While an investiagtion into the Mobile Housing Board by the HUD Office of the Inspector General pointed directly to the awarding of a multimillion-dollar contract to a company owned by the half-brother of State Rep. Adline Clarke, even more questionable connections appear to exist between the Clarke and those who may have benefited from MHB and MDE work. Clarke is a vice president of the board’s nonprofit arm, Mobile Development Enterprises.
Frank Seltzer, who state records list as president of Superior Masonry — a company that received more than $3 million worth of work from 2011 to 2015, as detailed in the OIG audit — is listed as a sibling in Clarke’s Statement of Economic Interest filing with the Alabama Ethics Commission.
And while MHB authorities have argued MDE is a totally separate entity from the Housing Board, thus making Clarke’s relationship with the contractor a non-issue, records show Seltzer, Clarke and another brother listed as being involved in a separate existing business together.
Business records from Alabama Secretary of State John Merrill’s office indicate Clarke incorporated a business with Seltzer and Plearse Clarke Jr. The business, Sun Belt Structures, was formed in 1986 and only filed a report with the state office once, in 1986. Clarke Jr. is listed as president. The address listed with the filing is a residential structure, and it was not determined whether the business is still a going concern.
Adline Clarke did not return a call to the Mobile Housing Board office late last week or respond to a message sent to her Statehouse email account. The email contained specific questions seeking to clarify her outside business connections. Seltzer also did not return a call Monday afternoon seeking comment on both connections.
While the audit points to Superior Masonry receiving more than $3 million from the contract, the OIG is specifically concerned with nearly $1.2 million the company received from the board. The report states that if the board can’t show proof that a conflict didn’t exist, it would be forced to pay back that money in non-federalized funds. A source with familiarity of HUD programs said while about 90 percent of the board’s funds are federal, some of those funds are de-federalized and the repayment would most likely come from that portion.
It would not, for instance, come from state or local funds, of which very few are involved. The report specifically cited the fact that Adline Clarke, as vice president, actually signed a contract between MDE and MHB that facilitated the hiring of Superior Masonry.
According to MHB Executive Director Dwayne Vaughn’s written response to OIG regarding the audit, Superior Masonry was one of three contractors awarded work following a March 10, 2014, Request for Proposals. Superior Masonry was the only minority-owned contractor to receive work, Vaughn wrote. The contract was awarded June 18 of that year. The board also entered into contracts with Bradley Construction and Langan Construction, according to Vaughn.
Vaughn wrote there was no conflict of interest in the contract award because Adline Clarke had no influence over Superior Masonry’s selection because she wasn’t an employee of board, but rather of MDE.
“[Clarke] had no role whatsoever in any contracting decision related to the request for proposals … ” Vaughn wrote. “More generally, [Clarke] never worked for the Housing Board, was paid solely by MDE, was an at-will employee of MDE and had no ability to influence our decision making with regard to construction related … with the request for proposals.”
In an interview following last week’s MHB meeting, Vaughn said Superior Masonry still had a contract for work with the agency, but wasn’t currently doing any work because of the impending report. Vaughn said he had no regrets about entering into the contract.
In its response to Vaughn before the audit was made public, the OIG found there was at least the appearance of a conflict of interest based on evidence provided.
Further, the OIG found that MHB and MDE share office space, executive staff, phone lines and bank accounts, which makes MDE an instrumentality or part of the Housing Board and not an affiliate or third-party contractor.
“Because of the Housing Board’s close relationship with its nonprofit, Mobile Development Enterprises, it allows the senior vice president to act as a Housing Board employee, which can potentially influence policy related to its low-income public housing developments,” the OIG wrote. “We determined that the nonprofit participates in the procurement of the Housing Board’s contractors.”
Vaughn also argued, in his response to OIG, that MHB had not been mistaken in identifying MDE as an affiliate, or third-party contractor and not an instrumentality.
OIG officials wrote they would have been able to determine if there was a conflict of interest had Vaughn released more information on MDE. Since it’s a nonprofit, very little about MDE has to be made public. Although many nonprofits are required to submit an Internal Revenue Service 990 form, which discloses some financial information, like the number of employees and sometimes a pay scale, MDE was granted an exemption from this filing in 2010.
Jackie Enterline, a spokeswoman for Guidestar, an internet database of nonprofit information, said MDE is not required to file the form because it is an arm of a local or state government.
Former MHB employees said Superior Masonry was involved in several so-called “make readies,” which was a term used to describe preparing apartments for tenants. A few of the employees said they specifically remember Superior Masonry doing work at Oaklawn Homes at 1010 Baltimore St.
Several sources, including four former employees, said MDE hired temporary workers from an employment agency called Spherion to do routine maintenance work. Spherion’s website lists a Cheryl Williams as president. A woman who answered the phone at Spherion confirmed Williams was the owner.
In an email message Monday night, Vaughn confirmed that some temporary employees were hired by MDE between 2011 and 2013, but he did not release the name or names of the businesses used.
There is also an apparent connection between Adline Clarke and Williams, according to records indicating a temporary employment agency named The Clarke Group was founded in 1994. Adline Clarke was listed as the registered agent at the time of its founding and is listed as the incorporator.
Starting with its report in 1995, a Cheryl S. Coleman was listed as secretary and Adline Clarke was listed as president. The company, according to records, changed its name to The Coleman Group in 1998, but Clarke remained president as of that year’s report. In 1999, according to records, Clarke was removed as president and replaced by Coleman. Adline Clarke’s name was removed and a Cheryl S. Williams was listed as president beginning with the 2000 report.
