A former Poplar Bluff, Mo., city manager and former technology contractor may have worked together to exploit a loophole in city purchasing policies, a law firm says.
Emails between fired city manager Heath Kaplan and Ryan Leestma, owner of Michigan-based Information Systems Intelligence, discuss "rearranged" pricing on equipment to meet criteria for no-bid contracts, according to a letter from Husch Blackwell.
The St. Louis, Mo., law firm was hired by the city to review potential legal action against ISI and/or Heath Kaplan (see main story).
"If the City filed a civil lawsuit against ISI, its manager, Ryan Leestma, and/or Heath Kaplan, the public and the press' desire for justice might be satisfied, but the economic cost of litigation would outweigh its practicality," wrote then-Husch Blackwell partner Jeff Jensen in an August 2017 document.
The city council approved approximately $3.5 million in no-bid contracts with ISI in 2014, under Kaplan's direction.
"... we believe that when ISI invoiced the City, ISI must have either inflated its labor costs or otherwise 'hid' the cost," differences in equipment being sold to the city, according to Husch Blackwell.
As much as 4,000 hours of labor were included under October and December 2014 projects with ISI.
The no-bid contracts were allowed, Kaplan said in 2014, because ISI agreed to match or beat prices negotiated by the Western States Contracting Alliance-National Association of State Procurement Officials.
Some of ISI's suppliers told the city ISI did not purchase the equipment through this program, the attorney says.
"Therefore, ISI would not have been able to sell equipment to the City without incurring substantial deficits," the letter concludes.
ISI refused to provide supplier invoices paid by the contractor, the attorney said. This information would be "critical" to proving how ISI used the "loophole" to circumvent the city's bidding process, they said.
Kaplan started a new job this month, managing the city of Beaverton, Mich. He will receive a salary of approximately $55,000 a year, sources say, to oversee the city of approximately 1,000 residents, and 10 city employees.
He had a salary of almost $160,000 when he was fired by the Poplar Bluff City Council in May 2015.
Kaplan and Leestma are also set Feb. 15 for a pre-trial settlement conference in a lawsuit involving Muskegon County, Mich. Kaplan worked for Muskegon County before coming to Poplar Bluff and oversaw technology purchases between ISI and the county.
Muskegon County has alleged ISI overbilled the county for millions of dollars. The county accuses Kaplan of conspiring with ISI for financial gain, saying he received a personal loan and help with a home mortgage.
Muskegon's lawsuit was brought after it was taken to court by ISI for approximately $3 million the tech provider says it is owed under previous contracts.