Friday, March 17, 2000

Delay of city inquiry defended

Shirey: Prosecution possible

The Cincinnati Enquirer

        City officials are asking the Hamilton County prosecutor to review an investigation that found an Over-the-Rhine development group misspent nearly $1 million in taxpayer money.

        “If they think this investigation was done well enough to support criminal prosecution, then that's what we'll do,” City Manager John Shirey said Thursday. “It's been an ongoing thing.”

        But some council members are questioning why it took the city more than five years to finish an investigation that points to possible criminal misconduct by some and gross mismanagement by city employees.

        “This is outrageous,” said Councilman Charlie Winburn. “This speaks loud about the continuing problems the ad ministration is having.”

        He said the city manager is responsible for “failing to expedite” this case.

        Councilman Pat DeWine agreed, saying he could not understand why the city manager did not act upon the report sooner — and make sure it was completed years ago.

        “It's incomprehensible that six years later, we're only now getting a draft report,” he said. “I'm very upset. Here you have what looks like strong suggestions of possible criminal conduct by city em ployees, and we wait six years.”

        Although the investigation began in October 1994, the findings were not made public until Thursday, after The Cincinnati Enquirer requested the report under the Ohio Open Records Act.

        “I've only had the report for three weeks,” Mr. Shirey said. “I was waiting for the county prosecutor.”

        Mr. Shirey said he did not know why it took more than five years to complete the report, which blamed delays on difficulties in obtaining subpoenaed bank records and other documents.

        The report, written by the former director of the city's Office of Municipal Investigations, alleges that Owning the Realty received $972,000 in federal grants to develop a housing project that never got done.

        Instead, the report says, neighborhood development group's executive director and another employee:

        • Used the federal grants to improve a private business.

        • Manipulated the bid process to ensure contracts went to a company owned by the employee.

        • Made duplicate billings.

        • Received money to pay bills, but never paid them.

        • Got public money for work that was done poorly if at all.

        “OMI conservatively estimates that (Owning the Realty) received at least $60,000 in unearned reimbursements,” the report says.

        In a memo to council Thursday, Mr. Shirey said the report “has not been signed and placed in final form for release because it is currently under review for the purpose of determining if there is any probable cause to believe that felony criminal violations have occurred.”

        Owning the Realty officials could not be reached for comment Thursday.

        Investigators said the city's Department of Neighborhood Services — then called the Department of Neigh borhood Housing and Conservation — failed to monitor the project and the disbursement of federal money to the neighborhood development group.

        “Minimal supervision” would have uncovered the problems, the report said, adding that former neighborhood housing supervisors were “unaware” of the severe mismanagement of the $972,000 project.

        The U.S. Department of Housing and Urban Development gives grant money to the city for neighborhood development groups, but the city is responsible for oversight.

        The report said the city did not require Owning the Realty to maintain adequate financial records and distributed money to the neighborhood group even though it failed to get $250,000 from other sources as required by the city's contract.

        “NHC used poor judgment in its failure to require that (Owning the Realty) obtain fire insurance coverage for the project buildings, even though one of them was being renovated as a result of prior uninsured fire damage,” the report said.

        Councilman James Tarbell said the report is long overdue and that it confirms suspicions he has had for five years. He said he has been asking about the investigation, but “I haven't been able to get anything on it.”

        Councilman Phil Heimlich said Thursday the situation mirrors recent revelations about a West End development group that is being probed by the FBI, the county prosecutor and the city's Office of Municipal Investigations.

        City officials called for those investigations after the Enquirer reported that members of Genesis Redevelop ment Inc. used a federal program to write themselves checks, hire family members and repair relatives' homes.

        “This report about Owning the Realty is just one more example of the absolute failure of Neighborhood Services to do developments,” Mr. Heimlich said, adding that private developers should be hired to do the job instead of relying on city staff. “We can't keep letting this happen.”

        Enquirer reporter Mark Curnutte contributed.


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