Questions about nonprofit emerges in housing tax credit corruption trial

In an earlier post (see issue 14) I mentioned that some social services that Low Income Housing Tax Credit developers get credit for under the Texas program are less that useful to the tenants.

Exchanges between Former Dallas Mayor Pro Tem Don Hill and his attorney and a federal prosecutor in Hill’s public corruption trial offered evidence of this yesterday. Bright III was a nonprofit that was set up by defendants in the corruption trial to provide services at a tax credit development run by tax credit developer Brian Potashnik.

Here is the exchange first with Hill’s attorney then with the federal prosecutor (Busch) as reported by Dallas Morning News reporter Jason Trahan

Jason Trahan/Reporter: “I feel good about that social service piece,” Farrington said on a wiretap, referring to her work with Bright III, which was funded by Southwest Housing. The government has said that the contracts were a sham used to funnel bribe payments from Brian Potashnik to Hill and Lee.

Hill described Farrington as “really really really fired up about that,” those contracts with Bright III and SWH, and reiterated that she didn’t consider it sham work.

Jason Trahan/Reporter: What happened to Bright III? Victor said.

It dropped out of sight, Hill said.

What happened on June 20, 2005 that affected Bright III? [This is the day the FBI served search warrants in the corruption case.]

Objection.

“My understanding was that Sheila had no further relationship with them after that because of the city hall raids. It was impossible to do anything with it at that point.”

Jason Trahan/Reporter: Hill said that he recommended to Sheila Farrington Hill that she enter into a contract with Bright III, the community housing development organization. “It avoided misunderstandings that can lead to litigation and that leads to the reduction of the quality of services. You want to have a good idea of what is expected of everybody” and this contract does that, Hill said.

Jason Trahan/Reporter: Busch: Brian Potashnik and Southwest Housing had good social services?

Yes, there had been no complaints.

Busch: And it was you that pushed Potashnik to hire Bright III, which was workign with Pilgrim Rest church.

I suggested it to him to work with the community.

Busch: But Pilgrim Rest isn’t even in district 5, your district?

Well, that’s right.

Busch: The fact that Sheila Farrington Hill, your mistress at the time, the fact that she was living in University Park, that didn’t have any bearing on your decision to have her involved in all this, did it?

She was very involved in District 5.

Jason Trahan/Reporter: Busch is asking about why Bright III vanished, using Hill’s words, after the FBI raids in 05. Why didn’t the Urban League “vanish” when the FBI served lawful warrants? Weren’t they providing social services for Southwest Housing too? Or getting money for it?

Hill said that Bright III was just getting off the ground at the time and couldn’t stay together after the FBI investigation went from covert to overt.

“Mr. Potashik is not in business any more and Bright III…”

Objection, non responsive, Busch says.

Busch: Has Bright III been indicted?

No.

Busch: Isn’t it true that James Mac Fulbright had no business providing social services.

He had experience in serving on boards.

Busch: Other than sitting on a board, what qualifications did he have providing actual social services.

A board is experience.

The cross examination in today’s trial makes for riveting reading.