The Joint Legislative Audit Committee held a public hearing today to take testimony and commence an audit of the Wisconsin Economic Development Corporation (WEDC). Unfortunately, Rep. Robin Vos (R-Rochester) left the hearing prior to the testimony of outgoing WEDC CEO Paul Jadin. If he had stayed, Vos would have heard Jadin call for “more legislative oversight and accountability” of WEDC in his testimony.
The recent criticism of WEDC and the Department of Administration (DOA) mismanagement of the Community Development Block Grant program (CDBG) from US Housing and Urban Development (HUD) directors uncovered what appears to be a pattern following Scott Walker from his County Executive office in Milwaukee to the Governor’s office in Madison. Is it sheer incompetence, or inherent corruption and cronyism?
On March 15 2012, just one month prior to HUD suspending WEDC from administering the block grant program, HUD sent a letter to the new Milwaukee County Director of Health and Human Services Hector Colon (Full March 15 2012 letter here). The letter informed DHHS Director Colon that after a HUD review of additional information supplied by the County, 23 of 29 block grant awards failed to meet federal requirements, and the County could face repayment of over $500,000 in grants. An additional 3 programs required further documentation.
The Milwaukee County program was being administered during that time period by Timothy Russell, at the time Walker’s housing director now facing trial in the John Doe investigation. Another key Milwaukee Walker Administration person in the block grant program was Lisa Jo Marks, director of DHHS under Walker. Marks is now the DOA Housing director in the current Walker Administration.
Lisa Jo Marks was Walker’s Child Support Enforcement Director from 2007 – 2009 before being named interim director of DHHS. Marks replaced Corey Hoze as DHHS director when Hoze left for a job as Associated Bank Vice President of Government Affairs. Hoze also now serves on the WEDC Board of Directors – another agency currently involved in CDBG program controversy under Walker. Marks and Hoze undoubtedly work together in their capacities in DOA and WEDC (respectively) grant programs. Marks has also appeared as a presenter at the ultra-conservative think tank American Enterprise Institute during her Walker Administration tenure.
Badger Democracy has obtained a 2009 HUD spreadsheet from the CDBG program demonstrating continuing administration problems with accountability in the program. The spreadsheet lists 2008 programs for “LMJ and LMH” (low-mid income housing and jobs) which failed to document accomplishments as required under federal law. HUD analysts informed Badger Democracy that two of the three had eventually fulfilled the reporting requirements. One had not. Program number 3254 in the amount of $12,258.52 was made to Wisconsin Community Services in 2008. WCS has received no block grant money since 2008, and to this day has not fulfilled the reporting requirement.
Key individuals in the Milwaukee Walker Administration not under investigation in the ongoing John Doe investigation have been selected by the governor to be involved in the current CDBG program. A series of department memos from May-June 2010 show that Timothy Russell, Lisa Marks, and Cynthia Archer were all involved in the block grant award process, and had to have firsthand knowledge of grantors and awards. Only 29 awards were distributed in 2011.
A subsequent memo from October 2010 shows that Walker, Russell, and Archer were directly involved (along with the County Board and DHHS) in grant awards. A full list of past and present grants are included in the memo. On September 10, 2010, DHHS Interim Director Lisa Marks presented the list of CDBG awards to the Committee on Economic and Community Development for approval. In spite of the numerous checks and balances in the system, the grants were made and approved on the basis of trust in the Walker Administration’s assurance of their qualifications.
A close examination reveals a pattern of questionable awards, personnel, and activities. County CDBG funds must go to non-city programs in Milwaukee County. The basic violation of the programs is that they serve constituents in the city of Milwaukee, not the county (non-Milwaukee city). Of note is the money awarded to similar organizations for similar purposes. A vast majority of the grants are awarded to private charities for either job training or facility improvements/construction. While the mission of these charities is largely legitimate, who receives the grant money at the contractor level is a very large question. Under the circumstances, it should receive much greater scrutiny – especially in the following three cases.
Milwaukee County Community Business Development Partners (CBDP) is a county agency that administers the Disadvantaged Business program, and is a public/private partnership. The CBDP received over $27,000 in federal block grant money in 2011 for “micro-enterprise development.” HUD has determined that this violates the program guidelines, as all clients are in the city of Milwaukee, not the County (non-city). On July 19, 2012, then director of CBDP, Frieda Webb, was arrested by the Milwaukee County Sheriff’s Department. Webb stands accused of defrauding the County through falsifying contracts for services not fulfilled and double-billing the county for some classes and services rendered. The FBI has been involved in the investigation. Webb was hired by Scott Walker to serve as the agency’s director.
Webb allegedly conspired with Homer L. Key, owner of 5 Star Construction and Renovation in Milwaukee in the scheme to bill the County for thousands of dollars in services. While neither Webb or Key have yet been charged, the Milwaukee County DA’s office “could not comment on the investigation.” All indications are this is an ongoing investigation. Webb has since been released from county jail. Key is having extensive legal issues in Milwaukee County. Neither party returned calls for comment.
Northcott Neighborhood House received $27,720 of block grant funds for renovation and construction in 2011. Executive Director of Northcott, McArthur Weddle, has recently been appointed to the Wisconsin Housing and Economic Development Authority (WHEDA) board for a four-year term by Scott Walker. Weddle joins close Walker associate and ally Wyman Winston (WHEDA Director) on the WHEDA Board.
Winston recently came under scrutiny after a report surfaced that he was over one year late in paying property taxes on rental property amounting to payments over $30,000.
The WHEDA connection leads to a third grant award in question – in Milwaukee’s Park East Corridor now under development using millions of dollars in tax credits, subsidized loans, and grants. For years, the city and county have been on the hook for development in the corridor amid a series of lucrative financing deals for developers.
The St. Catherine’s Residence received a veto override vote from the County Board in 2007. Since that Walker veto, St. Catherine’s has even received donations from the Walkers on an annual basis. The residence has been built and continually renovated, remodeled, and expanded largely with public money from block grants and WHEDA. St. Catherine’s recently received a share of 2012 grant awards from WHEDA to “expand security measures, remodel kitchens and bathrooms, replace or repair roofs, elevators and boilers, and make restrooms handicapped accessible.”
It is not the charitable organizations themselves that should receive heightened scrutiny. Both Walker administrations rife with cronyism have demonstrated a consistent level of incompetence – or they are corrupt. It cannot be both. Walker has taken the same people with him to Madison to run these programs, and they should (by now) know the rules. Which makes the WEDC/HUD/DOA fiasco even more outrageous.
Who are the contractors who have been paid millions of dollars over the years from the CDBG program in Milwaukee County under Scott Walker, and has this program become a giant boondoggle for them? How many no-bid contracts have been awarded by allegedly corrupt officials like Frieda Webb? Is this what Walker hoped to accomplish with WEDC – on a statewide scale? At risk are millions of dollars to municipalities which are critical to local development – particularly in areas of poverty.
No one from the previous Walker Administration in Milwaukee, WEDC, DOA, or WHEDA returned calls for comment. An open records request pertaining to this information has been filed and acknowledged with WEDC and DOA.
This story will be updated as it continues to develop.
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