In the late-2000s, Scot Dannen, the general manager of a Coleman Worldwide Moving facility in Colorado Springs, Co., was approached by one of the company’s truck drivers and asked an odd question.
The driver wanted to know where Dannen’s “weight crate” was located, according to testimony Dannen provided under oath in a deposition.
Dannen was confused. He had no idea what a “weight crate” was. When he asked the driver to explain, he “looked at me like I was from outer Mars.”
The driver then explained that a “weight crate” was a heavy crate — usually filled with something like bricks — that drivers would place on their trucks prior to a final weighing. That crate would “bump” the weight up hundreds, if not thousands, of pounds, allowing for Coleman Worldwide to bill more and for the drivers to earn more.
Dannen would learn over the next couple of years, from various drivers, that it was one of many common practices used by drivers and the company to falsify weights, and it was one piece of what the federal government deemed a nationwide “weight bumping” scam that netted Coleman Worldwide millions of dollars in fraudulent gains over the course of several years.
The “weight bumping” scam, and the resulting whistleblower lawsuits, federal lawsuits and criminal charges, has been a hot topic of late in Alabama, where Coleman Worldwide is headquartered and where Jeff Coleman, the company’s top executive, is running for Congress.
It is a district with a heavy military presence, and as such, Coleman’s opponents in the race have made the company’s legal trouble, which were settled in 2015, without much fanfare or press attention, a centerpiece of the race.
Coleman has not handled the renewed media attention of the case very well. Beginning with a Republican Women’s meeting in Coffee County last week, he began insisting that his company did nothing wrong but was instead the victim of overzealous prosecution by the Obama administration.
“That was meritless, our people did nothing wrong,” Coleman said, almost shouting into a microphone at the meeting of mostly elderly attendees. “It was a meritless, frivolous case that had no merit whatsoever. We were hit by the United States government and an Obama U.S. attorney and it was wrong. And we’ve got to do everything we can to protect this country against that sort of activity.”
It was a curious response, given that Coleman Worldwide agreed to a settlement of $5 million and one of its top managers went to prison for his role in falsifying the weights. Clearly, the company did something wrong and there was some merit to the government’s case.
Coleman was provided an opportunity by APR to answer specific questions about the case. A list of detailed questions was sent to his campaign, at Coleman’s direction, and he was told that APR was open to interview with him or it would accept answers to those questions. Coleman asked if this story, which was scheduled to run on Tuesday, could be held for a day in order for him to have time to fully answer the questions. No answers were ever provided.
What makes Coleman’s defense, and the defense his campaign is using of late — that there was no wrongdoing and it was just Obama going after an innocent company — essentially challenges the public, the media and his political opponents to delve into the facts and read more about this grave injustice.
The problem is, what they will all find is a mountain of evidence, most of which was collected by the government and backed up with emails, documents, witness statements and under-oath testimony, that shows Coleman Worldwide did a lot wrong.
APR spent the past several days combing through the many legal filings associated with the multiple whistleblower complaints against Coleman Worldwide. In addition, APR received related documents and transcripts from sources close to the legal proceedings. All of them showed a pattern of systemic fraud that spanned the country and was reported numerous times to company officials, including Jeff Coleman and other Coleman family members.
How it Worked
To understand the allegations and evidence against Coleman Worldwide, it helps to first have a bit of knowledge about just what the company does, in terms of its contract work for the U.S. military and Department of Defense.
Every year, the military will move thousands of active servicemembers all around the country, transferring them from base to base for a variety of reasons. Those service members, many of whom are married with families, have to pack up belongings and take them along.
That’s where moving companies, like Coleman Worldwide, come in. Coleman agrees to make those shipments for the government-set reimbursement rates set by the federal government. It bills the government per pound, and it determines those pounds through a series of weight checks.
To simplify things, the weight checks basically work like this: The empty Coleman truck or container, without the servicemembers’ household goods, is weighed. Then the same truck or container is weighed after the goods are packed for the move. The difference between the first weight, or “tare weight,” and the second weight is the number of pounds for which Coleman Worldwide bills the Department of Defense.
