Wednesday, May 31, 2023

Former MDE Director to Plead Guilty in Kickback Scheme

 Former Mississippi Department of Education Director Cerissa Neal submitted a petition to plead guilty to one count of engaging in a monetary transaction with funds gained from an unlawful activity in U.S. District Court today. A federal grand jury indicted Neal, Joseph Kyles, David  Hunt, and Lambert Martin for a bid-rigging and kickback scheme.

Neal allegedly took kickbacks in exchange for steering contracts.  The indictment accuses her of bid-rigging and splitting contracts so they would fall below the minimum thresholds that required competitive bidding.  She allegedly manufactured phony, inflated price quotes to justify the sweetheart deals.

Kyles filed a motion to plead guilty to one count of engaging in monetary transaction with funds gained from unlawful activity as well.  The Justice Department dismissed the indictment against Hunt and Martin.  

Attorney Dennis Sweet, III represents Neal.  The case is assigned to U.S. District Judge Thomas Lee.  

Kingfish note: JJ covered the indictments on  September 3, 2020: 

Microfiche Contracts (I &II)

MDE wanted to convert teacher record files into digital media in 2014.  Neal allegedly split the contract into two contracts of $98,875.  State law requires competitive bidding for personal services contracts over $100,000.  The Director's actions ensured no such bidding took place.

Neal awarded the first contract to Hunt Services.  David Hunt is the owner of the company.  Neal allegedly created two phony competing quotes from Docufree and Bits & Bytes.   However, the money didn't stay with Hunt.  Hunt in turn paid $15,700 to Kyles.

Neal steered the other $98,875 microfiche contract to a Hunt-owned company, Doc Imaging later in 2014.  Bogus quotes were again used to justify the award.   Hunt paid $14,730 to Kyles two days after receiving payment from MDE for the full amount of the contract in September 2014.

Hunt companies paid $5,000 to Bits & Bytes after receiving payment for the contracts.
  Equipment Sales

Kyles, Martin, and Neal allegedly conspired to use federal grant funds to purchase equipment from Kyles from 2014 to 2016. Purchase orders were kept below the $50,000 threshold for equipment purchased from Kyle.   Neal provided false quotes from Promethean Company to justify the awards.  Promethean was clueless about the quotes made in its name.   Martin "controlled" a company, Educational Awareness.  The company would provide a second quote for each Kyles purchase order.  All of Martin's quotes were higher than the Kyles quote.

MDE paid $650,000 to Kyles for purchases of educational equipment.  Kyles paid Educational Awareness over $65,000.  Kyles allegedly paid Neal over $42,000 in kickbacks.

Microfiche Contract (III)

MDE issued an RFP for conversion of microfice files in March 2015.  Doc Imaging (Hunt) submitted a price quote but lost to a legitimate" competitor from Texas.  The loss did not sit too well with Neal.  She tried to get the award thrown out and the contract re-bid.  Neal allegedly got her way.  All companies resubmitted the same bids except for Hunt.  He submitted a bid that was lower than the Texas company's bid and much lower than his earlier bid.

MDE paid $152,352 to Doc Imaging on June 9, 2016.  Doc Iamging paid $30,975 to Kyles a week later.  Kyles paid $3,000 to Garland Consulting, a Neal-controlled company. 

The case is assigned to U.S. District Judge Tom Lee and Magistrate Keith Ball.  The grand jury returned the indictment on February 25 but it was not unsealed until August 26. The defendants were not arrested until August.


Cerissa Neal: wire fraud, bribery, bribery involving federal programs, conspiracy to commit wire fraud and bank fraud. (Counts 1-9, 13-15)
Joseph Kyles:  wire fraud, bribery, bribery involving federal programs, conspiracy to commit wire fraud and bank fraud. (Counts 1-12)
Lambert Martin: Conspiracy to commit wire and bank fraud, wire fraud (Counts 2-8)
David Hunt: Conspiracy to commit wire and bank fraud, wire fraud (Counts 1-8)

State Auditor Stacey Pickering questioned payments to Kyles in a 2017 press conference.  JJ reported on September 28, 2017:

 State Auditor Stacey Pickering blasted the Mississippi Department of Education for awarding contracts while trying to get around public purchasing laws in a report. +.  In other words, the State Auditor accused the Superintendent of repeatedly giving sweetheart deals to her friends while the Board sat back and watched.  Payments were made for hundreds of thousands of dollars with no documentation while numerous contracts were structured to avoid bidding and any review by outside parties.

