published Wednesday, July 20th, 2011

News conference to be held in Chattanooga on FBI loan investigation


by Cliff Hightower
Sherrie Gilchrist, executive director of the Tennessee Multicultural Chamber of Commerce speaks to the media after a Chattanooga City Council meeting Tuesday.
Sherrie Gilchrist, executive director of the Tennessee Multicultural Chamber of Commerce speaks to the media after a Chattanooga City Council meeting Tuesday.
Photo by Alex Washburn.

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."

Loan deal

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.

Resignation

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."

MORE: Multicultural Chamber pledges transparency; auditing firm quits

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joepulitzer said...

"The only thing we're here for is character." SOUNDS LIKE THAT'S ALL THAT WORKS AT THE CHAMBER

July 20, 2011 at 5:36 a.m.
johnnyhurst said...

Indictments are next.... Uh oh

July 20, 2011 at 5:53 a.m.
harrystatel said...

Where was/is the local District Attorney? Why doesn't the local DA impanel a Grand Jury to investigate corruption in Chattanooga/Hamilton County corruption?

The DA has time and money to prosecute prostitutes, marijuana users, and firework jerks, but can't investigate the rampant corruption in local government.

Why not? Why does it ALWAYS take the Feds to come in?

You already know the answer, don't you?

July 20, 2011 at 6:33 a.m.
inquiringmind said...

I'm waiting for the indictment of mayor littlefield unless he learned the tricks of his trade better than his convicted protege.

July 20, 2011 at 7:51 a.m.
bigbearzzz said...

Where's the NAACP at this week?!?! Don't hear em screamin about a federal investigation this week do we?!!?

July 20, 2011 at 8:04 a.m.
harrystatel said...

New television show about a blind DA in Chattanooga.

Hamilton County District Attorney: NCIS (No Corruption I See)

July 20, 2011 at 8:30 a.m.
dao1980 said...

Yeah, no joke wildman.

I wonder why they used such a stupid picture.

July 20, 2011 at 10:33 a.m.
328Kwebsite said...

While they're here, they ought to look into a certain $328,000 website deal with the former mayor that's couched on $60,000 in misappropriated federal funds.

July 20, 2011 at 11:46 a.m.
eastridge8 said...

Agreed bigbearzzz...no NAACP in sight...they can't take on and intimidate the "big boys"...Rev Jackson and big Al Sharpton can't handle that heat...

I still say Sherrie will "resign" and move on...NOTHING will happen to her...no jailtime...no fines...no slap on the wrist even...the whole lot are worthless...from the DA to Littlefield to TMCC...TOTALLY USELESS and only in it for what THEY CAN GET OUT OF IT...

July 20, 2011 at 11:53 a.m.
librul said...

Get back back on the porch, boys. Pick up your banjos and start plucking on your deliverance theme. You are all so blinded by racism that you can't express any substance, just try to turn these forums into a digital klan rally.

Go crawl back in your stinking holes.

July 20, 2011 at 1:09 p.m.
timbo said...

librul......so criticizing an organization set up for other than white people that wastes and misappropriates tax money is racist?

Why don't you put on your beret and uniform an stand out in front of a polling place and intimidate voters Mr. Black panther? I guess you think that is ok. The only people I know that make every decision in thier life according to race,like music, art, working, etc. are black. Although whites have a lot of problems they are pikers compared to white hating, everything a black does is ok, black racists.

The reason you guys always use that lame accusation is because you're not talented enough to address the other posters who don't agree with you.

July 20, 2011 at 2:28 p.m.
brokentoe said...

This group is only there for a hand out. The location and color of your skin should have NOTHING to do with getting a contract.

That works in theory only. The truth is the Multicultural Chamber was established because the BIG chamber wasn't colorblind after all.

July 20, 2011 at 3:20 p.m.
brokentoe said...

cbtole, In America isn't it suppose to be innocent until proven otherwise? Or is that line only for a select group?

July 20, 2011 at 3:55 p.m.
fedup350 said...

Hey brokentoe, you going to give us the stories about the blackmen hanging from posts and the Sheriiffs posse chasing men down again? Everytime a racial subject you say those things. Just beating you to the punch....

July 20, 2011 at 6:53 p.m.
eastridge8 said...

Agreed fedup350...they can't stand it when it's thrown back at them and when anyone questions their business acumen...LOOK OUT YOU RACIST YOU!! HOW DARE YOU QUESTION US? HOW DARE YOU BRING THE FBI IN HERE AND DARE TO ASK QUESTIONS?

Yes, how dare we...

July 21, 2011 at 9:51 a.m.
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