Two years have passed; criminal acts uncovered by Joplin state audit still unaddressed

Last week marked the two-year anniversary of the release of the state audit of the City of Joplin.

The city received the lowest rating possible, the auditor turned over evidence of wrongdoing to county officials, and when all was said and done, nothing happened.

(Photo: Joplin city officials listen as State Auditor Nicole Galloway unveils the audit.)

It is true that changes were made in the operation of the city itself, which means that the thousands of city residents who signed the petition for the audit at least got something out of it.

Otherwise nothing has changed.

In recent issues of the Joplin Globe, we have learned that some of the same people who pushed for the hiring of the master developer Wallace Bajjali are still promoting the same sorts of projects the Texas con artist told them he could deliver.

Why not build a major concert venue in downtown Joplin and smash our sacred covenant with local veterans by razing historical Memorial Hall?

After all, there is a study showing that the arts are bringing in millions to Joplin and the new venue would bring in even more.

The study reminds me of the flawed study the Joplin Area Chamber of Commerce used to show that the city would embrace a minor league baseball team with open arms.

Two years have passed and the same people whose benevolent wisdom gave us David Wallace and the Joplin Blasters are still pulling the strings.

David Wallace and Costa Bajjali are free and clear in Texas and it is unlikely the city will ever receive a cent of the money it won in a court judgment.

And from all appearances no one locally has ever investigated those two or others who were deeply implicated in the audit, including former City Councilman Mike Woolston, Joplin Area Chamber of Commerce President Rob O'Brian, Mayor Michael Seibert, or CART director Jane Cage.

In the August 18, 2015 Turner Report, I wrote the following:

(State Auditor Nicole) Galloway spelled out a scenario in which Woolston had purchased property at the behest of Joplin developer Charlie Kuehn, who then sold the property to the Joplin Redevelopment Corporation at heavily inflated prices.

"It was a taxpayer-funded house flipping plan," Galloway said.

The auditor showed a chart which detailed the most egregious example of property flipping.

On July 1, 2013, Woolston, working on behalf of Kuehn's Four State Homes, bought property at 1801 Delaware for $35,000. Four State Homes then sold the property to the Joplin Redevelopment Corporation for $162,000.

In all, 16 parcels of property in that area were purchased by Woolston for Four State Homes for $963,380, then sold to JRC for $1,340,824.

"Council member Woolston was aware of the properties the JRC was considering buying for redevelopment and may have used this information for personal gain," the report says. "Council member Woolston signed the real estate sales contracts as the broker on the 16 properties originally purchased by the FSH (Four State Homes) and subsequently sold to the JRC. Further, NEWCO, LLC was formed on April 4, 2013, as a partnership between Wallace-Bajjali and Charlie Kuehn to purchase these 16 properties back from the JRC for redevelopment into a theatre and retail/loft shopping center near the new library."

Later in the report, Woolston's conflicts of interest are spelled out.

"Due to council member Woolston's involvement with the CART, he was aware of properties the JRC and city were considering buying for redevelopment and may have used this information for personal gain.

"Further, acting as a broker and signing the sales contracts involving FSH's purchase of real estate in the redevelopment area (which the CART and the city had identified for future development by the JRC) created an actual, or at the very least an appearance of conflicts of interest."

Though Woolston abstained from voting on anything having to do with these parcels, he did not abstain on another occasion when there was a clear conflict of interest, according to the report.

"Council member Woolston did not abstain from voting (or disclose his business relationship with the developer) on an ordinance approving a tax increment financing redevelopment plan involving Kevin Steele, a developer with whom he co-owns a local realty company.

"During the July 7, 2014, council meeting, the council approved the Hope Valley Tax Increment Financing Redevelopment Plan, which established a redevelopment area and designated Hope Valley Development Group, Inc., a group that includes Kevin Steele as the designer of the redevelopment project.'

The audit also noted the conclusions of Osage Beach investigator Thomas Loraine, who examined Woolston's dealings with Four State Homes and Wallace-Bajjali.

"In November 2013, the city entered into an agreement with an individual for investigative services including, 'The facts, circumstances, and ethical considerations surrounding the involvement of Council Member Woolston with Mr. Charlie Kuehn/Four State Homes, its subsidiaries and related entities, and the City's master developer, Wallace-Bajjali, with respect to the purchase, sale, or leasing of real estate for current or future development.'

"The investigator noted in his final report, issued February 3, 2014, that 'All business should be stopped under the contracts between Wallace-Bajjali and the City of Joplin. Further investigation should be considered.' "

The audit report noted, "Council members of a city serve in a fiduciary capacity. Personal interests in business matters of the city create actual or the appearance of conflicts of interest, and a lack of independence could harm public confidence in the council and reduce its effectiveness."

