The watchdog agency for the city of New Orleans has found that two city employees may have broken a number of state and city laws, including criminal statutes, while leading Mayor LaToya Cantrell’s scandal-plagued “smart cities” initiative.
The city’s Office of Inspector General released its findings in a Wednesday (Nov. 8) report on its investigation into the program, which the city abandoned last year.
The office found that Jonathan Rhodes, former director of the Mayor’s Office of Utilities, and city IT staffer Chris Wolff had a pre-existing relationship with the group that the city selected as lead contractor for the ambitious program and omitted that fact from legally required disclosure statements.
According to the report, those omissions potentially violated state laws against false swearing, a misdemeanor punishable with up to one year in jail, and filing or maintaining false public records, which can be prosecuted as a felony punishable with up to five years in prison.
In a emailed statement, Rhodes said he did nothing illegal or unethical.
“The OIG report found nothing conclusive, and I can confirm that my conduct did not violate any state laws or rules,” he wrote. “All of my work for the City, and to bridge the digital divide in our communities, was above board.”
The report comes more than a year after the would-be contractor, Smart+Connected NOLA, announced that it would pull out of the project amid an intensifying City Council investigation into allegations of bid-rigging, which were first reported in a multipart investigation by The Lens.
The Office of Inspector General is forwarding the report to the Orleans Parish District Attorney’s Office along with the City Council and the Cantrell administration.
“This Inspector General report confirms our concerns,” wrote Councilwoman Helena Moreno in a statement Wednesday afternoon. “From the start, the scope of the Smart Cities multi-million dollar project was unclear, but what was clear is that some of the city employees in charge of bringing the project online were molding and steering the contract to benefit their connections.”
Responding to a question on the report at her weekly press conference, Cantrell on Wednesday said, “I think that those are allegations, and that’s what I will have to say at this time.”
A spokesperson for Cantrell’s office later declined further comment.
When contacted for comment, a spokesperson for the Orleans Parish DA’s office said he was not aware of the report but would attempt to get additional information from DA Jason Williams.
Rhodes first announced the smart cities initiative — and the opening of contractor bids — in an April 2021 press conference. The program’s objectives were to create a “city-directed” internet service provider to compete with Cox Communications and AT&T and to replace traditional infrastructure — such as streetlights — with data-collecting “smart devices.”
At one point during the press conference, Rhodes thanked a consulting company, Ignite Cities, for its involvement in readying the project to be put out to bid.
“I’d like to thank our partners at Ignite Cities, who have provided assistance to help New Orleans understand the power of the Smart City approach to digital equity,” Rhodes said.
Ignite Cities — now known as Elevate Cities — is a Chicago-based firm led by George Burciaga, that provides advice to cities on adopting such smart city technologies. It had been providing its services free of charge to the city of New Orleans for two years beginning in 2019. (Cantrell denied that the city had a formal relationship with Ignite Cities. But last year, the City Council uncovered a 2019 agreement she signed with the firm that was never entered into the city’s purchasing database.)
What was not made publicly known at the time was that Burciaga had a business relationship with a group of companies — including wireless giant Qualcomm and Chicago investment firm JLC Infrastructure — that would later bid on the deal under the name Smart+Connected NOLA.
Burciaga was also close to Rhodes, working with him to get various ideas for projects — including the smart cities proposal and a city ID and basic income program — in front of Cantrell and top administration officials. In the months leading up to the announcement of the smart cities project, he and Rhodes were in frequent email contact. That included at least two emails where Rhodes provided Burciaga with a sneak preview of what would later go before potential bidders.
Smart+Connected NOLA would go on to win the bid in June 2021. Wolff, the city IT staffer who is also implicated in the Office of Inspector General report, was on the selection committee that evaluated the proposals. Wolff told investigators with the Office of Inspector General that he did not favor any particular vendor and simply wanted to choose a contractor that what was best for the city, according to notes from an interview earlier this year that were included with the report.
A losing bidder, Cox Communications, later submitted a formal complaint to the city, alleging that Burciaga’s dual roles as partner to members of Smart+Connected NOLA and adviser to the city amounted to a potential conflict of interest and provided the consortium an unfair advantage, in violation of city contracting laws. The city dismissed the complaint.
At the same time that Rhodes and Wolff were working on the smart cities deal, the duo was also running a side business called Verge Internet that had done work on similar projects with JLC and Qualcomm in other cities.
As the head of the Mayor’s Office of Utilities, Rhodes was required by city law to file annual financial disclosures with the city, according to the report. (In a Wednesday email, Rhodes disputed that it was a legal requirement for his office, saying he filled out the form voluntarily. The city charter requires the head of the Department of Utilities to fill out the annual form.) And as a member of the selection committee on the smart cities contract, Wolff was required to file a conflict-of-interest disclosure. Neither disclosed their interest in Verge Internet or their relationships with JLC and Qualcomm, possibly violating both city and state laws, according to the report.
According to the OIG investigators’ interview notes, Wolff said he felt he filled out the conflict-of-interest form truthfully and was impartial in his evaluation of the bids.
In testimony before the City Council last year, Rhodes said he didn’t believe disclosing his interest in the company was necessary because he and Wolff had not made any money from it. And on Wednesday, in response to Verite’s request for comment, he again said he felt the law did not require him to disclose the business.
“Since I had no financial interest in Verge Internet, there was nothing to report on any financial statement,” Rhodes wrote. “And since I had no contract, agreement or financial interest in any other business working with the City, there was no violation of any rules.”
In a statement, Wolff’s attorney Michael Kennedy likewise said that his client had no financial interest in Verge.
“Verge never had any assets, any money, bank accounts, tax filings or other than a corp filing and a website. There was no money or quid pro quo in any form,” Kennedy said.
Much of what appears in the OIG report was previously reported by The Lens and The Times-Picayune. But it is the first time that Rhodes and Wolff have been accused of potential criminal conduct.
An investigation commissioned by the City Council earlier this year was never completed. Still, a report that was released from that investigation found evidence of bid-rigging and ethical violations. The state Board of Ethics cleared Rhodes and Wolff of state ethics code violations in July.
The Office of Inspector General report recommends that the city maintain all contracts and similar agreements in its purchasing system, that city law be revised to clarify that businesses that do not produce income are not exempt from city financial disclosures and that outside entities, like Ignite Cities, that volunteer their services to the city be required to undergo ethics training.
“When Requests for Proposals projects such as Smart Cities are issued, it is imperative the process be fair and void of any hidden agreements,” Inspector General Ed Michel wrote in a statement. “The mere perception of a tainted process causes the public to lose trust and faith in city government.”
This story has been updated with comments from Jonathan Rhodes and Michael Kennedy, attorney for Chris Wolff.
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