Favorite

Honor Among Thieves Part II 

Three years after a Fort Carson project collapsed, federal investigators are still trying to find out what happened to millions of taxpayer dollars.

click to enlarge ed16_cover-14846.gif

Editor's note: This is the second in a two-part series about William Clary, a Texas entrepreneur being investigated in connection with the 2001 collapse of a multimillion-dollar construction project at Fort Carson. The first installment, which described how Clary built his business empire amid allegations of fraud, forgery and a murder-for-hire solicitation, appeared last week and can be read online at www.csindy.com.

In the late 1990s, Bill Clary was sitting pretty.

From his office in Austin, Texas, Clary had full control of PI Construction, a company with multimillion-dollar contracts at government facilities across the nation.

He'd survived an initial challenge to his ownership of the company, which had started in Denver in 1992 as a small, minority-owned business. The company's founder, an Iranian immigrant named George Haidarian, had alleged that Clary -- once a friend and business partner -- had stolen PI from him in 1996 through fraud and forgery.

Haidarian was still quixotically pushing his claims in court, but Clary was in the driver's seat. The former carpenter, Marine and college dropout from Nebraska had come a long way.

But controlling PI wasn't enough for Clary. He had a penchant for always developing new -- and, as it would turn out, shaky -- business schemes.

His seemingly compulsive entrepreneurship would land him a leading role in the 2001 collapse of a $58 million project at Fort Carson, which left Clary, his wife and several business associates financially devastated. The debacle also left several local project workers holding an empty bag; some were forced to sue for back wages that they will probably never collect, and others were stuck with unpaid medical bills when their health insurance proved worthless.

The fiasco ultimately sparked a federal investigation of Clary's operations, which had until then largely escaped government scrutiny despite repeated allegations of fraud and other misdeeds. For the past three years, criminal investigators from the IRS and the Department of Defense have been trying to figure out what happened to millions of taxpayer dollars spent on the Fort Carson project.

Clary, who still lives in Austin, believes he'll probably be indicted for fraud -- although he denies any wrongdoing.

"The government knows I don't have millions of dollars stashed away somewhere," Clary said.

'A bright, hardworking guy'

When Clary, who is white, won control of PI Construction in 1996, the company lost its official certification as a minority-owned firm. The certification had qualified the company for set-aside contracts under the U.S. Small Business Administration's program for small and disadvantaged businesses.

Nonetheless, PI had continued to grow. At its height, between 1999 and 2000, the company took in some $30 million in annual gross revenues, Clary estimates.

In 1997, Clary found a new partner to replace Haidarian.

Douglas Pourier, an American Indian who ran a small business called Landmark Construction in South Dakota, was doing subcontract work for PI at Ellsworth Air Force Base, near Rapid City, when he was introduced to Clary.

Pourier was certified as a minority contractor. He wanted to grow his business and asked Clary for advice.

"He seemed like a bright, hardworking guy," Clary recalled. "He said he needed help."

On Clary's recommendation, Pourier moved Landmark's main office to Denver, where there was more work to be gotten from the Small Business Administration.

With Clary's help, Pourier's nickel-and-dime outfit quickly grew to hold numerous multimillion-dollar contracts on military bases across the country. But by the time it was all over, Pourier -- just like Haidarian -- was broke, blaming Clary for his misfortunes.

"He ruined my life, man," Pourier said.

Striking gold

Landmark struck gold in 1998 when it landed a $58 million contract to renovate 34 barracks at Fort Carson, south of Colorado Springs. The barracks were to be completely gutted and rebuilt over a period of five years.

"It was a major undertaking," said Bruce Montgomery, Landmark's project manager at the site.

For most of the project's duration, Carson contracting officials were pleased with Landmark's performance.

"We were kicking ass out here," said Bill Decker, a quality-control manager for the project. "We were ahead of schedule. ... The government loved us."

Pourier wouldn't have gotten his big break, however, without Clary.

The government requires its contractors to have a form of insurance known as a bond. The contractor pays a premium for the bond, and in return, the company issuing the bond guarantees that the project will be completed. If, for some reason, the contractor can't finish the project or pay its subcontractors and suppliers, the bonding company steps in, pays the bills and hires another contractor to complete the work.

No bonding company would take a big risk on a small company like Landmark, however, unless the construction company had outside backing. So Clary agreed to co-sign indemnifications -- agreements stating that if Landmark went under and the bonding company had to step in, the bonding company could seek to recover its losses not only from Pourier and Landmark, but also from PI Construction and from Clary personally.

In exchange, Clary was to receive 1.1 percent of Landmark's gross revenues.

