Today’s news about a contractor accused of stealing $3.6 million from the Department of Education comes from a report by the Special Commissioner of Investigations. We’ve pasted the full report below.

The report paints a picture of contractor Ross Lanham’s straightforward scheme: he billed the DOE at a high price, and paid his subcontractors at a lower price. The difference, allegedly, went into a lavish lifestyle that includes three houses on Long Island.

More surprising, though, is the extent to which IBM and Verizon turned a blind eye to Lanham’s accounting. For instance, when an IBM staffer noted irregularities in Lanham’s billing, Lanham protested that the DOE was “okay with it.” IBM, perturbed, shuffled Lanham and his consultants into a different subcontracting company with a different name, but said nothing to the DOE.

Next, Verizon accepted Lanham’s subcontractors after he threatened to take the DOE contract to IBM. Puzzlingly, Verizon found out that Lanham was not giving his subcontractors the full amount that Verizon was paying out, but only went into action after the DOE contacted them with their concerns.

Overall, the report presents a world of unsupervised greed. The language at the end is particularly direct.

IBM and Verizon, by their silence, facilitated this fraud. IBM did not contact anyone at the DOE about the Lanham consultants. Instead, they moved the consultants from one subcontractor to another to cover themselves. Verizon concealed from the DOE and law enforcement that they got millions of dollars in contracts through Lanham only after agreeing to hire CCS as a subcontractor. All of the subcontractors named in this report, except Bayview, facilitated the concealment of the fact that Lanham was profiting from the DOE while he was being paid to represent the DOE.

04-11 Lanham Rpt