Once that weight is determined, it is written on a weight certificate. Using the weight certificate, the business office at Coleman Worldwide creates an invoice for which it bills the DoD. Additionally, a locator card is created for use by the warehouse where the servicemembers’ belongings are stored while waiting on shipment. The locator card also contains the original weight recorded.
The Alleged Fraud
The government and various witnesses allege that Coleman Worldwide used a variety of schemes to inflate the weights for which they billed the DoD. At the facility, weight certificates would be removed and replaced, or the original weights would be “whited-out” and rewritten on the forms or the tare weights would be altered.
Outside of the facilities, truck drivers would inflate weights through methods of their own. They could either pack on extra weight, falsify the original tare weight, add people to the truck, add fuel or add bogus, heavy crates, among other methods.
Among the findings documented in various court filings:
- A forensic accountant and investigator, working with the U.S. attorney’s office in South Carolina was able to identify more than 2,500 instances of false claims submitted by Coleman Worldwide in a three-year span.
- Two employees at Coleman Worldwide’s Augusta, Ga., facility reported that managers there routinely falsified weight tickets, allowing the company to over-bill the government for moving U.S. military service members’ household goods.
- The testimony of those two employees was supported by an audit of the Augusta facility that was carried out by the federal government. That audit discovered more than 400 instances of weight tickets failing to match their original weight cards, indicating that they had been falsified later.
- At a facility in Hawaii, military officials became suspicious of Coleman Worldwide shipping weights after complaints from service members. A re-weigh of every Coleman Worldwide shipment — more than 600 in all — found that over 80 percent had incorrect weights on their weight tags, all of them higher, allowing the company to over-bill the U.S. government.
- In a separate whistleblower lawsuit that was later folded into the original complaint, a truck driver from North Carolina testified that he was trained how to manipulate truck weights, including leaving the back wheels just off the scales, hiding workers in the truck, filling up with fuel when going to get the load weight and adding “weight crates.”
- In Colorado, Dannen said the mis-weighs were a common and ongoing problem — so much so that his workers began checking suspicious weights constantly. In one instance, a shipment arrived that was more than 6,500 pounds short. He alerted company officials, who told him to make the delivery and let it go.
- Independent truck driver/owner Chad Holsteen, a former Army Ranger, testified that he experienced “bumped weights” at Coleman Worldwide facilities all across the U.S., specifically naming San Diego, Killeen and El Paso, Tx., Fayetteville, N.C., Augusta, and Woodbridge, Va. Because he had to pay workers to load the shipments, he routinely had to pay out of his own pocket to cover the mis-weighs. Holsteen reported these issues to company executives, including vice-president Andy Coleman, who provided Holsteen with fuel cards and other payments to “placate” him.
A federal judge in South Carolina eventually determined that he would allow only the evidence from the original whistleblower complaint related to the Augusta facility. That was a major blow to prosecutors hoping to present to a jury a case outlining a national pattern of fraud and seek a larger verdict — somewhere in the nine-figure range — against Coleman Worldwide.
As it was, the government agreed to settle the case for a mere $5 million and sought prosecution of just one Coleman Worldwide employee, despite an abundance of evidence and testimony that implicated dozens more in the fraud.
“Fraud on the government is high priority in this office,” U.S. Attorney Bill Nettles said after the settlement. “Monies paid to Covan (which is a subsidiary of Coleman Worldwide) for inflated weights could have been used for the benefit of our servicemembers.”
The original whistleblowers, Mario and Elmer Figueroa, a father and son who worked at the Augusta facility, received $1.25 million of that money for coming forward. During a deposition in the case, the elder Figueroa said he and his son feared losing their legal immigration status in the U.S. if they participated in the fraud.
The depositions of Coleman Worldwide employees during the case were particularly unfavorable to the company. Numerous employees cited specific examples of fraud that they witnessed firsthand, providing the government with specific details that allowed investigators to also collect documents and other evidence. For example, a billing clerk at the Augusta location backed up the Figueroas’ claims, and helped investigators locate additional evidence.
Part of that evidence, according to a filing in the case, were the locator cards used by the Augusta facility. Those cards were filed at the facility and didn’t accompany the servicemembers’ shipments. So, unlike the weight certificates, they were never altered. When investigators recovered the locator cards and then matched them to weight certificates for the shipments sent by the facility, they discovered the weights on more than 400 of them didn’t match.
