Case Document 3 Filed 02/25/20 Page 1 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI NORTHERN DIVISION UNITED STATES OF AMERICA V. SOUTHERN EISTRICT OF MISSISSIPPI I i. LFEB 2 5 2020 JOHNSTON DEPUTY 3391" ?3'1ch. E's BY CRIMINAL NO. CERISSA RENFROE NEAL, 18 U.S.C. 1349 JOSEPH B. KYLES, 18 U.S.C. 1343 DAVID B. HUNT, and 18 U.S.C. 1957 LAMBERT MARTIN 18 U.S.C. 666(a) The Grand Jury charges: INTRODUCTION At all times relevant to the allegations of this Indictment: 1. Defendant CERISSA RENFROE NEAL was Executive Director with the Mississippi Department of Education (?Department of Education?). CERISSA RENFROE NEAL was also principal owner of Garland Consulting, located in Madison, Mississippi. 2. Defendant JOSEPH B. KYLES was principal owner of The Kyles Company, located in Memphis, Tennessee. 3. Defendant DAVID B. HUNT was principal owner of Doc Imaging, located in Jackson, Tennessee. Doc Imaging also did business as ?Hunt Services.? 4. Defendant LAMBERT MARTIN was principal owner of Educational Awareness, located in Memphis, Tennessee. 5. Mississippi Department of Education procurement rules required formal competitive bidding processes for services contracts valued greater than $100,000. 6. Mississippi Department of Education procurement rules required formal competitive bidding processes for tangible goods contracts valued greater than $50,000. Case Document 3 Filed 02/25/20 Page 2 of 12 COUNT 1 (Conspiracy: 18 U.S.C. 1349) 7. Beginning no later than on or about May 1, 2013, and continuing through on or about July 31, 2016, the exact dates being unknown to the Grand Jury, in Hinds County, in the Northern Division of the Southern District of Mississippi, and elsewhere, the defendants, CERISSA RENFROE NEAL, JOSEPH B. KYLES, DAVID B. HUNT and LAMBERT MARTIN, did willfully, that is, with the intent to further the objects of the conspiracy, and knowingly combine, conspire, confederate and agree with others known and unknown to the Grand Jury to commit certain offenses against the United States, namely, wire fraud, in violation of Title 18, United States Code, Section 1343. 1 Object of the Conspiracy 8. It was the object of the conspiracy for the defendants to unjustly enrich themselves by using interstate and international wires and using the mails, to defraud the State of Mississippi, the United States, and other persons by bid rigging, false quotes, and altered purchase orders, in order to make money and profit by defrauding the Mississippi Department of Education into awarding contracts and purchase orders at in?ated prices, directed to conspirators and their businesses. The Manner and Means of the Conspiracy 9. The manner and means by which the defendants and their coconspirators sought to accomplish the objects of the conspiracy included, among other things, the following: 10. Using her position within the Mississippi Department of Education, defendant CERISA RENF ROE NEAL would split contract requests from one contract to multiple smaller Case Document 3 Filed 02/25/20 Page 3 of 12 contracts to avoid threshold amounts that would trigger formal competitive bidding process. 11. Co-conspirators established and operated various business entities such as The Kyles Company, Doc Imaging, ?Hunt Services,? Educational Awareness, or Garland Consulting, in Mississippi, Tennessee, and elsewhere in the United States. 12. Defendant CERISSA RENFROE NEAL would entertain and advocate for a bid for the contract ?om one of the conspirators? businesses. To meet the Department of Education requirement that such an informal bid have at least two competing vendor quotes for comparison, defendant CERISSA RENFROE NEAL would obtain false and in?ated quotes, by herself and from the other conspirators, designed to make the intended conspirator?s business the lower bid, and to guarantee the award of the contract to that business. 13. Conspirators coordinated their submissions to the Department of Education as well as the sharing of the resulting contract payments. After the Department of Education made payment on the rigged contract to the conspirator-owned business, the assisting conspirator defendants received payments from the winning bidder, in return for their assistance in rigging the bid and winning the contract award from the Department of Education. 14. Payments would then be made to defendant CERISSA RENFROE NEAL from the winning bidder, to whom she had directed the award of the contract. 