{"id":3403,"date":"2012-02-16T15:48:14","date_gmt":"2012-02-16T23:48:14","guid":{"rendered":"http:\/\/www.fogcityjournal.com\/wordpress\/?p=3403"},"modified":"2020-09-12T04:28:55","modified_gmt":"2020-09-12T12:28:55","slug":"lackluster-finish-to-case-that-made-serious-political-charges","status":"publish","type":"post","link":"https:\/\/www.fogcityjournal.com\/wordpress\/3403\/lackluster-finish-to-case-that-made-serious-political-charges\/","title":{"rendered":"Lackluster Finish to Case that Made Serious Political Charges"},"content":{"rendered":"<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/cobra_trial_year_of_dragon_20120206\/mw2w7074_std.jpg\" alt=\"\" width=\"500\" height=\"333\" \/><p class=\"wp-caption-text\">Cobra Solutions founder and president James Brady said he was disappointed by a jury&#8217;s verdict yesterday that determined the City and County of San Francisco and Cobra Solutions were responsible for failing to detect a city employee&#8217;s fraudulent kickback scheme. Photo by Luke Thomas.<\/p><\/div>\n<p><strong>By <a href=\"http:\/\/www.fogcityjournal.com\/wordpress\/author\/luke\/\">Luke Thomas<\/a><\/strong><\/p>\n<p>February 16, 2012<\/p>\n<p>A jury awarded the City and County of San Francisco $24,498 yesterday following its deliberations of a\u00a0<a href=\"https:\/\/web.archive.org\/web\/20140315005924\/http:\/\/www.sfbg.com\/2012\/02\/14\/how-business-was-done\" link=\"external\">complicated civil case<\/a>\u00a0filed by the city in 2003 against a minority-owned computer services company accused of fraud and breach of contract, a company that countersued with a claim of being harmed by top city officials.<\/p>\n<p>But that paltry sum and the jury\u2019s verdict of shared responsibility in failing to root out corruption in city government belied the more politically significant accusations made through depositions in the case that Mayor Ed Lee and former Mayor Willie Brown overrode city staff to give contracts to a \u201cfraudulent\u201d yet politically connected company, which proved to be a tangential issue that was left largely unexplored at trial.<\/p>\n<p>In CCSF vs. Cobra Solutions, the jury found that both the city and Cobra Solutions failed in their responsibilities to prevent a former Department of Building Inspection information technology manager, Marcus Armstrong, from fraudulently\u00a0<a href=\"http:\/\/www.fogcityjournal.com\/wordpress\/3394\/mayor-lee-testifies-in-corruption-lawsuit-that-could-cost-the-city-10-million\/\" data-wpel-link=\"external\">bilking the city<\/a>\u00a0out of at least $482,000 between 1999 and 2001. An alleged Armstrong accomplice, Government Computer Sales, Inc. \u2013 which<a href=\"https:\/\/web.archive.org\/web\/20150906135245\/http:\/\/www.sfbg.com\/2011\/02\/08\/dirty-business\" link=\"external\">\u00a0witnesses said Brown and Lee improperly certified<\/a>, and which they say they don\u2019t remember \u2013 fled and was never brought to justice.<\/p>\n<p>Cobra Solutions, which was awarded master contract status in 1998, was bound by a provision in its agreement with the city that required Cobra to \u201csupervise\u201d sub-contractors. The allegation of fraud against Cobra, however, was effectively dropped from the city\u2019s complaint, but not until the end of the trial when consideration of fraud was omitted from the city\u2019s closing arguments.<\/p>\n<p>The award to the city was the difference between the monies paid by the city to Cobra Solutions ($269,739.93) and the monies paid by Cobra Solutions to Armstrong\u2019s phony companies ($245,241.93), or the markup Cobra Solutions received from the city following the submission of several fraudulent invoices from two phony sub-contractor companies, Monarch Enterprises and Mindstorm technologies, set up by Armstrong.<\/p>\n<p>Following the verdict announcement, a juror who did not want to be identified, said there wasn\u2019t a single piece of evidence that was most compelling, but that, \u201cthe city proved its case. Cobra failed to prove its case.\u201d The \u201cvast majority\u201d of jurors shared that opinion, the juror said. \u201cIt wasn\u2019t even close.\u201d<\/p>\n<p>\u201cThe jury thought there was obviously a failure to supervise,\u201d the juror continued. \u201c[Cobra Solutions] took on work without even knowing who the party was that was working for them. Who was Monarch?\u201d<\/p>\n<p>Several invoices from Armstrong\u2019s phony companies contained different addresses that the juror described as \u201ca bit of a red flag.\u201d<\/p>\n<p>\u201cIf I\u2019m in business, I\u2019m not going to have someone working for me who I don\u2019t know, and I\u2019m not going to be paying them checks,\u201d the juror said.