The audit features references to Joplin City Charter and state laws concerning conflicts of interest for elected officials, but since the state auditor is not a law enforcement official, those concerns have been turned over to others.

"We were unable to investigate in more depth the issues of possible conflicts of interest as the pursuit of some information (e. g. subpoenaing personal bank records) is beyond the scope of our audit power. However, we have referred this matter to proper law enforcement authorities who can conduct such in-depth investigations."

The audit also addressed the roles of Rob O'Brian and others in putting in the fix so Wallace Bajjali could be hired as the master developer, a decision that cost the city millions:

Wallace Bajjali may have benefited from favorable treatment during the RFP and qualifications preparation and evaluation process because the RFP preparer and two evaluators had been meeting with David Wallace or employees of Wallace Bajjali before the RFP was drafted and proposals solicited.

In addition, the city did not take sufficient actions to eliminate potential conflicts of interest before awarding the master developer contract. The Joplin Chamber of Commerce President Rob O'Brian (a member of the ITF) drafted the RFP and qualifications for the master developer during December 2011.

Chamber invoices indicate Chamber of Commerce President O'Brian and another chamber employee, Gary Box, traveled to Houston, Texas, on October 1, 2011, to meet with representatives of Wallace Bajjali. They also met with David Wallace in Joplin on October 13, 2011.

Box later evaluated the potential master developer proposals and was subsequently hired by Wallace Bajjali in August 2012. Additionally, an employee of Wallace Bajjali submitted a parking invoice from Dallas, Texas, dated December 5, 2011, which indicated he was meeting with city of Joplin representatives.

Chamber credit card invoices indicated Chamber of Commerce President O'Brian was also in Dallas, Texas, on December 5, 2011. Additionally, in sworn testimony Chamber of Commerce President O'Brian indicated he first met with Wallace in August 2011, and met with him several other times during the fall of 2011.

Also in sworn testimony CART Chairperson Jane Cage indicated she had met Wallace a few months after the tornado and at other times during the fall of 2011. Chairperson Cage was also a member of the CART ITF and an evaluator. Chairperson Cage developed the evaluation scorecard, evaluated the master developer respondents and completed a scorecard, and compiled the totals of the scorecards.

It is questionable why the Chamber President, CART Chairperson, and another chamber employee had multiple meetings with a potential master developer company or its partners prior to drafting and evaluating the RFPs.

In sworn testimony Chamber of Commerce President O'Brian indicated Wallace suggested the "master developer concept" for redevelopment of the city, and a Wallace Bajjali employee emailed him a template of a RFP at Wallace's request. However, Chamber of Commerce President O'Brian indicated he deleted the email.

These prior relationships with Wallace Bajjali may have impaired the RFP preparer and the evaluators' ability to act impartially when preparing and evaluating the RFPs. Some of the RFP requirements and terminology may have been favorably written for Wallace Bajjali. The RFP included terminology regarding pursuit costs as a form of compensation, which was not used in proposals submitted by the 5 other RFP respondents. The ability to estimate these types of costs was also questioned by one of the respondents. In addition, some of the RFP requirements likely would have required the respondents more than a month to prepare and were questioned by other respondents.

The audit noted that three of the seven members of the committee that evaluated the master developer proposals gave Wallace Bajjali much higher scores than the others. One of those was Chamber of Commerce employee Gary Box, who was later hired by Wallace Bajjali.

Another was Mayor Michael Seibert, who told auditors "he could not recall" why he gave Wallace Bajjali a higher score.

Much more information about the hiring of Wallace Bajjali, including the content of CART documents obtained by the Turner Report and featured in my book Silver Lining in a Funnel Cloud which showed how local officials ignored Wallace Bajjali's record of bankruptcies and lawsuits and how they not so subtly moved the vote in the direction of recommending that Wallace Bajjali be hired for a job that never should have been created in the first place.

The state auditor clearly thought that crimes had been committed, particularly in the roles played by Woolston, Wallace and Bajjali, but the actions of others raised suspicions.

Two years have passed and it is becoming more and more apparent that this community, unlike nearly every other community where the state auditor has turned information over to prosecutors and investigators, plans to ignore the auditor's recommendations and continue with the same brand of leadership that caused so many people to sign petitions in the first place.

Maybe we will all feel better when we attend the first concert in that brand new performing arts center.

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The lowdown on what city and school officials did in the months and years following the May 22, 2011 tornado and those who fought back to take back their city government and school board can be found in my book Silver Lining in a Funnel Cloud: Greed, Corruption and the Joplin Tornado, available at Amazon. com and at Always Buying Books, Changing Hands Book Shoppe, and the Book Guy in Joplin, and Pat's Books in Carthage.