Fifth Circuit Says Racketeering Lawsuit Against Former HISD Trustee Larry Marshall Should Proceed
Larry Marshall, the former Houston ISD trustee and school board president accused in a bribery lawsuit, a man who has been embroiled in controversy time and time again while on the school board, saw his fortunes take a definite turn for the worse Monday as a federal appeals court decided a lower court was taking a far too narrow interpretation of federal racketeering statutes and that the case against Marshall should proceed.
HISD itself was cleared by the Fifth U.S. Circuit Court of Appeals and is out of the suit filed by contractor Gil Ramirez against Marshall, HISD, Marshall's alleged co-conspirator Joyce Moss-Clay and her consulting company, and Ramirez's competitors Fort Bend Mechanical and RHJ-JOC and their respective owners. Under the Fifth Circuit's ruling, the others all remain part of the case.
Appellate attorney Martin Siegel, who represented the Gil Ramirez Group on appeal, said the Fifth Circuit ruling expands the scope of the federal Racketeer Influenced and Corrupt Organizations Act (RICO) by holding to broader standards.
"We're gratified that the Court of Appeals agreed with us and applied the statute broadly, as Congress intended. The allegations in this case — that a public official and others corrupted his office through bribery — go straight to the heart of what RICO is designed to expose and stamp out," Siegel said.
In November 2013, U.S. District Court Judge Keith P. Ellison dismissed all claims in the lawsuit filed in late 2010 filed by Gil Ramirez Group and Gil Ramirez Jr. Ellison said there was no evidence there had been manipulation of any contracts. At that time, Superintendent Terry Grier expressed the hope that the school board would go after the Ramirez Group for reimbursement for what he said was more than $1.5 million in legal expenses over the past three years.
In the lawsuit, Ramirez and his firm had alleged that Eva Jackson of RHJ-JOC, Inc. paid Marshall's campaign treasurer, Moss-Clay, a total of $185,000 (saying there was no justification for this large an amount) and that Moss-Clay in turn handed at least part of the money over to Marshall.
This was disputed by Marshall's lawyer, Arturo G. Michel, who insisted there was no evidence of kickbacks. Michel also said in 2011 that the Ramirez Group never should have been selected for work with the district to begin with because it wasn't ranked high enough in a committee evaluation of companies, and RHJ always was rated higher. An internal auditor questioned the list of approved contractors and in a subsequent re-review of the companies' qualifications, the list was changed.
Monday, among its findings, the Fifth U.S. Circuit Court ruled that Marshall, does not have sovereign immunity, explaining that protections only extend to someone acting "within the scope" of his duties. "To the contrary, bribery and peddling influence are not within the scope of a trustee's duty. He was allegedly defiling his position and wholly outside the legitimate scope of a trustee's duties if he accepted bribes in exchange for advancing the interests of certain contractors," the opinion read.
In restating the case — the court noted that it considered the evidence "in the light most favorable" to the Ramirez group appealing the lower court's ruling — the court states that "RHJ paid Clay over $2,000 per month for several years but neither RHJ nor Clay could explain what work Clay actually performed. FBM's owner Pete Medford avers that he wanted to make donations to specific schools and hired Clay to help him negotiate the rules and regulations governing those donations. Clay's explanation for forwarding Marshal 65% of her consulting fees is that he was her 'mentor.'"
The court also refers to the testimony of former HISD Superintendent Abe Saavedra, who said he got crosswise with Marshall when he dropped RHJ from the approved-vendors list and that Marshall put "tremendous pressure" on other senior administrators to approve RHJ.
In another historical note, the ruling says, "FBM paid for Marshall to attend the Super Bowl in Tampa, Florida. Medford admitted on tape that he had given Marshall approximately $150,000 since 2008. When Marshall faced a reelection contest in autumn 2009, the owners of RHJ and FBM donated to Marshall's campaign, in amounts totaling over $50,000."
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Ramirez alleged that he and his company, GRG, were punished for refusing to participate in the corruption of municipal authorities and saw a sharp drop-off in their business with the district once Marshall pressured HISD to resume doing business with RHJ-JOC. Ramirez testified that Ricardo Aguirre, a janitorial consultant, told him that his company would need to hire Clay as Marshall's "bag lady" in order to continue doing business with the district. (The court notes that, "When asked whether he was involved in bribery schemes involving Marshall, Aguirre invoked his Fifth Amendment right against self-incrimination.)
While a school board member, Marshall was on the Community Education Partners payroll as a consultant for the private company that operates alternative schools for HISD. He insisted he never voted on anything involving CEP, but critics questioned how impartial he was as he was paid $72,000 a year by CEP.
Details of the CEP payments surfaced as part of a 2001 suit against Marshall in which he was accused of unethically trying to influence HISD to do business with a health-care provider that had also paid Marshall for consulting services.
In 2013, the timing of Judge Ellison's announcement coincided with Marshall's retirement from the board. Marshall had previously been a high-level administrator for the district before going on the board.
"With nearly 50 years of service to HISD, the district is incredibly pleased to see Trustee Marshall being able to transition off the board to more fully enjoy the retirement he has so rightfully earned," said Grier. "His legacy as a Houston educator and leader is preserved now that he is free from the cloud of suspicion of these claims."
Of course, there's all kinds of legacies.
We put in calls to the HISD press office and to Marshall's attorney, Rick Morris, and will update this story when we hear from them.
Update: An HISD spokeswoman declined comment other than to state: "We don't comment on pending litigation."