Filing details HISD kickback allegation
A Houston ISD landscaping and maintenance vendor overbilled the district by $6 million over seven years as part of a kickback scheme involving former Chief Operating Officer Brian Busby, prosecutors alleged this week.
Newly filed court records show prosecutors believe Southwest Wholesale LLC, a longtime HISD contractor owned by former pro football player Anthony Hutchison, repeatedly billed HISD for mowing services that it did not performbut still receivedpayment at the direction of Busby.
Prosecutors allege that Hutchison paid kickbacks to Busby, who moved about $2.3 million in cash over the course of five years between bank accounts he owned. They also allege Hutchison’s companies performed $83,000 in renovations on the top-ranking administrator’s Cypress home as part of the scheme, with no evidence of Busby paying for the upgrades.
The new filings, an amended complaint in a civil forfeiture case and an unsealed affidavit used to obtain a search warrant, provide the most detail to date on the allegations tied to Busby, whom federal investigators tracked for nearly 18 months before launching raids on his home and office earlier this
year. Prosecutors filed the forfeiture case in late September, seeking on behalf of the government to keep $90,000 seized from Busby’s home and $95,000 seized from Hutchison’s property during separate raids on the same day in February.
As part of their investigation, federal agents obtained extensive bank records, tax filings, emails and text messages, leading them to conclude Busby “exhibits an unusual level of affluence for his position,” the records show.
Prosecutors said Busby made “multiple large deposits” of cashin increments of slightly less than $10,000, the amount that triggers mandatory reporting requirements by banks. In one text message, Busby sent Hutchison a photo of two bank deposit envelopes with dollar amounts written on them — one showing “10,000,” the other showing “8,800.00” — and thewords “Nobiggie but just wanted you to know what you gave me bro,” prosecutors wrote.
Neither Busby nor Hutchison has been charged with a crime, though a motion to unseal a warrant authorizing the raid indicated that a criminal investigation is ongoing. Both have filed claims to recover the seized cash, arguing they legally obtained the money.
‘Not embarrassed’
Busby’s lawyer, Dick DeGuerin, said his client denies the allegations and said the millions of dollars in cash came from several sources, including income on nine rental properties, gambling winnings and profits froma Kashmere Gardens day care center Busby owns with his wife.
“We’re not embarrassed about his banking, the money he has made,” DeGuerin said. “I think it’s outrageous to say hewas living beyond his means. He’s a successful guy who has worked hard.”
Hutchison’s lawyer, Rusty Hardin, said the government’s allegations are “simply not accurate.”
“(Southwest Wholesale) was doing all the work they were contracted for, and Busby was not receiving bribes. It’s as simple as that,” Hardin said. “This is why they created courthouses, and we’ll be delighted to try both cases in front of a jury.”
Details about the investigation into Busby, whose contract with HISD was not renewed in September, and Hutchison have trickled out in the past month following the filing of the civil forfeiture complaint, the first public action taken by prosecutors in the case.
Federal officials outlined broad strokes of the investigation in court records late last month, though they omitted key details, such as the amount of money tied to the alleged kickback scheme.
Prosecutors filed an amended, 11-page complaint in the civil forfeiture case Wednesday, offering new information about the allegations. Court officials also posted the affidavit and search warrant Thursday, one week after federal prosecutors moved to unseal them and declared that “the criminal investigation has progressed sufficiently” enough that disclosing the documents “will not undermine” it.
In the documents, prosecutors said Hutchison’s company repeatedly charged HISD for 35 lawn “cuts” per property — the amount specified in its contract with the district — but performed only 20 cuts. At one point in 2018, Southwest Wholesale was under contract to mow grass at 157 of the district’s 280 schools, prosecutors said.
Prosecutors also alleged Busby “caused his managers to authorize and approve overtime pay” to HISD employees for mowing lawns that Southwest Wholesale was under contract to service. One employee who frequently earned overtime made more than $100,000 in 2017-18, double his annual salary, prosecutors said.
Federal officials said Southwest Wholesale still billed HISD for mowing those properties.
In the complaint, prosecutors said they reviewed HISD records and Southwest Wholesale’s monthly mowing schedules to reach their conclusions.
Prosecutors alleged that Hutchison helped orchestrate the kickback scheme by writing “large” checks to subcontractors, who would cash them and return the money to Hutchison. In turn, Hutchison would deliver cash to Busby, prosecutors said.
According to the newly released documents, investigators tracked more than$2 millionworth of cash deposits Busby made across 14 bank accounts between 2015 and 2019.
“A review of records shows that those cash deposits did not stem from the HISD salaries of (Busby) and his wife,” prosecutors said.
Busby and his wife, Courtney, an HISD administrator, earned about $360,000 in combined salary in 2019-20, district payroll records show. Courtney Busby has not been accused of any wrongdoing and remains employed by the district as a school support officer.
As part of their investigation, federal agents surveilled Busby at Hutchison’s home in September 2018 and followed himto a meeting with a Hutchison associate in January 2019, according to the affidavit.
They also reviewed thousands of emails from Busby’s work and personal accounts, including some messages that documented “complaints from principals of HISD schools about tall grass on their respective school grounds and Southwest Wholesale not properly servicing school lawns,” IRS Special Agent Jason Webb wrote in his search warrant affidavit.
Criminal charges coming?
DeGuerin and Hardin said it is unusual for prosecutors to file a civil forfeiture claim before a criminal case, though neither ruled out the possibility of criminal charges.
“At the end of the day, I’m assuming that they’re going to file charges sooner or later,” Hardin said. “I can’t imagine why they would try to keep this money if they weren’t.”
Southwest Wholesale holds a landscaping contract with HISD worth up to $30 million over five years. The contract is scheduled to expire in 2021.
HISD administrators have not responded to questions about the status of the district’s contracts with Southwest Wholesale and another company owned by Hutchison, Just Construction.
District officials did not provide any documents to the Houston Chronicle in response to a public records request seeking any communications between HISD staff and Southwest Wholesale representatives since late September, when prosecutors filed the civil forfeiture case.
It was not immediately clear whether HISD officials knew about the allegations against Southwest Wholesale prior to the civil forfeiture filing. The district’s online check register shows HISD making 18 payments totaling about $670,000 to Southwest Wholesale since the raid, with the most recent payment dated Sept. 28.