OXFORD — Testimony got underway Tuesday morning in federal court in Oxford in the fraud trial against Jabari Edwards and Antwann Richardson. The two businessmen are accused of misusing several million dollars in federal pandemic relief funds.
The case centers around a group of companies owned by Edwards, which includes J5 Solutions, J5 GBL, the Bridge Group and North Atlantic Security Services. Also involved is Edwards’ personal, limited-liability company Edwards Enterprises. Edwards owned the companies, but Richardson oversaw the day-to-day operations.
North Atlantic Security and Edwards Enterprises are the companies at the heart of the investigation. Edwards and Richardson, among other things, allegedly applied for Paycheck Protection Plan loans for NAS after they had sold that company.
The bulk of the day Tuesday was taken up with the testimony of Christina Steadman, who, along with Jim Bell, bought NAS’s client list in early 2021 and used it to set up their own company, American Sentry Security Systems.
Steadman testified, while being questioned by Assistant United States Attorney Robert Mims, that she began working for Edwards as human resources manager at NAS in September or October 2018. After the company relocated to Court Square Tower, Steadman said she became comptroller for the J5 family of companies.
Steadman said she was only allowed access to some of the companies’ financial files — information was compartmentalized on a need-to-know basis. At first, she was unaware of the level of debt that NAS had accrued, which was mostly due to unpaid payroll taxes.
“One year it would be $40,000, the next $120,000,” Steadman testified.
She estimated the company’s total tax burden at around $1 million.
Steadman testified that in early 2021 Edwards and Richardson were talking about either selling or shutting down NAS entirely and were taking steps to shut the company down to avoid continuing to accrue more tax debt.
She and Jim Bell, who had previously worked with NAS, decided to buy the company’s contracts.
“(Edwards) told me he wanted out of the security business, that he would never do it again,” Steadman said. “… (Bell) and I had relationships with (NAS’s) clients, and we felt like we could do it.”
She and Bell bought the company in March 2021 and rebranded it as American Sentry, because they felt the name NAS had a bad reputation in the business. They paid a total of $260,000: $20,000 in cash, coupled with a swap of condos owned by Bell and worth $240,000.
Steadman said she didn’t put up any money, but Bell gave her a 50/50 stake on the understanding she would continue working for American Sentry in the same capacity she had with NAS.
The contract of sale was dated March 1, 2021, and signed March 4, Steadman said. She explained she and Bell were in Kansas working at the time and signed the paperwork upon their return to Columbus.
The final payroll entry for NAS was March 1, Steadman testified. However, American Sentry and NAS continued to invoice each other due to some complications with contracts — NAS held bids with Lowndes County and with Montgomery County, Texas, that would have to be rebid if NAS backed out.
American Sentry paid those employees and then invoiced NAS, Steadman testified.
NAS applied for a PPP loan in January 2021, Steadman testified, but there was some discussion between Edwards and Richardson regarding whether doing so was a good idea.
“(Richardson) said (NAS) should apply, but (Edwards) said they weren’t entitled to the money and there were other companies out there that needed it,” Steadman said. “(Richardson) told him he would have an accountant look at it and find out if NAS was eligible.”
Steadman testified that she later got a better look at the state of the J5 companies’ finances. For a period of about 12 hours she had unfettered access to the books, and what she saw alarmed her.
Edwards’ businesses were running a deficit, she said.
“I told (Edwards) if everybody that owed him paid and then he shut his companies down right then, he would have a deficit,” Steadman said. “He put his head down and appeared to cry. I told him if you keep following (Richardson), he’s going to lead you right to jail.”
Cross examination
Under cross-examination by Edwards’ attorney Chandler Rogers, Steadman admitted that Edwards and Richardson were establishing a company called We C U, which would install and monitor security camera systems. She denied that NAS and We C U were equivalent companies, in spite of the fact that they are both security-oriented.
“NAS was security (people),” Steadman said. “We C U is cameras. It’s not the same thing.”
Part of the defense’s argument is that Edwards and Richardson were trying to spin off NAS into a new, more profitable company, and that the release of its employees and the sale of its contracts was not an “adverse” event, which would have precluded the company getting a loan under federal guidelines.
She also testified that as many as four or five NAS employees continued working for some time after the company as a whole ceased operations, and were paid by “an entity,” although she did not know which of the J5 companies it was.
Rogers also questioned Steadman about other financial challenges NAS faced, including a multi-million-dollar loss in 2019 when the state of Louisiana unlawfully — as another court determined — terminated the company’s contracts.
Richardson’s attorney, Victor Fleitas, during his cross-examination accused Steadman of double-dipping when it came to PPP money herself.
Under his questioning, Steadman said she filed for a PPP loan for American Sentry soon after buying the contracts from NAS. The document of sale for the NAS contracts was dated March 1, and Steadman filed a loan application for $98,800 on March 5.
Steadman denied that she did anything wrong.
Fleitas also pressed Steadman on whether she knew Edwards and Richardson intended to move into the security camera business. Steadman said she “was not privy” to those discussions, but did admit that she knew Bell was helping acquire cameras and equipment for We C U.
The trial is expected to stretch into next week.
Brian Jones is the local government reporter for Columbus and Lowndes County.
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