Obama
Broadband Grant Recipient, FRBA, Sued by Tampa Based
Internet Company, Rapid Systems, Inc. for $25,000,000
Posted April 23, 2013 07:35 am
Rapid Systems CEO, Dustin Jurman and CFO/VP Denise
Hamilton.
TAMPA, FL – On Friday, April 19, 2013, Rapid Systems, Inc., a leader in the field of wireless middle and last mile broadband internet networks, filed a $25 million lawsuit against the Florida Rural Broadband Alliance (FRBA) LLC. Several alleged accomplices were also named in the lawsuit.
FRBA was one of the two winners of the Obama Stimulus funded Broadband Opportunities Grants awarded in Florida. The other was the now infamous North Florida Broadband Authority (NFBA). FRBA received a grant award of $23,693,665. The NFBA grant award was $30,142,676. While Rapid Systems was hired after a competitive procurement process to do engineering services on the NFBA project, the FRBA project was different.
According to Rapid Systems VP/CFO Denise Hamilton, the FRBA arrangement went like this. Government Services Group, FRBA, the NTIA (National Telecommunications & Information Administration), FRBA attorney Crystie Cary of Nabors, Giblin, Nickerson, PA, the Hardee County IDA, and Rapid Systems all agreed that in return for Rapid Systems donating their Hardee County Broadband network to FRBA, Rapid Systems would become a partner in the project. This is known as a public/private partnership.
In return for their donation, which was originally estimated to be $2,000,000 in cash, equipment, and in-kind services, Rapid Systems would have received the operation side of the network. Additionally, Rapid Systems would construct and operate the middle mile infrastructure in the South Central Rural Area of Critical Economic Concern (SCRACEC) and provide last mile service in the region.
At the present time, while both projects appear to be under investigation by federal agencies, FRBA is the only grant recipient being sued by Rapid Systems.
The lawsuit alleges that FRBA and several of its alleged accomplices failed to pay Rapid Systems for services in connection with the development and management of a new broadband infrastructure which connected Rapid Systems Hardee County network to several surrounding rural areas.
Rapid Systems alleges that FRBA was awarded millions of dollars in federal grant monies to build a broadband infrastructure for disadvantaged rural counties in northwest Florida, including Hardee, but failed to pay Rapid Systems after they performed the work.
Dan Nicholas of Nicholas & Bell, PA, the lead attorney for Rapid Systems said in a press release, "The goal was to link up economically disadvantaged rural communities to public sector providers through what is called the 'Middle Mile.'"
The Law Suit
Rapid Systems explained in papers filed in Hardee County Circuit Court that its law suit arose out of misrepresentations, omissions, misappropriations, fraud, double-dipping, illegal trade practices, violation of public trust, sexual promiscuity and other circumstances surrounding the grant money awarded FRBA and administered by the National Telecommunications and Information Administration.
Rapid Systems called this the "FRBA Fraud Scheme" and is seeking relief from the "Fraud Scheme" and the "deceptive actions, artifice and outright fakery" of what Rapid Systems called the "fraudulent conspirators."
Rapid Systems alleges that FRBA failed to pay them after they performed contracted work.
Rapid also alleges that federal grant money was used to pay inflated salaries to employees, who then fled to South America, and that grant money was used for inflated fees to consulting companies which were owned by FRBA principals.
The suit also alleges that general counsel for FRBA and Government Service Group (GSG), Crystie Carey Voehl, "misled" Rapid and that she "engaged in a pattern of malfeasance, sex and promiscuity with Rapid System's employees (ultimately leading to marriage to a Rapid System employee)" while she was "providing improper and inappropriate legal advice" for Rapid Systems and while she was "preparing documents on behalf of" Rapid Systems.
FRBA Fraud Scheme
The law suit alleges that there was a FRBA Fraud Scheme by which FRBA induced the Hardee County IDA and Rapid Systems to participate as project partners. In return for Rapid's commitment "to provide a matching investment of cash, equipment and in-kind services" FRBA "was required to engage Rapid Systems to deploy and operate" the broadband network.
Rapid Systems alleges that "FRBA never intended to fulfill its obligations" under the memorandums of understanding agreed to by both the Hardee County IDA and Rapid Systems.
The Rapid complaint goes on to claim that it appeared that "FRBA's real purpose was to embark on a clandestine, fraudulent course of conduct, including self-dealing and double-dipping, intended to misappropriate monies from the Grant Award, thereby enriching itself and the other FRBA Conspirators, while simultaneously fraudulently deceiving RSI [Rapid Systems, Inc.] as to its status on the Project."
Rapid Systems claims that while FRBA was paying management consulting fees of $10,000 a month to GSG, it was also paying GSG a pro rata share (3% of the grant) for a "grant compliance fee" and an additional 13 % of the Grant Award as a "Capital Improvement Program Administrative Fee."
Rapid Systems claims that when all the numbers are added up, GSG would be receiving 16% of the total Grant, or the "unconscionable sum of $3,790,986.40" in total management fees.
The FHREDI – FRBA Connection
While these payments were going on, Rapid Systems claims that FHREDI (Florida's Heartland Regional Economic Development Initiative), whose CEO is Gina Reynolds, who is also a managing member of FRBA, and Opportunity Florida's Richard Marcum, who is also a managing member of FRBA and is alleged now to be located in South America, "were being paid fees in the amount of $8,500 a month to themselves cloaked as administrative and community outreach funds."
Rapid Systems alleges these individuals engaged attorneys to manipulate and provide misleading legal advice to Rapid Systems in order to prevent the company from receiving payment.
The Complaint goes on to claim that FRBA misapplied funds clearly budgeted for the work performed and instead paid law firms large retainers to intimidate and thwart vendors' efforts to receive payment for their services.
The Complaint further alleges that FRBA conspired with public officials, specifically County Commissioner Grady Johnson, a director and member of FRBA, to defame Rapid Systems in the court of public opinion.
Epilogue
Dustin Jurman, the president of Rapid Systems told the Observer, "Rapid Systems has done everything possible to build out a rural broadband network using honest and transparent business practices and hiring local people. We have invested millions of dollars of our own money to bring affordable broadband to the rural counties in the "Heartland" of Florida."
Dan Nicholas summed up his client's law suit this way, "The end game of FRBA seemed clear from the start. Take Rapid Systems' network, stiff Rapid out of millions of dollars, and then try and make them go away through embarrassment, lies, and character assault. In contrast to FRBA, our end game is to expose the truth of what has transpired, and bring justice to those communities being affected."
