Atlanta City Hall. (Photo: Natalia Bratslavsky/Shutterstock.com)

An Atlanta City Hall executive who abruptly resigned last week pleaded guilty Thursday to federal charges of wire fraud and filing false tax returns stemming from his work for a consulting firm managed by former Atlanta Mayor Kasim Reed's older brother and sister-in-law.

Larry Scott, formerly director of the Office of Contract Compliance, pleaded guilty to a criminal information charging him with filing multiple false financial disclosure statements and false income tax returns. Judge Steve Jones of the U.S. District Court for the Northern District of Georgia, who has presided over previous corruption cases associated with the ongoing City Hall probe, accepted the plea.

U.S. Attorney Byung J. "BJay" Pak said, "Larry Scott betrayed the citizens of Atlanta by failing to disclose that when he served in an executive level position with the City of Atlanta, he was simultaneously working for a consulting firm for businesses who sought contracts in metro-Atlanta. Scott's divided loyalty undermined the integrity of the office he served at the City of Atlanta."

Assistant U.S. Attorneys Jeffrey W.  Davis, Stephen H. McClain and Sekret Sneed are prosecuting the case.

On Wednesday, Atlanta Mayor Keisha Lance Bottoms' press secretary Michael Smith issued a statement addressing Scott's plea. "We are disheartened by these allegations against a long-time employee," he said. "While the DOJ has not shared with this administration the names of any other employees whom may be suspected of wrongdoing, we remain steadfast in our commitment to fully cooperate with the authorities during this investigation."

According to the information, Scott allegedly failed to disclose more than $220,000 he earned from a private management consulting firm he incorporated in 2011. That firm, Cornerstone U.S. Management Group, provides consulting services for businesses seeking contracts in metropolitan Atlanta and elsewhere, the information says. As contract compliance director, Scott administered the city's minority contracting programs.

Scott co-founded the U.S. Cornerstone Management in 2011 with Crystal Reed, former Atlanta Mayor Kasim's Reed's sister-in-law and the wife of the former mayor's older brother, Tracy F. Reed, according to corporate records on file with the Georgia secretary of state. When the company was administratively dissolved last year, Tracy Reed was listed as the registered agent. The company website listed his wife, Crystal, as Cornerstone's CEO.

According to the criminal information, from 2011 to 2017 Scott earned from $1,000 to $5,000 a month as Cornerstone's business manager but failed to disclose his work for Cornerstone—a violation of the city's ethics code.

During that time, Scott served as the city's director of procurement and then director of the office of contract compliance. While employed at City Hall, Scott submitted six annual financial disclosure statements under penalty of perjury omitting all mention of his work for Cornerstone or the wages he earned from the firm, the information says.

According to the information, Scott did so because he could be fired if he disclosed his Cornerstone income.

The information also accuses Scott of filing six fraudulent federal income tax returns in which he failed to report the majority of the income he earned from Cornerstone, the information says. Scott's attorney, Steve Murrin of Roswell's Murrin & Wallace, said that Scott was "an honorable person who made mistakes."

"He's taking his medicine and regrets his actions greatly," he said. "To this day, he loves the city with all his heart."

Murrin acknowledged that Scott failed to disclose his income from Cornerstone either to Atlanta City Hall or to the IRS. Murrin said that Scott made the decision to resign as "a mea culpa," "out of a sense of duty" and "as plainly as he could without compromising any investigation."

"Larry did not want the city to be dragged into a character assassination," he said. "He did not want any official he worked with to be questioned about his ethics. … He says to this day he loves the city administration and its workers, its leadership."

"This is truly a sweet guy who has a love of the city and feels like he's failed and fallen and has taken his lumps," Murrin added. "He's not  pointing fingers, not blaming anyone. He is manning up to his own acts and omissions."

Scott submitted an undated resignation last week, effective immediately. Atlanta City Hall provided a copy of the resignation to The Daily Report. Scott addressed the resignation letter to Joshua Williams, the city's chief operating officer, and deputy COO Justin Johnson. In it, he said he was tendering the resignation "with extreme frustration and disappointment." He didn't elaborate.

Scott said his 16-year tenure at City Hall "represents one of the highlights of my life."

"It is my hope that in the time that you have interacted with me, you had the opportunity to assess my full character and know that I enjoyed my work with the city and will always remember my time there fondly," he concluded.

Murrin said Scott organized U.S. Cornerstone Management in 2011 with the Reeds shortly after Tracy Reed resigned from his City Hall job that same year. No one answered the phone Wednesday at a number listed on U.S. Cornerstone's still-active website.

Murrin said that, when Scott founded the consulting firm, Tracy Reed "was simply Larry Scott's friend." Scott and Tracy Reed have known each other for years and were college classmates and fraternity brothers at Howard University, the lawyer said.

Tracy Reed, who worked for 12 years at City Hall, was a supervisor in the Office of Contract Compliance in 2011, during his brother's tenure as mayor, when he came under investigation by the city law and human resources departments following a traffic stop, according to a 2011 report in The Atlanta Journal-Constitution. Tracy Reed had been stopped for driving with expired tags and without a license, the newspaper reported. Even though Reed's driver's license was suspended in 2006, he had continued to drive without a valid license, including some city vehicles, the AJC reported.

At the time, Scott also was working at the city Office of Contract Compliance, where he was a senior contract compliance manager, according to the criminal information.

Murrin said that Scott was the business manager, but Tracy Reed "was the day-to-day man at the company." Scott left the firm in 2017, Murrin said. "My client was adamant he left the company to concentrate on his new family and focus on his career with the city," he said. "He had recently gotten married and didn't want to involve himself with the company any longer."

Murrin said he doesn't know whether U.S. Cornerstone actually did business with the city or enabled its clients to secure city contracts. "What the company did—outside of its monthly banking—we don't really know," he said. "That was not my  client's forte. … That was Tracy Reed."

Kasim Reed was mayor from 2010 to 2018.