The Georgia attorney general's office is investigating an unusual land deal in which the daughter and son-in-law of former state Sen. Don Cheeks bought a piece of property and sold it to the Georgia Department of Transportation two years later for more than 10 times what they paid for it.
Through interviews and a search of public documents, The Augusta Chronicle has found that the 98-acre tract in Burke and south Richmond counties changed hands three times during the past two years, passing through a local nonprofit agency before netting Ashby and Donna Krouse about $240,000 in state money.
The attorney general's investigation was prompted by information uncovered by the Chronicle.
Russ Willard, of the attorney general's office, confirmed that his office has "opened an investigation file on the matter" and that the case is ongoing.
He would not discuss specifics but said, "We are looking at some questionable real estate transactions that occurred in relation to the transaction of land into and out of a charitable organization, as well as the acquisition of the land by the Georgia Department of Transportation."
The duration of the investigation is uncertain, Mr. Willard said, because the time frame will depend on what is uncovered.
The Chronicle's investigation of the land transactions found:
In 2002, Mr. Hatcher gave it to the Hale Foundation, an area charity, after the land's appraised value went up by almost $100,000.
In September 2002, Mr. Cheeks was a member of the Senate transportation committee, which discusses and reviews legislation related to Georgia's highways, railroads, inland waterways and transportation vehicles.
Mr. Cheeks told The Chronicle that he had no knowledge of the property and did not speak to anyone at the DOT about the tract.
"There's nothing wrong with speaking on behalf of one of my constituents, and my daughter and son-in-law are my constituents," he said.
"But I did not speak in their behalf. I have never called anyone on behalf of my daughter or son-in-law."
Steve Wiedl, a DOT biologist, said, however, that Mr. Cheeks did arrange a meeting to talk about selling the land to the agency several days before the Krouses bought it.
Mr. Wiedl said Mr. Cheeks first called someone at DOT about the land before Aug. 29, 2002, which is the day when he contacted the then-state senator to set a time to evaluate the land as a possible wetland mitigation site.
"I met him (Mr. Cheeks) at Waffle House, and he introduced me to his son-in-law, who took me out to the property," Mr. Wiedl said.
After touring the property with Mr. Krouse for about an hour Sept. 6, Mr. Wiedl said he realized the land was too swampy for DOT to use, so he notified Mr. Krouse and Mr. Cheeks separately that the tract had been denied.
"They were mildly disappointed," the DOT biologist said.
During t he next several months , mention of the property "went to sleep" until June 2003, Mr. Wiedl said, when his supervisor , Susan Knudson , requested that he draft a letter for the DOT's right-of-way department about the possibility of using the land to mitigate damage to McBean Creek in the Savannah River Parkway project.
Although the DOT maintains it wasn't interested in the Krouse property until 2003, that stance is inconsistent with some state documents provided by the agency.
In the fall of 2002, DOT officials were preparing an application for a wetlands mitigation permit to offset damage incurred in the widening of U.S. Highway 25 in Richmond and Burke counties.
A July 31, 2002 , letter written by Harvey Keepler, a state location engineer for DOT, discusses a July 24 conference call with the U.S. Army Corps of Engineers, the U.S. Fish and Wildlife Service and other agencies concerning environmental issues around McBean Creek.
The letter mentions that possible wetland mitigation sites had been identified. DOT officials said, however, that the letter was not referring to the Hatcher/Krouse property.
By December 2002, that had changed.
A permit issued Dec. 6 that year by the Corps of Engineers includes a map of the Krouse property and stipulates that the DOT must acquire the tract and set aside 20 acres of it for wetlands mitigation within two years.
Still, the DOT made no move to acquire the land until the next June.
"I can assure you there was no one influencing the process," Mr. Wiedl said.
How it began
Mr. Hatcher told The Chronicle that he purchased the 98 acres straddling the Richmond and Burke county lines for hunting, although he never hunted on it because the tract was "unsuitable" for that.
"Plus the county was putting a ton of taxes on it," he said.
So Mr. Hatcher said he decided to donate the land and get the tax break.
It was an option he said he knew he would take from the start, the only question being who would receive the land.
The Hale Foundation, which counsels and houses alcoholic men, eventually reaped the benefits.
Mr. Hatcher cannot recall who suggested the Hale Foundation, but he said it might have been attorney Ben Swain McElmurray, who later brokered the deal between the two parties. Mr. McElmurray said he simply served in a legal capacity and did not initiate the deal in any way.
