A typical trump administration contractor
Rick Smith
Houston Chronicle
Saturday, January 16, 2021 3:54 p.m.
Galveston-based border wall contractor finds itself at center of federal whistle-blower lawsuit
By Nick Powell
On a gray, blustery Tuesday in Alamo, Texas, President Donald Trump stood in front of a completed portion of the border wall on the southern Texas-Mexico border and touted the completion of 452 miles during his term.
“We reformed our immigration and achieved the most secure southern border in U.S. history,” Trump proclaimed.
Unmentioned in Trump’s remarks was that 163 miles of the wall are being built by a Galveston-based contractor accused in a federal whistle-blower lawsuit of illegally hiring Mexican nationals to guard border-wall construction sites in California.
Last month, U.S. District Judge Cynthia Bashant unsealed a complaint filed by two former contract employees of Sullivan Land Services Co. (SLS) — a construction company founded and operated by brothers Todd, John and William “Billy” Sullivan.
The complaint also alleges that SLS hired “unvetted workers” to work on its job sites at the border, and allowed a subcontractor to construct an illegal dirt road to ferry armed Mexican nationals across the border to provide security, all with the approval of an Army Corps of Engineers supervisor. High-level employees of SLS as well as Ultimate Concrete of El Paso, its subcontractor on the project, allegedly made false statements not only about the hiring of Mexican workers, but also overcharging for construction costs.
The U.S. Department of Justice investigated the false-claims allegations and notified the court in December that it would not intervene, allowing the case to proceed in federal court without DOJ involvement.
Through a spokeswoman, Liz Rogers, the Sullivans declined requests to be interviewed for this story.
“This case is based on inaccurate and untrue allegations; therefore, we are not surprised that the Government reached the same conclusion,” Rogers said in a statement. “Our legal system allows for plaintiffs to make accusations and file lawsuits regardless of basis of evidence. We vehemently disagree with the claims made in this lawsuit and will defend ourselves through the legal system. We have no further comment.”
The allegations place the Sullivans in the type of spotlight they have largely shied away from despite being successful businessmen and well-known citizens of this small resort city.
What began as a tight-knit entrepreneurial landscaping operation when the brothers were students at Ball High School in Galveston has evolved into a lucrative consortium of business interests — from port dredging to home building to debris removal for natural disasters across the country, including in Houston after Hurricane Harvey in 2017.
Along the way, they have built a sterling resume through high-quality work and have won major state and federal contracts, including $1.8 billion for constructing the border wall in Texas, New Mexico and California. Known in political circles, the brothers have contributed to the campaigns of key players in Texas such as Land Commissioner George P. Bush and U.S. John Cornyn, both Republicans. Locally, the Sullivans’ philanthropic reputation, shrewd business acumen and political power have largely insulated them from scrutiny — even as some of their projects on the island and deal-making have drawn criticism.
Many native Galvestonians know the Sullivans by name, but such is their clout that few will go on the record to discuss the family candidly.
“I just see them as stand-up people in our community,” said Ted O’Rourke, a Galveston businessman who serves on the Port of Galveston’s board with Todd Sullivan. “I can’t say one way or the other if (the border wall complaint) has merit, but it’s just hard for me to believe that they would knowingly do anything inappropriate in the business world.”
Deep Galveston ties
While few acquaintances besmirch the work ethic and entrepreneurial spirit of the Sullivan brothers, they were also raised by a family that set them up well for success. Born to Gerald and Susanne Sullivan, the brothers (Todd is 45, while twins John and Billy are 41) are the sixth generation of Galveston Sullivans.
Gerald’s father, John R.A. Sullivan, was a cattle rancher in the early 20th Century, back when much of Galveston’s West End was undeveloped land suitable for farming, hunting and fishing. John R.A. Sullivan worked in the dairy industry but also as a cowboy, leasing pastures on the West End and starting his own herd — eventually shipping cattle to Florida and the Caribbean, according to news reports. Gerald took over the family business after graduating from Texas A&M University in the 1960s.
“Always, while we have been involved in many other things, we have been in the cattle business,” Gerald Sullivan told Coastal Monthly magazine in 2018.