In another odd twist, as investigators were combing through evidence, they discovered that a manager at the Coleman Worldwide facility in Fayetteville, N.C., had quietly attempted to repay the Department of Defense for six shipments. After a number of court hearings, the company admitted that it had conducted an audit of its recent shipments — 24 in all — and the court ordered the results turned over to the government.
That company-conducted audit, according to a court filing, found that 10 of the 24 shipments had been weight-bumped, including four shipments that were off by more than 1,300 pounds and one that was off by more than 2,700 pounds.
Some managers and other high-level employees for Coleman Worldwide refused to answer questions during their depositions, choosing instead to invoke their Fifth Amendment rights against self-incrimination. In a brief filed in the case, the government accused other managers and top-level executives of lying and of having very fortunate “lapses in memory.”
The government also accused Coleman Worldwide officials and attorneys of refusing to follow the rules of discovery and dumping massive amounts of documents on prosecutors, in some instances several years after they requested.
However, those prosecutors did manage to dig out a number of emails that show corporate executives, including Jeff Coleman, were alerted multiple times of instances of shipping weights being inflated or outright fraud occurring. But there were no emails indicating that corporate executives, including Coleman, had directed the fraud.
Instead, prosecutors alleged that executives passively encouraged the fraud by establishing a pay-by-weight system that rewarded employees at every level for “bumping weights” and had almost no checks to ensure fraud didn’t occur. In fact, some employees testified in depositions that the practice was so common that they were trained by managers on how to increase weights improperly.
One of those managers, Ronald Niemi, who worked at Coleman Worldwide’s Augusta facility, was convicted of fraud in 2015 and sentenced to 5 months in prison. He also had to repay more than $22,000 for 40 false weight certificates he altered.
Despite the numerous witnesses and documents outlining alleged fraud occurring at Coleman Worldwide facilities across the country, Niemi was the only employee charged criminally and the U.S. government dropped the case against Coleman Worldwide following the $5 million settlement.
Will Mike Hubbard ever go to jail? Yes. And likely soon.
Mike Hubbard is likely going to prison within the next couple of months.
Hubbard, the former Alabama House speaker, had his conviction on 11 felony ethics counts partially upheld last week by the Alabama Supreme Court. The justices overturned five of the charges and sent them back to the Alabama Criminal Court of Appeals for review, but upheld six of his charges.
And those six matter a lot.
Under the original sentence imposed by Lee County Circuit Court Judge Jacob Walker, Hubbard was set to serve four years in prison and eight years of probation. That sentence was structured in a manner that all but assured that Hubbard would serve that time unless the entire verdict against him was overturned.
It wasn’t. And a source familiar with the ALSC’s opinion in the case told APR that the justices were fully aware that their opinion would not lessen Hubbard’s jail time.
That ALSC opinion puts an end to Hubbard’s appeals bond that has allowed him to remain a free man as his case worked its way through the appeals process over the past four years.
According to the Lee County Circuit Court clerk’s office, once a final determination is made by the ALSC on charges that result in a sentence, that opinion is the final piece supporting the need for an appeals bond.
Basically, there are no additional avenues for appeal that could possibly result in Hubbard not serving his prison sentence, so the bond has to be revoked and Hubbard sent to prison.
Once Walker receives the certificate of judgment from the ALSC showing it upheld the counts that related to Hubbard’s sentence, that should prompt Walker to revoke the bond and Hubbard will be notified that he is expected to begin his prison term.
According to Scott Mitchell, the clerk of the Alabama Court of Criminal Appeals, that certificate of judgment can’t be issued by the ALSC until at least 14 days have passed. That span allows both the prosecution and defense time to submit requests for rehearings on ALSC’s opinion. Should either side do so, consideration of those requests by ALSC could add more time.
“It’s really hard to say (how long it might take) — it’s such a case-by-case thing,” Mitchell said. “It could be anywhere from weeks to a couple of months before we get it.”
It is also not uncommon for one side or the other to ask for an extension of time to file their requests for a rehearing, which would add additional time.
