Look, the local sheriff, gave away $2,000,000 to her boyfriend.
Investor: Sheriff was not duped</>
By MARK DAVIS, STEVE VISSER
Published on: 04/02/04
Fulton County Sheriff Jackie Barrett was actively involved in a failed $2 million investment of public money, meeting twice with the businessman whose lending company handled the cash and staying in close contact with an agent who brokered the deal, the man who received the money said Thursday.
Michael Zein, president of the Florida company that administered the cash, said Barrett was not a dupe in a transaction that has resulted in the loss of $2 million in surplus funds that were supposed to go to Fulton County residents whose property was sold to settle tax claims.
Barrett's lawyer disputed Zein's claim and said the sheriff had no knowledge of any "illegal or improper conduct" in the administration of the investment or an additional $5 million she invested with MetLife, a reputable insurance company.
In a related development, federal authorities issued subpoenas this week seeking more information about the failed deals — one to Zein and his corporation, Provident Capital Investments Inc., and a second one to a Fulton County official.
Federal authorities have demanded that Zein, of Fort Lauderdale, appear April 20 before a grand jury at U.S. District Court in Atlanta to answer questions about his transactions with the Fulton County sheriff. Zein said Thursday he will cooperate.
The inquiries center on deals Barrett said she made at the behest of stockbroker Byron Rainner, at the time an employee of Metropolitan Life Insurance Co. in Florida. Barrett signed two checks for millions of dollars, made out to MetLife and to Zein's corporation.
County auditors have concluded Barrett exceeded her authority when she made the investments, which they said were illegal in nature. Barrett made the investments after receiving $4,000 in re-election campaign contribution from Rainner's company and three of his business associates.
Fulton County has recovered the bulk of one of the investments — $5 million sent to MetLife. The company returned the cash to Fulton County in mid-March, minus $363,370 in penalties for early withdrawal.
But the $2 million in county funds lent to Zein's mortgage investment company has not been recovered. A deadline for the return of the money lapsed Wednesday afternoon.
'The first red flag'
In an interview Thursday at his Florida offices, Zein, 49, characterized himself as an entrepreneur who stifled his suspicions about stockbroker Rainner and the propriety of handling the Fulton County cash.
Zein paused during the interview to read a fax his secretary brought to him — a federal subpoena ordering him to appear for questioning in Atlanta later this month.
The two South Florida businessmen had not known each other long, Zein said, when Rainner approached him in October 2002 with a deal. Zein said Rainner told him he could secure $8 million from the Fulton County Sheriff's Department that Zein's company could in turn lend to start-up businesses. Zein said he agreed to the proposal.
A month later, Zein recalled, he asked Rainner when he would see the money. He said Rainner told him to be patient, that auditors were going over the sheriff's books.
"That was the first red flag," Zein said Thursday. "It really put a question mark about what the audit had to do with anything if everything was legitimate."
Yet in March 2003, Zein received a $2,036,134 check payable to Provident Capital — not the $8 million he said Rainner promised. The check was signed by Jackie Barrett.
In April, Zein said, he went to Atlanta with Rainner in hopes of meeting with Barrett to discuss how he was investing the money she had sent to him. Zein said he brought along an attorney and a Chattanooga businessman who headed one of the companies in which Zein's company was investing. They met at a Wachovia bank building in Atlanta, Zein said.
Zein said he listened as the sheriff deferred to Rainner during the conversation.
"We had tried discussing the money transfer and the bond buy, but she said, 'Byron is taking care of all the specifics. I don't have to worry about that,' " Zein said.
Later that month, Zein said, he and Rainner returned to Atlanta to meet a second time with the sheriff. This time, he said, a Sheriff's Department official picked them up at Hartsfield International Airport and drove them to Barrett's house.
Zein said he and the sheriff's official remained in the car while Rainner went inside the house. When Rainner came out, he was accompanied by Barrett, who simply greeted the men waiting in the car, Zein said. Zein then was taken back to the airport. He said he was surprised that he was not given time to talk with the sheriff.
In May, said Zein, he received a letter from Barrett requesting that he return the money. By then, he said, it was too late: He had invested it.
Records show that Zein lent $925,000 of the $2 million to Lancelot James, president of XPress RX Pharmacy Inc., a Plantation, Fla., enterprise.
Zein is suing Rainner, James and the pharmacy for fraud, breach of oral agreement and other alleged offenses. According to court papers, Zein said he invested the cash thinking the pharmacy had two clients with which to do a large volume of pharmaceutical business — Jackson Memorial Hospital in Miami and the Fulton County Sheriff's Department, which operates the county jail in Atlanta.
Zein said he has recouped $250,000 of that investment, and wants the remaining $675,000.
He also is suing Rainner for the return of $284,000 that he said he lent him.
The status of the rest of the Fulton County cash, more than $1 million, remains undetermined.
DA defers to feds
In Atlanta, state and federal officials increased their scrutiny of the financial transactions, which on Wednesday prompted Fulton County Commission Chairwoman Karen Handel to call for Barrett's resignation.
Fulton County Attorney O.V. Brantley confirmed Thursday that she was served with a subpoena from the U.S. attorney's office the day before. The subpoena, she said, seeks county records.
"The county is cooperating fully," Brantley said.
Fulton District Attorney Paul Howard and his office's Public Integrity Unit reviewed the county audit and decided not to initiate a separate criminal investigation.
Howard sent U.S. Attorney Bill Duffey in Atlanta a memo Thursday afternoon saying in part: "By reason of the large number of transactions that took place in Florida as well as other factors involved, my staff has concluded that the investigation of this matter should be handled through your multistate jurisdiction."
Barrett has hired an Atlanta attorney, Mark Trigg, in an effort to recover the money and to investigate what happened.
Trigg said his client is eager to find out what happened to the $2 million and already had asked the FBI to investigate the deals. Barrett was traveling and unavailable for comment Thursday, Trigg said.
The attorney said he didn't know why Barrett didn't contact authorities in July after she first began trying to recover the $2 million and failed.
"At this point I don't know much more than what I've read in the paper and what I learned in the course of a brief conversation [with Barrett]," Trigg said.
Barrett has done nothing improper, the attorney said.
"To the extent there has been some duping, she has been duped as well," said Trigg.
Staff writers Richard Whitt and D.L. Bennett contributed to this article. |
