Louisiana State Treasurer John Schroeder said Wednesday he is divesting all state treasury funds from BlackRock Inc., the world’s largest asset manager, accusing the company of violating state law with respect to its fiduciary duty. (Getty Images)
The Louisiana Legislative Auditor has released a report detailing the findings of a money laundering and racketeering investigation that led to indictments this summer of a State Fire Marshal’s Office employee, his brother and several others accused of defrauding the state of nearly $400,000.
At the center of the scheme, according to the audit, was former Lt. Robert McCormick, an emergency management officer for the State Fire Marshal’s Office, and his brother Thomas McCormick, a lawyer who formerly worked as a fraud prosecutor at the Louisiana Attorney General’s office until at least 2018, according to a profile piece by the Pointe Coupee Reporter.
The audit, released last week, said Robert McCormick “used his position to improperly direct state funds totaling $846,140 to companies doing business with or on behalf of his brother, Thomas McCormick,” from Aug. 30, 2020 to April 29, 2021.
Robert McCormick was part of the logistics team that decided which companies got contracts to provide disaster-relief services when the Fire Marshal’s Office responded to hurricanes. He and his brother, according to the audit, allegedly used the McCormick Law Firm as a way to alter contractor invoices and inflate prices in order to pocket money for themselves and others involved in the scheme.
The McCormicks used a friend’s company, Westside Services, to bill the State Fire Marshal’s Office for bottled water at an average cost of $1.41 per bottle or nearly 10 times more than the average that Thomas McCormick actually paid for the water — $0.13 per bottle, according to the audit. The Fire Marshal’s Office could have used any of the five emergency state contracts that were already in place at the time to purchase the water at a cost of $0.21 to $0.25 per bottle, the audit said.
The bottled water scheme, alone, cost the state at least $150,450 more than it would have cost if the water had been purchased through an approved emergency contractor, the audit said.
In one instance, the McCormicks allegedly altered a contractor’s invoice for services to set up a basecamp for Hurricane Delta, replacing the name of the company with Westside Services and marking up the price from $97,000 to $145,000. After Robert McCormick processed the payment through the Fire Marshal’s Office, Thomas McCormick used Westside Services to pay the legitimate invoice of $97,000, and then paid the excess $64,000 to his law firm. Thomas McCormick, the audit said, allegedly used $8,600 of that money to pay off his brother’s Toyota Corolla and $27,000 to pay off his own BMW car loan.
Bank records show that whenever the companies Gifts Unlimited and Westside Services received state funds, those companies would then pay almost half of the funds to the McCormick Law Firm. These records, according to the audit, show that Gifts Unlimited and Westside Services issued checks totaling $367,846 to McCormick Law Firm and made cash withdrawals totaling $104,570 from Westside Services from Sept. 18, 2020 to March 4, 2021. The audit said Thomas McCormick then made payments totaling $45,422 to pay his brother’s personal expenses such as his personal credit cards and his child’s school tuition.
Robert McCormick’s activities did not go unnoticed by other State Fire Marshal employees. The audit noted several employees questioned transactions involving Westside Services following Hurricane Laura.
One Fire Marshal’s Office employee who used his state-issued credit card to purchase bottled water and later paid Westside Services for bottled water at Robert McCormick’s request, found the water prices charged through Westside Services to be unreasonable, the audit stated. This employee and another later observed who they believed to be Thomas McCormick cleaning a State Fire Marshal base camp for Westside Services. These employees and others raised concerns with their supervisors. Those concerns were eventually brought to the attention of Fire Marshal Butch Browning, who instructed a deputy chief and his executive assistant to look into the matter on Oct. 9, 2020.
In a July statement, the Fire Marshal’s Office said when they learned of the suspicious activity, they immediately conducted an internal investigation that uncovered policy violations by employees. The Legislative Auditor then initiated its investigation in May at the request of the governor, the Fire Marshal’s Office said.
“We were angered and frustrated to be informed that our agency’s genuine effort to help the people of Louisiana, during one of the most challenging years in this state’s history, was allegedly taken advantage of,” the Fire Marshal’s Office said at that time.
The McCormick brothers and four others were indicted in July in the 18th Judicial District Court in West Baton Rouge Parish on charges including money laundering, conspiracy to commit money laundering, racketeering, malfeasance in office, conspiracy to commit malfeasance in office and filing false documents.
The McCormicks could not be reached for comment on Monday. A phone number listed for Thomas McCormick was for his former office at the Louisiana Attorney General’s Office. It’s unclear when he left that position.
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