Mallory's agency faces probe

FBI also may look into role of mayor's brother
BY GREGORY KORTE ENQUIRER STAFF WRITER

The Cincinnati Police Department and federal authorities will conduct a joint investigation into the Cincinnati Empowerment Corp. after reports of conflicts of interest at the inner-city development agency, a top police official told the West End Community Council Tuesday night.

Whalen said the investigation into the Empowerment Zone started after some of the articles started hitting the paper. The Cincinnati Police Department was also contacted with a letter from HUD requesting a criminal investigation. In addition, the West End Community Council filed a complaint for criminal embezzlement against Dale Mallory.

Members of the West End Community Council allege that Dale Mallory, after he was removed as president in February, wrote $1,119 in checks from the community council account.

Dale's signatures are on those checks. He didn't even deny to the press that he cut those checks. The facts of this case have been widely reported and are not in dispute.

An FBI agent said the bureau had not opened a formal investigation. "We've had discussions with the Cincinnati Police Department about investigative activity they're already engaged in," said Special Agent Michael Brooks, general counsel for the Cincinnati Division.

It is worth noting that well over a month has passed since the original complaint, and nobody has started a formal investigation. All reports that I have indicate that the CPD didn't subpoena the bank records or talk to bank management.

Politically motivated stall?

In a few weeks the deadline will pass for Tim Burke and the Hamilton County Democratic Party to replace Dale on the ticket. If Dale is indicted on felony charges for cutting those checks he will be removed from the ticket and his political career will be over. Let us be clear here, if the charges involved are true (and they are!), this is a felony. Assistant Police Chief James Whalen said as much when asked the question.

If Dale is allowed to go past that deadline in August, the Dems won't be able to remove him from the ticket. The 32nd has been a democratic seat for many decades. A Mallory has held the seat for 32 out of the last 40 years. If he is the Democrat on the ticket, I think he will win that race.

The Cincinnati Department of Community Development and Planning is citing a possible FBI investigation in holding up the release of Empowerment Corp. documents requested by The Enquirer under the Ohio Public Records Act. The Empowerment Corp. also has declined to release documents related to its $2.4 million small-business loan program. The corporation's attorneys acknowledge that 84 percent of the portfolio is behind on payments.

If you want to find the bulk of the money mischief, it is going to be found in the 84% of the loans that went belly up. These are low interest loans, which make them easier to pay back than regular loans. The loan portfolio has never been available to public view. That is a shame. Both the press and concerned citizens could help this investigation. You are talking about a fairly large document dump, and you need people with a good idea of where the bodies are buried.

And how many people have access to those files now? The City, CPD, HUD, THE FBI, and the outside auditor selected by the City. You have a lot of people with their hands on those documents, this isn't just an FBI investigation.

Be on the lookout for Bill Seitz, the new lawyer for the Cincinnati Empowerment Corporation.

In a letter he sent to HUD Monday, Seitz called the controversy a classic case of "don't believe everything you read in the newspaper." He said the issues were stirred up by Dale Mallory's Democratic primary opponent, former Hamilton County Recorder Eve Bolton, and a group opposed to a proposed West End social services center that the Empowerment Corp. supported.

The new lawyer for the Empowerment Corporation admitted that the C.E.C. was supportive of the CityLink homeless mall. This is in stark contrast to what Harold Cleveland has told the press and West End residents recently, which is that the C.E.C never supported CityLink. I would agree with the argument that this affair started with the CityLink Homeless Mall. In the begining, it was widely believed that Dale Mallory was getting paid to promote CityLink and that he had sold out his community. Months after investigating the matter, that is exactly what we have found (along with his upcoming felony indictment). The corruption and incestual financial relationships of the Empowerment Zone are a real eye opener as well.

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