The case of a St. Croix couple accused in a $4 million scheme to defraud taxpayers through a contract to store wood for the territory’s hurricane recovery will be heard separately from that of a former V.I. Housing Finance Authority executive who was charged alongside them, V.I. District Court Judge Wilma A. Lewis has ruled.
Davidson Charlemagne and his wife, Sasha Charlemagne, each filed motions in V.I. District Court in July to sever their case from that of Darin Richardson, former chief operating officer of the VIHFA. Richardson subsequently filed his own motion to sever.
The U.S. Attorney’s Office rejected their calls, arguing in response that while the defendants are charged with different offenses, all three were engaged in the same “series of acts or transactions, constituting an offense or offenses,’” as required under the Federal Rules of Criminal Procedure governing the joinder of cases.
The trio was arrested in June after a federal grand jury returned an indictment charging Davidson Charlemagne with government program fraud, wire fraud, and money laundering conspiracy; his wife with money laundering conspiracy; and Richardson of St. Thomas with criminal conflict of interest and making materially false statements.
The charges stem from a two-year FBI investigation into a VIHFA contract for the storage and management of wood that was shipped to the territory for the reconstruction of commercial and residential buildings following hurricanes Irma and Maria in 2017, funded by the Department of Housing and Urban Development Community Development Block Grant Disaster Recovery program.
According to court documents, Davidson Charlemagne, head of maintenance for the V.I. Education Department, approached the owner of ISG — referred to as Individual One in the indictment — to submit a bid for the contract that named Charlemagne’s company, D&S Trucking, as the subcontractor.
In a bid process overseen by Richardson, ISG and D&S Trucking were awarded the contract in January 2021 for $2.9 million over a three-year period, an amount that was increased to $4.4 million in October that year — a sum the government alleges was grossly inflated.
Richardson had significant control over the procurement process and allegedly manipulated the evaluation of bids to favor ISG’s proposal, according to the complaint. Moreover, it was unlawful for him to formally award the contract after convening a bid evaluation committee in June 2020 to rate the proposals, the government alleges. Federal regulations contemplate a bifurcation of these two duties, and Richardson violated the regulations by performing both roles, it said.
According to court documents, VIHFA paid Charlemagne’s trucking company a total of $3.6 million in federal funds, of which $3,177,000 was credited to bank accounts owned and controlled by him and his wife.
Just over a year after the contract was awarded, Davidson allegedly received a payment of $107,000 from Individual One.
Meanwhile, the woodpiles on St. Croix and St. Thomas remained almost entirely unused and stacked on pallets outdoors and exposed to the elements for more than three years. Additionally, the St. Croix woodpile was stored rent-free at Henderson Elementary School — meaning the government was paying millions to store its own property on its own land — the Justice Department alleges.
In her ruling on Wednesday granting their motions to sever, Lewis said that while the allegations in the indictment clearly associate Individual One with both Davidson Charlemagne and Richardson, it falls short of alleging that Individual One was a participant in either the Charlemagnes’ scheme or Richardson’s scheme.
“This absence of mutual awareness strongly suggests that the Charlemagnes and Richardson did not engage in a common illicit enterprise,” Lewis wrote.
“The Charlemagnes are not accused of having participated in a criminal conflict of interest or making any false statement, and Richardson is not accused of committing any fraud or money laundering. The varying natures of these offenses further weighs against finding that the Charlemagnes and Richardson engaged in a common illicit enterprise,” Lewis wrote in a memorandum opinion accompanying her order.
Moreover, Individual One is not alleged to have authorized, known about or participated in Davidson Charlemagne’s allegedly fraudulent submissions to VIHFA or alleged overbilling practices, or the Charlemagnes’ alleged money laundering scheme, said Lewis. “In fact, the Indictment alleges that Davidson Charlemagne, rather than Individual One, prepared ISG’s bid to VIHFA,” she wrote.
Similarly, there is no allegation that Individual One knew about Richardson’s alleged participation in the bid selection process for the woodpile contract, “and thus the Court cannot reasonably infer that he knew that his alleged business relationship and eventual payment to Richardson constituted a criminal conflict of interest for Richardson,” the judge said.
Further, Individual One is not alleged to have committed any of the various offenses allegedly committed by the Charlemagnes and Richardson, she said. “Accordingly, the Court finds that the Indictment does not allege that Individual One was a common participant between the Charlemagnes’ and Richardson’s alleged schemes.”
While the government asserts that the schemes were integral to each other because “no violation of federal law would have occurred, but for Richardson using his authority to award the contract to the Charlemagnes,” Lewis said just because the Charlemagnes and Richardson allegedly committed financial crimes generally related to their participation in the woodpile contract “does not mean they participated in a common illicit enterprise.”
After a review, “the Court concludes that Defendants have met their burden of demonstrating that the Indictment does not sufficiently allege that the Charlemagnes and Richardson were engaged in a common illicit enterprise” as defined by the federal rules of pleading, said Lewis. “Rather, the allegations in the Indictment describe two separate sets of offenses or schemes. Thus, the Charlemagnes’ alleged scheme and Richardson’s alleged scheme are improperly joined,” she ruled.