 The most egregious example were the payments made to the Kyles Company.  The company is owned by Joseph Kyles, a community activist in Memphis.  MDE paid $214,470 to Kyles in 2015 yet could not produce a contract for the company.  MDE did not have any documents such a a procurement packet for Kyles.  The only records are the actual payments.  However, every payment was under $50,000:

▪     October 2014 – $49,300
▪     October 2014 - $49,950
▪     December 2014 – $28,994
▪     March 2015 - $36,700
▪     May 2015 - $49,525

Each payment is below $50,000- the threshold for competitive bidding for such contracts.  MDE could not even say which districts received anything from Kyles nor what they received.  The State Auditor couldn't even determine if the items purchased were even delivered to MDE. Earlier post with video of press conference and copy of report.
   JJ reported in 2016   that Superintendent Dr. Carey Wright's friends got over $600,000 in sweetheart contracts. 


Anonymous said...

Presley blames Reeves for these crimes in 3 ... 2 ... 1.

The Accountant said...

Just the tip of the iceberg.

Anonymous said...

Guess this must have slipped by Auditor Pickering.

Anonymous said...

1. Not accusing her, but what about all the contracts 'steered' (what a cool word) to Maryland friends and cronies of ex SDE-head Carey Wright?

2. Why do all these things wind up with 'ONE COUNT' pled guilty to? First thing you know, Feel Brant will be offered the same sweet deal. To hell with trial-avoidance.

Anonymous said...

She is attractive. She will be able to “work” her way through prison.

Anonymous said...

Kickbacks are illegal in Mississippi? Who knew?

Anonymous said...

The odds of getting away with this stuff are much higher if you are ATTRACTIVE . She certainly is, but it doesn’t seem to have worked this time. She will make friends in Parchment prison.

Anonymous said...

"She's so fine
There's no tellin' where the money went" Robert Palmer

Anonymous said...


Federal plea deal. If she catches any time it will be at a minimum security federal facility like Alderson WV.

Anonymous said...

It NEVER stops.

whats in the water said...

Wait wait don't tell me...she's another USM alum?!

Anonymous said...

Getting sloppy KF. Missed this nugget:

Anonymous said...

Delete it again.

Kingfish said...

Oh really, dummy?

Check this out

Anonymous said...

Parchment is a type of writing material. Parchman is the state penitentiary in Mississippi located in Sunflower county.

Anonymous said...

"Parchman is the state penitentiary in Mississippi located in Sunflower county."

She'll never go through that gate!

Anonymous said...

Thank you @4:45. And women haven’t been housed at Parchman in decades.

Anonymous said...

It's not like she used the money to build a volleyball court.

Anonymous said...

Mississippi is getting screwed by not having a purchasing division.
100K$ is the cut off for requiring bids , this is a lot of room for sticky hands to play with.
the whole reason Brett DiBiase got hired by john Davis , Brett leased them photo copiers and got to see how the sausage is made.

this state needs a purchasing division....

Anonymous said...

"Oh really, dummy?

Check this out"

KF with the boom!

Anonymous said...

Any idea why Hunt and Martin were let off the hook?

Anonymous said...

I wonder if Kyles is related to the famous Reverend Sammy Kyles in Memphis?

Anonymous said...

Every once in a while KF has to spray for piss ants.

Anonymous said...

Mississippi is still the most corrupt state in America.

Anonymous said...

I cant wait until Pickering looks at Chokwe and his friends who got the Siemens settlement of $30mil. 1/3 of the settlement that should have been allocated to Jackson to fix some of its water woes, went to Chokwe's donors and atty friends. Thats fraud.

Anonymous said...

Mississippi is a joke, no doubt 1:23.

There is no way it's "more corrupt" than Louisiana though, Skippy.

Anonymous said...

When KF gets his draws in a wad, he calls you 'dummy' or worse.

Anonymous said...

I don't see the problem here. Hell, all she did was accept a finder's fee.

JACKSON, Miss. September 4, 2020 (WLBT) - State Superintendent of Education Dr. Carey Wright responded to the announcement of the indictment and arrest of former Mississippi Department of Education executive director, Cerissa Neal.

Wright released this statement:

“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.”

In a letter to former State Auditor Stacey Pickering in 2017, Dr. Wright says there were red flags that caused the MDE to suspect potential fraud, waste and abuse.

Neal and three contractors are accused in federal indictments of participating in a bribery and kickback scheme that involved wire fraud and money laundering, resulting in misuse of state education funds.

Copyright 2020 WLBT. All rights reserved.

Anonymous said...

F’ing hell- Please do not accept plea deals from corrupt government employees. Long periods of jail time may not deter others but at least I’ll sleep better.

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