Williams was still listed as president of the company, which shares an address with Spherion at 12 S. Florida St. as of its 2015 report.
Williams did not return a call seeking comment on the connection to Adline Clarke, so it is not clear whether Clarke continued a business relationship with the temp agency or left.
And while Clarke’s potential conflict of interest was pointed out by the OIG audit, another powerful ex-member of MHB and MDE also has business connections related to tax-credit properties.
Former MHB Chairman Clarence Ball, owner of Ball Healthcare, is connected to a number of apartment complexes built using low-income tax credits. According to records, Ball is listed as the registered agent for Oleander Park Apartments, established in 2003. The Prichard Housing Authority takes applications for Oleander and at least some renters receive project-based housing choice, or Section 8 vouchers, according to a woman answering the phone at the PHA’s front desk.
Ball is also connected — through a business called A&B properties — to an Allan Rappuhn, listed as the registered agent of a number of properties, including Gateway Management LLC. Gateway acts as a property management company for several apartment complexes across the Southeast, including three in Mobile and one listed on the company’s website as “coming soon.”
The complexes in Mobile include Oleander Park, Cottage Hill Pointe Apartments, Pelican Landing and the Palladian Apartments I and II. There are two separate listings for “Palladian Apartments” on the secretary of state’s website. One of the records lists Independent Living Investments — Palladian II LLC as a registered agent and the other, Palladian Apartments LTD, lists Rappuhn as an agent.
After reaching the front desk by phone and being transferred to a Ball Healthcare representative, Lagniappe was told Ball was on vacation “for the month.” The representative declined to provide other contact information for Ball. Attempts to email an account listed as Ball’s bounced back.
Ball held sway over MHB for many years until his appointment ended in August of last year. He was also a major donor to former Mayor Sam Jones’ campaigns. Jones went to work for Ball at some point after his 2013 re-election defeat and is listed as an employee on the Ball Healthcare website.
Other audit findings
While OIG didn’t find any misspent funds, the audit did call out the board for failing to use the money it received from HUD in a way the agency felt was appropriate. For instance, the audit found the board did not use its capital funds to make enough apartments ready between 2011 and 2015 and decrease its waiting list. Although the board presented a plan to reduce the number, the report states, the waiting list roughly doubled in size.
Vaughn argued in writing and in a phone interview after the report’s release that MHB felt it would be inappropriate to use the federal funds to renovate apartments in complexes like Josephine Allen Homes and Roger Williams. Instead, he said, MHB felt because of the ages of the respective complexes they should be torn down.
In its response to Vaughn, OIG said MHB has had ample time to either sell or demolish Josephine Allen Homes under HUD’s disposition approval, yet hasn’t done so. Josephine Allen is completely vacant.
There are still about 100 families living at Roger Williams, but they will soon be given housing choice vouchers and moved out.
Several former employees said the deterioration of Josephine Allen Homes could have been avoided with better maintenance and care. The OIG report also stresses a lack of proper upkeep as a major issue in the deterioration of some of MHB’s complexes.
In an email message sent Monday night, Vaughn said the board disagrees.
“We believe that the OIG report’s assertion that Josephine Allen and Roger Williams deteriorated due to poor maintenance was incorrect and without any factual support,” Vaughn wrote. “Roger Williams was put in service in 1954 so that it was nearly 57-plus years old in 2011. Josephine Allen was put into service in 1965 so that it was nearly 46-plus years old in 2011. Both were approved for demolition by HUD for obsolescence, not deferred maintenance.”
Mayor Sandy Stimpson, who last week saw his third MHB appointment get sworn in by City Clerk Lisa Lambert, feels like he now has control of the board.
“It’s disturbing,” he said of the report. “But I was not surprised because we had multiple discussions with HUD over the last two and a half years where they apprised us of their suspicions. The OIG report is simply a validation of those suspicions.”
Stimpson said that before he had the majority of appointments on the five-member board autonomous of the city government, he felt he wasn’t in good position. Now, he said, it’s time to be proactive.
“We could sit back and let HUD tell us what to do, or we can come to HUD with a plan and let them endorse it,” he said. “The preferred route is we develop a plan that is approved by HUD.”
Stimpson suggested he would review MHB’s plan to replace its older complexes with new, mixed-use, mixed-income developments before it could be endorsed by the administration.
While Stimpson has called for a financial audit of the board’s operations, he also said it’s important to promote an atmosphere of collaboration between his office and the board’s administration. To that end, city spokesman George Talbot said the office began having better communications about nine months ago, including regular meetings with different MHB departments.
Employees’ wage lawsuit
In a separate issue, the MHB recently reached a settlement agreement with a number of former employees over back wages. U.S. District Court Judge Kristi Dubose approved the joint settlement agreement earlier this month, according to court documents. The suit was brought by six housing board maintenance supervisors after they were laid off in 2014.
Ty Criswell, Ronald Coffman, Eric Knight, Samuel McCord, Denisa Peacock and Joe Frank Smiley Jr. claimed in the suit MHB knowingly withheld regular, overtime and on-call pay.
The original suit alleged a violation of the Fair Labor Standards Act because the housing board “has had a uniform policy and practice of consistently requiring the plaintiffs to work ‘on-call’ and/or ‘off the clock’ without pay and has required employees to work over 40 hours a week without paying them for every hour worked and without paying them overtime compensation due to them.”
As part of the settlement each of the six employees received between $18,500 and $25,600 in damages from the board. The settlement also requires the board to pay $40,000 in legal fees of the six plaintiffs. The deal will cost the board a total of $165,000, including attorneys’ fees.