Poplar Bluff, tech firm wrangle over payments

POPLAR BLUFF, Mo. -- The City of Poplar Bluff and its former Michigan technology provider remain at an impasse over unpaid invoices and computer equipment the company has not delivered.

Information Systems Intelligence has claimed since August 2015 the city owes it an additional $376,000.

The city paid almost $3,476,000 in no-bid contracts to the company prior to May 2015, at the direction of former city manager Heath Kaplan.

Current city manager Mark Massingham said because of invoices received after Kaplan was also fired, ISI refuses to release servers and other equipment held in Michigan.

St. Louis law firm Husch Blackwell has advised against suing ISI.

Attorneys believe the company could not afford to pay a judgment, Massingham said.

The city manager said he is reaching out to federal agencies, but declined to say which agencies.

The Daily American Republic has been provided with a letter dated Aug. 28 which explains why the law firm believes ISI would not be able to pay a cash judgment.

The letter does not specifically say why the city would be unable to recover equipment purchased under a December 2014 city council ordinance for a project not to exceed $1,514,278.

The computer equipment still held by ISI was installed at a Michigan location to serve as an emergency backup for city operations and could duplicate all city data, Massingham has said. It operated in 2015 until the city's relationship with ISI soured and the servers were cut off from city data because of security concerns.

ISI owner Ryan Leestma told attorneys he transferred the company to its employees at no cost and refused to turn over financial documents.

Leestma and his attorneys also refused to provide the city with documentation relating to the company's insurance or invoices from ISI's suppliers.

ISI is already involved in multimillion-dollar litigation with Muskegon County, Mich. -- Kaplan's employer before he arrived in Poplar Bluff. Any award in that case would likely be assessed against ISI's assets prior to litigation undertaken by the city of Poplar Bluff, Jensen said.

Because the city's system appears to work, he added, the city could not claim professional malpractice.

"Therefore we believe it would be prudent for the city to disengage our services and accept the de facto walkaway detailed in this letter, wherein the city recovers no money from ISI, pays no money to ISI, and the undelivered servers remain with ISI in Michigan," Jensen wrote.

The letter offers detailed explanations of ISI's financial situation and possible insurance coverage.

The undelivered servers are mentioned only twice in the letter, both times when the law firm says the city should walk away from litigation with ISI.

Jensen has since been appointed as a U.S. attorney for the Eastern District of Missouri.

The city awarded two large contracts to ISI, in October and December of 2014.

The October project was not to exceed $1,789,600.66, according to city ordinance, but charges appeared on invoices that seemed to charge the city twice.

As an example, the city received two invoices, eight days apart, for the first half of 60 months of hosting fees. The first invoice charged a price of $330,000 and the second a price of $450,000.

The city pre-paid for 30 months of hosting by ISI for the $1.2 million in equipment it has not been able to recover.

ISI sent the city 12 new invoices in September 2015, less than four months after Kaplan was fired.

They included new charges of between $45 and $350,000 for purchases dating as far back as Sept. 22, 2014, nearly one month prior to the first city council vote to hire ISI.

The city has not paid the bills and believed at the end of 2015 it owed ISI less than $78,000, Massingham has previously said.

Much of the new invoices related to a "disaster recovery" project, under which the servers now held by ISI were purchased.

Leestma put the total cost of that project at $1.8 million, despite city council approval for approximately $1.5 million.

Kaplan told residents during a city council meeting the night the equipment was purchased it would help pay for a 911 center. Placing servers in Michigan was never mentioned during the meeting.

Police later said about $10,000 in equipment was provided by ISI for the center.