As late as 2001, the land's value had been appraised at $15,900, but according to a letter from the Richmond County Board of Assessors to Mr. Hatcher, this value was raised to $117,888 on Aug. 2, 2002.
Chief Appraiser Sonny Reece said he realized the values of much of the agricultural land countywide were "out of whack," which is why he set a mini-mum value of $1,200 per acre across the board and did a large-scale reappraisal in 2002 of agricultural land throughout the county.
In order to appeal the assessed value of a piece of land to the Board of Assessors, the owner must submit a form that outlines a justification for the request.
In Mr. Hatcher's case, a Sept. 4, 2002 , appeal form with his name on it asked that the value of the land be lowered to $25,000 because the property was "under contract for $25,000" to Mr. Krouse and the sale would close the next day.
Along with the form was a letter dated Aug. 25, 2002, explaining that Mr. Krouse was representing Mr. Hatcher in the appeal.
Mr. Hatcher told The Chronicle, however, that he does not remember writing the letter or filling out the form.
"That's not my signature," he said when shown a copy of the Aug. 25 letter. "My signature is usually not that messy.... I don't know where the $25,000 came from."
Mr. Hatcher also told The Chronicle that he never had any dealings with Mr. Krouse about the land and that he did not seek his counsel on the property appeal.
"They didn't indicate they wanted to buy it from me," Mr. Hatcher said of Ashby and Donna Krouse.
All he knows about the property is that he gave it to the Hale Foundation, he said.
In his 2002 tax returns, Mr. Hatcher said he claimed $117,888 for the value of the land as a deduction.
Mr. Krouse, a real estate appraiser and member of the Augusta-Richmond County Planning Commission, says it was Mr. Hatcher who sought him out when it came to the land appeal, not the other way around.
"Bill called me to appeal the process," he said. "He was up¤set it (the value) had gone up so much."
Mr. Krouse said his part was merely to represent Mr. Hatcher at the hearing, which was not necessary.
He also says he did not sign Mr. Hatcher's signature on the Aug. 25, 2002, appeal letter and that he has no idea why Mr. Hatcher did not remember signing it.
In the middle
Records show that the land was donated to the Hale Foundation on Sept. 5, 2002, by Mr. Hatcher and that on that same day officers with the Hale Foundation sold the property to Mr. Krouse for $25,000.
Sam Sibley, the foundation's president, says his agency was simply "in the middle of the deal."
"It was just a tax benefit," Mr. Sibley said of Mr. Hatcher's donation. "That was our participation in it."
The nonprofit agency certainly had no use for the land, so when Mr. Krouse offered to buy it,
Mr. Sibley said, he gladly accepted.
A corporate resolution dated Sept. 4, 2002, signed by Bernard J. Mulherin, the secretary of the Hale Foundation, states that the organization's board met and authorized the sale of the land to the Krouses.
The next day, Mr. Sibley was present ñ as were Mr. McElmurray, Mr. Hatcher and Mr. Krouse ñ to close the multipart deal, the Hale Foundation president told The Chronicle.
Mr. Sibley said he had no idea what happened to the land after that.
A new value
It took five months for the appeal on the property's value to be approved.
Mr. Reece said that once the appeal is received an appraiser surveys the land ñ looking at the percentage subject to flooding and basic topography ñ and examines comparable pieces of land to determine a suitable value for the tract.
But that's not what happened with the 98-acre property near McBean Creek.
There is no paperwork showing that former appraiser Patricia Lord even looked at the land, Mr. Reece said.
"We can only assume that the basis for the appeal was the fact that Mr. Hatcher was under
contract with Mr. Krouse for $25,000," he said, explaining that no sales contract was provided either.
Mr. Hatcher, however, said there was no such contract. He said his intention was to donate the property to the Hale Foundation, not sell it to anyone.
After Ms. Lord recommended that the value be changed to $25,000, the Board of Assessors considered the change at its March 10, 2003, meeting. Ac¤cording to minutes of the meeting, the appeal was granted without any discussion.
Closing the deal
Originally, Mr. Krouse said he too, planned to make use of the property for hunting, but when he realized it was landlocked he had to sell.
Before he sold it, though, Mr. Krouse claims he worked for more than a year to try to acquire access to the property. Ultimately he was unsuccessful, which led him to strike a deal with DOT officials.
DOT documents tell another story.
According to a DOT interoffice correspondence, Mr. Krouse tried to sell the land the day after he bought it.