However, once that certificate is sent out by the ALSC, it should trigger Walker to revoke the appeals bond.
The Criminal Appeals Court will also have to review Hubbard’s case and issue a new decision that considers the ALSC’s opinion on the six reversed counts. That process is likely to take much longer.
“Again, a lot of factors play into that and it’s hard to determine how long any one case might take,” Mitchell said. “I’d say you’re looking at a few months at least.”
It will only add to the extraordinary length of this case.
Hubbard was convicted in June 2016 on 12 felony counts for using his office for personal gain and directing public business to his clients. Court testimony and evidence revealed Hubbard was making more than $600,000 per year in “consulting” contracts, mostly for work in areas in which he held no prior work experience.
Since his conviction, a team of attorneys working for him — and financed by his campaign funds and various other entities — have challenged every word of his conviction, accusing the prosecution of misdeeds and attacking the state’s ethics laws — which Hubbard helped write — as overly broad and vague.
Those appeals have been successful in getting half of the charges knocked down. But because Hubbard’s prison sentence was tied to only a couple of the specific charges, those decisions will not lessen his jail time.
Opinion | Deception, subtlety and the wholesale destruction of current ethics laws mark proposed rewrite
Legislation proposed by Rep. Mike Ball, R-Madison, would radically alter the existing State Ethics Act rendering it useless as an effective tool to regulate the behavior of public officials, much less prosecute a rouge lawmaker.
Testifying at a pre-trial hearing in the criminal case against then-Speaker of the House Mike Hubbard in April 2015, Ball said the ethics laws needed amending to avoid prosecutions like Hubbard’s in the future.
If HB179 becomes law, Ball will have fulfilled the words he spoke at the Lee County Court House, where Hubbard was tried and convicted.
As House Ethics Committee Chair, Ball has sought to change the State’s Act since Hubbard was indicted.
Ball’s bill is subtly written from an enforcement and trial perspective to neuter the law.
Words are added, deleted, and meanings changed in ways that might look harmless but actually open the door for the kind of corruption Republicans vowed to change in 2010, when they passed the toughness in the nation’s ethics laws.
Beyond changes that would allow for general corruption to go unpunished, Ball’s legislation would strip the Attorney General and district attorneys of their power to prosecute anyone who violates the ethics laws without first securing approval from the State Ethics Commission.
All prosecution of any public official would first have to be approved by the Ethics Commission, a group that has repeatedly shown that it bends its decisions according to the prevailing political winds.
HB179 reads in part, “This bill would prohibit the Attorney General or a district attorney from presenting a suspected ethics violation by an individual subject to the code of ethics, other than a member or employee of the commission, to a grand jury without a referral by the commission.”
In other words, Ball would have a politically-appointed commission decide if law-enforcement agencies can seek indictments against wrongdoers.
Neither the Attorney General or a county district attorney can even impanel a grand jury in an ethics probe without the commission first finding probable cause.
Some of Ball’s alterations come in the form of removing whole sections of the law under the guise of redefining words, like “a thing of value” or “widely attended event.”
An example of how Ball’s legislation plays with the law is under the section of code, which defines a family member of a public official. Currently, a family member is “[t]he spouse, a dependent, an adult child and his or her spouse, a parent, a spouse’s parents, a sibling and his or her spouse, of the public official.” Ball changes it so it only includes a spouse and a dependent. That means that a public official may act to enrich his adult children, a parent, an in-law a brother, or a sister. These small but destructive alterations to the law are at the heart of Ball’s legislation.
Some loopholes are so extensive that a sitting legislator could be paid by a city or county governmental economic development entity and still seat in the Legislature voting on bills that might directly affect his consulting client.
Out-of-state junkets make a comeback as do several other goodies lawmakers have been desiring.
It seems Republicans want to cash in on the rewards of office like Democrats did once upon a time.
One thing is clear, Ball didn’t write the bill, but whoever did knew precisely what they were doing and were probably paid handsomely for their efforts.
There are so many cunningly deceptive changes to the ethics laws in Ball’s bill as to make it impossible to catch them all without days of intense study—and perhaps a team of lawyers.
