Executive Jaques Davis and his company, AT Security, has been accused of defrauding the state of Arizona out of $250,000, according to a report released by the Arizona Auditor General’s Office.
On October 18, Davis was indicted on 12 felony counts including theft, fraud, forgery, and identity theft.
The report states that “the Arizona Governor’s Office of Economic Recovery…failed to perform an adequate background check of AT Security Service and its chief executive, Jacques Davis, who went on to spend hundreds of thousands of dollars intended to fund the relocation of his business to Arizona” (Associated Press). The Arizona Republic’s article is available here.
This is not the first time a government agency has failed to conduct adequate due diligence.
In 2010, Dallas spent more than $500,000 on a restaurant intended to revitalize Dallas Executive Airport. After contracting two brothers to run the restaurant, the city realized that both brothers had been sued for unpaid debts and breached contracts, both had filed for personal bankruptcy, and their last restaurant had closed in bankruptcy.
City Manager, Mary Suhm said, “Clearly, we could have done better on this.”
A September 2012 update from Dallas states that while the brothers projected $700,000 in annual revenue, the restaurant is bringing in less than $200,000.
More examples of fallouts from inadequate due diligence by state and local governments can be found here.
After their publicized oversight, Dallas city officials reassessed their procedures for vetting city contractors.
It looks like Arizona will now be doing the same.