According to a press release issued by Oklahoma's Attorney General Mike Hunter, the release of the audits come at his discretion, as is the case with all investigatory audits presented to the multi-county grand jury unit.

MIAMI – The release of the long-awaited Lead Impacted Communities Relocation Assistance Trust (LICRAT) audit came after a decision from Multicounty Grand Judge Thomas Prince on Monday.

The Board of Directors of LICRAT, composed of private citizens, served without compensation to oversee remediation of the Tar Creek Superfund site, deemed one of the most toxic Superfund sites in America.

LICRAT's responsibility and purpose was to oversee the federal buyout to purchase homes and properties located within the Tar Creek Superfund site in Picher and Cardin.

LICRAT Trustees included Dr. Mark Osborn, Virgil Jurgensmeyer, John Lomax, Janell Trimble, Kim Pace, and Mike Sexton. Jack Dalrymple served as Project Manager.

The LICRAT Trust audit was called for by then state attorney general, Scott Pruitt in 2011 over concerns brought forward by Senator Tom Coburn from staff pertaining to the awarding of alleged unlawful contracting practices of LICRAT for reclamation of Tar Creek Superfund properties. The audit took approximately 3,000 hours to complete and concludes there is no direct evidence of a conspiracy against the State.

The Washington DC watchdog group, Campaign for Accountability (CfA) filed an Open Records Act (ORA) request on Nov. 9, 2017, and a subsequent lawsuit on Nov. 27, 2017, listing Oklahoma State Auditor Jones and Hunter as the defendants in order to obtain the audit.

In legal responses to CfA's lawsuit, Jones, through his attorney agreed and argued the audit should be released but said he was prohibited from releasing the audit by the former and current Attorney Generals. Jones asked for the judge to grant him the ability to release the audit.

After the lawsuit was filed by CfA in 2017, Attorney General Hunter tasked MCGJ Chief Joy Thorpe and Senior Deputy Attorney General Tom Gruber, both experienced prosecutors, with reassessing whether charges should have been or needed to be filed in the case.

Thorpe and Gruber both determined no larger investigation was necessary and that no criminal charges were warranted after review of the audits and MCGJ investigative files.

Responsive information was provided to the audits by the attorney for LICRAT Andy Lester.

The Release

According to a press release issued by Oklahoma's Attorney General Mike Hunter, the release of the audits come at his discretion, as is the case with all investigatory audits presented to the multi-county grand jury unit.

Hunter also released associated investigative files along with the audit on April 9.

“The politicization of this matter by an out of state special interest group is unnecessary and unwarranted,” Hunter said. “The facts are clear: The investigative audits looked into the bidding process for the removal of structures and to facilitate the removal of toxic debris, not the buyout and relocation of residents by the federal government. The matter, which was the subject of the audits, was reviewed by prosecutors in the Attorney General’s Office, the EPA under President Barack Obama and reexamined and scrutinized by newly hired, experienced criminal prosecutors in my office. No one in the review chain described above found prosecutable evidence of criminal activity.”

He went on to say, “My office continues to support transparency and remains committed to sharing information with Oklahomans in a manner consistent with the obligation to protect the rights of informants and individuals who are not charged with a crime. We will continue to defend the integrity of the multicounty grand jury process and those who appear before it.”

Hunter said the LICRAT audits are considered investigatory audits from the state auditor, which are necessary to assist in investigations and become part of litigation and investigatory files of the Attorney General's Office.

In his release, Hunter says these files are kept confidential to preserve the integrity of the investigation and it is not uncommon to provide information to the audited party after completion to allow response or clarification. These files become public at the discretion of the attorney general or if criminal charges are filed and become part of the court files.

“No criminal charges were filed after the LICRAT audits were complete, therefore never making them an open document,” Hunter said in the press release.

LICRAT Audit

Pruitt called on State Auditor Gary Jones for the investigative audit on April 21, 2011, to a bid let and awarded on March 24, 2010, by LICRAT, and the re-letting of the contract by LICRAT through the Department of Central Services (DCS) in December 2010.

The auditor’s report states, “Although our investigation did not provide direct evidence for a conspiracy against the state, it did provide considerable circumstantial evidence that a conspiracy may have existed.”

