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untanglingwebs
El Supremo
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Finding 2- Failure to carry out an Economic Development Project
The eligible activity for OK Industries should have been economic development under section 570.703(i)(1) and section 570.203(b).
Section 570.203(b)
"The provision of assistance to a private for-profit business, including, but not limited to grants, loan guarantees; interest supplements, technical assistance, and other forms of support for any activity where the assistance is appropriate to carry out an economic development project, excluding those described as ineligible in 570.207(a). In selecting businesses to assist under this authority,the recipient shall minimize, to the extent practicable, displacement of existing businesses and jobs in neighborhoods." |
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Fri Sep 01, 2017 2:29 pm |
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untanglingwebs
El Supremo
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OK Industries alleged they were prevented from moving to flint due to several sewer back ups at the site. Their position was that Flint had provided poor oversight and that contributed to the sewer back ups so the City should pay for any decontamination services.
Problem is these sewer backups occurred in 2000 and2001, HUD recommended OK Industries move to Flint no later than August 14, 2002. HUD noted Ok Industries had 16 months to decontaminate the site and they did not. Since the N. Saginaw Street site was not specified in the agreement,another Flint site could have been used. |
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Fri Sep 01, 2017 2:38 pm |
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untanglingwebs
El Supremo
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The City was unable to determine if the equipment was purchased using Loan funds. HUD recommended a City representative review the equipment purchases, check serial numbers and rord the equipment as City property. The labels should remain in place until the loan is repaid. HUd was to receive a copy of the inventory.
Finding- Failure of OK Industries to maintain documentation of uses of federal funds
Section 85-2(b)(2) states:
"Accounting records . Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligated balances, assets, liabilities, outlays or expenditures, and income" |
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Fri Sep 01, 2017 2:59 pm |
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untanglingwebs
El Supremo
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The accountant for OK Industries was Anthony J. Michael and Co. and that office maintained their financial records. Hud reviewed the 2002 general ledger and the November 2003 balance sheet provided by the accountant, but they were unable to determine the specific uses of $820,000 in Section 108 funds.
Joe Giacalone indicated to HUD that because the City took so long to process the loan that he and Dan Robin, OK Industries General manager, had to take out loans to keep the business running. The response was the 108 funds were used to repay the loans. "The uses of the funds were not separately tracked; and the alleged use of the funds, to repay loans, was not in compliance with the uses approved in the application." |
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Fri Sep 01, 2017 3:14 pm |
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untanglingwebs
El Supremo
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Note: other threads detail the lawsuits that emerged from this loan. Money was used to pay child support owed by Robin. The Major Grants Director prior to parker had facilitated a loan to the company from the Flint Area Investment Fund. The $250,000 loan was made out to OK Industries or joseph Giacalone and was never repaid.
Also the properties used to secure the loans were appraised too high and Flint had a second and even a third place in some of the mortgages. |
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Fri Sep 01, 2017 3:24 pm |
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untanglingwebs
El Supremo
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| HUD demanded the City of Flint obtain a sources and uses statement which detailed how the 108 funds were used as well as any additional funds funds were obtained and used. Also the fund sources were to be specified. The information was to be sent to the Detroit HUD office by the City of Flint. |
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Fri Sep 01, 2017 7:20 pm |
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untanglingwebs
El Supremo
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Joseph Giacalone and Daniel Robin ordered to pay $1.3 million restitution to Flint
Print Email Kristin Longley | klongley1@mlive.com By Kristin Longley | klongley1@mlive.com
on October 25, 2009 at 5:00 AM
FLINT, Michigan — In one of the largest theft cases of public money local officials have ever seen, the city of Flint could be in line to land $1.3 million in restitution.
Businessmen Joseph P. Giacalone and Daniel Robin were ordered last week to pay the huge sum after pleading no contest to pocketing $1.2 million in loans for a factory they never built.
It would be a huge windfall for the cash-strapped city of Flint — if the responsible parties ever pay up. Both men have filed for bankruptcy, and it’s unclear how much the city will ever bank.
Still, officials say it’s a long overdue victory in the four-year-old case.
“This is one of the larger thefts of public money that I’ve ever seen,” said Genesee County Prosecutor David S. Leyton. “Most criminals are not ordered to pay that kind of money.”