15. The (First and Second) Micro?che Contracts: On or about May 2014, when the Department of Education sought to contract an outside business to convert teacher personnel record ?les ?om micro?che to digital storage media, defendant CERISSA RENFROE NEAL caused the contract to be split into two contracts, each valued below the $100,000 threshold, at equal amounts of $98,875. Case Document 3 Filed 02/25/20 Page 4 of 12 16. On or about May 16, 2014, defendant CERISSA RENFROE NEAL awarded the First Micro?che Contract to bidder ?Hunt Services.? ?Hunt services? was in fact Doc Imaging, owned and operated by defendant DAVID B. HUNT. The competing quotes used to justify the award to ?Hunt Services? were from a business named Docufree and another business called Bits Bytes. The Docufree quote was not actually submitted by Docufree as a bidder, but instead had been created by Defendant CERISSA RENFROE NEAL. 17. On or about June 10, 2014, the State of Mississippi paid $98,875 to ?Hunt Services? for the First Micro?che Contract. 18. . On or about June 10, 2014, Doc Imaging, controlled by defendant DAVID B. HUNT, paid $15,700 to The Kyles Company, controlled by defendant JOSEPH B. KYLES. 19. On or about June 2, 2014, Doc Imaging paid $2,500 to the Bits Bytes company. 20. On or about July 9, 2014, defendant CERISSA RENFROE NEAL caused the award of the Second Micro?che Contract to Doc Imaging, controlled by defendant DAVID B. HUNT. The competing quotes used to justify the award to Doc Imaging were the identical quotes from Docufree and Bits Bytes, previously used in June 2014 to justify the award of the First Micro?che Contract to ?Hunt Services.? . 21. On or about September 12, 2014, the State of Mississippi paid $98,875 to Doc Imaging for the Second Micro?che Contract. 22. On or about September 16, 2014, Doc Imaging paid $14,730 to The Kyles Company, controlled by defendant JOSEPH B. KYLES. 23. On or about August 28, 2014, Doc Imaging paid $2,500 to Bits Bytes. 24. The Kyles and Company sale of educational equipment: Defendants 4 Case Document 3 Filed 02/25/20 Page 5 of 12 CERISSA RENFROE NEAL, LAMBERT MARTIN and JOSEPH B. KYLES further conspired and colluded to submit fraudulent quotes to guarantee and ensure that The Kyles Company received Department of Education purchase orders for certain educational classroom equipment. The classroom equipment purchases were paid for from federal grant money given to the State of Mississippi. 25. Beginning in September 2014, and continuing through 2016, defendant CERISSA RENF ROE NEAL directed Department of Education purchase orders for the bene?t of The Kyles Company. The purchase orders were kept below the $50,000 threshold for tangible goods, in order to evade formal competitive bidding procedures. 26. For every purchase order, the quote from The Kyles Company was the winning low bid. CERISSA RENFROE NEAL obtained a competing vendor quote from a company named, Promethean company, however that quote was for equipment that was not equivalent to that sold by The Kyles Company. The identical Promethean quote reappeared as a competing vendor quote in every purchase order awarded to The Kyles Company. The Promethean company was unaware that this quote was submitted as justi?cation for successive purchase orders. 27. Defendant LAMBERT MARTIN controlled Educational Awareness, which supplied the second competing vendor quote for each purchase order for educational classroom equipment awarded to The Kyles Company. Each vendor quote from Educational Awareness was higher than the corresponding quote from The Kyles Company. 28. Throughout the time that the Department of Education was awarding purchase orders to The Kyles Company in preference over the quotes from Educational Awareness, The Kyles Company, controlled by defendant JOSEPH B. KYLES, made recurring payments to 5 Case Document 3 Filed 02/25/20 Page 6 of 12 Educational Awareness and defendant LAMBERT MARTIN. Defendant JOSEPH B. KYLES, acting through The Kyles Company, aided and abetted by others, also made payments back to defendant CERISA RENFROE NEAL. 29. In this manner, The Kyles Company received from the State of Mississippi payments on purchase orders in total exceeding $650,000. 30. During the same period, The Kyles Company made payments to Educational Awareness altogether in excess of $65,000. 31. Defendant CERISSA RENFROE NEAL in this manner received payments directly or indirectly from defendant JOSEPH B. KYLES and The Kyles Company, totaling more than $42,000. 