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Demorest Mayor Rick Austin to pay $60,000 to settle lawsuit alleging fraud
Rick Austin.jpg
Demorest Mayor Rick Austin during his time as a member of the Georgia General Assembly in 2009.

Demorest Mayor Rick Austin and company Pegasus Drone Services must pay $60,000 within 60 days to settle a lawsuit alleging fraud filed in Habersham County Superior Court, according to the attorneys.

“Once he pays, we dismiss the case. If he doesn’t pay, we pursue a judgment for that amount,” attorney Michael Cummings said, who was representing Kingwood Water and Sewer.

According to the lawsuit filed in Habersham County Superior Court, Austin entered a contract to purchase a local water and sewer business in August 2017.

The suit claims that, after taking over collection of bills for the business, Austin funneled profits from the company, which were meant to pay operating expenses, to his own personal use.

Joseph Homans, who is representing Austin and Pegasus Drone Services, said it was settled Wednesday afternoon during the middle of a trial but did not have any further comment on the settlement.

“Assuming that the settlement agreement is complied with, the case will be dismissed with prejudice, so there wouldn’t be anything left. The case would be completed,” Homans said.

Cummings said the original demand was around $20,000. As he pursued the case, the complaint was amended to add a claim of fraud.

“What we thought was a simple refusal to pay a bill turned into more like an attempt to defraud somebody, once we started looking at his bank account information and where the money was going and what he was saying to my client while he was taking the money,” Cummings said.

Austin did not return a call for comment.

Austin was set to assume ownership of the business on Aug. 1, 2017, according to the lawsuit filed by Kingwood Water and Sewer LLC, with a stipulation that all income received from operations in July be used to pay that month’s bills.

“Despite the parties’ clear discussions and despite the language of the contract that (Austin) would not receive any assets or payments from the business earned prior to Aug. 1, 2017, (Austin) collected the payments from plaintiffs’ water customers for water and sewer service for July 2017,” the lawsuit states.

According to the lawsuit, Austin opened a checking account account with the plaintiff’s name and taxpayer ID number using July 2017 payments by the plaintiff’s customers.

Austin then allegedly withdrew money for auto parts for his personal vehicle and a computer from Best Buy after obtaining a debit card.

“Instead of operating plaintiff’s business, Defendant Austin spent three months raiding the income from the business and putting it in his pocket,” according to the lawsuit, which also references a $10,000 cash withdrawal.

In his affidavit, Austin said that he informed Bert Williams, the managing member of Kingwood, that he needed to open the account to deposit customer receipts and pay business expenses, including payment to Austin’s business, Pegasus Drone Services Inc., for running the water and sewer operation.

Austin said previously he paid the bills he was responsible for during the months of August and September.

Kingwood was unable to pay bills owed to Georgia Power, Windstream and the City of Clayton, the lawsuit contends, due to Austin’s actions.