TMCC lender says it's not FBI target, - WRCBtv.com | Chattanooga News, Weather & Sports

Lender says it's not FBI target, TMCC leader alleges 'smear campaign'

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CHATTANOOGA (WRCB) -- The man who oversees two loans made to the Tennessee Multicultural Chamber of Commerce (TMCC) confirms that FBI has questioned him about lending practices.

He says agents have told him, point-blank that the Chattanooga Community Development Financial Institution is not the target of a federal investigation.

When asked if the CCDFI or anybody involved with them the subject of an FBI investigation, David Johnson answered "the answer from the agent also was no."

The FBI has declined comment. But Johnson says that the loans to TMCC seemed to be the "perfect type for a CDFI" when they were made in October 2008.

TMCC borrowed $574,000, Johnson says. Half a million went to buy two buildings in the 400 block of East Martin Luther King Boulevard. The rest was meant to help the TMCC make interest-only payments on the front-end of the loan.

TMCC Executive Director Sherrie Gilchrist says the properties were part of five-parcel purchase to build a Multi-Cultural Business Center, for which the TMCC would be prime tenant and landlord.

Gilchrist confirms that the TMCC had not lined up a developer, investors, or tenants, when it received the loans. Johnson says the CCDFI Board's minutes don't indicate whether anybody knew that.

Gilchrist was a member of CCDFI's Board, Johnson confirms.

"I was not part of the CCDFI at the time....but Board minutes indicate...she recused herself from the voting and left the room," says Johnson.

Johnson says the CCDFI had no idea that the TMCC had money troubles until the TMCC stopped making loan payments in October 2010. Those payments averaged $4,000-5,000 monthly.

Tuesday, Gilchrist told Chattanooga City Council, in writing, that the TMCC started having trouble paying the loans when Council and the Hamilton County Commission began to cut funding two years ago.

TMCC has been unable to secure a grant to cover those loan payments, Gilchrist says.

"We (the CCDFI Board) feel insecure right now," Johnson says. "And we're going to be acting within the next several days, on our options."

Foreclosure is one option, Johnson confirms. But he would not say whether he believes it's the best or least viable choice.

Gilchrist calls the past week's developments, a "smear campaign."

"We're not sure who's behind it," she says.

"You (the media) have the ability to find out for us," TMCC Board Member John Taylor tells Eyewitness News.

Taylor and Gilchrist fault City Auditor Stan Sewell for not putting his questions directly to them. They also take issue with Mayor Ron Littlefield for releasing Sewell's results to City Council.

"We did not do a long-term investigation," Sewell says. "We did not conduct a complete audit."

Sewell says a full audit would prompt direct questions and demands for documents.

The U.S. Department of Housing and Urban Development is making such a request, concerning how TMCC spent $545,000 in federal grant for three more properties involved in the Business Center proposal, according to Joe Phillips, spokesman for HUD's Atlanta office.

Taylor says the TMCC Board still supports Gilchrist fully.

"At this point, we have not seen anything. No stealing of money, nothing of that nature," says Taylor.

The TMCC has 15 days to answer HUD's questions. Once it receives the official letter of inquiry, which went out today.

City Council members and County Commissioners already are complaining about how TMCC's responded to the auditors questions.

Asked if it could provide a list of assets and liabilities, the TMCC responded yes but has offered no list.

 

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