Tennessee Multicultural Chamber of Commerce faces lawsuit

Tennessee Multicultural Chamber of Commerce faces lawsuit

December 2nd, 2011 by Cliff Hightower in News


The Tennessee Multicultural Chamber of Commerce came under fire earlier this year after a Times Free Press investigation showed inconsistencies between budget requests the chamber turned into Chattanooga and Hamilton County. A later review by City Auditor Stan Sewell showed possible financial mismanagement, questionable land deals and exorbitant salaries and travel expenses.

The FBI and U.S. Department of Housing and Urban Development then stepped into investigate the use of federal loans and grants to buy property to build a business solutions center on M.L. King Boulevard. The center was never built and the federal investigations are ongoing.

The Tennessee Multicultural Chamber of Commerce is being sued by a local financial institution for not paying its bills.

The Chattanooga Community Development Financial Institution filed a lawsuit saying the Multicultural Chamber owes it $61,179.82.

"It's just trying to collect a debt," said David Elliot, one of the attorneys filing on behalf of CCDFI.

Jerry Hanner Sr., a board member for the Multicultural Chamber, said Thursday it was the first time he heard about the chamber being sued.

"I didn't know about it," he said.

He said the Multicultural Chamber would talk about the issue at its next meeting and figure out what steps to take.

Elliot, as well as local attorney Joseph Dickson, filed the lawsuit in Hamilton County Chancery Court on Nov. 23.

According to the lawsuit, the money is owed from a line of credit for $289,850.67 given to the chamber on Oct. 13, 2008. The maturity date was Oct. 13, 2010, and by then, the Multicultural Chamber owed $306,630.44 with interest added on, the lawsuit states.

David Johnson, president of Chattanooga Neighborhood Enterprise and CCDFI, has said the Multicultural Chamber only paid interest on the loan for 33 months. He did not wish to comment Thursday.

The Multicultural Chamber used the money to buy property on M.L. King Boulevard. On July 28, the financial institution sent a letter to the chamber, saying it needed to pay the full amount of the loan or face foreclosure of the property.

The loan was never repaid, and the CCDFI took the property back, then put it up for auction. Because there were no bids of the $250,000 minimum at the auction, the financial institution absorbed the cost of the property.

The $61,000 asked for in the lawsuit is the difference between the $250,000 and the $306,000 that was due when the chamber's credit line matured, plus other fees. The lawsuit states it would like the damages paid as soon as possible.

"TMCC's default has damaged CCDFI and continues to damage CCDFI," suit states.

The Multicultural Chamber has faced numerous setbacks after the FBI and U.S. Department of Housing and Urban Development opened up investigations on its financial dealings.

Former Executive Director Sherrie Gilchrist resigned and the chamber moved from a location on Chestnut Street to a new location on South Highland Park Avenue.

The chamber also lost all its annual city and county funding, $75,000 from each. The county decided three weeks ago to give the money to the Chattanooga Area Chamber of Commerce for a minority business program.

The city will hear next week from the Chattanooga Area Chamber of Commerce and the Urban League of Greater Chattanooga on minority business proposals.