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State moves to bar Putnam contractor following WV DOH kickback scheme

CHRIS DORST | Gazette-Mail file photo
Bayliss & Ramey offices in Putnam County.

A state agency has started proceedings to bar a Putnam electrical contractor from doing business with the West Virginia Division of Highways, nearly nine months after the company and its president admitted to taking part in a kickback scheme that illegally diverted $1.5 million in payments for traffic signal repairs.

The state Purchasing Division recently moved to block Bayliss & Ramey, a Scott Depot firm that repairs and installs traffic signals, from bidding on state contracts.

The “debarment” proceedings started a week after the Charleston Gazette-Mail reported that the DOH had awarded three contracts – valued at more than $600,000 – to Bayliss & Ramey, even though the company and its former president, Mark Whitt, admitted guilt last year in federal court.

Purchasing Division officials resisted sanctioning Bayliss & Ramey, saying they couldn’t take action against the electrical contractor until after Whitt’s sentencing in federal court. State officials insisted they could do nothing without a formal conviction.

But the Legislative Auditor’s office took notice, weighing in on the matter in a report released Sunday: “The acting director of the state Purchasing Division is not correct,” the report says.

The Legislative Auditor also scolded state officials for their delays and inaction.

“It seems implausible that the state and DOH would continue to conduct business with a company and an individual that have admitted guilt in an illegal kickback scheme that allegedly defrauded the DOH out of $1.5 million,” Denny Rhodes, post audit director, told state lawmakers Sunday. “Yet this is exactly the current situation.”

Auditors noted that Whitt and the company admitted to violating state laws, which was enough to stop them from doing business with DOH.

“The scheme involving Bayliss & Ramey was an intentional violation of the competitive bidding laws of the state, and since the company marked up the actual cost of the work invoices, the state ended up paying far more for these services,” the report states.

Whitt inflated invoices by 20 percent to ensure the company was paid for its role in the kickback scheme, federal prosecutors allege. Whitt used a statewide signal maintenance contract to illegally funnel work to Dennis Corp., a South Carolina firm, and conceal the flow of funds from the DOH, according to the U.S. Attorney’s Office.

Whitt, who had stepped down as president but stayed on the company’s payroll as an administrator, resigned as an employee Thursday, according to an email Whitt sent to DOH.

As late as June – six months after his guilty plea – Whitt was corresponding with DOH officials, alerting them that he was Bayliss & Ramey’s contact for emergency signal repairs.

“That was first time we had any interaction with Whitt (since his guity plea),” said Jonathan Storage, a Department of Transportation lawyer. “He was off our radar.”

Whitt’s wife, Janice, now heads the company, and his brother also works for the firm.

“It’s very clear that future profits from Bayliss & Ramey will continue to flow to Mark Whitt,” Rhodes said.

Transportation Secretary Tom Smith told lawmakers Sunday that his department put off taking action against Bayliss & Ramey while waiting for the federal judge to sentence Whitt. Smith added that Bayliss & Ramey “does good work.”

House Speaker Tim Armstead, R-Kanawha, countered that Whitt’s guilty plea should have triggered sanctions -- a view shared by the Legislative Auditor.

“To me, that’s a conviction,” Armstead said.

Whitt was scheduled to be sentenced in late July, but the hearing was moved to Monday.

Four others have pleaded guilty to federal charges in connection with the kickback scheme: Marshall University engineering professor Andrew Nichols, former DOH engineers Bruce Kenney and James Travis Miller, and Dennis Corp. executive Daniel R. Dennis.

Kenney was sentenced to 21 months in federal prison. The others are awaiting sentencing

The Purchasing Division also recently started proceedings to bar Dennis Corp. -- as well as Nichols, Kenney, Whitt and Dennis -- from bidding on or securing state government contracts.

In October 2016, Bayliss & Ramey signed a “deferred prosecution agreement” with the U.S. Attorney’s Office in which the company agreed to cooperate with federal investigators and adopt corporate reforms to prevent fraud in the future. In exchange, federal prosecutors agreed to drop all charges after 18 months.

In a statement sent to the Gazette-Mail earlier the month, Whitt apologized for taking part in the kickback scheme, calling it the “biggest mistake of my life.”

Whitt suggested that the company shouldn’t be punished for his crimes. Bayliss & Ramey has 22 employees, and none knew about or took part in the kickback scheme, Whitt said.

Since July 2014, West Virginia has paid Bayliss & Ramey $12.5 million, according to the state auditor’s website.

Reach Eric Eyre at, 304-348-4869 or follow @ericeyre on Twitter.

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