32. The Third Microfiche Contract: On or about March 9, 2015, the Department of Education published a request for proposals for conversion of micro?che ?les in the Department. Defendant DAVID B. HUNT and Doc Imaging submitted a price quote, but was underbid to a legitimate competitor company from Texas. 33. Following the April 2015 award of the Third Micro?che Contract to the Texas vendor, defendant CERISA RENFROE. NEAL advocated within the Department of Education for the revocation of the contract award and republication of the request for proposals. 34. Defendant CERISSA RENFROE efforts led to the Department of Education?s request in May 2015 that the vendors competing for the Third Micro?che Contract ?clarify? their bids. 35. On or about May 8, 2015, Doc Imaging submitted a new bid quote that was substantially lower than its initial quote and lower than the previous winning quote from Texas. 6 Case Document 3 Filed 02/25/20 Page 7 of 12 All other original bidders had resubmitted their original proposals in the original amounts. 36. On or about July 22, 2015, the Department of Education awarded the Third Micro?che Contract to Doc Imaging. 37. On or about June 9, 2016, the State of Mississippi paid $152,352 to Doc Imaging. 38. On or about June 16, 2016, Doc Imaging paid $30,975.60 to The Kyles Company. 39. On or about July 10, 2016, The Kyles Company paid $3,000 to Garland Consulting, controlled by defendant CERISSA RENFROE NEAL. All in violation of Title 18, United States Code, Section 1349. COUNTS 2-8 (Wire Fraud: 18 1343) 40. Beginning on or about May 1, 2013, and continuing through on or about July 31, 2016, the exact dates being unknown to the Grand Jury, in Hinds County, in the Northern Division of the Southern District of Mississippi, and elsewhere, the defendants, CERISSA RENFROE NEAL, JOSEPH B. KYLES, DAVID B. HUNT and LAMBERT MARTIN, aided and abetted by others, did knowingly and with intent to defraud, devise and intend to devise a scheme and arti?ce to defraud the Mississippi Department of Education and other parties, and to obtain money and property, by means of materially false and fraudulent pretenses, representations, and promises, knowing that the pretenses, representations, and promises were false and fraudulent when made, and did knowingly cause to be transmitted, by wire communication in interstate and foreign commerce, writings, signs, pictures, sounds and signals for the purpose of executing such scheme and arti?ce. Case Document 3 Filed 02/25/20 Page 8 of 12 41. Pu_rp_ose and Manner and Means of the Scheme and Arti?ce Paragraphs 1 through 39 of this Indictment are incorporated by reference as though fully stated herein, as the purpose and manner and means of the alleged scheme and arti?ce. 42. Use of Interstate Wire Communications On or about the dates listed below, in Hinds County, in the Northern Division of the Southern District of Mississippi, and elsewhere, for the purpose of executing the aforesaid scheme and arti?ce to defraud, the defendants, CERISSA RENFROE NEAL, JOSEPH B. KYLES, DAVID B. HUNT and LAMBERT MARTIN, did knowingly transmit and cause to be transmitted, in interstate and foreign commerce, by means of wire communications, certain writings, signs, signals, pictures and sounds, as more particularly described for each count below: COUNT DATE WIRE COMMUNICATION Email from CERISSA RENFROE NEAL to JOSEPH B. 2 March 3, 2015 KYLES forwarding email chain about payments to The Kyles Company 3 April 2 2015 Email from CERISSA RENFROE NEAL to JOSEPH B. KYLES about equipment sale to County, MISS. 4 May 11 2015 Clearance of deposited check in amount of $49,525 from The State of Mississippi to The Kyles Company Clearance of de osited check in amount of $36,700 from The 5 September 16? 2015 State of Mississli3ppi to The Kyles Company 6 February 8, 2016 Clearance of deposited check in amount of $6.668 from The State of Mississippi to The Kyles Company . May 27, 2016 Clearance of deposited check in amount of $29,000 from The State of Mississippi to The Kyles Company June 9, 2016 Clearance of deposited check in amount of $152, 352 from The State of Mississippi to Doc Imaging All in violation of Title 18, United States Code, Sections 1343. Case Document 3- Filed 02/25/20 Page 9 of 12 COUNT 9 (Engaging in Monetary Transactions: 18 U.S.C. 1957) 43. On or about March 1 l, 2015, in Hinds County in the Northern Division of the Southern District of Mississippi, and elsewhere, the defendants CERISSA RENFROE NEAL and JOSEPH B. KY LES, aided and abetted by others, did knowingly engage and attempt to engage in the following monetary transactions by through or to a ?nancial institution, affecting