Indictment Alleges Contract Bid-Rigging Scheme, Kickbacks and Money Laundering
Jackson, Miss. – Cerissa Renfroe Neal, 45, of Madison County, David B. Hunt, 54, of Jackson, Tennessee, Joseph Kyles, 51, of Memphis, Tennessee, and Lambert Martin, 59, of Memphis, Tennessee, have been charged in a federal indictment with conspiracy, wire fraud, money laundering and bribery, announced United States Attorney Mike Hurst, Special Agent in Charge Michelle A. Sutphin with the Federal Bureau of Investigation in Mississippi, Special Agent in Charge Neil E. Sanchez with the U.S. Department of Education Office of Inspector General, and Mississippi State Auditor Shad White.
The indictment, returned by a federal grand jury on February 25, 2020, and recently unsealed by a federal court, charges Cerissa Renfroe Neal, the former Executive Director of the Mississippi Department of Education (“MDOE”), along with her co-defendants Joseph B. Kyles, David B. Hunt, and Lambert Martin, with one count of conspiracy to commit wire fraud and seven counts of wire fraud. The indictment also charges Neal and Kyles with one count of money laundering. Finally, Neal and Kyles are each also charged with three counts of bribery.
“Those who defraud the public’s trust will find themselves standing before a court of law to answer for their wrongs. Public corruption erodes faith in our democracy and decays the very soul of our form of government. Bringing to justice corrupt public officials has always been and remains a high priority of this office, and a personal mission of mine, and we will continue to pursue corruption wherever it may lead,” said U.S. Attorney Hurst.
According to the indictment, Cerissa Neal was the Executive Director of the Mississippi Department of Education during 2013-2016, when she conspired with the three named defendants and other conspirators, to defraud the State of Mississippi and the United States by bid-rigging, false quotes, and altered purchase orders, in order to make money and profit by defrauding the Mississippi Department of Education into awarding contracts and purchase orders at inflated prices, directed to conspirators and their businesses.
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 conspirators, designed to make the intended 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 conspirator-owned business, the winning bidder shared some of the money with conspirators, in return for their assistance in rigging the bid and winning the Department of Education contract. In this manner, Neal received more than $42,000 directly or indirectly from her conspirators. 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.
Hunt, Kyles and Martin will appear for arraignment September 10, 2020, before United States Magistrate Judge F. Keith Ball in Jackson at 2:30 p.m. Neal appeared in court for her arraignment on August 19, 2020, and was released on conditions of bond pending trial.
If convicted, each defendant faces maximum penalties of 20 years in prison for each count charged for conspiracy and wire fraud, and 10 years in prison for each count of money laundering and bribery. Each count also can merit a fine of up to $250,000.
The case has been assigned to Senior U.S. District Judge Tom S. Lee for trial.
U.S. Attorney Hurst commended the work of the Special Agents of the FBI’s Jackson Division and the Office of the Inspector General, United States Department of Education, as well as the Mississippi State Auditor’s Office and the Mississippi State Attorney General’s Office, who investigated the case. The case is being prosecuted by Assistant United States Attorney Theodore Cooperstein.
The public is reminded that an indictment is merely a charge and should not be considered as evidence of guilt. Every defendant is presumed innocent until proven guilty in a court of law.
Release from U.S. Attorney for the Southern Distict.