3 housing executives put on administrative leave

Housing Commissioner Mike Badik and Neighborhoods Director Kattie Bond are put on paid leave. THE BLADE Enlarge | Photo Reprints

Three top officials in the City of Toledo's Department of Neighborhoods have been put on administrative leave pending an investigation.

Neighborhoods Director Kattie Bond, Housing Commissioner Mike Badik, and Housing Manager Jody Prude were placed on paid leave Friday, their work identification cards were confiscated, and they were told to leave One Government Center where they work, city spokesman Jen Sorgenfrei said.

She said the decision stems from the city's ongoing internal investigation into the Department of Neighborhoods, but declined to give specifics.

Meanwhile, U.S. Rep. Marcy Kaptur (D., Toledo) has asked the inspector general of the U.S. Department of Housing and Urban Development to assist the city in its probe.

HUD officials have visited the neighborhoods department twice in the past week, but Ms. Sorgenfrei could not say if they were from the inspector general's office.

HUD's involvement and the decision to put three of the neighborhoods department's top officials on administrative leave come after The Blade published a story Nov. 22 detailing allegations of bid rigging, favoritism, and poor oversight in the Department of Neighborhoods, which awards millions of dollars each year in federal housing and development funds.

The day after the story appeared, a city rehab specialist left a voice mail for a local contractor who had been quoted in the newspaper. The employee, Toni Thomas, told the contractor that the department's director, Ms. Bond, wanted him to recant his statements to The Blade. The recording set off an investigation that led to Ms. Thomas being placed on paid administrative leave last week.

That investigation is being led by the city's law director, Adam Loukx, and a former city auditor, Dan Hiskey, Ms. Sorgenfrei said. "They're continuing their review of the department and will make further decisions as appropriate," she said.

Ms. Bond, Mr. Badik, and Ms. Prude did not return calls seeking comment.

Lourdes Santiago, a senior city attorney with experience in purchasing and contract management, will serve as interim director of the department. Decisions about interim appointments for the other positions likely will be made Monday, Ms. Sorgenfrei said.

In her Nov. 23 letter to the HUD inspector general's office in Chicago, Miss Kaptur asked for a review of how the city manages the money it receives from the agency, which totaled $27.4 million in 2010.

She was not available for comment Friday, but her spokesman, Steve Fought, said Miss Kaptur wanted to help the city clear up the questions surrounding the department so its federal funding is not at risk.

"Having read The Blade's stories, the congresswoman was concerned about the administration of the program," he said. "Certainly Toledo desperately needs federal assistance to upgrade the housing stock. ... She didn't want to jeopardize the city's position with the agency, but at the same time wanted to make sure the funds were being properly administered."

In a memo to city council members Wednesday, Mayor Mike Bell said the city is cooperating with HUD.

"They have encouraged us to continue with our internal departmental review process and staff investigations and we will maintain that effort until it is complete," he said.

He also said the city's investigators have interviewed several Department of Neighborhoods employees and "have had conversations with external parties in an effort to gather complete information and establish a thorough and accurate representation of departmental operations and leadership styles."

The investigation has expanded dramatically over the past two weeks.

Shortly after The Blade story ran, Toledo City Council held a hearing on the issues it raised. During that meeting, Mr. Bell told council he had initiated a review of departmental policies and procedures but stopped short of calling the efforts an "investigation." The day after the hearing, Councilman D. Michael Collins provided the city's law department with audio recordings of Ms. Thomas' calls to local contractor Craig Gordy of Continental Construction.

Mr. Gordy had told The Blade that Ms. Thomas steered him to use Leon Jackson, Jr., as a subcontractor on a project in the city's federally funded roofing program. Mr. Gordy said Ms. Thomas told him to hire Jackson, who has a lengthy criminal history, and instructed him not to list Jackson on city paperwork.

After the voice mails surfaced, the city's law director began an investigation, which has expanded to include interviews with other contractors as well, including Sam Khalaf, owner of CSK Construction. He believes a competing contractor was given access to three of his sealed bids, which he said he dropped off with housing consultant Tina Butts of Friendship New Vision, a local community development agency. Ms. Butts has denied that Mr. Khalaf dropped off his bids at her office.

In those three cases, Mr. Khalaf's bids, each of which included 60 to 80 line items, were nearly identical to bids submitted by his competitor, Phoenix Custom Builders, with the exception of a few differences that gave Phoenix the advantage.

Several city council members said Friday they welcomed HUD's involvement and the administration's expanded investigation.

"I commend the administration for taking appropriate action," Councilman Adam Martinez, who is chairman of council's neighborhoods committee, said. "I think this clears any doubt from council that the administration is taking this seriously and investigating thoroughly."

George Sarantou, chairman of council's finance committee, said he welcomed the involvement of federal authorities in the city's investigation, given the importance of HUD funding for Toledo.

"Clearly this investigation is becoming broader and more in-depth and I am glad we have some federal officials now looking at this," he said. "We need to make sure things are followed according to the law."

Councilman Collins said he was not surprised by the developments.

"My hope is that the investigation will result in honesty and transparency in [the] neighborhoods [department]," he said. "I feel confident that if a proper investigation occurs, the outcomes -- while painful -- will prove in the end to be necessary."

Councilman Rob Ludeman said that for the time being, he would reserve judgment on the neighborhoods officials who have been put on leave. His experiences working with Ms. Bond and Mr. Badik always have been positive, he said.

"There may be nothing that comes out of [the investigation]," he said.

The city already has proposed several policies and procedures to ensure fairness in the way the Department of Neighborhoods awards federally funded home rehab projects.

Ms. Sorgenfrei said the administration will continue its review of the department's policies and procedures through mid-January, even as it investigates allegations of employee misconduct. She emphasized that no final decisions have been made about the employees on administrative leave.

"Some people have reached out, and we would encourage other people with information they think would benefit the investigation to come forward," she said.

Contact Tony Cook at: acook@theblade.com or 419-724-6065.