From then on, Clary and Landmark were joined at the hip.

In fact, just like Haidarian had accused Clary of hijacking his company, Pourier claims Clary eventually made most of Landmark's decisions.

Clary vehemently denies this assertion, noting it would be fraud if he had controlled Landmark, which was certified as a minority company.

A federal judge, however, recently ruled in a civil lawsuit that Clary "exerted extraordinary dominion and control over Landmark."

On the airplane

After landing the Fort Carson project six years ago, Landmark set up an office in Colorado Springs. Pourier moved to Monument, north of the city.

Soon, however, Pourier was traveling all over. With its certified minority status and Clary's backing, the company took off spectacularly and soon held contracts at Peterson Air Force base in Colorado Springs, Holloman Air Force Base in New Mexico, McChord Air Force Base and Whidbey Island Naval Air Station in Washington state, and for the Louisville District Corps of Engineers in Kentucky.

By one estimate, the company's contracts once totaled $94 million. Fort Carson was by the far the largest of them and most crucial to Landmark's success.

Though Pourier says he was in charge of Landmark initially, he claims he relinquished most control to Clary as he spent more and more of his time flying around the country, meeting with government contracting officials and project managers on each job site.

He says he suspects Clary wanted it that way.

click to enlarge Bill Clary, now 58.
  • Bill Clary, now 58.

"He kept me so busy I didn't have time to do anything else," Pourier said. "Every week I got on an airplane and went to a job -- which makes sense now, why he wanted me doing it. He didn't want me at the office."

Pourier says Landmark's records ended up being kept at Clary's office in Austin. "He wanted everything down there," Pourier said. "He wanted to control everything."

Clary, meanwhile, says Landmark documents were kept at the company's job sites, not in Austin.

In one of the many lawsuits sparked by Landmark's subsequent collapse, Pourier would testify that he felt concerned about Landmark getting stretched too thin. But he says Clary kept reassuring him that everything was fine.

"I trusted him," Pourier said. "I had no reason not to."

Mutant companies

In fact, Clary wound up controlling much of the money from the Fort Carson project and Landmark's other jobs through a complicated web of companies that he incorporated, most of them designed to feed off Landmark.

Over a period of just a few years, Clary founded, controlled or owned at least 18 separate companies incorporated in Texas and Colorado. Most of them were headquartered at Clary's offices in Austin. The companies went by the names of Atilla, Baker White, Bethel, Cambridge, Coastal, JKH Holdings, Johnson Pugh, Lester, Martin Mink, Meridian, The Millshop, Peabody Southwest, Petrus, Rockhart, TM Solutions, Tech-Con and Zeta.

Some of the businesses were "service companies" that performed specific functions for Landmark, for PI and for each other. Martin Mink, for instance, handled accounting for the Landmark-PI "family" of companies; another firm, Petrus, was in charge of quality control and human resources.

Other companies performed subcontract work. Baker White, for example, was created to carry out electrical subcontracting work for Landmark at Fort Carson, while Johnson Pugh was started to do mechanical work on the site.

Clary chose seemingly random names for the firms. "Martin Mink was somebody's two elementary teachers," he said. "Johnson [and] Pugh were two of my high school teachers."

By specializing, Clary's separate service companies could perform their functions at a lower cost than if Landmark or PI had performed them in-house, he says.

As for the subcontractors, Clary says Johnson Pugh and Baker White were both started because other subcontractors were either unavailable or would charge too much to do the work.

A main result of forming the businesses, however, was that most of the money from Landmark's projects was kept within the family of Clary-connected companies.

Richard Barrick, a bonding agent for Landmark, would later characterize the proliferation of Clary-controlled firms as a scheme to siphon off Landmark's profits.

"They fleeced Landmark of money," Barrick testified in a deposition. "It was like a cookie jar."

Though Landmark held the government contracts, much of the revenues from those contracts ended up being passed on to Clary's firms as payment for subcontracting work and services. A former vice president for Landmark, Greg Smith, later testified in court that he believed at least one of Clary's firms was grossly overcharging Pourier's company.

Moving money

Money was also repeatedly moved among the different companies, making funds difficult to track and sparking rumors -- which have not been proved -- that Clary somehow absconded with cash, thereby causing or contributing to Landmark's collapse.

"Money was moved back and forth; that's true," Clary said. "That's what they're going to try to nail me on -- money laundering and wire transfers."

But all the transfers were legitimate, Clary maintains. Sometimes, he says, Landmark would be behind on paying one of its bills, and PI would cover it. Later, when Landmark got paid by the government, some of the money would be transferred to PI to compensate.