Work was halted by Ottawa County District Court for the demolition of 248 properties and the bid re-let after the initial contract was awarded to Stone’s Backhoe, Dozer & Trucking, Inc. in March 2010 and was almost immediately assigned to CWF Enterprises, Inc. (CWF). The court found the contract was invalid and had been awarded in violation of the Open Meeting Act.

A second demolition contract was awarded by DCS through the re-letting to CWF.

“The assignment of the contract was under the sole approval of LICRAT’s Project Manager, Jack Dalrymple,” the audit reads.

Dalrymple is a professional engineer with many years of experience and diverse expertise.

“DCS employee David Mihm, not Mr. Dalrymple, was the Project Manager for the contract. Thus, this report debunks the impression left by the Audit that LICRAT and Mr. Dalrymple were in control of the administration of the contract,” Lester wrote in a response report to the auditor date June 30, 2014. “By using DCS to design and administer the contract, the Trust hoped to insulate the Trust, its Trustees and its employees form further legal action.”

Lester’s response also says the Selection Committee used a blind scoring process for the contract and the low scores were the result of confusion in using a new procedure, or because the bidders did not provide sufficient information.

The audit report states, “As a consequence of highly questionable change orders and extremely lax contract administration of the Dec. 2010 contract, the payments to CWF, under this second bid award/contract totaled $3,050,785. This amount, along with a payment to CWF of $366,282 under the March 2010 contract, brought the total payments to CWF for the Property Improvement Clearance Project to $3,417,068. Contrast this total amount with the original bid received on the project in October 2009 of $599,988.”

The auditor reported that a restoration cleaning company with no heavy equipment and less experience received a perfect 10 in the DCS pre-bid qualification process through a committee led by LICRAT Project Manager Jack Dalrymple, while three other demolition companies rated 1s on a scale of 1 to 10 though they provided examples of prior experience of major and more complete demolition contracts.

Although unsure of what influence was had on the bid process, the auditor’s report states that CWF’s owner Chris White signed a bid affidavit claiming no business relationship with Dalrymple, but did have a prior business relationship with LICRAT and Dalrymple for the LICRAT/DCS contract that should have been disclosed on the bid affidavit.

“No bias existed in the bidding process, DCS, not LICRAT, was responsible for the bidding process,” Lester wrote in response. Lester argues that Dalrymple served as a consultant, and not project manager for the LICRAT/DCS contract and was subordinate to the owner of the contract, the State of Oklahoma.

Another issue of concern raised was in regards to a change order requested by CFW raising demo costs charged from $2.95 per square foot to as high as $5.75 because 66 of the 248 demolition properties were pending release from the Bureau of Indian Affairs and the Quapaw Tribe and may cause delays, an issue that was known to bidders during the bid process.

Jones’ audit report to the AG states all parties signed a contract omitting the Alternate Bid as unnecessary, only to subsequently add a $1.3 million Alternate Bid two months later due to a “clerical error” as justification for increasing the contract award by nearly 78 percent. The report finds fault in the claim that this change order was deemed reasonable and appropriate, although state law prohibits cumulative “change order or addenda” from exceeding 10 percent on contracts exceeding $1 million.

A DCS directive for the Alternate Bid was added to reflect the additional amount required to utilize a licensed landfill rather than the EPA Repository should it not be available. On Jan. 3, 2011 DEQ and DCS officials agreed by email that there was no need for accepting the alternate, and on Jan. 7. 2011 the official project contract was signed without inclusion of the Alternate Bid.

According to the audit report, the Alternate Bid was invoked for additional costs to haul debris to a fee-based Kansas landfill when non-fee based facilities were still receiving debris, and the contractor charged LICRAT a lump sum for the entire $1.3 million although reporting only approximately 15 percent of project debris was hauled to the fee-based Kansas landfill, resulting in a “windfall” to the contractor of over $1 million.

“We do not believe that the above events can be explained away as poor management or ‘clerical error.’ We believe the above provides sufficient circumstantial evidence for additional investigation into a potential conspiracy against the state,” auditors wrote in the audit.

