FBI, U.S. Attorney’s Office drop investigation against city of Lubbock [Lubbock Avalanche-Journal, Texas]

Feb. 03--A three-and-a-half-year investigation of the city of Lubbock and its former health insurance administrator is over, said the U.S. Attorney's Office on Thursday.

"After the careful evaluation of many factors, the U.S. Attorney's Office for the Northern District of Texas is no longer pursuing its investigation of the city of Lubbock," read a statement released by Kathy Colvin, public information officer with the U.S. Attorney's Office.

On May 14, 2008, FBI agents searched Lubbock City Hall and the city's Information Technology Department, seizing records and documents relating to its investigation into conspiracy, false statements, wire fraud and health care fraud, according to the search warrant filed in U.S. District Court in Lubbock.

Lubbock Mayor Tom Martin said the FBI contacted the city's outside attorney, Larry Wharton, last week to inform him about the end of the investigation.

"The FBI office had called him and said that their investigation was over, it was done, there was nothing to be filed and for him to come to pick up all the records that they had seized back in City Hall in 2008," the mayor said.

Wharton deferred all comments to the Lubbock City Attorney's Office.

The documents are related to the city's contract with Ted Parker'sAmerican Associated Agency Group, the one-time insurance administrator for the city, according to an affidavit by FBI Special Agent Michael Orndorff of the Lubbock office.

Targets of the investigation were former Lubbock City Councilman John W. Leonard; Parker, chairman of The Parker Group; Jim White, CEO and president of Jim White Insurance Agency Inc.; and Gary Boren, a former City Council member and vice president of G. Boren Services.

"I am relieved that this four-year personal nightmare is over," Leonard wrote Thursday in response to questions about the investigation's end. "I have maintained my innocence throughout this painful process. It is unfortunate that the personal politics of destruction, initiated by a key elected city official and a few city bureaucrats against a handful of their perceived opponents, were so extreme and costly to the taxpayers of Lubbock."

Boren said he was always confident of his innocence, and he had never been notified he was the subject or topic of an investigation.

"I'm not surprised that the FBI and the U.S attorney came to this conclusion because I do not believe I did anything wrong," Boren said.

Parker did not return messages left with his cellphone. White did not return messages left with his cellphone and office voicemail.

Documents from the federal court file attached to the affidavit show what the FBI knew about working relationships between some former city officials and AAG, which maintained the health insurance business for Lubbock's 6,000 employees from 2004 until 2006. AAG was under the auspices of The Parker Group.

The Avalanche-Journal has been working to make public a controversial audit of the city's dealings with Parker's company, now known as HealthSmart. Attorneys for the company have appealed public records requests for the audit to the courts.

<p>The city dropped AAG, later HealthSmart, amid concerns of improper fees and commissions, documents show, and Lubbock officials remain locked in a battle over what they say are overcharges by Parker's company, as well as legal fees.

Martin said the civil case remains in arbitration, and the city has incurred nearly $3.8 million in legal fees during the ordeal.

Sam Medina, city attorney, said he received more than 100 boxes of documents in the last week from the FBI. He said the city must go through the boxes and determine what is pertinent to the civil case against AAG.

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