Opinion ID: 57320
Heading Depth: 3
Heading Rank: 1

Heading: mcc

Text: MCC, owned and operated by the Hamakers, fraudulently billed Community Bank for hundreds of thousands of dollars worth of construction services that MCC performed for Patterson. See also Hamaker, 455 F.3d at 1319. According to the evidence presented at the trial of these three defendants, the MCC component of the scheme worked as follows. MCC recorded the number of hours worked by each construction employee, as well as the location at which each employee performed the work, in a computerized accounting system called Quickbooks. MCC’s Quickbooks records included accounts for each of MCC’s individual construction projects, and documented the materials, labor, and other costs that MCC incurred on each particular project. Between 1995 and 2001, MCC provided construction services at Community Bank branches throughout Alabama, as well as services at a site in Tennessee. Additionally, beginning in late 1997, MCC began providing services at 5 defendant Patterson’s HVF. Between January 1, 1998 and July 15, 2000, MCC billed and received from Community Bank a total of $3,122,977 for work reportedly done on several Community Bank construction projects. The trial evidence established that MCC—even accounting for price mark-ups in accordance with MCC’s “cost-plus” billing arrangement3—overbilled Community Bank by over $1.6 million. In the meantime, MCC barely billed Patterson at all while performing substantial work on HVF and Patterson’s other personal properties. For example, of the more than $3 million that MCC invoiced to Community Bank, MCC attributed approximately $500,000 to work performed at Community Bank’s Guntersville, Alabama branch. However, MCC’s records established that MCC incurred only approximately $30,000 in direct labor costs on the Guntersville project. MCC was due approximately $48,000 for such work after its “cost-plus” mark-ups, but MCC submitted, Bishop approved, and Community Bank paid invoices totaling $484,750 for work at Guntersville—more than ten times the amount actually due. Moreover, MCC’s records established that MCC incurred no labor costs at 3 MCC and Community Bank agreed to a “cost-plus” billing agreement whereby MCC’s labor costs were used as a benchmark and then percentage markups were added for workers’ compensation, taxes, overhead, and profit. 6 all on the Guntersville project between February 9, 2000 and June 20, 2000. MCC nevertheless invoiced Community Bank for $178,500 of work purportedly done at the Guntersville site during that time, and Bishop approved and Community Bank paid those invoices as well. By contrast, over the same two-and-a-half year period, MCC received only $10,000 from defendant Patterson for MCC work performed at HVF.4 MCC received this relatively small amount of compensation despite the fact that MCC’s Quickbooks records reflect that MCC employees worked over 61,000 hours at Patterson’s personal HVF during that time period, incurring a total labor cost of $691,359.58. In other words, “during the same time frame in which MCC billed Community Bank over 1600% of the labor costs at the Guntersville project, MCC received from Patterson less than 1.5% of the labor costs at [Patterson’s] Heritage Valley Farms.” Hamaker, 455 F.3d at 1320-21. Additionally, at Community Bank’s Albertville, Alabama site, MCC 4 MCC sent Patterson two invoices during this period: a December 28, 1998 invoice for $37,500, and an April 21, 1999 invoice for $10,000. The government presented evidence that Patterson only paid MCC $10,000 prior to the discovery of the conspiracy in approximately June-July 2000. The government also presented evidence that Patterson requested the $37,500 invoice from MCC in the latter part of 1998. At that time (November-December 1998), certain Bancshares stockholders threatened and ultimately filed a shareholder derivative suit in which it was alleged that Community Bank funds were being spent improperly. (This shareholder derivative suit is referred to infra as the “Townes litigation.”) In other words, the government presented evidence that, viewed in the light most favorable to the government, established that Patterson only requested the $37,500 invoice in late 1998 in response to the Townes litigation. 7 incurred approximately $70,000 in direct labor costs, which should have equated to about $110,000 in invoices under the “cost-plus” arrangement. Instead, MCC billed Community Bank approximately $585,000 for the Albertville project. Just as with the Guntersville project, Bishop approved MCC’s Albertville invoices, and Community Bank paid the full overcharge of approximately $475,000. Further evidence of MCC’s fraudulent billing of Community Bank was introduced in the form of handwritten entries made on a printout of MCC’s Quickbooks records. On a November 9, 1998 report reflecting numerous printed entries for labor costs and expenses on HVF-related projects, there were handwritten entries in the margins next to each HVF project that bore the names of various Community Bank projects. MCC administrative employee Tina Rogers testified that she made the handwritten notes next to the HVF-related entries at the direction of Linda Hamaker. Comparison of the November 1998 report with data found in MCC’s computer systems in 2000 revealed that each entry from the HVFrelated accounts was subsequently shifted to Community Bank accounts, and Community Bank was invoiced to cover those charges. Finally, evidence established that MCC charged Community Bank not only for HVF-related work, but also for work performed at other personal properties connected to Patterson. MCC employees performed construction services on 8 Patterson’s Royal Acres property in Blount County, Alabama in March 2000, and at Patterson’s mother’s house in Leeds, Alabama in 1999. Former MCC employees testified that Bishop directed them to work on both the Royal Acres and Leeds sites.