A March 18, 2011 email was sent from DCS Project Manager David Mihm and DEQ’s Programs Manager which read, "I spoke with Mike about our concerns with this project and what we could do to resolve them. He confirmed my thoughts on the matter. We are unable to exercise an Alternate after the fact, an Alternate and option can only be accepted if within the Contract. The other alternative we have discussed with Mike was the idea of declaring an emergency. We do not suggest this due to the sensitive nature of the project already. Basically LICRAT, with advice of legal counsel, would declare the remaining work as either a safety or health concern. Projects declared, and accepted by the Director of DCS, can be given to any contractor – logically here, to CWF. This is what not recommended. Let me know what you think.”

Three days later Change Order No. 2 was approved adding the Alternate Bid back into the contract including a statement declaring this measure was being added because it was left off the original contract by a “clerical error.”

The auditors found no evidence of a clerical error supporting the claim, nor any notice of such error by DCS, LICRAT or Dalrymple. In review the auditors found the EPA Repository remained available for use by CFW at no cost throughout the demolition project as well as another EPA location in Hockerville, making use of the Alternate Bid unnecessary.

Change Orders by law were to be approved by the governing body of the awarding agency and recorded, both change orders were signed by the LICRAT Board Chairman, but no evidence was found that either change order had been approved in an open meeting by the Trust board as required.

The auditors found that if the Alternate had been a legal addition to the contract, and the use of the $1.3 million amount allowed by the change order should have been limited to $158,133 by records reviewed.

“Based on the actual language of the Alternate Bid, maintaining the position that it was a ‘lump sum’ addition to the original contract provided in excess of a $1 million ‘windfall’ to the contractor,” the audit reads.

“The Alternate Bid to the contracts existed because at the time of the initial bid, LICRAT had no way of knowing whether the EPA Repository would be available over the entire term of the contract to accept debris from the project,” Lester responded. “…Although DCS did not include the Alternate Bid in the original signed version of the contract, DCS’s decision to put it back in the contract was lawful, as it simply reformed the contract to reflect the actual vote of the LICRAT Trustees approving the bid.”

Lester argued the contract for the bid was for a lump sum and, for work done.

State auditors found no evidence of collusion or of a “straw bidder,” any illegal conflict of interest, or unlawful disclosure of bid information. Potential evidence was found of a violation of state law in the successful bidder providing misstatements of facts to the Public Trust, with no direct evidence of a “conspiracy” but there appeared to be an inordinate level of bias to the winning bidder that could warrant further investigation, according to the audit report.

No evidence was found of any transactions and activities that would meet the criteria of bribery, embezzlement, and kickbacks.

In further review the auditors found CWF invoiced LICRAT for $6,345 for removal of the Mickey Mantle historic home and for landfill fees when the home was actually moved to Commerce which the City of Commerce paid $3,000 to the Trust for the cost of the move.

CWF invoiced the LICRAT for other such claims for costs and fees not incurred for clean up and demolition of a structure destroyed by fire, and non-existing structures, according to the audit.

Lester claims debris removal work was completed on these properties listed in the audit.

“The volunteer citizens who have served on the LICRAT Trust Board were commissioned to perform a large and difficult function. The job of LICRAT to oversee the voluntary relocation of residents living in the communities of Picher, Cardin, Hockerville and surrounding areas, and to demolish structures the Trust acquired in the course of the relocation, so as to protect public health and safety, naturally created significant opposition. Under the circumstances, LICRAT performed its job admirably, if not perfectly,” Lester concluded in his response.

CfA Response

CfA's Executive Director Daniel Stevens responded to news of the audit's release.

“We’re obviously pleased that the Attorney General has agreed to release the audit as the law requires. However, it shouldn’t take months of litigation to force the state's top law enforcement officer to release public documents,” Stevens said. “Moreover, we were not notified that the Attorney General planned to release the documents, instead, we first heard about it on Twitter. We're still evaluating the documents posted online to determine whether the Attorney General has released all of the documents as the law requires.”

According to Stevens, CfA intends to continue efforts to seek further information and records involved in the Tar Creek Superfund site buyout.

“Additionally, we're not done digging. We're planning to file another lawsuit that demands the Attorney General release all of Scott Pruitt's communications with James Inhofe about the Tar Creek audit," Stevens said. “We will leave no stone unturned in our efforts to get to the bottom of what happened at Tar Creek."

Melinda Stotts is the associate editor of the Miami News-Record. She can be emailed at mstotts@miaminewsrecord.com or followed on Twitter @MelindaStotts1.