While Gerald Sullivan primarily co-owns Santa Rosa Ranch in Crockett and Navasota, friends say he set the template for his sons by investing in a wide range of businesses, from real estate development to port operations.
“They were taught to work hard from the very beginning and so they actually got their business start when they were teenagers in the landscaping and yard business,” said James Yarbrough, a former Galveston mayor and county judge who has known the family for decades.
Clashes with neighbors
After the brothers graduated from college — all three attended Texas A&M — they began to flex their business muscles. They founded Sullivan Land Services Co. in 1995, and transitioned their commercial landscaping business, Sullivan Environmental Services, into a real estate company, Sullivan Interests.
The Sullivans’ real estate arm purchased lots in The Heights neighborhood in Houston, which eventually were developed into luxury homes, and built townhouses in College Station. However, their purchase of 93 acres on the West End of Galveston in the early 2000s stirred up controversy.
The land that would become the Evia subdivision — a luxury development with 388 residences, three freshwater lakes and a nature preserve — was folded into a 2,000-acre tax increment reinvestment zone (TIRZ) in 2003. The zone was structured by the city of Galveston to provide public financing for capital improvements in and around Scholes International Airport.
The project came under fire after the Sullivans sought up to $8 million in reimbursements from the city for what they termed “public improvements,” such as lakes and parking areas that are ostensibly open to the public.
“(In Evia) we’re not only taking over the maintenance, we’re paying for the streets,” then-Galveston City Council member Jackie Cole said during a contentious council meeting in 2006. Developers, she noted, generally built streets and sewers and turned them over to the city for maintenance.
Although the city ultimately provided a lower amount, $6 million, to reimburse the Sullivans for public improvements, the city also assumed $5 million of the company’s debt to pay for infrastructure within the Evia subdivision. As of December 2019, the city still owed the Sullivans $1.5 million in reimbursements.
The brothers also faced criticism when Sullivan Interests pursued a proposal to acquire and develop a 600-acre site used by the Army Corps of Engineers to deposit dredged material. Some council members decried it as a backroom deal, drawing a rebuke from Billy Sullivan at a 2008 meeting.
“You don’t know me and you don’t know my family,” Sullivan said, according to the Galveston County Daily News. “You don’t know how we care about this island ... You have a special agenda. You are trying to beat down people who have done good things on this island. You can’t drive us away.”
Businesses expand
Over the years, the Sullivans have added to their portfolio. After buying a terminal at the Port of Galveston in 2005, Todd Sullivan established Texas International Terminals, a liquid and dry bulk multi-modal facility along Galveston Ship Channel capable of serving rail, deep draft vessel, barge and trucks. He also joined the Wharves Board of Trustees, which oversees port operations.
Two years ago, it was reported that Sullivan intended to build a crude processing facility at his terminal to make 50,000 barrels per day of low-sulfur fuels, a project that would require a deepening of the ship channel to accommodate the deeper-draft vessels that would ship the product.
Elizabeth Beeton, a trustee on the Wharves board, questioned whether Todd Sullivan had a conflict of interest.
“How can we proceed with this if you have a board member advocating for it, who is also the main beneficiary?” Beeton asked during a 2018 board meeting.
Sullivan responded that he was advocating for local industry, worried that the Port of Galveston would get left behind without the dredging project. He agreed to recuse himself from future discussions on the project.
The Army Corps of Engineers later dredged the ship channel, with the Port of Galveston serving as the local sponsor and paying up to one-third of the $3.3 million project cost.
More recently, the brothers have become major players in disaster recovery. After Alabama-based DRC Emergency Services subcontracted with Sullivan Land Services to remove debris from cruise ship terminals at the Port of Galveston following Hurricane Ike in 2008, SLS went on to build homes in Haiti after the 2010 earthquake and won a contract to help rebuild New York City after Superstorm Sandy in 2012. Four years later, the Sullivans had acquired DRC Emergency Services, raising the company’s profile even more.
DRC’s requests for proposals for disaster recovery work, obtained by the Houston Chronicle, show that the company boasts one of the largest subcontractor networks in the industry. Since its acquisition, DRC has won millions of dollars in contracts to perform debris cleanup after storms and hurricanes in Louisiana, Florida, and Texas, including Houston and Harris County after Harvey.
