[StBernard] (no subject)

[Westley Annis]

Feds reach terms with disaster company

Owners get $80K; lawsuit to progress

By EMILY KERN
Advocate staff writer 
Published: May 20, 2006 

The federal government will take back $1.2 million from an initial $5.2
million it paid the owners of a disaster relief company to build a shelter
after Hurricane Katrina for emergency workers in St. Bernard Parish.

As part of a settlement reached Friday in Baton Rouge federal court, the two
owners of Lighthouse Disaster Relief will receive $40,000 each in living
expenses in exchange for dropping any further challenges to the government's
attempt to garnish the money.

The attorneys for Lighthouse Disaster Relief will receive $100,000 in legal
fees as part of the settlement, while a lawsuit the federal government filed
against the company will continue through the court system.

The lawsuit the federal government filed in February alleges that Lighthouse
Disaster Relief was paid $5.2 million to set up a base camp for
disaster-relief workers in Chalmette after Katrina. However, the government
claims much of the work never was done.

Attorneys for Lighthouse have said, however, that the company was unable to
work for several days because of Hurricane Rita, which hit a few weeks after
Katrina. In a news release, lawyers for Lighthouse also say the company was
late in getting the camp up and running because the federal government asked
workers to dismantle and move a partially completed tent site to another
location.

As part of the settlement, Lighthouse owners Gary Lee Heldreth and Kerry
Lynn Farmer each will receive $40,000 for food and shelter during the next
12 months. If the government's lawsuit continues past one year, they each
will receive another $40,000 in living expenses.

Heldreth and Farmer, both of Virginia, attended Friday's hearing, but
referred all questions to their attorneys.

While Lighthouse continues to fight the government's suit, the government
also will place liens on the owners' cars, land, church and any other
property bought with funds the Federal Emergency Management Agency provided
after Katrina for disaster relief.

According to the lawsuit, Lighthouse was to establish a 1,000-person base
camp with 75 air-conditioned and heated tents, flooring, bedding, linens,
shower/restroom and laundry facilities, a recreation hall and two kitchens
providing three meals a day.

The company promised it could deliver the shelter in two days, by Sept. 20,
according to the lawsuit.

But by Oct. 2, the camp still wasn't ready for residents and never was able
to support more than 400 people, the lawsuit says.

According to the lawsuit, Lighthouse submitted an invoice for the full $5.2
million just two days after winning the contract and before any work had
begun. The government paid the invoice in full, because, the lawsuit says,
the National Disaster Finance Center was "deluged with Katrina-related
invoices."

After the mistake was discovered, the federal government asked to freeze the
assets of the company and its owners, claiming they had spent the money on a
motor home, three new cars and writing at least five $10,000 checks made out
to cash. The lawsuit also says there were two $500,000 transfers to the
owners' personal accounts.

The government claimed it was worried that the owners would "continue to
squander, dispose of, and waste money wrongly paid them."

Attorneys for Heldreth and Farmer, however, countered that the government's
accusations are "outlandish."

Heldreth and Farmer filed a motion to stop the government from garnishing
their money and assets, and claim they are free to transfer and spend their
earnings as they please.

In a news release, attorney Stephen Babcock says Lighthouse was prevented by
the federal government from fulfilling the contract.

Lighthouse claims that FEMA officials told workers to await the passage of
Hurricane Rita at a staging area in Baton Rogue. Once the hurricane passed,
environmental concerns at the St. Bernard site delayed Lighthouse for
several more days.

Once at the site, FEMA told Lighthouse to pick up and move the tents to
another location, the news release says.

"Now the government wants to claim that Lighthouse didn't fulfill its
contract since it failed to start construction timely, ignoring that it was
the government that prevented them from doing so," the news release says.

In a statement released after court Friday, Babcock says the agreement will
allow the lawsuit to move more quickly through the court system.

"The bottom line is that both parties left the courthouse today somewhat
disappointed, and in the early stages of multimillion-dollar commercial
litigation cases, that isn't always a bad thing," Babcock said.