'Returned' donation sat in bank

Though the Augusta Commission had voted to return $20,000 given by developers of Maxwell House Apartments subsidized housing because of ethics concerns, the money lingered in the city's coffers for 17 months.

 

It didn't leave an interest-bearing checking account until someone had found a use for it -- gastric bypass surgery for a Utilities Department employee and family friend of Commissioner Betty Beard.

The city cut a $20,000 check to Maxwell House LLC on March 23, 2007. It was endorsed over to the Atosha Harden Health Fund and deposited three days later, according to a copy of the remittance obtained by The Chronicle under an open records request.

Tom Gallagher, a principal with Maxwell House developer Edmundson & Gallagher Group, said last week that he never wanted the money back, and when Ms. Beard asked him whether it would be OK to use it to help a morbidly obese woman, he said yes.

Former Commissioner Andy Cheek, who says he raised the ethics issue before the October 2005 vote to return the money, said Monday he's outraged the commission's directive wasn't followed.

"So they kept it in the account; then they ended up doing exactly what we told them not to do," Mr. Cheek said.

A law enforcement source confirmed last week that the Richmond County Sheriff's Office and the FBI are looking into why the Maxwell House developers gave $25,000 to the city and how it wound up paying for an employee's bariatric surgery.

Ms. Beard has said the bribery allegations are coming up years later in retaliation for her refusal to vote in favor of a $38 million trade, exhibit and event center downtown. She said helping Ms. Harden was "a wonderful thing to do," and "if I have to go to jail over something like this, that's fine."

Why a check wasn't written to Maxwell House after the 2005 vote wasn't clear Monday. Finance Director Donna Williams said her department never received instructions to issue one. When it did in 2007, the directive came in a memo to Ms. Williams from City Administrator Fred Russell.

Attempts to reach Mr. Russell on Monday resulted in a missed phone call, and subsequent messages weren't returned.

Ms. Beard said Monday that after the 2005 vote she thought the money had been returned to Maxwell House LLC -- the legal entity that owns the Greene Street high rise, set up by Virginia-based Edmundson & Gallagher and Atlanta-based Progressive Redevelopment.

In 2007, she began advocating for Ms. Harden, who was suffering health problems because of her weight but couldn't get coverage for surgery from Blue Cross Blue Shield. She had raised the issue repeatedly with Mr. Russell, and she said she even brought it up once in a closed legal meeting.

At some point, someone -- she can't recall who -- told her the Maxwell House money was still in the city's account. Though Mr. Russell has said that he doesn't recall it, Ms. Beard said she asked the city administrator whether the money could go to help Ms. Harden.

"He said, 'I don't see why not,' " Ms. Beard said.

Last week, Mr. Gallagher called the notion that his company bribed Ms. Beard "absolutely ridiculous." As part of the plan, Edmundson & Gallagher wanted to contribute $25,000 to the community, and this was offered openly to Main Street Augusta and to the Augusta Commission. Later, it was offered to a charity of Ms. Beard's choice because the building is in her district.

The developer sent a check to the city dated Sept. 29, 2005. At the next commission meeting, Ms. Beard presented a $5,000 check to Augusta Youth Center. At the time, she said, she planned to split the money among 13 charities.

According to commission rules, a commissioner can't arbitrarily route money out of an account without a vote by the full board. At the next meeting, on Oct. 18, the commission ratified the $5,000 donation and, on advice from former City Attorney Steve Shepard, voted to return the remaining $20,000 to Maxwell House.

Commissioner Don Grantham, who seconded the motion to return the money, said he plans to find out why it took nearly a year and a half to follow the board's instructions.

"I don't understand why it wasn't refunded within a reasonable time," he said Monday.

Reach Johnny Edwards at (706) 823-3225 or johnny.edwards@augustachronicle.com.

ONLINE EXTRA

Click here to see the check issued by the finance department. (.pdf)

WHAT'S NEXT

A group of pastors and activists will hold a news conference and rally in support of Commissioner Betty Beard at 5 p.m. today near the Lady Justice statue behind the Municipal Building at 530 Greene St.

TIMELINE

DEC. 21, 2004: The Augusta Commission votes 7-3 to approve a resolution endorsing the Augusta Housing Authority's issuance of tax-exempt bonds allowing Maxwell House Apartments to be renovated into Section 8 housing. Before the vote, Mayor Bob Young asks whether any cash payments have been promised to any groups in exchange for support. Tom Gallagher, a principal in Edmundson & Gallagher Group, says the developers have an interest in putting $25,000 into downtown Augusta, and it will go to a cause of District 1 Commissioner Betty Beard's choice.

SEPT. 29, 2005: Maxwell House LLC -- a legal entity set up by the developers to be the building's owner -- cuts a check for $25,000, made out to Augusta-Richmond County. A letter from Mr. Gallagher to Ms. Beard says the money is for "charities and nonprofit organizations in Richmond County."

SEPT. 30, 2005: Finance Director David Persaud writes a memo to Assistant Director of Accounting Donna Williams, directing her to cut a $5,000 check to the Augusta Youth Center. In an e-mail chain later in the day, Ms. Williams points out that the check is from Maxwell House LLC. "We have never before accepted private pass thru donations," she writes. "They are not attractive to most organizations since by writing the checks to us instead of the charity, they lose the status of it being tax deductible."

She asks whether she should make the city attorney aware of the situation.

"She stated it is from one of her trust fund, so I accepted it," Mr. Persaud responds. "I do not have a problem with what she is doing since it is her funds."

OCT. 4, 2005: At a commission meeting, Ms. Beard presents a $5,000 check to the Augusta Youth Center.

OCT. 18, 2005: City Attorney Steve Shepard advises returning the money to Maxwell House LLC, saying that under the ethics ordinance the commission cannot accept a gift and he's concerned about an appearance of impropriety for Ms. Beard. Commissioner Andy Cheek makes a motion to return the full $25,000, but Commissioner Bobby Hankerson makes a substitute motion to let the donation to the Augusta Youth Center stand. The vote is 6-2-2, with Ms. Beard abstaining, to ratify the $5,000 donation and return $20,000 to Maxwell House.

MARCH 23, 2007: City Administrator Fred Russell sends a memo to Ms. Williams, now interim finance director, telling her to issue a check to Maxwell House LLC for $20,000. A check is cut the same day.

MARCH 26, 2007: The check issued to Maxwell House LLC, endorsed to the Atosha Harden Health Fund, is deposited.

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