"Was money taken from Landmark, put in PI, and then back and forth? Yes, it was," Clary said in a subsequent deposition. "There's a whole track of money that goes from Landmark to PI to subcontractors. There's money that goes from Landmark to PI back to Landmark. ... There's money that goes from PI to Landmark back to PI."

And just like PI had always been dogged by slapdash accounting, so was Landmark.

"Martin Mink couldn't keep track of the invoicing and keep track of everything," Clary said "It made a terrible mess."

Clary says he tried several times to hire a chief financial officer who could straighten out Martin Mink's bookkeeping. But it was hard to find people experienced in the complex field of government contracting, he says.

"It's not like I didn't try," Clary said. "I tried to hire three or four of those guys."

Clary says he's turned over documentation to federal agents showing that none of the money was ever diverted for illegitimate purposes.

"Every check that was ever written, every wire transfer -- it's all recorded," he said. "The government's got all that."

Checks are bouncing

Exactly when, and how, things started to go wrong with Landmark is unclear. But by the summer of 2001, despite its numerous large contracts, Landmark ran out of money.

There had been indications of trouble earlier.

"During the first year of my employment, several of my paychecks were returned to me marked 'non-sufficient funds,'" recalled Hank Kuiper, an equipment operator on the Fort Carson project. However, the checks were made good within a week or two, he said.

Another former Landmark employee at Fort Carson, who asked not to be identified, says he contacted Fort Carson contracting official Bob Mills in the fall of 2000 and told him that the company wasn't paying its subcontractors and vendors.

"I told him of these problems, and he failed to act," the ex-employee said. "I told him the payments were not being made, or when they were being made, the checks were bouncing."

The employee claimed he asked Mills to issue a "letter of concern" to Landmark. However, "he refused -- flat-ass refused."

The Independent's request to interview Mills was denied by Fort Carson officials, who cited the matter as under investigation.

Pourier later testified that he received complaints from time to time that certain bills weren't being paid. But when he called Clary or Martin Mink to inquire about it, he was always told it would be taken care of, he said.

Crisis mode

Despite the early signs, the possibility that something might be seriously wrong didn't seem to sink in until late 2000 or early 2001.

At that time, Barrick, Landmark's bonding agent, discovered that the company's financial situation had worsened rapidly. In just one month, from November to December 2001, "payables," or unpaid debts, had grown by at least $2 million, and the company had a negative cash balance.

Barrick's initial reaction, he later testified, was that "These numbers can't be right. ... I firmly believed that it was an error."

click to enlarge George Haidarian, 69.
  • George Haidarian, 69.

But it wasn't.

As would soon become clear, Landmark Construction had stopped paying payroll taxes and was more than $1 million in arrears. In addition, it owed various private creditors an estimated $6 million.

"It was, you know, fingers in every hole of the dike," Clary himself said in a deposition.

Pourier says he had no idea how bad the company's situation was, until then.

"I freaked out," he said.

Landmark moved into crisis mode. In April of 2001, it hired a financial consulting firm to try to rescue the company.

The consultants said that "this is much worse than you had thought," Barrick recalled. "Nobody knew where the money was for sure. ... I was being told that the internal checks and balances back and forth were nonexistent, and money was going from one company to the next with no invoicing, no internal tracking."

However, the consultants had a falling out with Clary and Pourier and were fired.

Sometime around the end of June or beginning of July 2001, Fort Carson defaulted Landmark for failing to meet its contract obligations and evicted the company from the job site. Landmark's bonding company then stepped in and hired another contractor to finish the work.

Landmark also defaulted on most of its other contracts around the country. By the end of summer, the company was out of business.

Clary later estimated that Landmark took in more than $70 million in revenues from the government during its short life span. By the end, he said, it was approximately $10 million in the hole.

Lawsuits and more lawsuits

Soon after Landmark's collapse, a torrent of lawsuits began hitting the company, Pourier, Clary and PI Construction. Numerous subcontractors and vendors, who hadn't been paid, sued Landmark's bonding companies to recover their money. The bonding companies, in turn, sued the bond indemnifiers -- including Clary, Clary's wife, Pourier and PI -- to recover the money they had to spend to fulfill Landmark's obligations.

The bonding companies won multimillion-dollar judgments. One of the results was that PI lost its creditworthiness and could no longer obtain bonds for its own projects.

Further adding to Clary's woes was a federal lawsuit filed in Texas, hailing from the earlier years when Clary and Haidarian were still in business together.

In 1997, former PI employee Tony Garcia had filed a whistleblower case against the company. As part of the case, Garcia resurrected old allegations that the firm's initial owner, Haidarian, had fraudulently gotten his company certified as a disadvantaged minority-owned business by lying about his place of birth.

