The Tennessee Multicultural Chamber of Commerce faces an investigation by the FBI and an inquiry from the U.S. Department of Housing and Urban Development about the use of federal loans and grants to buy property and build a Business Solutions Center that never materialized.
The inquiries were spurred after a Times Free Press investigation showed inconsistencies with budget requests 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
Asked outside the City Council on Tuesday whether the Tennessee Multicultural Chamber of Commerce has answered questions from HUD, the Chamber's board president was casual.
John Taylor said U.S. Housing and Urban Development officials asked nearly the same questions that the city and county have asked in recent weeks about the Chamber's finances.
"They were the same questions as the city audit," Taylor said, referring to City Auditor Stan Sewell's review of the Chamber, which brought up problems with financial management, salaries and travel expenses.
But a HUD spokeswoman said the agency is asking the Chamber to prove how it spent every penny of a $545,000 grant and account in writing for any money that hasn't been spent.
In an email, HUD spokeswoman Gloria Shanahan said the agency wants the following:
* Complete source documentation for the expenditure of grant funds for each line item of the approved project budget for a Business Solutions Center to be built on M.L. King Boulevard
* A copy of documents associated with the acquisition of three properties on M.L. King for the center
* A narrative report comparing actual accomplishments to the objectives indicated in the approved application and project budget
* A current status update and schedule for project completion.
Shanahan said the Chamber has 15 days to respond.
The Multicultural Chamber, whose stated goal is to spur minority business development, is facing inquiries from the FBI and HUD concerning the $545,000 HUD grant and a $579,000 loan from the Chattanooga Community Development Financial Institution.
The Chamber received two HUD grants in 2005 and 2006, and Chamber officials have said they spent $200,000 to buy property along M.L. King Boulevard for a business center that would also house the chamber. They also spent $106,400 for planning, management and administration for the project, Chamber officials said.
But when asked last week what happened to the balance of $238,400, Taylor did not offer an explanation.
"The money is where the money is," he said.
The FBI last week asked officials with the Chattanooga Community Development Financial Institution about the loan. The Chamber is behind in its loan payments and could face foreclosure on two M.L. King properties purchased with the money.
Chamber Executive Director Sherrie Gilchrist also attended Tuesday night's council meeting, where the council voted to appropriate $75,000 to a yet-to-be-named entity that could carry out the Chamber's mission of minority business development.
Gilchrist left the building quickly after the vote and would not answer questions when a reporter saw her in the hall.
On Tuesday, she sent out an email blast asking Chamber supporters for money. Chattanooga and Hamilton County, which each gave the Chamber $75,000 last year, zeroed out their allocations in the fiscal year that began July 1.
"We are aggressively trying to raise monies to continue the operations of the organization," she wrote. "As you may have read, we have not received any funding from the City Council or County Commission. Therefore, we in [sic] the fundraising mode."