Robin and Giacalone, an ex-convict who had spent time in prison for unarmed robbery and gambling convictions, pleaded no contest to larceny by conversion over $20,000 — a maximum 10-year felony.
Robin’s attorney, Glenn Cotton, said Robin has 42 days to decide whether he will file an appeal of the ruling from Genesee County Circuit Judge Judith A. Fullerton.
Neither Giacalone nor his attorney could be reached for comment.
The loans from the city were supposed to be used by Giacalone’s Lennon-based company, OK Industries, to build a vinyl manufacturing plant at a site he owned on North Saginaw Street. Giacalone in 2001 said the plant would employ 100 people, most of them low- to moderate-income people.
No work was done and none of the money was repaid, authorities said.
Knowing Giacalone’s criminal history, Genesee County Sheriff Robert J. Pickell initiated the investigation.
Dan Robin.jpgDaniel Robin
“These are con men,” he said. “White collar criminals tend to get away with stuff, but you can’t minimize crime.”
The case took several years to wind its way through the court system in art because the original larceny by conversion charges were thrown out. However, the prosecutor’s office appealed and the charges were later reinstated.
“In the end, despite the long hard road it took us to get here, we won,” Leyton said. “This is a good outcome. I’m certain the judge in the case will keep an eye on whether these individuals comply.” |
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Fri Sep 01, 2017 7:23 pm |
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untanglingwebs
El Supremo
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COA 271624 CITY OF FLINT V OK INDUSTRIES ... - State of Michigan
publicdocs.courts.mi.gov:81/opinions/final/.../20070410_c271624_58_271624.opn.p...
Defendants OK Industries, Inc., Joseph Giacalone, and DeAnne Giacalone (collectively ... Designed “to increase economic activity” in Flint and to “increase the ... |
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Fri Sep 01, 2017 7:29 pm |
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untanglingwebs
El Supremo
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Flint Talk Forums View topic - The Prosecutor, the Feds, the Mob ...
flinttalk.com/flint/viewtopic.php?p=78368
It appears Leonard went to the extreme. ... Defendant Caesar Montevecchio, Loren Jolly, and Joseph Giacalone were charged with armed robbery. ... "If a man can come into our city, pull a gun on two of our citizens, rob them of between ...
This is the case (page 2-3) that Pickell was referencing when he spoke of Giacalone as an ex-con. Pickell was working with the Prosecutor's oice during this case and the shooting of their undercover person. |
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Fri Sep 01, 2017 7:41 pm |
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untanglingwebs
El Supremo
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Manhattan Place also received a 108 loan . The reason given was the project filled the national objective of addressing slum or blight. The buildings were in disrepair and in a blighted community. [section 570.208(b)(1)] Also the building was in the historic Carriage Town and the project was in conformance with the City's urban renewal plan.
Manhattan Place was approved for $1,804,000 of section 8 Loan Guarantee funds. A total of $1,408,077 of this amount was for construction costs. However in May of 2003, an additional $359,408,077 was lent to the project using Community Block Development Grants. Staff indicated the extra funds were to allow completion of the common areas in order to facilitate the sale of the condominium units. |
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Fri Sep 01, 2017 8:06 pm |
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untanglingwebs
El Supremo
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When HUD reviewed, they found several issues:
1) Change orders for additional costs in the budget had not been submitted to the City for approval prior to implementation.
2) Budgeted and paid amounts were not consistent from pay request to pay request.
3) Pay requests were initially submitted to Greco Title Co., which made sure there were no liens against the project.Greco also received and maintained copies of supporting cost documentation. However, representatives from Greco ,the City, or an independent professional certified that the work was correctly performed at the specified cost levels.
4) The Developer, Mr. Crawley, served as construction manager, and certified the expenditures for the project. As a result, the incomplete project had cost overruns totaling $265,905. Additionally, the developer estimates that another $1, 015,800 is needed to complete the project.
5) The HUD reviewer was unable to determine the amount of equity contributed by the developer to the project.
6) Ten percent of the construction costs were not set aside as retainage. |
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Fri Sep 01, 2017 8:25 pm |
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untanglingwebs
El Supremo
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The City of Flint was required to monitor the project.
Monitoring by grantees Section 85.4(a)
Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity.