interstate or foreign commerce, in criminally derived property of a value greater than $10,000, that is the transfer and exchange of US. currency, such property having been derived from a speci?ed unlawful activity, that is, wire fraud: COUNT DATE MONETARY TRANSACTION 9 March 11, CERISSA RENFROE NEAL Deposit of check in amount of $20,000 2015 and JOSEPH B. KYLES by CERISSA RENFROE NEAL Allin violation of Title 18, United States Code, Sections 1957 and 2. COUNTS 10-12 (Bribe to an Agent of an Organization Receiving Federal Funds: 18 U.S.C. 666(a)(2)) 44. At all times material to this Indictment, the Mississippi Department of Education was an agency of a state government that received federal assistance in excess of $10,000 during the one-year period beginning August 1, 2015 and ending July 31, 2016. 45. Defendant CERISSA RENFROE NEAL was an agent of the Mississippi Department of Education, whose duties included review of proposals and awards of contracts to vendor businesses. 46. On or about the dates below, in Hinds County, the Northern Division of the Southern District of Mississippi, and elsewhere, the defendant JOSEPH B. KYLES, aided and Case Document 3 Filed 02/25/20 Page 10 of 12 abetted by others, did corruptly give, offer, and agree to give a thing of value to any person intending to in?uence and reward defendant CERISSA RENFROE NEAL in connection with a transaction and series of transactions of the Mississippi Department of Education involving $5,000 or more. COUNT DATE TRANSACTION 10 August 5, 2015 Check in amount of $3,000 to CERISSA RENFROE NEAL 11 October 5, 2015 Check in amount of $2,000 to CERISSA RENFROE NEAL 12 July 10, 2016 Check in amount of $3,000 to Garland Consulting All in violation of Title 18, United States Code, Sections 666(a)(2) and 2. COUNTS 13-1 5 (Receipt of a Bribe by an Agent of an Organization Receiving Federal Funds: 18 U.S.C. 47. At all times material to this Indictment, the Mississippi Department of Education- was an agency of a state government that received federal assistance in excess of $10,000 during the one-year period beginning August 1, 2015 and ending July 31, 2016. 48. Defendant CERISSA RENFROE NEAL was an agent of the Mississippi Department of Education, whose duties included review of proposals and awards of contracts to vendor businesses. 49. On or about the dates below, in Hinds County, and Madison County, in the Northern Division of the Southern District of Mississippi, and elsewhere, the defendant CERISSA RENFROE NEAL, aided and abetted by others, did corruptly solicit, demand, accept and agree to accept a thing of value from a person, intending to be in?uenced and rewarded in connection with a transaction and series of transactions of the Mississippi 10 Case Document 3 Filed 02/25/20 Page 11 of 12 Department of Education involving $5,000 or more. COUNT DATE TRANSACTION 13 August 5, 2015 Check in amount of $3,000 to CERISSA RENFROE NEAL 14 1 October 5, 2015 Check in amount of $2,000 to CERISSA RENFROE NEAL 15 July 10, 2016 Check in amount of $3,000 to Garland Consulting All in violation of Title 18, United States Code, Sections 666(a)(1)(B) and 2. NOTICE OF INTENT TO SEEK CRIMINAL ORF EITURE As a result of committing the offenses as alleged in this Indictment, the defendants shall forfeit to the United States all property involved in or traceable to property involved in the offenses, including but not limited to all proceeds obtained directly or indirectly from the offenses, and all property used to facilitate the offenses. Further, if any property described above, as a result of any act or omission of the defendants: cannot be located upon the exercise of due diligence; has been transferred or sold to, or deposited with, a third party; has been placed beyond the jurisdiction of the Court; has been substantially diminished in value; or has been commingled with other property, which cannot be divided without dif?culty, then it is the intent 11 Case Document 3 Filed 02/25/20 Page 12 of 12 of the United States to seek a judgment of forfeiture of any other property of the defendant, up to the value of the property described in this notice or any bill of particulars supporting it. All pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(1); and Title 28 United States Code Section 2461. JR United States Atto ey A TRUE BILL: SIGNATURE REDACTED Foreperson of the Grand Jury This Indictment was returned in open court by the foreperson or deputy foreperson of the Grand Jury on this the 925521} of February, 2020 ITED STATES JUDGE 12