Two More Plead Guilty in New Orleans Schools Insurance Kickbacks Case

Two insurance brokers who previously denied paying kickbacks to a key school official in exchange for lucrative insurance contracts have pleaded guilty to extortion charges in federal court as part of a plea deal with the government.

Glenn Davis, 53, and Charles Swanson, 61, both key figures in a 3-year-old corruption investigation of New Orleans Public Schools, admitted to paying kickbacks to former school system risk manager Carl Coleman in order to land lucrative health insurance contracts for companies they represented, authorities said.

Davis also pleaded guilty to tax evasion for failing to report more than $150,000 in income in 2000. As part of the deal, the government agreed to reduce the number of counts Davis faced from six to three. Swanson’s charges did not change.

Davis and Swanson remain free on bond, and both have agreed to cooperate with the government “in attempting to root out corruption in city government,” according to a news release issued by the U.S. attorney’s office.

Sentencing was set for March 29 by U.S. District Judge Martin Feldman. Both men, pleaded guilty to extortion and conspiracy to commit extortion, and face a maximum of 20 years in prison on each count. Davis also faces an additional three years on the tax evasion charge. However sentencing could be influenced by the amount of useful information the men provide investigators.

Federal officials have brought charges against 24 people in their investigation of the Orleans Parish school system. Including Thursday’s developments, 22 of the 24 have pleaded guilty. The remaining two – Debra Harrison and Drena Clay – are scheduled to go to trial in February. Both were school office workers who are accused of participating in a scheme to alter payroll reports to get extra money.

Coleman has admitted taking bribes from Davis, Swanson and Lillian Smith Haydel, an aunt of former Mayor Marc Morial, beginning in 1997 and continuing through 2001, in exchange for keeping the three on as brokers for the school system. Commissions on the school board insurance contract paid each broker as much as $100,000 annually.

Coleman and Lillian Smith Haydel – who is married to Glenn Haydel, a consultant who is now serving time in federal prison for bilking the New Orleans transit system out of $540,000 – have pleaded guilty to participating in the bribery scheme. They are awaiting sentencing.

Letten said the investigation is far from over, and is expected to bring more indictments in 2007.

Information from: The Times-Picayune, www.timespicayune.com.