Ball, one of Hubbard’s most an ardent defenders has said Hubbard’s indictment and conviction was a political witch hunt. He has said he wants to rewrite the ethics laws to save future Hubbards; it now looks as if he has.
Former state senator challenges Poarch Creek legal status
Former state Sen. Gerald Dial raised questions at a Tuesday press conference over the legal status of the Poarch Band of Creek Indians, distributing letters from high ranking officials in the Department of the Interior who question the tribe’s history and its legal rights to operate casinos.
In one letter, written by then-Interior Department solicitor David Bernhardt, Bernhardt flatly questions the Poarch Creeks’ history as a tribe and states that: “… the record simply does not support the Band’s existence as a separate tribal entity with a government relationship with the United States.” That letter also determines that the tribe should not have authority to operate a casino on lands in Montgomery, where PCI currently operates a casino.
“What if they’re not really legal?” Dial asked during his press conference. “Would this not be the biggest scam on Alabama?”
It is unclear what weight the letters, which were written between 2009 and 2011, currently hold, since statute-of-limitations considerations would certainly come into play. Dial tied the revelations in the letters to a recent issue with a Florida tribe, which was forced to repay around $1 billion in back taxes. It’s also unclear how the two cases are similar.
What is almost certainly an issue for PCI, given the opinions expressed in the letters from Bernhardt, who is now the Interior Department secretary, is future gaming expansion for the tribe within the state. Any expansion without a compact for the Poarch Creeks would require the Interior Department and Bureau of Indian Affairs to approve trust lands. Such approval appears highly unlikely.
APR has reached out to the Interior Department for more information but has not yet received a response.
At the press conference, Dial questioned why the Poarch Creeks have not received a compact with the state — the only federally recognized tribe operating gaming casinos in the U.S. without a compact — and raised questions about the billions of dollars the state has lost because of that fact.
“They have spent billions all over the U.S. and outside of the U.S. — if you have a child with college debt, that should bother you,” Dial said. “The Poarch Creeks and their money have been directly responsible for killing lottery bills that would have paid for that college. And they put that money into other states, to help their kids go to college debt free.”
To that end, current state Sen. Jim McClendon led off the press conference with legislation that would prevent PCI, and all other gaming entities in the state, from contributing to political campaigns — directly or indirectly.
“I am not making claims of corruption, but we must be very wary of the appearance of corruption,” McClendon said. “I’m not making claims of undue influence based on monetary donations, but we must be very wary of undue influence.
“Now is the time to put a stop to this invasion of gambling dollars.”
McClendon and Dial each claimed the Poarch Creeks have dumped more than $4 million into recent elections, and McClendon also blamed the tribe for his recent lottery bills dying quick deaths despite receiving favorable receptions from voters and other lawmakers.
Mclendon predicted that there would be legal challenges to his legislation, but he compared it to laws barring regulated industries from contributing to the Alabama Public Service Commission.
“I expect there will be legal challenges to this legislation,” he said. “Rest assured, it will come from those with big bucks.”
He also expects some pushback from his colleagues in the Legislature.
“Since a number of people in the Senate have taken gambling money, I’m sure they will speak up,” McClendon said. “It’ll be interesting to see what position they take.
“There is a lot of money flowing from gambling interests and I don’t think it’s healthy at all.”
Tuesday’s press conference comes as the 2020 legislative session gets under way and lawmakers are expecting to tackle new gambling legislation that might finally put an end to the purgatory state in which Alabama gambling exists.
Currently, PCI operates three electronic bingo casinos, but doesn’t have a compact with the state and pays zero state taxes on the billions they collect each year. There are also three operating dog tracks, two of which offer electronic bingo games and a third that offers pari-mutuel wagering machines.
For years, lawmakers have toyed with the idea of legalizing some form of gambling, but the various interested parties involved have never been able to come together and reach an agreement. That usually results in gambling bill after gambling bill dying for lack of support in one house or the other.
Most recently, it has been the Poarch Creeks who have done the majority of the killing, knocking down gaming bills — with the help of tribe-friendly lawmakers — that they believe will cut into their current near-monopoly. In 2019, for example, one state senator, Greg Albritton, with the help of Senate President Del Marsh, managed to kill a McClendon-sponsored bill that was very popular with other lawmakers, because it cut all interested parties, including the Poarch Creeks, in on the games.
Another bill that would have allowed the tracks at VictoryLand and GreeneTrack to operate the same games as PCI was also killed.
Such heavy-handedness has rubbed a number of lawmakers the wrong way, and PCI’s quick ascent to power has also ruffled the feathers of longtime powerbrokers around the state.
Those hard feelings helped spawn Poarch Creek Accountability Now (PCAN), for which Dial serves as spokesperson. The non-profit has not disclosed its funding sources, which is legal, and Dial said at Tuesday’s press conference that it wouldn’t out of fear of retribution from PCI.
Dial released a trove of documents to the media, many of which show that federal authorities question PCI’s federally recognized status because of the Alabama tribe’s sketchy history. That status was achieved in 1984, and no one questioned it for several years. However, when PCI asked the Interior Department to approve trust lands for gaming at the Tallapoosa site in Montgomery, Bernhardt and his legal team apparently discovered that there fatal flaws.
Most notably, for a tribe to achieve federally recognized status, it has to prove that it had a pre-existing relationship with the U.S. government. The Poarch Band, which was a mish-mash of former Creek groups left behind after the Trail of Tears, never had such a relationship, according to documents contained within Interior Department legal research.
That is why Bernhardt and his team refused to approve the Tallapoosa lands for gaming in 2009. That decision was later withdrawn after the Interior Department failed to come to a comprehensive agreement on the lands, and PCI overall, within the required timeframe, and PCI was allowed to move forward with gaming operations at the site.
The state has challenged PCI’s standing in a federal lawsuit, and Escambia County challenged it another, with both citing problems with its history. However, neither lawsuit specifically addressed the issues raised by Bernhardt, nor did they challenge individual land trust decisions.
District 2 candidates criticize Coleman over fraud allegations
Jeff Coleman has no friends on the campaign trail.
After APR published a story on Wednesday that recapped the U.S. government’s fraud allegations against his moving company in 2015, Coleman’s challengers in the race for Alabama’s 2nd Congressional District seat piled on.
“Jeff Coleman taking advantage of military families in a time of war is despicable,” said Jessica Taylor.
“Jeff Coleman was faced with a decision — serve the military or steal from them. He chose profit over patriotism,” said Troy King.
The comments from the other candidates shouldn’t come as a surprise. They have been hammering Coleman, the presumed frontrunner in the race, according to internal polling viewed by APR, over the fraud allegations hoping that the four-year-old case caught on with voters in the Wiregrass.
APR’s story was the most comprehensive to date, detailing numerous specific instances of fraud alleged by federal prosecutors and supported by witness testimony and documents. Many of the witnesses who testified in depositions in the case were employees in Coleman’s company.
And the candidates are hopeful that those details are enough to make voters question their decision to vote for Coleman.
“Jeff Coleman only sees military families as a cash cow to be exploited to line his own pockets,” Taylor said. “As your next congresswoman, I will fight to ensure that we stand behind our men and women in uniform no matter what.
“Our nation’s debt is reaching critical levels and the theft of taxpayer dollars and defrauding military families only weakens our nation. As a conservative and a patriot, I’m appalled that Jeff Coleman thinks that qualifies him to represent us in congress.”
King noted that Coleman’s moving business, Coleman Worldwide, would also cause additional problems. In response to questions about the fraud case and his ability to be impartial concerning military contracts if elected, Coleman has promised to recuse himself and not vote on any military contracts.
“When faced with another decision between making money or serving the citizens of the Second District, he chose the money,” King said of Coleman. “In the process, he disqualified himself from voting on issues that matter most to the military bases in the district, and, once again, put profit ahead of patriotism.”
While King and Taylor, who are polling in second and fourth place, respectively, were harsh with their criticisms of Coleman, Barry Moore, who is running just behind King, took a more timid approach.
“Hopefully all of the facts will be brought to light soon and everyone involved can move forward,” Moore said. “I trust the voters of District 2 to do their due diligence and vote informed.”
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