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Confessed embezzler, TDOT contractor worked directly with cities of Brentwood and Franklin

Prudent fiscal policies employed by the cities of Brentwood and Franklin shielded the governments from fraudulent activities in its business dealings with a contractor who recently confessed to embezzling more than $500,000 from the Tennessee Department of Transportation.

Kirk Bednar, assistant city manager for Brentwood, told the Williamson Herald that despite working extensively with Michael Wayne Young, 53, president of Capitol Consultants, Inc., to acquire property on behalf of the city, taxpayer dollars were never at risk. The city, he said, paid the property owners or lien holders directly. In the instances of fraud to which Young confessed, TDOT released funds to Capitol Consultants with the understanding they would be used to purchase the properties in question.

“We have a fee-for-service agreement with Capitol Consultants, meaning that upon request of the city they perform certain tasks [such as right-of-way] negotiations, mortgage lien-release processing, and closings,” Bednar said. “We never provided any funding [for purchasing property] directly to the company.”

Bednar said Brentwood first worked with Capital Consultants in 2007, and that is the only private company the city has used to for acquiring right-of-ways, the technical term for the real estate purchased by governments for public projects.

“Capitol Consultants is the only firm the city has used for acquiring R.O.W.,” Bednar said. “In all other projects, the city staff members have handled R.O.W. acquisition.”

Bednar said the embattled Brentwood-based company has negotiated on behalf of the city for “maybe 20 to 30 tracts over the past 12 months or so,” with several still pending.

“We do have several tracts negotiated by Capital Consultants that are still waiting on lien releases from the mortgage holder and other various paperwork in order to close,” he said. “We are reviewing the exact status of each of these tracts and preparing a plan for getting these completed.”

A spokeswoman for Franklin city government said the last time it conducted business with Young or his company was “about five years ago.”

“We paid [Young] mainly for consulting services for appraisal and negotiations for properties in the right of way,” said Milissa Reierson, spokeswoman for the city of Franklin. “It was basically a per-tract fee, then we would pay the property owner directly.”

According to a press release issued Monday by U.S. District Attorney's Office for Middle Tennessee, Young agreed to forfeit more than $500,000 in assets he embezzled while working as a contractor for the Tennessee Department of Transportation. State auditors discovered the embezzlement earlier this year when examining right-of-way projects that should have been closed but were not.

“The state of Tennessee's check for each of these properties had been negotiated,” Jerry E. Martin, U.S. attorney for the middle district of Tennessee, said in a statement released Monday. “However, the real estate closings had not occurred and the properties had not been deeded to the state of Tennessee.”

The auditors determined the state paid $318,781 over multiple disbursements to Capitol Consultants, Inc. Young confessed to the embezzlement to TDOT's Internal Audit Division Aug. 30.

Jimmie Lynn Ramsaur, criminal chief with the U.S. States Attorney's Office of Middle Tennessee, did not immediately return a phone call to determine whether Young will face criminal charges.

According to the affidavit of Internal Revenue Service special agent Jim Kenneth Runkle filed Oct. 10, Young agreed to forfeit four accounts held at the Bank of America, as well as property in Mt. Carmel, Tenn.; Kingsport, Tenn.; Dickson, Tenn.; and Fairview, Tenn.

“I want to be sure it is understood that all negotiations undertaken by Capital Consultants [on behalf of Brentwood] were done under the direct authority of the city’s public works director,” Bednar said. “Capital Consultants could not agree to any negotiated settlement that was in excess of the amount initially established by the city’s independent appraiser without prior approval of the public works director.”

Posted on: 10/16/2012


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