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Two Deal Brokers With Dirty Hands Manipulated Ohio Water Contracts

May 29, 2006|Mike Hudson | Special to The Times

Nate Gray and Gilbert Jackson used a variety of sweeteners to ingratiate themselves with municipal officials: tickets to ballgames and Broadway shows, under-the-table payments, a $700 Louis Vuitton handbag.

Gray had especially good connections in the Ohio suburb of East Cleveland. When another businessman approached the mayor about getting some city business, Gray called the rival and confronted him, federal wiretaps show.

"You stole my mayor," Gray complained.

"Which one?" the businessman asked.

Gray and Jackson helped secure water and sewer contracts in Cleveland and East Cleveland for two of the nation's most prominent engineering firms. Those deals became key elements in a federal racketeering investigation that eventually put the pair in prison. Their story offers a glimpse of the underside of the municipal water business.

Jackson was a New Orleans-based senior vice president for the engineering firm Camp Dresser & McKee. He developed ties to Cleveland Mayor Mike White and was active in the U.S. Conference of Mayors, serving as co-chairman of its Mayors Business Council, created to promote "public-private partnerships."

Gray was a political supporter and close friend of White, Cleveland's mayor from 1990 to 2002. Gray twice served as best man at White's weddings.

In April 1996, Gray began collecting a $2,500-a-month retainer from Camp Dresser. Jackson became Gray's friend and worked with him to snag contracts in cities around the country, prosecutors said.

In Cleveland, Gray and Jackson helped Camp Dresser secure nearly $15 million in business with the city's water department. The two manipulated competitive bidding for a 2001 contract to renovate water treatment plants, prosecutors said.

Camp Dresser had the lowest expertise score of three bidders. During a second round, described by prosecutors as a "sham," Dresser outscored its rivals and won the $4.7-million contract.

Prosecutors noted in court papers that Jackson opened his New Orleans home to a political fundraiser for White and that Gray gave Cleveland Water Commissioner Julius Ciaccia Jr. tickets to 22 Cleveland Indians baseball games over two years.

Neither White nor Ciaccia, now the city's utility director, has been charged. Both denied wrongdoing. An attorney for Camp Dresser said the firm had been unaware of illegal activities by Jackson and Gray.

Gray also helped CH2M Hill, a Colorado engineering firm, win a $3.9-million no-bid contract in 2002 to run East Cleveland's water and sewer system.

A CH2M subsidiary, Operations Management International Inc., also known as OMI, channeled cash payments to then-Mayor Emmanuel Onunwor through a front company, prosecutors said in court papers. They said OMI passed money to a Cleveland engineering firm that employed Gray as a subcontractor and Gray made payments to the mayor.

Ralph Cascarilla, an attorney for OMI, said his company had no idea that consulting fees it paid the local firm were used to bribe the mayor. OMI has not been charged in the case.

OMI pulled out of the contract in 2004, saying that East Cleveland had stopped paying its monthly fee. The city responded that it couldn't afford to pay, because water and sewer revenues were well below what OMI had projected.

As part of the racketeering investigation, the FBI planted a camera in Gray's office and tapped his phone, intercepting calls between January 2002 and April 2003. Nine people, including Gray and Jackson, have been convicted in a probe that examined contracts in Ohio, New Orleans and Houston.

In December 2005 a federal judge sentenced Jackson to 82 months in prison. Onunwor, who cooperated with the government, drew a 108-month sentence and was ordered to pay East Cleveland $5.1 million in restitution.

Gray, sentenced to 15 years, told the judge: "I've clearly made some bad choices." But in one wiretapped conversation, he suggested that his methods were hardly unusual: "Ninety percent of getting public contracts required greasing the palms of public officials."

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