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Homes in the 800 block of 22nd Street are part of a city program to build and rehab 60 homes in troubled Coleman Park. West Palm has spent more than $3 million in federal stimulus money.

By Andrew Abramson

Palm Beach Post Staff Writer

Updated: 10:04 p.m. Wednesday, Dec. 7, 2011

Posted: 7:10 p.m. Wednesday, Dec. 7, 2011

WEST PALM BEACH — Bishop Harold Ray, surrounded by trusted advisers in a room full of smiling photos of himself with famous political figures and celebrities, stood firm on Wednesday that he was guilty of no wrongdoing in a scandal that has rocked the Redemptive Life Fellowship Church.

Ray's nonprofit company associated with his 600-member church in West Palm Beach has been ordered by West Palm Beach officials to repay as much as $1.1 million from money that the city alleges was not properly administered in a federally funded low-income housing project.

So Ray turned to high-profile attorney Willie Gary, who warned that he is willing to fight the city.

"We don't want to fight," Gary said. "If we have to, we'll fight."

Gary and Ray, former law partners, embraced at an early morning news conference at the church, where Ray is lauded as an upstanding, holy man. Nearly every photo in the hallway and conference room featured Ray with figures ranging from politicos Bill Clinton, George W. Bush and Henry Kissinger, to talk show sideman Ed McMahon.

But in West Palm Beach government circles, Ray is being cast as a man who built at least 22 low-income homes but violated federal guidelines in the process by hiring contractors without bidding, paying board members with federal dollars and having potential conflicts of interest with people and companies he hired.

City officials said they might have to eventually repay the federal government as much as $4.1 million because of undocumented spending or procedural problems with the project.

On Wednesday, Ray said, "I can tell you that no board member was paid from grant funds, absolutely."

Hours later, the city provided three invoices from 2005 and 2006 showing that Ray and the organization's chief operating officer, Earl Hamilton - both board members - submitted invoices to the city listing "salary expenses." Ray received $2,500 each time, and Hamilton was paid $5,000 each time.

The U.S. Department of Housing and Urban Development, which has ordered West Palm Beach to pay $654,000 by Jan. 4 because of the problems with Redemptive Life, stipulates that money toward a community housing development organization such as Redemptive Life cannot be controlled by "individuals or entities seeking to derive profit or gain from the organization."

In his response to the city, Ray said the money he and Hamilton received from the city, "was not by virtue of their position as board members." The city in 2002 designated them as people responsible "as developer, owner or sponsor" and that's why they were paid, he said.

The Palm Beach Post reported on Tuesday that Dominion Realty, the company that sold the homes that Redemptive Life built and which received commissions on the project, was affiliated with Tram Ventures, which was started by Ray. The city Wednesday released incorporation documents showing that Tram Ventures and Dominion were in effect one and the same, that Tram was doing business as Dominion Realty.

At Wednesday's press conference, Ray downplayed the connection. "It's not the parent company in the sense that I own, or my wife and I own, Dominion Realty," he said. "Tram was a shell corporation. My wife and I have helped a number of persons. It was very transparent."

Throughout the press conference, Gary defended Ray, saying the company made simple business errors.

"We feel a lot of damage has been done to the bishop here and his family," Gary said. "He's never tried to hide anything. It's a small business, a small corporation and compared to some major corporations, you're going to have some mistakes made. You're going to have some errors here and there."

Former West Palm Beach housing employee Jerry Kelly, who administered much of the program with Redemptive Life, said that while he's not aware of all the financial issues with Redemptive Life, he did believe that company was putting much of its income from home sales back into the program by building more houses, as required by HUD.

While the city said it has found records only of 22 houses that were built and sold, Ray said he built 30 houses and sold 27 of them. Kelly said he remembered 29 houses built.

Redemptive Life began with $1.6 million to build the houses over four phases between 2003 and 2009, although the city alleges Redemptive Life earned about $2.5 million from the sales.

Kelly backed one of Ray's assertions, that the city staff had agreed tentatively to waive a $251,600 loan provided to Redemptive Life in 2003 and convert it to a grant. But Kelly said city staff simply never ended up bringing it to city commissioners for approval. Valmarie Turner, who took over as housing director last year, is now demanding that Redemptive Life repay the $251,600.

Ray said he will cooperate with the city's inquiry. The intense media scrutiny has "turned our lives into an absolute whirlwind and caused my family to suffer in ways I wouldn't even take my time to respond to," he added.

Staff writer Kimberly Miller contributed to this story.

Redemptive Life Urban Initiatives Corp. apparently was 'compensated twice for the construction of 1120 22nd St.,’ according to a West Palm Beach report. 

Bishop Harold C. Ray of West Palm Beach blames the city for poor oversight and said he’s clarifying the issues raised by the city. 'It’s just totally unfair for us to be hit like we have stolen funds,’ he said Monday. Bishop Harold Calvin Ray

Rick McKay/Cox/Washington Bureau

 What West Palm Beach Says They Owe:
Redemptive Life Urban Initiatives Corp. directors and one employee shouldn't have received compensation from a housing project, the city says.

