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VOL. 131 | NO. 156 | Friday, August 5, 2016

HUD Serves GMF With Search Warrants

By Bill Dries

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Agents with the Inspector General’s office of the federal Department of Housing and Urban Development served search warrants Wednesday, Aug. 3, at the Memphis offices of Global Ministries Foundation and showed up at GMF-owned apartment complexes in Indianapolis, Ind., and the offices of the Gill Group, a real estate company in Dexter, Mo.

The July 11 report of the court appointed receiver for Warren and Tulane apartments shows conditions there remain bleak. The report also includes descriptions of a persistent problem with gangs and drug sales.


Federal officials would only confirm the actions but shed little light on what may have prompted the search warrants.

GMF is “fully cooperating with recent HUD inquiries and requests for documentation,” the organization said in a statement. “And we will continue to aid HUD and other government representatives should they have additional inquiries.”

Indianapolis television station Fox 59 reported the HUD agents at a local apartment complex, Stonekey Apartments, walked through the facility with cameras and notebooks, taking pictures and writing down observations.

GMF owns five properties in Indianapolis, including Stonekey.

The Sikeston Standard Democrat newspaper reported Thursday that the Gill Group had appraised GMF properties in Memphis and Florida and those were the records and files seized Wednesday in Missouri.

The July 11 report of the court appointed receiver for Warren and Tulane apartments shows conditions there remain bleak. The report also includes descriptions of a persistent problem with gangs and drug sales.


U.S. Sen. Marco Rubio (R-Florida) has been a vocal critic of conditions at GMF apartment complexes in Jacksonville, including Eureka Gardens.

“It’s about time that federal investigators go after the slumlords at Global Ministries Foundation for stealing millions in taxpayer dollars and forcing residents across the country to live in deplorable housing conditions,” said Rubio, a one-time Republican Presidential contender.

“This investigation is just getting started,” Rubio said. “But I am confident these slumlords will be held accountable for stealing money and endangering the public health and safety of families.”

The warrants were served six months after HUD cut rent subsidies to the Warren and Tulane apartments in Memphis, both owned by Global Ministries.

The cutoff of subsidies began a move of all residents out of both complexes where all tenants pay their rent with the federal subsidies. HUD took the action after each complex failed a second inspection in January by its inspectors.

HUD and local code enforcement officers, who took Global Ministries to General Sessions Environmental Court, confirmed persistent complaints of bedbug infestations, sanitary problems with toilets that weren’t repaired, roof leaks and apartments that were generally uninhabitable.

Bank of New York filed a lawsuit in May against Global Ministries in Memphis federal court seeking the appointment of a receiver for Warren and Tulane, alleging “an appearance of fraud” by Global Ministries in a memorandum filed with the complaint.

The bank is the trustee of $11.8 million in bonds through the local Health, Educational and Housing Facility Board issued to finance GMF’s ownership of both complexes.

U.S. District Judge Jon P. McCalla appointed Foresite Realty Management LLC of Rosemont, Ill., as the receiver for both properties to oversee their eventual sale.

The receivership was in a consent order GMF agreed to after the Bank of New York called for the court to appoint a receiver.

Donald S. Shapiro, the agent for Foresite, reported to McCalla last month that Foresite’s requests for more money to get the Warren and Tulane apartments secure and in shape for sale have been “largely dismissed” by both GMF and HUD.

The 24-page report is a vivid description of two apartment complexes that continue to have problems even as residents move out.

The July 11 report to the court by Foresite says that its staff “consistently reported feeling physically ill after spending time” in the leasing offices at Warren and Tulane, which were each infested with bedbugs and cockroaches and had “unsanitary” restrooms as well as “a significant level of dirt and grime on the carpeting, walls and desktops.”

The properties beyond the leasing offices are described in the report as “significantly distressed” and “in various stages of disrepair, compounded by years of neglect.”

But the report noted that the most significant problem was prostitution and vandalism.

Foresite hired Class A Security after its staff at Warren and Tulane “confronted verbal abuse, threats of bodily harm, intimidation and various forms of harassment.”

The private security firm found “drug and weapon caches were present throughout the properties in vacant units.”

At the end of May Class A Security set up a “military-style checkpoint” at Tulane requiring photo IDs to enter the complex. When it proved successful, the security firm used a similar checkpoint at Warren.

“The need for adequate security is still necessary due to continued gang activity, the continued theft of large appliances and the sale of narcotics occurring in open areas and in front of children,” the report reads.

In addition to a beefed up presence by Memphis Police, Foresite has noticed a federal presence at both complexes by agents with the Bureau of Alcohol, Tobacco & Firearms.

“The exact nature of ATF’s affairs with residents is unknown, three agents were identified by the receiver after demanding identification, due to what appeared to be suspicious activity,” according to the report.

By mid-July, Shapiro reported the problem was still present but at a lower level and its security costs had gone down and should continue to go down “since some of the security threats have been minimized as well as have been relocated through the HUD voucher program.”

Foresite also reported to McCalla that lease files at the two apartment complexes were “in complete disarray and scattered throughout the leasing offices.”

What records there were included residents still listed even though they had moved out and residents listed in one unit when they lived in another unit.

Foresite sought more money from HUD and GMF for air conditioning units, armed security and maintenance staff for trash pickup, maintenance and repairs.

The report describes the initial budget for each complex before the receiver took over as “wholly insufficient for running the properties in any reasonable capacity necessary to make units even semi-livable for existing residents during the relocation process.”

PROPERTY SALES 56 295 6,392
MORTGAGES 26 180 4,035
BUILDING PERMITS 128 840 15,361
BANKRUPTCIES 31 153 3,270