Sullivan Land Services won a $375 million FEMA contract to construct homes in Puerto Rico after Hurricane Maria, and successfully lobbied officials in New York in March and April for a $20.8 million no-bid emergency contract to build a field hospital in Brooklyn for COVID-19 patients.
DeWight Dopslauf, a purchasing agent for Harris County, said DRC is one of “the most qualified” debris removal companies in the country. During cleanup after Harvey, Dopslauf said, the county had to renegotiate its contract with DRC because of a high demand for its trucks in Florida after Hurricane Irma that fall.
“There’s only a handful of decent (disaster recovery) companies out there that have actually done the work,” he said. “And they’ve worked with us several times, throughout different disasters. They have the ability to …bring in more assets when we needed them.”
But DRC has also caught the attention of state watchdogs. It was one of three companies subpoenaed by the Florida attorney general in 2018 for charging higher rates for debris removal on previously agreed-upon contracts in the wake of Irma.
In a statement to the Palm Beach Post, John Sullivan said one South Florida jurisdiction increased DRC’s pay before Irma struck and that the company “welcomed” the pay increase because it advanced the progress of debris removal in that area. A spokeswoman for the Florida attorney general said no action was taken against the company.
While the Sullivans’ quality of work is well-regarded, they have also demonstrated political savvy. Companies seeking state business frequently give money to Texas politicians involved in contracting decisions, which is allowed under state law. The Austin-American Statesman reported in 2018 that Sullivan Land Services was one of 12 companies that had donated to Bush, the Texas land commissioner. The three brothers also contributed $16,875 to Bush from 2013 through 2017. The company has won four Harvey-related contracts from the Texas General Land Office totaling $23.6 million.
Since 2017, federal campaign finance reports show, the three Sullivan brothers have donated $84,741 to Republican candidates, including more than $22,000 to Cornyn and nearly $20,000 to GOP-backed political committees.
Forbes estimated in 2019 that the Sullivans had made $1 billion in revenue from government contracts in recent years — a potential windfall of up to $50 million in profits.
Whistle-blowers allege misconduct
The whistle-blower complaint against Sullivan Land Services and its subcontractor, Ultimate Concrete of El Paso, was filed in the Southern District of California in February 2020 and mostly focuses on alleged actions during the summer of 2019.
As a prime contractor on a border wall project near Imperial Beach, Calif., SLS was responsible for hiring subcontractors for design and construction, as well as security, on its job sites, with the funds provided by the federal government under a $144 million contract. According to the complaint, Ultimate Concrete used taxpayer dollars to illegally hire armed Mexicans to provide security for the wall project.
The scheme was uncovered by two whistle-blowers — a former deputy sheriff in San Diego County and an ex-FBI special agent who worked for security firms hired by SLS, the suit alleges. It also claims that they were rebuked by a SLS project manager after reporting on the illegal security practices as well as on a gunfight that broke out on the U.S. side of the border between Mexican security guards and Mexican nationals attempting to steal from wall construction sites.
One of the whistle-blowers alleged in the complaint that Chris Lankford, federal division president for SLS, and Jesse Guzman, president of Ultimate Concrete, acknowledged they were aware of the Mexican guards working for them, with Guzman claiming that he was “paying for the services of the Mexican guards.”
The whistle-blowers said at least one unidentified Army Corps supervisor, who later stepped down, was aware of the operation.
Representatives from Ultimate Concrete could not be reached for comment.
The day after the shooting, one of the whistle-blowers contacted the FBI. Several months later, in October 2019, the SLS project manager informed one whistle-blower that he had been fired and should no longer communicate with the other whistle-blower, according to the complaint. Ten days later, the other whistle-blower met with Lankford, who fired him.
Both whistle-blowers are seeking damages and civil penalties for each false claim they say Sullivan Land Services and Ultimate Concrete presented to the federal government. Attorneys for the whistle-blowers did not respond to requests for comment.
The Imperial Beach wall replacement was completed in 2019. The Sullivans’ work on the border wall continues unimpeded in Texas, California and New Mexico, with work scheduled to be completed this year.
Rick Smith
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