A June 2003 memo written by DOT's Mr. Keepler says Mr. Krouse "through referral of his father-in-law, State Senator Don Cheeks, met on-site with biologist Steve Wiedl of this office on Sept. 6, 2002," to discuss its sale. Mr. Wiedl confirmed the meeting took place.
At that point, DOT personnel "did not see a mitigation use for this parcel and advised Mr. Krouse that we would most likely not be interested," the memo states.
The same memo, written to Terry McCollister, a DOT right-of-way coordinator, also says that DOT could now "make use of the wetland/stream preservation available at this site and would like to reopen discussions with the landowner."
According to Bert Brantley, a spokesman for the DOT, representatives of the Fish and Wildlife Service and the U.S. Army Corps of Engineers did a study to look at the impact of the Savannah River Parkway project on the environment.
These agencies told transportation officials that McBean Creek would be affected by the road work and "recommended that we find property along there to make up for the impact on the creek," he said.
At that point, he said officials remembered the tract owned by the Krouses and the couple's request to sell DOT the land.
R. Lee Fraysier, of Fraysier Appraisal Services , was hired to determine the fair-market value of the tract.
The value was set at $265,850, according to a December 2003 letter he wrote to Steven Manley, the project manager of Manley Acquisition Services, which worked with DOT on the deal. Most of the land's value was in timber ñ $177,950.
One document supplied by DOT indicates there was pressure to close the deal.
A July 28, 2004 , e-mail from Mr. Manley asks DOT to expedite getting funding for the sale.
Mr. Manley wrote: "This owner is very upset that we can't close. GDOT has to have this site. Her father is Sen. Don Cheeks, she has threatened to call him for help with the commissioner."
Mr. Cheeks said he did not intervene on his daughter's behalf.
The sale was closed Aug. 30, 2004, for the suggested price of $265,850.
The DOT's Mr. Brantley said the property was considered by experts to be "high-grade wetlands," meaning it's of the best quality because of the large quantity of old hardwood and timber there ñ which is why the price tag was so high.
"This land satisfied our needs for that area of the project perfectly," he said.
Reach Dena Levitz at (706) 823-3339 or email@example.com.
Jan. 21, 1983: William Hatcher purchases the 98-acre piece of land next to McBean Creek from the General Electric Co. for $5,000.
July 24, 2002: DOT officials have a conference call with officials from several other state and federal agencies to discuss issues involved with widening U.S. Highway 25. DOT officials insist discussion of wetlands mitigation sites did not include the Hatcher property.
Aug. 2, 2002: The Richmond County Board of Assessors informs Mr. Hatcher that the value of his property had been raised from $15,900 to $117,888.
Aug. 29, 2002: DOT biologist Steve Wiedl talks with then-state Sen. Don Cheeks about the land and arranges a meeting to see the land the next Friday.
Sept. 4, 2002: Mr. Krouse, representing Mr. Hatcher in a letter to the Board of Assessors, appeals the value of the land on the basis that it is about to be sold for $25,000.
Sept. 5, 2002: Mr. Hatcher donates the property to the Hale Foundation, and during the same closing, the Hale Foundation sells it to Mr. Krouse's wife Donna for $25,000.
Sept. 6, 2002: Mr. Krouse meets with Mr. Wiedl to evaluate the land for possible purchase. At that point the agency officials say they decline to buy it.
Dec. 6, 2002: The U.S. Army Corps of Engineers issues a permit, as requested by DOT officials, for DOT to purchase "and place under restrictive covenant" the land next to McBean Creek.
March 10, 2003: The Board of Assessors, during its scheduled monthly meeting, approves lowering the property value to $25,000, as requested, without discussion.
May 2, 2003: The Hale Foundation's 2002 income tax returns, received by the IRS on this day, do not include the land donation from Mr. Hatcher, or the money received from its sale. Sam Sibley, the foundation's president, later said the omission was an oversight.
June 2003: An internal memo says the DOT can now "make use of the wetland/stream preservation available at this site and would like to reopen discussions with the landowner."
Dec. 12, 2003: R. Lee Fraysier, of Fraysier Appraisal Services, determines that the fair-market value of the 98-acre tract is $265,850.
Aug. 30, 2004: DOT buys the land from Mrs. Krouse for $265,850, more than 10 times the price of purchase of $25,000.
When the Georgia Department of Transportation begins a road project that will destroy wetlands, it is required to submit a plan to federal regulators outlining how it will mitigate, or make up for the damage. Often, this involves purchasing and protecting other land near affected wetlands. In this purchase, the DOT was mitigating damage incurred from the Savannah River Parkway project.