David Johnson, president of Chattanooga Neighborhood Enterprise and the Chattanooga Community Development Financial Institution, will hold a news conference 3 p.m. today to discuss an FBI inquiry on a loan made to the Tennessee Multicultural Chamber of Commerce.
Johnson acknowledged Tuesday the FBI called him to ask questions concerning a $579,000 loan made to the chamber three years ago.
The chamber has been under fire for a week after a city review questioned the organization’s financial management, loans and land deals, salaries and travel expenses.
For more information, see tomorrow’s Times Free Press.
On the same day the FBI started asking about a loan made to the Tennessee Multicultural Chamber of Commerce, a key member resigned from the chamber board, saying he believes an investigation into the organization should take place immediately.
David Johnson, president of Chattanooga Neighborhood Enterprise and the Chattanooga Community Development Financial Institution, confirmed he had received a call Tuesday morning from the FBI about a $579,000 loan made to the Chamber in October 2009 by the Community Development Financial Institution.
"They seemed to be more interested in the chamber than the CCDFI," Johnson said Tuesday. "A lot of their questions were concerns about the loan process."
He said he was "very cooperative" with FBI agents.
Ed Galloway, with the Chattanooga office of the FBI, said Tuesday he could not divulge any details about an investigation.
"We're not in the position to comment at this time," he said.
The Chamber has been under fire after a review from city Auditor Stan Sewell raised questions about the organization's financial mismanagement, land dealings and extravagant salaries and travel expenses. The Chamber's stated role is to help minority-based businesses within the community and to encourage minority-business growth.
Multicultural Chamber board member John Taylor and Executive Director Sherrie Gilchrist appeared before the City Council Tuesday night. Taylor said the Chamber and Gilchrist -- who has not returned numerous phone and personal requests from the Chattanooga Times Free Press for comment over the past week -- had nothing to hide and would answer any and all questions from the public or investigative bodies.
"I stand here fully assured no money has been stolen, no money has been misappropriated," Taylor said.
Also Tuesday, Volkswagen Purchasing Director Thomas Loafman, a Multicultural Chamber board member, sent the Times Free Press a copy of his letter of resignation from the board. In the letter, he said "an investigation should have been immediately requested" and Gilchrist should have been put on "at least a temporary suspension."
Taylor said the board never considered that option because there is no evidence Gilchrist is guilty of anything.
"I wouldn't suspend you until we know of any improprieties," he said.
Taylor said Tuesday that the city review was full of inaccuracies.
"Have you read the city audit?" Taylor asked. "The answer is in the second paragraph where he says he never talked to the executive director or any board members."
After receiving the loan from the Chattanooga Community Development Financial Institution, the chamber paid about $250,000 each for a pair of properties along East M.L. King Boulevard, saying they were going to be used to help build a Business Solutions Center.
One of the properties was to be part of a land swap deal with the University of Tennessee at Chattanooga, according to a Chamber document.
But the business center has never been built.
This week, the Multicultural Chamber provided to the City Council a document detailing answers to some questions posed by the city review. According to the chamber, the two lots were capitalized at $507,630, while the loan was made for more than $71,000 above the cost of property.
"Funds were used to pay interest only until a developer was retained to complete the project," the chamber document states.
The Chamber stopped paying on the loan two months ago, and now CCDFI officials are deciding whether to foreclose on the two properties.
At the council meeting, Gilchrist said 50 percent of the chamber's money has been cut because they have received no city or Hamilton County funding and that's why the chamber stopped making payments.
In his resignation letter, Loafman wrote that VW fully supports the vision of an advocate for small and minority-business owners in Chattanooga. He said he offered five steps to the chamber board at a recent meeting.
"Unfortunately, the [Chamber] board decided against these steps, which further jeopardizes the future viability of this needed and valued organization," he wrote.
His steps included:
* An investigation should have been immediately requested.
* Gilchrist should have been placed on temporary suspension until an audit and investigation were concluded.
* A report to the City Council should not be done until all documentation has been gathered and answers completed.
* The board should bring the City Council a sustainability plan that includes restructuring the Multicultural Chamber, transferring the title of the land already purchased to the city and showing self-sufficiency within three years.
* City and county funding should not be requested without a viable sustainability plan.
Taylor said he had talked to Loafman about these issues and they disagreed on a course of action.
Taylor said the next step would be to appear before County Mayor Jim Coppinger and the County Commission to answer any questions. At this point, he said, the chamber is not asking for the $75,000 it has received annually from each body.
"We're not here to ask for funding," Taylor said. "The only thing we're here for is character."
Cliff has worked for the Times Free Press for five years and covers Chattanooga city government. He previously covered Rhea County, as well as transportation and growth and development in Southeast Tennessee. A native of Maryville, Tenn., Cliff graduated in 2003 from the University of Tennessee with a bachelor’s degree in communications with an emphasis on journalism. Before coming to Chattanooga, he was a crime reporter with Hernando Today, a supplement of The Tampa (Fla.) ...
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