A former board member of Lake Forest Elementary Charter School said he “made a mistake” by selling dirt from his company’s land for a school construction project, which would violate state ethics law.
Developer Donald Pate said one of his companies received about $120,000 from a contractor preparing the site for Lake Forest’s new school in eastern New Orleans.
State law says public officials can’t receive “anything of economic value” in exchange for services provided to their agency. The law also says members of boards, or their companies, can’t bid on a job or be involved in a contract or subcontract with their government body.
Charter schools in Louisiana are run by private nonprofit groups, but they must follow state law pertaining to government bodies, and their board members are considered public officials.
Pate told The Lens he resigned from the school board the day its lawyer told him he had violated the law. A few hours later, he said, he reported the matter to the Louisiana Board of Ethics.
The ethics board investigated the matter, but its account doesn’t square with Pate’s. The board closed the case after concluding Pate didn’t receive any compensation for “management services” provided by two of his companies to his company that owned the land.
However, Pate is part owner of The Golf Club of New Orleans, the company that was paid for the dirt. It receives a royalty for every cubic yard sold, and it was paid as part of the Lake Forest project.
“I’m just going to lay the facts out. I made a mistake — not knowingly,” Pate said Monday. “Our intentions were to save the school money … and I think we did that.”
The dirt pit is located next to the gated Eastover subdivision, just two miles from the new school, and “the big cost of moving dirt is the transportation,” he said. He also said he reduced his typical royalty to help the school.
The contractor who used Pate’s dirt pit submitted the lowest bid and was hired by the school. Public officials aren’t supposed to be involved in contracts with agencies they oversee, even when they’re part of the lowest bid.
A lawyer for the school said officials there didn’t know until after the contract was signed that Pate owned the dirt pit. Pate said Lake Forest CEO Mardele Early did know.
The school board president later approved a 52 percent increase in the contract amount. Pate said he was involved in that, too.
An audit of the Orleans Parish School Board, released last week, hinted at the business arrangement. It referred to a “possible violation of Louisiana Code of Ethics” involving an unnamed board member at Lake Forest, which the Orleans school board oversees.
Lake Forest’s own audit was updated in January to note that the Ethics Board had cleared Pate.
New school presents an opportunity to sell some dirt
In the summer of 2015, Lake Forest needed someone to clear, fill and grade eight acres behind its new school at 11110 Lake Forest Blvd. in eastern New Orleans.
In response to a question from Pate about the cost, the school architect estimated $800,000, Pate said. He told Early he could do it for a lot less.
Pate said he had had helped build a soccer field at his son’s school in Covington and sold some dirt to the U.S. Army Corps of Engineers for levees.
When presented with his offer, Pate recounted, Early cautioned him he couldn’t be involved. He said he didn’t know that.
Early denied his account, according to board attorney Frank Endom. He said Early learned that Pate may own the pit on Aug. 12, 2015. That was after the contract had been signed and work was underway. The Orleans school board audit supports Early’s timeline.
Lake Forest sent out a notice asking for bids. The state Public Bid Law is meant to ensure public entities receive the best price on work. Government bodies are required to accept the lowest bid.
On June 18, 2015, before bids were due, the board unanimously decided to hire whatever company submitted the lowest bid. Pate was at that meeting.
Later that month, the project engineers held a meeting for any contractors interested in the job.
Utility Constructors of Jackson, Mississippi, was there. So was Eastover Excavators, a related company that managed dirt removal on The Golf Club of New Orleans’ land. And so was Pate, he said.
Pate said Eastover Excavators’ representative told the other companies that his pit was nearby and available to them.
Utility Constructors came in with the lowest bid, $382,903. “They could not have bid as low as they bid if they had not gotten the material from Eastover,” Pate said.
The next highest offer was $452,000.
Utility Constructors was required to say where it was getting the dirt and to provide a report saying it was the right type. On July 7, before the contract was signed, Utility Constructors said it would use the Eastover pit.
However, Endom said Pate didn’t show that document to the school until late August, and he pointed out that it didn’t identify Pate as the dirt pit’s owner.
G. Lee Caston, president of the Lake Forest board, signed the contract with Utility Constructors on July 15, 2015. Pate signed as the board’s witness.
The excavation company paid The Golf Club of New Orleans for the dirt, according to Pate and a letter from the Ethics Board. Pate said he has an ownership stake of 25 to 30 percent in The Golf Club.
Three weeks after the school signed the contract, Caston authorized Utility Constructors to haul more dirt, raising the maximum payout by $200,000. Documents provided by the school don’t explain why the job was expanded, but Pate said the school needed more fill than expected. They also wanted to raise part of the land for recreational space, he said.
Early, through the school’s lawyer, confirmed Pate’s account of why more dirt was needed.
The additional work put the potential payout at $582,903. In the end, the school paid Utility Constructors $478,863.
The Orleans Parish School Board audit, dated Dec. 20, says the unnamed board member “may have circumvented the School’s established management and administrative procurement practices” in approving the change to the contract.
Caston has not responded to requests for comment. A woman who answered the phone at Utility Constructors referred questions to the company’s lawyer, but she refused to say who that is.
Around this time, the engineering firm forwarded the first invoice from Utility Constructors. The letter was addressed to Pate at the school.
On Aug. 12, Early got a tip that Pate was the “possible owner” of the pit, according to Endom. He said she conducted a brief investigation.
Pate said Endom called him and told him to resign and report himself to the Ethics Board. He resigned that day.
”Which is one thing I hated to do, because I really enjoyed working with the school board,” Pate said. “I think we accomplished a lot for the school.”
The dirt pit in question is part of a long-running dispute between Pate and residents of the Eastover subdivision, who say he hasn’t lived up to his promises to rebuild a clubhouse and golf course destroyed by Hurricane Katrina.
Pate has described his plans to turn the pit into a lake with a jogging path.
In an interview, Pate acknowledged that removing the dirt, even without being paid for it, helped his development plans. “Well, yeah,” he said. “If you don’t excavate it, you don’t have a lake.”
Ethics board clears Pate
A year later, a lawyer for the Ethics Board wrote Pate to tell him about its findings.
Tracy M. Barker wrote that two of Pate’s companies — he owns one and is president of the other — manage The Golf Club, which was paid for the dirt.
However, she wrote, the board concluded that neither Pate nor those two management companies “received any compensation for the management services provided.”
She didn’t explain how that conclusion was reached, and she didn’t include anything about Pate’s ownership stake in The Golf Club.
Ethics investigations are based on confidential tips, and the Ethics Administration does not comment or release any information on investigations that don’t lead to charges.
Told of Pate’s admission that his company received money in the deal, Ethics Board Chairman Robert McAnelly directed The Lens to Ethics Administrator Kathleen Allen. She said decisions are based on the information presented and declined to comment further.
Barker told Pate that he could ask the Ethics Board for advice, “and, by seeking advice, you can prevent violations before they occur.”
Pate said he thinks the Ethics Board may have reached a different conclusion if he hadn’t resigned from the school board and reported the matter to the state.