<\/p>\n<p>\u201cThe city also bore responsibility\u201d in its failure to detect Armstrong\u2019s kickback scheme, the juror said, mirroring the same sentiment echoed by then-City Controller Ed Harrington, who took the stand and conceded the city\u2019s internal controls \u2013 as well as those of Cobra Solutions \u2013 failed to detect Armstrong\u2019s kickback scheme.<\/p>\n<p>Cobra had sought damages for breach of contract (the city\u2019s failure to pay monies owed Cobra) and due process violations in connection with the city\u2019s alleged debarment of Cobra from doing further business with the city.<\/p>\n<p>\u201cI\u2019m disappointed,\u201d said Cobra Solutions founder and president James Brady. \u201cLife goes on. We\u2019ll continue to move forward and repair our damaged reputation, raise our grandchildren, and focus on our families.\u201d<\/p>\n<p>Asked about the issue of sub-contractor supervision, Brady said, \u201cI don\u2019t think anybody could supervise a con man and the city was negligent in hiring this guy \u2013 they wouldn\u2019t even bring him in the courtroom \u2013 so it\u2019s just betrayal. And it\u2019s a sad day that you hire con man and you won\u2019t take any responsibility for his actions and you blame the small business. That\u2019s not the American way.\u201d<\/p>\n<p>On the jurors finding that Cobra was not intentionally or defacto debarred from doing further business with the city, Brady said, \u201cI think they got it wrong. I have no doubt about that.\u201d<\/p>\n<p>\u201cThe jury missed a lot of important facts,\u201d said Mr. Brady\u2019s wife, Deborah Brady, a co-founder of Telecon, the parent company of Cobra Solutions. The city had originally sued Telecon in its case-in-chief, but pursued no claims against Telecon at trial. \u201cI don\u2019t know how they missed them, but they missed them.\u201d<\/p>\n<p>Ms. Brady said the city gave another company, Desktop, the opportunity to defend itself against debarment, but \u201cthey never gave us that opportunity.\u201d<\/p>\n<p>\u201cJudith Blackwell, she told the whole story in terms of Monique Zmuda saying they wanted us out, that we\u2019re crooks,\u201d Ms. Brady continued. \u201cThey accused us\u2026 and never gave us the opportunity to respond, ever.\u201d Monique Zmuda is the deputy City Controller.<\/p>\n<p>\u201cI feel really betrayed by a city that I used to really love and [City Attorney] Dennis Herrera, who is our private attorney, betrayed us,\u201d a tearful Ms. Brady said. \u201cEd Lee, who claims he barely knew us, betrayed us. Ed Harrington? I don\u2019t know what that was all about, or Monique Zmuda\u2026 but Ed Lee and Dennis Herrera, they let down really good people who used to live in this city and loved this city and did all that we could to do good in the community and this city. \u201c<\/p>\n<p>\u201cSo I pretty much call it, \u2018The City of Betrayal.\u2019\u201d<\/p>\n<p>Cobra\u2019s lead counsel in the case, Whitney Leigh, told us, \u201cThe jury made its decision. We\u2019re concerned that the jury was allowed to find that Cobra could have breached the contract by refusing to submit to an audit by the City Attorney. So we believe there are some issues that need to be researched, so we\u2019ll be looking at those issues.\u201d<\/p>\n<p>Asked if there would be post-trial motions, Leigh said, \u201cPost trial motions and\/or appeal.\u201d<\/p>\n<p>\u201cObviously we\u2019re disappointed,\u201d Leigh added, \u201cbut we\u2019ll review the transcripts and see what options are available.\u201d<\/p>\n<p>Because of the possibility of an appeal, Herrera was unable to comment on the verdict or to discuss city\u2019s costs in trying the case, said Herrera spokesperson Matt Dorsey.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In CCSF vs. Cobra Solutions, the jury found that both the city and Cobra Solutions failed in their responsibilities to prevent a former Department of Building Inspection information technology manager, Marcus Armstrong, from fraudulently\u00a0bilking the city\u00a0out of at least $482,000 between 1999 and 2001.<\/p>\n","protected":false},"author":3,"featured_media":6340,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222,17],"tags":[1199,784,921,1110,1207,1205,312,294],"class_list":["post-3403","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-politics","tag-cobra-solutions","tag-dennis-herrera","tag-ed-harrington","tag-ed-lee","tag-gcsi","tag-monique-zmuda","tag-whitney-leigh","tag-willie-brown"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - 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