Haidarian was of Iranian descent, but under government regulations, Iranians weren't considered qualified for the minority program. Haidarian, however, claimed he was born in India.

Acting on a tip, the Small Business Administration launched an investigation in 1995. But the agency backed off when Haidarian produced copies of what he said was an original birth certificate showing he was born in Bombay, India.

As part of the subsequent whistleblower case, federal investigators contacted Indian officials and found that the certificate was likely a forgery. The government sued PI for fraud and, in September 2002, won a default judgment against the company for almost $1.7 million.

By the end of 2001, PI Construction was no longer in business. All of Clary's other companies have followed suit.

Assistant U.S. Attorney Michelle Zingaro, who prosecuted the fraud case against PI, acknowledged the government's chances of ever collecting the judgment are "remote."

"I, quite frankly, am not optimistic," she said.

Short end of the stick

Landmark's collapse didn't just affect the company's principals and its creditors. A number of employees also ended up with the short end of the stick.

"I had two weeks worth of paychecks that never cleared," Montgomery said. "Because of the way this thing ended, I lost in excess of $80,000 myself, between salaries and bonuses."

In 2001, nine former Landmark employees at Fort Carson filed a lawsuit, claiming they were owed a total of $135,000 in back pay. They won a default judgment, but like the federal government, they will probably never see a dime of it.

Others were left with unpaid medical bills, which were supposed to have been covered by their health insurance through Landmark. The company was self-insured, meaning that employees' premiums supposedly went into a designated account to pay their health-insurance claims.

Steve Ransom and his wife, Georgie, got stuck with almost $10,000 in health-care bills. Georgie had a complicated birth in January 2001, and the couple's infant son, Jake, was later hospitalized with a fever and an infection.

Landmark had deducted a health-insurance premium from Steve Ransom's paychecks. But when the company that managed the health-insurance plan issued checks for the Ransoms' bills, the checks bounced. As it turned out, Landmark's health-insurance account was empty.

The Ransoms' creditors, including Memorial Hospital in Colorado Springs, insisted that the Ransoms pay their bills. For a long time, the family spent $500 a month to pay down the debt.

"I'm pretty bitter," Georgie Ransom said.

Meanwhile, Pourier himself sustained a head injury in an off-roading accident in late 2001 and spent a week in an intensive-care unit. When he sought reimbursement from the Landmark health-insurance plan, he likewise found that the money was gone. However, Pourier qualified for assistance through the Indian Health Service.

'Lowdown dirty thieves'

So what had happened to the millions of dollars that the U.S. government poured into the Fort Carson project and Landmark's other jobs around the country?

Clary says the answer is simple: Landmark spent more money than it made. The main reason, he says, was dishonesty by the government.

Fort Carson's original estimates had also included employee wages that didn't meet federal regulations. When this was discovered in 2000, the government ordered Landmark to pay back wages to make up for the difference.

Normally, contractors can seek "equitable adjustment" payments for such cost overruns. But when Landmark submitted claims for $5 million in such adjustments, Fort Carson officials denied them.

"The people at Fort Carson," Clary says, "are low-down, dirty thieves."

Montgomery, Landmark's project manager at Fort Carson, says it's true that incomplete specifications led to cost overruns. But that alone wasn't enough to bankrupt a $58 million project, he says.

Clary, however, says the government also stiffed Landmark on other jobs -- especially at McChord Air Force Base in Washington state.

"Fort Carson didn't bankrupt Landmark all by itself," Clary said. "McChord had a lot to do with it. ... The people at McChord are just terrible thieves."

click to enlarge Douglas Pourier says Clary ruined his life.
  • Douglas Pourier says Clary ruined his life.

The seriousness of the situation didn't hit immediately, Clary says, because Landmark trusted the government to eventually make things right. But it never did.

"All we relied on was the truthfulness and integrity of the people at Fort Carson," he said.

McChord officials also denied Landmark's claims for equitable adjustment, Clary says. In fact, the main reason why Landmark's payables suddenly skyrocketed in late 2000 was that the true costs of the McChord project were starting to show up on the books, he adds.

Still, Clary says he's not trying to pretend he played no role in Landmark's demise.

"Doug and I didn't do the best job we possibly could," he conceded.

Asked if he was a poor businessman, Clary replied, "I'd certainly have to say so."

Pourier, meanwhile, says he remains confused to this day about what really happened to his company. He says the only money he ever took out of Landmark, besides his salary, was a lump sum of about $400,000, which he used as a down payment to purchase a vacation resort in Keystone, S.D. The money was a loan, he says.

