within the Mississippi Department of Education, would split contract requests from one contract into multiple, smaller contracts, in order to avoid threshold amounts that would trigger a formal, competitive bidding process.  Neal would entertain and advocate for a bid for the contract from one of the three conspirators’ businesses, including The Kyles Company in Memphis, Tennessee (Joseph Kyles), Doc Imaging (also d/b/a as “Hunt Services”) in Jackson, Tennessee (David Hunt), and Educational Awareness in Memphis, Tennessee (Lambert Martin). 

To meet the Department of Education requirement that such an informal bid have at least two competing vendor quotes for comparison, Neal would obtain false and inflated quotes, by herself and from the other co-conspirators, designed to make the intended co-conspirator’s business the lower bid, and to guarantee the award of the contract. 

The indictment alleges that conspirators coordinated their submissions to the Department of Education as well as the sharing of the resulting contract payments.  After the Department of Education made payment on the rigged contract to the co-conspirator-owned business, the winning bidder shared some of the money with co-conspirators, in return for their assistance in rigging the bid and winning the Department of Education contract.  Kyles, Hunt, and Martin, through their respective businesses, garnered over $650,000 from the State of Mississippi, including federal funds granted by the U.S. Department of Education to Mississippi.

As alleged in the indictment, Errol Harmon’s role in the scheme was to receive money from Kyles and convey that money as payments to Neal.  In multiple instances, Kyles gave cash or wrote a check to Harmon.  On or about the same day, Harmon then wrote a check to Neal for substantially the same sum and caused that check to be delivered to Neal.  In this manner, Neal received more than $42,000 directly or indirectly from her co-conspirators.” 

Harmon will appear for arraignment on September 24. Neal, Hunt, Kyles and Martin have each appeared in court for arraignment earlier in August and September, and were all released on conditions of bond pending trial.

If convicted, Harmon faces up to 5 years in prison on the conspiracy charge, 10 years for the bribery charge, and 5 years for interstate transport in aid of bribery charge.  Each count also can merit a fine of up to $250,000.