Mansfield Law Director says missing $78K could lead to felony

MANSFIELD — Law Director John Spon warns that a criminal probe may be warranted unless someone can explain what happened to $77,929 of city money earmarked for contractors via local nonprofit Mary McLeod Bethune Intervention and Enrichment Center.

Spon said the money was meant to reimburse HUD for work on blighted homes in Mansfield. He confirmed Monday his office is looking into the matter “with the appropriate law enforcement.” 

“So we don’t know who received the money. But someone did, records show it. Maybe it was MBIE contractors,” Spon said. “A felony (theft) may have been committed by someone out there. We’ll know at some point in time because there will be an audit.”

Recent controversy surrounding Mansfield’s decision to outsource its Community Development Department dredged up the unresolved issue that dates back more than a year.

During a public affairs meeting in late August, council member Jon Van Harlingen said the city transferred $77,929 from the general fund to local nonprofit MBIE in hopes of being reimbursed.

“Not one dime has been paid back,” Van Harlingen said.

Essentially, Mansfield’s city administration and representatives from the U.S. Department of Urban Housing and Development struck a deal last year — and it could end badly for someone, Spon said. According to a HUD investigation, the work on blighted homes was never finished.

The homes include properties at 219 E. Second St., 229 E. Second St., 69 S. Foster St., and 241 E. Second St.

“It went to someone out there and we don’t know where it went because work was supposed to be performed — it wasn’t performed,” Spon said. “But for some reason the city was billed to pay those bills.”

From May 11 to 13, 2015, a representative from HUD in Columbus executed an onsite monitoring review of the city’s Community Development Department’s HOME Program and Community Housing Development Organization activities.

HUD representative Robert Milburn’s June 25, 2015 report found that “serious issues exist in four properties … that are under the control of the CHDO (MBIE).”

MBIE serves as the city’s CHDO for various properties in Mansfield. By definition a CHDO’s main purpose is to develop affordable housing for the community it serves under federal HOME Program property standards.

Milburn’s report said the violations found after reviewing the four properties were too numerous to document, even after already spending $77,928. According to the report, the city was required to deposit the nearly $78,000 into its local HOME trust account within 30 days of receiving HUD’s report, which was managed by the Community Development Department under former manager Sam Dunn.

On July 15, 2015 a letter signed by Mayor Tim Theaker, Safety Service Director Lori Cope and Dunn, was sent to Cheryl Lovely, former board president of MBIE.

The letter offered to enter a deal with MBIE “wherein a lump sum payment of $30,000 will be made to the City on or before Sept. 1, 2015.” The remaining balance of around $48,000 would be paid in $1,000 monthly installments.

No interest or penalties would be charged as long as MBIE made the payments on time, by the first of each month. However, if a payment is missed, “the city would have the right to and would initiate legal action,” the letter states.

Lovely said she remembers receiving the letter but declined to comment further. She said she retired from her role as MBIE’s board president on May 1, 2016 and is not an active member of MBIE in any way.

“There were many untruths about what happened,” she added, referring to news articles published in August 2015.

When contacted Monday, Alverta Williams, MBIE’s president and founder, declined to comment on this story. 

Two days after the city’s letter to MBIE, on July 17, 2015, Dunn wrote a letter to Jorgelle Lawson, Columbus Field Office Director for HUD. It stated the city will create a trust fund for the $78,000 it owed. The move, however, could not happen without city council’s passing of legislation, which Dunn predicted would occur at its next session on Aug. 4.

City records show the bill was tabled until the city’s next meeting, Aug. 18, when it was passed as an emergency measure. It took effect immediately. The bill allowed roughly $78,000 to be transferred from the city’s general fund into a HOME trust account.

The HOME trust, historically, has been managed by the city’s Community Development Department manager.

“I remember Sam Dunn speaking in vague terms and I had to ask him some tough questions,” Spon said of the city council meeting on Aug. 4, 2015.

But Spon said details surrounding why the money was needed were not given.

On Aug. 28, 2015, a letter obtained by Richland Source reveals Lovely declined the city’s offer for the settlement, a note that Spon sees as a discrepancy.

On Oct. 30, 2015, Lawson sent a letter to Dunn thanking him for following through with corrective action and for reimbursing HUD its $78,000.

Dunn retired as the Community Development Department’s manager in July 2016. He declined to comment on this story.

To date, Spon said he has no idea who received the money.

Theaker also does not know where the money went and confirmed Monday the city has not been reimbursed the roughly $78,000. He also said he believes the rehab work on the four homes has still not been completed.

Spon wondered why his office was never made aware of discrepancies found within HUD’s initial report that found $78,000 was unaccounted for, a detail he claims could have changed city council’s vote to approve legislation in August 2015 to reimburse HUD.

He also said his office did not know MBIE declined to take the city’s deal, as expressed in Lovely’s letter on Aug. 28, 2015. Spon said the administration’s failure to disclose this information could be a violation of a state law.

He referenced Ohio Revised Code 2921.22 which states no person can knowingly fail to report a felony that has been committed or is being committed. He does not suspect administration knew a felony had been committed, but he said it’s hard to understand.

“All we know is they (city administration) were aware of it, they had the meeting behind closed doors and then attempted to sweep it under the rug,” Spon said. “It’s hard for me to understand why they didn’t disclose it except that … well I guess they can only answer the question.”

City officials will meet Tuesday, Sept. 13 at 6 p.m. to discuss a new plan that proposes to keep the city’s Community Development department and hire a housing director.