Directors:
Donald Minor....$110,302
Earl Hamilton $89,373
Harold Ray $66,450
Trinette Hobbs $65,040
Dale Smith....$10,000
Brenda Ray $5,500

Employee:
Sherrell Cockell..........$4,500

Total $351,165

 

 

By Andrew Abramson

WEST PALM BEACH — An internal review launched by the city's housing department has raised questions about a church's federally financed program to build homes in low-income neighborhoods, including whether it violated federal rules by paying board members with taxpayer money and hiring builders without putting contracts out to bid. 

The city is demanding records from Redemptive Life Urban Initiatives, a non-profit associated with the 600-member Redemptive Life Fellowship Church based in West Palm Beach. The city contracted with the group to build at least 22 houses in the Coleman Park area using $1.6 million from the U.S. Department of Housing and Urban Development HOME program under four contracts between 2003 and 2009. 

If the non-profit cannot prove the propriety of its expenditures, West Palm Beach could have to repay the federal government the $1.6 million plus any profit earned on the houses, said city housing director Valmarie Turner. The city questions more than $2 million in expenses and is already demanding the repayment of as much as $1.1 million. 

But Bishop Harold C. Ray, leader of the church and CEO of the company, blames the city for poor oversight and said he's in the process of clarifying the issues raised by the city. 

"We're not saying we're squeaky clean on some oversights, and there might have been some sloppy stuff here and there, but it's just totally unfair for us to be hit like we have stolen funds," Ray said Monday. 

The city acknowledges that Ray built at least 22 homes after it entered into four separate agreements with his company. Ray said the number was closer to 30. One contract required the development of 22 homes and another required four homes, or the purchase of six lots. The others involved the purchase of lots. 

City officials began looking into Redemptive Life in May during what Turner termed the city's "annual monitoring review" of the agreements. But Turner, who came to the city a year ago, said she was told by an external auditor that the city hadn't performed an annual review in years, even though it's required for the department to obtain the federal funds. 

According to Turner's summary of her review, which was released Monday, she found numerous discrepancies in Redemptive Life's paperwork, she said. Among those cited: 

"I don't know where all the dollars went, and that's what we're trying to work out," Turner said. 

Turner has passed along the information to the U.S. Department of Housing and Urban Development's inspector's general office. 

Mayor Jeri Muoio, who took office in March, said she was unaware of issues with the low-income housing building program before Turner began investigating. 

"(Turner) came to me and said, 'we need to follow up on this' and that's what we've been doing," Muoio said. "It's part of a transition to a new director, and new leadership in the city." 

Under Mayor Lois Frankel, when the contracts were initiated, the housing department had eight acting or full-time directors in eight years. 

In June HUD ordered the city to pay back $1.67 million, much of it from the 2006 Blue Roof program in which the city didn't seek bids when it hired a contractor to replace roofs on low-income homes. 

Frankel said she was "following all the rules and regulations" as mayor. City Administrator Ed Mitchell said, "It was the department directors' responsibility to monitor their funds." 

During its review, the city found that on more than one occasion, two invoices were submitted and the city reimbursed Redemptive Life twice for the same work. 

It also found that the city reimbursed Redemptive Life for rental costs associated with a construction trailer and the renewal of expired permits, even though the federal regulations don't allow reimbursements for operating costs or overhead. 

Among the board members whose pay the city is contesting are Ray and Earl Hamilton, who were paid salaries; and Donald Minor of Dominion Realty and Trienette Hobbs of Hobbs Realty, who were the listing agents and received commissions. Dominion Realty was owned by Tram Ventures, which in 2006 listed Ray as an officer. 

Hobbs was also the developer of the ill-fated Oasis apartment project in Riviera Beach that received $700,000 from the county but went into foreclosure in 2010 and has been abandoned. 

Ray's wife, the Rev. Brenda Ray, also received real estate commissions, according to the review summary. 

The employee who was paid, Sherrell Cockrell, served as an assistant city administrator for West Palm Beach in 2005 and 2006, before being hired by Redemeptive Life to help negotiate its deals with the city. 

In addition the $351,165 in contested pay, the city is seeking about 
$722,000 from Redemptive Life if it can't properly document certain transactions. 

But Ray said he doesn't have all the proper documentation, because past city officials asked Redemptive Life to monitor its program in a certain way and now new city officials and asking for different documents. 

"It's like saying, 'We see the house, but because of a technicality even though you built the house and put money in the house, we want the money back,'" Ray said. 

Ray said he couldn't avoid having connections to some of the contractors and the real estate salespeople because he said larger firms weren't willing to work in low-income neighborhoods. 

"They walked the streets and sometimes worked tirelessly," Ray said. "This wasn't Century 21, where you put up a sign and the house sells. This was a lot of footwork." 

On Monday, Commissioner James defended Ray, disclosing at a city meeting that he is both a member of Ray's church and has done legal work for Ray. 

"Let it all play out, before we drag the man's name through mud," James said after the meeting. "I don't know whether he's going to come out clean or dirty, but this is a country where you're innocent until proven guilty."