By Gregory Korte
The Cincinnati Enquirer
DOWNTOWN - About 80 employees of the Cincinnati Department of Community Development and Planning were temporarily locked out of their office Monday as police continued their investigation of a series of development scandals in the city.
The employees, returning from a long Thanksgiving weekend, also had their e-mail and voice mail accounts frozen as police moved to back up the data to make sure no evidence was destroyed.
But even as the Cincinnati Police Department's fraud squad took those extraordinary steps, detectives told employees they had no reason to think any of them had done anything criminal.
In a meeting with the employees Monday morning, Police Capt. Vincent Demasi told the city development officials they were not suspects in the probe.
"We wanted them to know we need their help," Demasi said. "It's pretty clear to us that vendors are acting inappropriately."
City Manager Valerie Lemmie asked police to open an investigation last week, just before the four-day Thanksgiving holiday. Police say they're looking at a long list of scandals dating to 2000, and including Genesis Redevelopment program in the West End, the Empire Theater project on Vine Street, and - most recently - a failed Findlay Market housing project.
The probe also includes Inner City Health Care, a city-funded agency accused in a city audit of submitting vouchers to the city for equipment that was never actually purchased.
That equipment included a van, and when city officials asked the agency to show proof the van existed, agency officials rented one to show the city, according to the audit. Another federal audit this year said the city overstated the accomplishments of Inner City Health Care.
The question police are trying to answer about the development problems, Demasi said, is this: "Do they keep coming up because of the system that's in place, or is someone manipulating the system to their advantage?"
The FBI has been investigating the Empire Theater matter since January, and has an arrest warrant for fugitive developer LaShawn R. Pettus-Brown. The former Taft High School basketball standout got $184,172 from the city to rehabilitate the now-ruined Vine Street theater before disappearing.
But it was the Findlay Market housing project that caused the city manager to call for a police investigation. Husband-and-wife architect team of David Ross Scheer and Brenda Case Scheer got $338,859 from the city before their project collapsed. The two now teach architecture at the University of Utah.
David Scheer said Monday the couple only learned of the investigation Sunday night.
"My company will cooperate fully with any investigation of its relationship with the city. Any allegation that we were engaged in any kind of criminal wrongdoing is utterly unfounded," he said. "This whole thing was a complete surprise to us."
Scheer said his only failing was that of many other Over-the-Rhine developers - he underestimated the amount of work it would take to stabilize the eight buildings on Elm and West Elder streets.
"You can't tell the condition of those buildings until you go in and do the demolition," he said. "What we found exceeded what we allowed for in the proposal. As soon as I realized that, we contacted the city and stopped the work."
Councilman Jim Tarbell, a longtime champion of Over-the-Rhine development, said the police investigation - especially with regard to Scheer & Scheer - was unnecessary.
"'Criminal,' to me, should not be in the vocabulary," he said. "Stupid, yes. Incompetent, yes. They should never have gotten that project in the first place."
Demasi said police understood they were dealing with complicated financial structures, and was quick to say a failed development project was not, in itself, evidence of criminal wrongdoing.
"Anybody who knows anything about community development in cities in our size knows they deal in high-risk areas. They work in areas where normal finance companies would not go into," he said. "The city, to a certain degree, serves as a gap-filler."
Before police allowed development staffers back into their office late Monday morning, they met with Assistant City Manager Deborah Holston. Other than the presence of police detectives, Holston said the hourlong meeting was "a routine staff meeting."
She introduced Assistant City Solicitor Laura Porter as the department's acting director.
She takes over for Peg Moertl, who resigned.
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