Section 570.501(b)states
The recipient is responsible for ensuring that CDBG funds are used in accordance with all program requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the recipient of the responsibility for determining the adequacy of agreements and procurement contracts, and for taking appropriate action when problems arise such as the actions described in Section 570/910. |
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Fri Sep 01, 2017 8:41 pm |
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untanglingwebs
El Supremo
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24 CFR 570.910 - Corrective and remedial actions.
s.
(a)General. Consistent with the procedures described in § 570.900(b), the Secretary may take one or more of the actions described in paragraph (b) of this section. Such actions shall be designed to prevent a continuation of the performance deficiency; mitigate, to the extent possible, the adverse effects or consequences of the deficiency; and prevent a recurrence of the deficiency.
(b)Actions authorized. The following lists the actions that HUD may take in response to a deficiency identified during the review of a recipient's performance:
(1) Issue a letter of warning advising the recipient of the deficiency and putting the recipient on notice that additional action will be taken if the deficiency is not corrected or is repeated;
(2) Recommend, or request the recipient to submit, proposals for corrective actions, including the correction or removal of the causes of the deficiency, through such actions as:
(i) Preparing and following a schedule of actions for carrying out the affected CDBG activities, consisting of schedules, timetables and milestones necessary to implement the affected CDBG activities;
(ii) Establishing and following a management plan which assigns responsibilities for carrying out the actions identified in paragraph (b)(2)(i) of this section;
(iii) For entitlement and Insular Areas recipients, canceling or revising affected activities that are no longer feasible to implement due to the deficiency and re-programming funds from such affected activities to other eligible activities (pursuant to the citizen participation requirements in 24 CFR part 91); or
(iv) Other actions which will serve to prevent a continuation of the deficiency, mitigate (to the extent possible) the adverse effects or consequences of the deficiency, and prevent a recurrence of the deficiency;
(3) Advise the recipient that a certification will no longer be acceptable and that additional assurances will be required;
(4) Advise the recipient to suspend disbursement of funds for the deficient activity;
(5) Advise the recipient to reimburse its program account or letter of credit in any amounts improperly expended and reprogram the use of the funds in accordance with applicable requirements;
(6) Change the method of payment to the recipient from a letter of credit basis to a reimbursement basis;
(7) In the case of claims payable to HUD or the U.S. Treasury, institute collection procedures pursuant to subpart B of 24 CFR part 17; and
( In the case of an entitlement or Insular Areas recipient, condition the use of funds from a succeeding fiscal year's allocation upon appropriate corrective action by the recipient. The failure of the recipient to undertake the actions specified in the condition may result in a reduction, pursuant to § 570.911, of the entitlement or Insular Areas recipient's annual grant by up to the amount conditionally granted.
[ 53 FR 34466, Sept. 6, 1988, as amended at 60 FR 1917, Jan. 5, 1995; 72 FR 12537, Mar. 15, 2007] |
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Fri Sep 01, 2017 8:46 pm |
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untanglingwebs
El Supremo
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When HUD reviewed Manhattan Place, they determined the "developer/borrower did not adhere to a construction schedule, comply with lead-based paint requirements of HUD, or provide change orders to the city for approval. As the loan agreement was dated October 18, 2004. the conversion date for Manhattan Place from condominiums to rentals is January 18, 2004. At the time of the monitoring review, it was not evident that this process had begun or was even being considered."
HUD recommended Crawley finish the first building (116 W. First) no later than January 30, 2004. A second recommendation was that marketing was needed to obtain purchase agreements, deposits, and/or sales on all of the units in the project. HUD insisted Crawley seek other funding to complete the second building (408 Garland) and the associated garages. They advised no seeking additional federal funding. The Construction Loan Agreement had to be amended in order or the project to be in compliance. The City was to provide proof of corrective actions to the HUD Detroit offce. |
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Sat Sep 02, 2017 9:02 am |
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untanglingwebs
El Supremo
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| Section 7.1 Failure to sell 80% of the Condominium Units: If Borrower fails to sell or obtain reservations on 80 percent of the Condominium units within two years and three years of the date of this agreement then Borrower agrees to take all actions and execute all documents necessary to convert the project from a condominium project into a rental project. The rental project shall then be deeded to a Limited liability company or similar entity created by the City, which will have its owners/members the lLender and Borrower. The entity shall be created in mannr so that the Lender shall have complete control of such entity. |
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Sat Sep 02, 2017 9:15 am |
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