Records seized

The government, meanwhile, seems to suspect that fraud played a role in Landmark's demise.

Over the course of the Independent's 18-month inquiry into Clary and his companies, numerous sources confirmed that criminal investigators from the Department of Defense and the IRS have repeatedly interviewed them about the Landmark fiasco. One person said he had also spoken to the FBI, and several said they have turned over documents to the feds.

Clary himself says that in late 2002, agents seized the records of all the companies he's been involved in -- some 500 boxes of files altogether, which were at a storage facility near his former office in Austin.

Though Clary believes he's being targeted, the exact scope and focus of the investigation is unclear. Fort Carson officials refuse to discuss the matter, and Army officials in March of 2003 denied a Freedom of Information Act request from the Independent regarding the project, saying they were barred from talking or releasing information due to an ongoing investigation.

"We can't comment on it," said Richard Bridges, a Fort Carson spokesman. "I can't comment on, even, the terms of the contract."

Bridges referred questions to Ray Rayos, an agent with the Army Criminal Investigation Division's major procurement fraud unit. But Rayos wouldn't even confirm that an investigation was ongoing.

Other agents involved in the probe did not return phone calls.

Growth in mind

As for the allegations that he, and not Pourier, controlled Landmark Construction, Clary concedes that he both advised and helped Pourier in running the operation.

As an indemnifier of the company, he had a strong interest in seeing it succeed. The success of his other businesses -- the service companies and subcontractors -- also depended on Landmark.

"I wanted Landmark to grow," he said. "I needed them to succeed. Landmark succeeding would fuel all these other companies."

Instead, when Landmark failed, all the other companies crumbled -- and Clary and his wife were held liable.

In fact, Landmark owed large sums of money to Clary's companies when it went under, he maintains.

Clary also concedes that there were times when he grew concerned that employees and business associates were coming to him, rather than Pourier, to discuss Landmark issues.

"People came to understand that if you really need something and you can't get it, go to Bill," he said. However, "I tried never to be the final decision maker."

Clary insists that Pourier, despite testifying to the contrary, knew what was going on at Landmark and made all the important decisions.

He also says Pourier himself was responsible for the company's rapid growth. "He wanted to get big. He kept pressing."

Clary in charge

But Clary's characterization is contradicted by a decision recently handed down by a federal judge. In a civil lawsuit relating to the Fort Carson project, Judge Lewis Babcock of the U.S. District Court in Denver found there was "abundant evidence" that Clary controlled Landmark.

"Clary made major decisions for Landmark," Babcock declared in his ruling, issued in May. "The directors or executives of Landmark ... did not act independently, but took direction from Clary."

Though Clary argued extensively to the contrary throughout the case, "I find that Clary's testimony was not altogether credible," Babcock wrote.

Several people interviewed by the Independent also backed Babcock's view that Clary was in charge.

Pourier, some said, wasn't clever enough to run the mind-bogglingly complex operation.

"Doug was a sucker," said Montgomery, the former Fort Carson project manager. "He, in my mind, trusted Clary emphatically and got screwed in the deal. ... I like Doug, but he doesn't have the gray matter to put something like this together."

Decker, the former quality-control manager, agreed.

"My impression on that was that Doug Pourier did not take an interest in what was going on," Decker said. "Clary was obviously running it. I think it was by default. Somebody had to run it. That's just my opinion."

Holding pattern

Three years after Landmark imploded, Clary finds himself in limbo, waiting to see what comes out of the federal investigation.

He currently isn't working. His only remaining asset, he says, is his house in Austin. The house is assessed at $366,000 but was recently refinanced.

"I'm about $15 million to $20 million upside down," Clary estimated.

Though Clary hasn't filed for personal bankruptcy yet, his wife did so last November -- listing more than $11 million in total debt owed to bonding companies, the IRS and miscellaneous other creditors.

"I know everybody thinks I'm a scumbag," Clary said. However, he insists, "I didn't willfully cheat anybody."

Pourier, likewise, has been stuck in a holding pattern. With millions of dollars in debt, he says he'll be forced to file bankruptcy -- but he's been advised to wait until all the dust has settled.

Until then, Pourier can't start another construction business or begin to rebuild his credit. He currently works for a South Dakota construction company owned by his brother.

"I can't start a new life," Pourier said. "It's a nightmare that won't go away."

Comments

Subscribe to this thread:

Add a comment

Latest in Cover Story

Popular Events

Most Commented On

Top Viewed Stories

All content © Copyright 2014, The Colorado Springs Independent   |   Website powered by Foundation