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By Gina Edwards
Naples City Desk
Attorneys for H.O.M.E. are asking federal law enforcement and housing officials to investigate whether elected auditor Dwight Brock and others have abused their authority to carry out political retribution against volunteer board members of the defunct charity in connection with a nearly 6-year-old housing grant.
“H.O.M.E. requests that HUD-OIG, or any other law enforcement agency, investigate the actions of those who appear to have abused their authority in order to seek political retribution,” says the letter dated May 19 and copied to an FBI supervisor, and sent to officials at HUD’s Inspector General Office in Atlanta.
H.O.M.E. also has asked the inspector general of the Housing and Urban Development department to investigate Collier County’s federal housing grant process so other charities in Collier are not subjected to an “unfair and inconsistent” audit process by Clerk of Courts Brock and grant administrators under County Manager Leo Ochs, who answers to elected commissioners.
H.O.M.E.’s request for broader intervention comes as a coalition of activists from 20 churches say excessive red tape and moving target rules by Brock’s Finance Department are holding up needed federal grant money to help Collier’s homeless and needy residents. The City of Naples is questioning whether HUD grants administered through Collier County are worth the effort and the area’s largest homeless shelter, St. Matthews House, says it won’t apply for any more HUD money through Collier County because Brock’s Office has taken 11 months to pay some reimbursements.
H.O.M.E. founder John Barlow ran against Brock in 2012 and board member Gina Downs ran against Commissioner Georgia Hiller in 2010. Barlow and Downs filed a successful state Ethics Commission complaint against Commissioner Tom Henning that became public last year. Commissioners Hiller, Henning and Tim Nance voted to support Brock’s re-opening the H.O.M.E. audit a month later in April 2013.
"Not surprisingly, Ms. Hiller and Mr. Henning have recently been strong proponents of the Clerk's ongoing attacks on HO.M.E. outlined in this letter," H.O.M.E. attorneys wrote in the letter sent Tuesday night.
Hiller declined to respond to Naples City Desk questions through County Attorney Jeff Klatzkow, who sent an email response saying: “Given the potential for litigation in this matter, I have advised Commissioner Hiller not to respond to any queries regarding this matter.” Henning did not respond to an email.
“The H.O.M.E. Board of Directors has expended a great deal of money to fight these false allegations. H.O.M.E. Board members and [Boran Craig Barber & Engel] have suffered financially, as well as emotionally. These allegations have irreparably harmed their businesses, their reputations, and their families. In the meantime, Mr. Brock continues to disparage my clients in public meetings and hearings with absolutely no recourse for this blatant abuse of power,” H.O.M.E. attorneys Nicole Waid, of Roetzel & Andress, and Barlow’s attorney, Jeff Fridkin, of Grant, Fridkin, Pearson, wrote.
The letter from H.O.M.E. is a rebuttal to a joint May 1 letter sent by Brock and Henning, acting as Collier County Commission Chairman, to HUD’s inspector general office in Atlanta. Commissioners were copied on Brock’s letter May 12 and Naples City Desk obtained the letter and thousands of pages of back-up material Brock sent to HUD last week.
Brock and Henning’s joint letter to HUD comes more than three months after commissioners voted to send it and after a Naples City Desk investigation published in February raised questions about whether Brock had made misleading allegations against H.O.M.E. and remodeling contractor Boran Craig Barber & Engel and buried information favorable to the charity, including that it turned over $427,000 in notes to Collier County when it closed down in 2010.
Naples City Desk reported that appraisal reports reviewed by Brock’s own audit staff two years ago documented extensive remodeling work on the houses, contradicting Brock’s statements in January he had no way to determine the work was done.
Brock and Henning’s May 1 letter says that H.O.M.E. owes program profits to Collier County and the project had “bidding irregularities, missing or withheld documentation, acquisition/appraisal/sales irregularities and the appearance of apparent conflicts of interest.”
The letter further raises new allegations by Brock that low-income buyers who bought H.O.M.E.’s houses were potentially “victimized” by notes H.O.M.E. gave the buyers.
The notes are zero-interest, 30-year, no-payment loans the buyers received from H.O.M.E. The buyer is obligated to pay the note holder at the end of 30 years or whenever he or she sells, whichever is sooner.
Brock says these loans inflated the total house prices at the time of sale, including to levels above the houses’ appraised value at the time.
“These additional agreements potentially victimize the ultimate buyer by overvaluing the houses,” Brock wrote to HUD. “As a consequence of the inflated mortgages, homebuyers are at a significant disadvantage with house appraised values far below mortgage amounts, at the time of sale.”
Brock’s letter to HUD references notes H.O.M.E. gave to Collier County, but fails to disclose to HUD that the notes are worth $427,000 — and represent program profits.
The $427,000 in notes is equal to the full amount H.O.M.E. received in federal grant money to buy, remodel and sell 12 foreclosed houses to low-income buyers.
