Okaloosa County BOCC — April 19, 2016 — Proposed Settlement of case of Okaloosa County v. Lewis — agenda request — reading text

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: April 19, 2016 TO: Honorable Chairman and Members of the Board FROM: Roland Sims Jr. SUBJECT: Proposed Settlement of case of Okaloosa County v. Lewis Communications, Inc DEPARTMENT: County Administrator BCC DISTRICT: All STATEMENT OF ISSUE: Okaloosa County instituted an action against Lewis Communications, Inc. for certain actions taken by them while they were under contract with the County. Lewis Communications entered into a contract with the County for advertising services in June, 2011. During the course of their contract, they were involved in several expenditures instituted by Mark Bellinger, the former Tourist Development Director. These included the purchase of a house that was titled in Mr. Bellinger’s name and certain direct payments to Mr. Bellinger. Upon discovery of these expenditures, the County terminated the contract with Lewis Communication and instituted suit to seek recovery of the loss. At the time of termination, Lewis also had submitted a final invoice in the amount of $59,798.76 that was not paid. They filed a counterclaim against the County for recovery of this amount, interest on that amount at a rate of 18% and various attorney’s fees and costs. Mediation was held and a proposed settlement was reached. The Board is requested to consider the proposed settlement. BACKGROUND AND ANALYSIS: On June 17, 2011, Okaloosa County entered into a contract with Lewis Communications (“Lewis”) to provide advertising and marketing services related to the Tourist Development Council. On July 8, 2011, Lewis was contacted by Mark Bellinger, former Executive Director of the Tourist Development Council, by email and requested to provide services purportedly related to a “Boast the Coast” national television campaign. On August 2, 2011, Lewis was wired the amount of $747,000, purportedly for this “Boast the Coast” campaign. However, Bellinger later told Lewis that the campaign had been cancelled and instructed Lewis that these funds be paid to Regions Bank in Birmingham, Alabama, for further credit to Title Works, a title company in Destin, Florida, which Lewis did. The funds that were being transferred to Lewis were unrelated to any promotional campaign and ultimately went toward the purchase of a house in Okaloosa County, Florida, which was titled in Mr. Bellinger and his wife’s name. The property was eventually seized by the Federal government and sold pursuant to its forfeiture procedures. The County requested, pursuant to Federal procedures, the remission of all of the net proceeds of the sale to offset the loss to Okaloosa County and that petition was granted. As a result, the County received the net proceeds from the sale of approximately $561,773.99, resulting in a net loss of $198,226.01. Additionally, in reviewing the records of Lewis, we have determined that there were three payments of $5,000 made by Lewis in August, September and October, 2011. These payments were made directly to Mark Bellinger and were unrelated to any promotional activities. Lewis’ contract was terminated by the County effective September 30, 2012. At the time that the County’s contract was terminated for convenience by the Board, there were outstanding invoices submitted by Lewis in the total amount of $59,798.76. That amount was held back and has not been paid to Lewis. On July 2, 2015, the County filed suit against Lewis in the Circuit Court for Okaloosa County. Lewis filed a counterclaim for the unpaid invoice interest on that amount and costs (at 18% under the terms of the contract), lost time and attorney’s fees that they had to incur in response to the various criminal, legislative other investigative activities. The amount sought by Lewis was $261,980.11. The case was removed to Federal Court by Lewis but ultimately the County was able to have the case returned to state court. Lewis appealed that determination to the 11th Circuit Court of Appeals. The parties participated in mediation on March 21, 2016, and were able to arrive at a proposed settlement. A copy of the mediated settlement agreement is attached. OPTIONS: Approve/Disapprove. RECOMMENDATION: Approve the proposed mediated settlement agreement and authorized the execution of all necessary documents and releases to effectuate the settlement by the appropriate parties. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator