A non-profit organization being run as a subsidiary of the Mobile Housing Board had its tax-exempt status revoked more than two years ago for failure to file required forms for three consecutive years, according to the Internal Revenue Service.

Mobile Development Enterprises, had its tax exempt status revoked in May 2010 for failure to file a Form 990-series return for three consecutive years, according to an IRS website. A call to the IRS confirmed MDE’s tax exempt status remains revoked at this time.

MDE was incorporated as a non-profit corporation in 2003 by then-Mobile Housing Board Executive Director Stevens Gregory, according to Mobile County Probate Court records. Housing Board Chairman Clarence Ball and Vice-Chairman Donald Langham also were listed on the MDE board of directors. The Housing Board also incorporated a for-profit version of MDE in 1997 that remains active. MDE’s articles of incorporation were updated in 2010 to replace Gregory with new Housing Board Director Dwayne Vaughn, according to probate records.

On the Alabama Secretary of State’s website, there are two versions of MDE listed. Mobile Development Enterprises is listed as a non-profit corporation, with Vaughn as the registered agent. Also listed is Mobile Development Enterprises, Inc., a domestic corporation with Vaughn listed as the agent.

The issue of MDE’s relationship with the Housing Board has recently come to the fore as its vice president for Business and Community Relations, Adline Clarke, launched a campaign to win the Alabama House of Representatives District 97 seat. Clarke won more than 40 percent of the vote in the Feb. 26 primary election and is headed for a runoff with local attorney Karlos Finley.

However, questions regarding Clarke’s ability to run due to limitations set by the Hatch Act surfaced before that race, with some opponents suggesting she actually works for the Mobile Housing Board. The Hatch Act is a 1939 law aimed at keeping civil servants from running for partisan office, and housing board employees have been covered by Hatch Act prohibitions in the past.

Clarke has said she believes she is not covered by the law because she works for MDE, not the Housing Board. She says she has asked for a ruling from the federal government as to the legality of her run but has not yet received an answer.

In a Jan. 30 letter to Clarke’s campaign, Vaughn declared MDE’s non-profit corporation as a separate entity from the Housing Board, thus making Clarke’s run legal. However, many question whether MDE is in fact separate from the Housing Board as Clarence Ball and Donald Langham serve as chairman and vice-chairman respectively for both.

Also, the address and telephone numbers on MDE letterhead also belong to the Housing Board. Clarke is even listed in the Housing Board’s electronic phone directory.

The U.S. Office of Special Counsel said three weeks ago Clarke’s ability to run would primarily be determined by whether her salary was paid through federal funds.

“Unless the salary is paid 100 percent by federal funds, there is no prohibition,” said U.S. Office of Special Counsel spokesperson Ann O’Hanlon. However, a restriction would still be in place if Clarke’s salary comes from federal funding.

Vaughn told Lagniappe Clarke is paid by MDE, which now employs about 30 people. In his letter to Clarke’s campaign, he described the non-profit company as one “focused on providing construction administration, extensive social services and public relations services for entities and individuals that serve low to moderate income families.” He told Lagniappe the Housing Board is currently MDE’s only client, but added that the company is actively seeking to compete for outside work with other businesses.

While employees of the Mobile Housing Board have traditionally worked under the guidelines of the Mobile County Personnel Board, MDE employees may not. When contacted about Clarke’s status under the Personnel Board, Chairman Sydney Raine said her position was not subject to Personnel Board rules. MDE is currently advertising for two new positions, a senior compliance manager and a senior compliance analyst. Both have a salary range of $53,000 – $84,000.

According to IRS documents, MDE could have been assessed penalties of $20 per day for failure to file its Form 990, not to exceed $10,000 or 5 percent of the organization’s gross receipts. It is not known if MDE was fined for failing to file for three years as Vaughn did not return phone calls or emails prior to this story’s writing.

The question of how MDE can use federal grant money given to the Housing Board when it no longer has a tax-exempt status is also difficult to determine. According to HUD documents, “eligible non-profits must have two years 501c3 IRS tax-exempt status.”

HUD spokesman Hollis Wormsby did not respond to inquiries about MDE’s lack of tax-exempt status prior to publication of this article. In response to previous questions as to whether HUD has audited MDE, he wrote, “Regarding audits, there are no records of a specific audit involving the nonprofit company you mentioned, Mobile Development Enterprises. There is an internal working document HUD has about the HOPE VI Renaissance Redevelopment project that will be finalized when the grant is completed and closed.”