A Naples City desk investigation reported on the notes in February, including that Brock’s Finance Director Crystal Kinzel urged county staff to pull a vote by commissioners to accept the notes as program profits at the Jan. 11, 2011 meeting.
In the letter to HUD, Brock faults H.O.M.E. and says it “attempted to assign these mortgages to Collier County with no evidence of acceptance by Collier County.”
H.O.M.E.’s attorney Waid raised the issue of the $427,000 in notes given to Collier County in 2011 at the May 13 Commission meeting but was cut off by Henning who said the Commission would address the notes at a future board meeting.
The role of Brock’s office in urging the county not to accept the notes may come under scrutiny. The notes are an asset of the county worth $427,000 and Brock is the custodian and accountant of county funds.
Kinzel, who is both director of Internal Audit and Brock’s director of Finance and Accounting did not request that county commissioners officially accept the notes following an audit of H.O.M.E. by her staff in 2012. That audit downplayed the notes and told county management that “better coordination” on the notes was needed.
Naples City Desk, which obtained Brock’s letter and back-up documents sent to HUD on Friday, provided written questions to Brock and Kinzel late afternoon Tuesday and will publish responses if they are received. Brock has declined interview requests or to provide written correspondence to Naples City Desk since January. Naples City Desk filed a public records lawsuit against Brock over high fees charged for public records related to H.O.M.E. and Brock’s audit department in February. After a judge ruled in favor of Naples City Desk in March, Brock challenged the ruling and has requested a trial, which is scheduled to begin June 3.
The packet of info sent to HUD indicates Brock’s Office brought in a new Internal Audit Manager, former state prosecutor James Molenaar, sometime after late February when documents show Dale Phillips still held that title. Naples City Desk has learned that Phillips, who is a witness in the public records lawsuit, is no longer employed by the Clerk’s office.
Brock’s staff collected more documents after it told Naples City Desk it had provided all public records to this reporter as of Jan. 29.
New documents included an analysis by Brock’s office of appraisal reports of the 12 houses remodeled and sold by H.O.M.E. This reporter marked appraisal reports for copying on Jan. 22 as part of a public records request, but later Brock’s office didn’t provide them and subsequently denied they were ever in the audit work paper binders.
An analysis by Brock’s staff sent to HUD, based on the appraisal reports, says that collectively the sales prices of the houses were $1.7 million, which is $300,000 more than the $1.4 million appraised market values of the 12 houses at the time they were sold in 2009 and 2010. The buyers are paying monthly payments on bank-offered first mortgages on those 13 houses totaling $1 million. (Brock includes two houses that weren’t part of the federal program.)
However, the houses were sold in the depths of the foreclosure crisis and appraisers noted at the time on their reports that the real estate market was depressed by the large number of foreclosures in the area, particularly Golden Gate where many of the houses are located.
A review of value current estimates on the real estate site Zillow by Naples City Desk shows that the collective value of the houses in Brock’s analysis is $1.8 million. Two of the houses remain under water based on Zillow’s values, but it’s unknown if the owners would fetch higher prices if they sold today because of the extensive remodeling upgrades.
Brock’s attorney Steve Blount asked commissioners to consider legal action to get more records from H.O.M.E. at the May 13 commission meeting. H.O.M.E.’s attorney says Boran Craig Barber & Engel turned over several thousand pages of internal cost records to the county attorney’s office last week.
H.O.M.E.’s attorneys copied HUD officials on an email exchange with County Attorney Klatzkow in which Klatzkow said he wanted all H.O.M.E.’s public records, echoing a refrain from Brock’s attorney. H.O.M.E. asked for a specific request saying the organization had already turned over thousands of pages to Collier County and the Clerk’s office. Fridkin responded in the email to Klatzkow that all of the charity’s records, electronic or otherwise, would be in his law office and available for review.
“H.O.M.E. has attempted on numerous occasions to cooperate with the County and resolve any outstanding issues, however it is abundantly clear that the County does not want to resolve these issues. Instead, the County Clerk and his employees want to continue to make false allegations in order to harass my clients and tarnish their reputations,” H.O.M.E. wrote in the letter to HUD.
“H.O.M.E. was a charitable organization created to assist the citizens of Collier County.
The program operated with no staff and all administration and oversight was done on a volunteer basis. H.O.M.E. solicited and received upgrades and donations of materials to enhance the final product and provide housing for those who could otherwise not afford home ownership. H.O.M.E. was enhanced with considerable private financing and it successfully put families into safe, affordable homes in Collier County. Instead of enjoying this success and applauding these charitable efforts, H.O.M.E. has been the victim of public attacks on numerous occasions by the very office that approved all of the grant reimbursements.”
Information on whether there’s a time limit for any action to be taken on potential grant violations couldn’t be obtained by press time.
Brock’s office, in its letter says it is “self-reporting” issues and requesting that HUD’s inspector general “audit/investigate the program.”
“The issues discovered in the model used by H.O.M.E. have the potential to be used by other entities round the country, and therefore is of great importance,” Brock writes.
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