Houston Mayor John Whitmire stopped a payout of more than $8 million Wednesday to a Houston business owner charged with bribery, following KPRC 2’s ‘DRAINED’ Investigation into the city’s waterline contract corruption scandal.
The payout was for work completed on an unrelated city project.
Joseph Nerie, owner of Nerie Construction, appeared on Wednesday’s City Council agenda, catching the attention of our investigative team. Houston officials have told us that defendants in the scandal are banned from city contracts and business.
Nerie was charged with bribery and tampering with government documents last year. Texas Rangers investigators say he paid Patrece Lee, a water maintenance manager, more than $77,000 over 15 months. During that time, the emergency contracts Lee awarded to Nerie’s company ballooned from $1 million to over $8 million.
The Rangers say Nerie paid Lee through Cash App and personal checks.
In January, Nerie pleaded guilty to “gift to a public servant.” In exchange, prosecutors dropped the two more serious felony charges.
According to the city’s procurement website, Nerie Construction and three other businesses involved in the scheme are listed under debarment, meaning they cannot be awarded city contracts for the next five years.
So why was City Council voting to pay Nerie more than $8 million?
The city’s chief procurement officer, Jedidiah Greenfield, told us Nerie Construction was already more than halfway through a paving and drainage project on the city’s northeast side when he was charged in the scandal. The project began in 2021 and was completed in November 2024. Greenfield says the city owes Nerie $8.3 million for that work.
Greenfield said Nerie will not be awarded any new contracts; but disclosed that Nerie was awarded a contract in July 2024 for another drainage project.
“When business owners are charged and plead guilty to these crimes, they should not be awarded more projects,” said Mary Nan Huffman, District G Houston City Council Member.
Public Works Director Randy Macchi told council members a clerical error in the finance department made the contract appear active in the city’s portal, but it was not.
Greenfield said a hold was placed on the contract when Nerie pleaded guilty in January.
“When we see someone that’s under investigation... in our accounting system, we can put a hold. What that hold does is say, ‘Don’t release any purchase orders. Do not release any payment,” Greenfield said.
In court last month, Nerie’s attorney asked the judge to end his deferred adjudication early. The period is supposed to last through January 2027.
The judge hasn’t made any changes just yet.
On Wednesday, Mayor Whitmire and city council members said Nerie should not receive any money from the city of Houston, but they said the subcontractors who may have done work under the contract should not be penalized for work they legitimately completed.
Whitmire directed the city’s legal and public works departments to look at the bill again.
“Review the work orders to see that the subs are paid and that Nerie Construction and Joseph Nerie and his brother receive no city dollars,” Whitmire said.
Council Member Fred Flickinger, District E, agreed that Nerie should not be paid.
“I would think for the behavior that took place, we should have iron-clad language that: ‘No, you’re not gonna get paid.’ And maybe that would actually discourage anybody from attempting to do anything like this in the future,” Flickinger said.
Other city council members spoke about strengthening ethic guidelines and financial disclosures. We will follow up to find out what comes out of all of this.
The ‘DRAINED’ Investigation started with emails and calls from viewers. Do you have a problem or a story you’d like to share?
Email Investigator Amy Davis at ADavis@kprc.com and Investigative Producer Andrea Slaydon at ASlaydon@kprc.com.
