HATTIESBURG, MS (WDAM) - Day three of testimony in the trial of Hub City Pastor Kenneth Fairley continued with Robert Weeks, an investigator for the HUD Office of Inspector General on the stand.
Fifth Witness continued:
Weeks testified to $98,000 of Housing and Urban Development (HUD) money that was given to Pinebelt through the city of Hattiesburg.
His testimony talked about funds that were sent from Neighborhood Improvement and Community Education (NICE) a non-profit organization based in New Orleans, connected to co-defendant Artie Fletcher to Kenneth Fairley's organization, Pinebelt Community Services (Pinebelt).
"It was very important the Office of Inspector General got involved in this investigation," Weeks said.
The topic of other HUD projects in the city of Hattiesburg was also brought up by the government.
"HUD approved (Pinebelt) to receive more funding for more homes around Mt. Carmel," Weeks said.
That funding did not take place, due to lack of documentation from Pinebelt.
"They suspended Pinebelt and the two other contracts (Fairley) had lined up," Weeks said.
On March 30, 2015, members of the FBI, HUD OIG and IRS met with Fairley, where they discussed "briefly" about the homes located at 202 South Street and 127 East 5th Street.
"My main focus was to find out what happened," Weeks said. "(Fairley) started explaining the whole process, and what he did at 131 East 5th Street."
That home was one of the first ones "completed" by Pinebelt.
"He said it was for sale, not a rental and he had trouble selling it, so he rented it to his daughter-in-law and his son," Weeks said.
According to Weeks, they currently live at that address.
Investigators then continued to question Fairley.
"It's not what it seems to be, all the money went to Interurban," Weeks said on behalf of Fairley's statements. "He also said he used local labor."
Weeks said that Fairley wanted to speak with him one-on-one, in private with no attorneys present.
"He began to ask me what he was looking at, was it a felony or a misdemeanor," Weeks said. "He said he would have to see this matter all the way through."
Weeks said Fletcher did provide seed money for the projects, which is not illegal, it was how the funds were used that was illegal.
"It was somewhere around $150,000 to $160,000 that Fletcher send to Fairley through NICE," Weeks said.
According to Weeks testimony, Pinebelt is located inside Mt. Carmel Baptist Church, and the executive director is Kenneth Fairley, and Fairley is the pastor at Mt. Carmel, therefore they are all in the same entity.
"Fletcher gave Fairley the use of Interurban, he gave him the name Elaine Chase, this is where the forgery comes into play," Weeks said.
Chase is the vice president of Interurban and the mother of Artie Fletcher.
"Fairley would use low labor to do the rehab…on the homes," Weeks said.
Weeks added that the complaint filed said Fletcher would be able to keep the equity and Fairley could keep anything left over.
How money is made:
Weeks testified that through Interurban, no work was actually done, no supplies, no assistance in the rehab, nothing was done through Fletcher's organization.
"Fairley is able to go under the cost that he has turned in and he takes that," Weeks said.
The home at 202 South Street, roughly $10,000-13,000 was used.
The home at 127 East 5th Street, roughly $20,000-23,000 was used.
"He received about $98,000 for the work," Weeks said. "Once HUD suspended the two projects, that is where Fairley was going to pay Fletcher, and when HUD suspended it, it caused a delay."
Fairley then called Fletcher asking for receipts and things to turn over to HUD to get the project back on track.
Weeks added that Fairley submitted forged records to the city of Hattiesburg, tied with Fletcher and his company to qualify for the HUD grants.
"The documents showed that Interurban was being paid and was doing the work," Weeks said. "But statements made by both Fletcher and Fairley told us they did no work."
Another audio recording between Fairley and Fletcher was played by the government.
Fairley and Fletcher continued to discuss projects located on 6th Street and Main Street as well as continued to discuss how Fairley would pay the owed money to Fletcher.
"I was hoping to give you some of your 6," Fairley said. "I'm going to get you yours, I want to get this out of the way."
Fairley told Fletcher they have to make this right.
"I didn't pull out my sword and put on my helmet because I wanted to, I was forced to," Fletcher said
Fairley said, "We have to do whatever we have to do to square up the dollars."
Fletcher said, "I only want what's mine, I don't want to take anyone else's money."
Fletcher questioned Fairley on how much Pinebelt owes him; he pushed him to say it.
"Pinebelt owes me about $150,000," Fletcher said.
"Yes," Fairley said. "That's between me and you."
"Pinebelt, because there is other people involved, other entities, I did not use all that money," Fairley said. "I used it to pay notes."
Fairley claimed that Pinebelt does owe the money, but he could not document it because of the way the projects were done.
"I need to line some stuff up, that all our Ts and Is are dotted," Fairley said. "I haven't gotten any sleep; these guys have been questioning me."
"Those issues are how you have run Pinebelt or Mt. Carmel, not with Interurban," Fletcher said.
"I need to make sure that I'm not jail bound," Fairley said. "They are questioning me man, I got questioned again yesterday, I don't like that man."
Fletcher then questioned Fairley about how many documents he signed "as Interurban."
Fairley claimed it was just the one document related to the two homes.
"I don't want to talk about who signed what on the phones," Fairley said.
The two began to discuss the projects and brought up Hattiesburg Mayor Johnny DuPree.
"Johnny called me," Fletch said.
"I was in here when Johnny called you," Fairley said.
"Johnny will do everything in his power to move these projects forward," Fletcher said.
The two then discussed sending a crew from the coast to finish punch-list items on the homes.
Fairley details that on record Clarence Williams is the director of Pinebelt, and then he took it over.
"I'm saying too much over the phone, you know I'm tapped," Fairley said.
Fletcher disclosed to Fairley that the only reason he had spoken to HUD was regarding a matter with a Section 8 home in New Orleans.
"That little statement right there has made a huge impact to my mindset," Fairley said.
Weeks continued testimony:
Weeks clarified that the crew that came to do the work was from Champion Construction, and it was well after the time the project was said to be completed.
Weeks was questioned by the defense on his background as a law enforcement officer as well as on aspects of the investigation.
"The victim in this crime would be the taxpayers," Weeks said. "This was a reimbursement loan, you get paid back what you put in to it, if it's 10 to 13,000 that's what you get."
Weeks was questioned about the money that went to Pinebelt from NICE.
"The seed money wasn't provided by Fletcher, it was provided by NICE, by his wife to Pinebelt and Mt. Carmel," Weeks said. "It was not going back to NICE, it was going to Interurban."
Fletcher founded the NICE organization, but his wife was on the board, according to Weeks.
Audio was played from a meeting with Andrew Ellard, a former city of Hattiesburg employee who worked in the city's state and federal program's office and Fletcher.
Weeks also cleared up that there was no wiretap on Fairley, and there had not been.
The government's sixth witness called to the stand was IRS Agent Bradley Luker, who works in the Criminal Investigation Division.
Luker testified that he "followed the money" to see where he led him as well as to receipts and documents received during the investigation.
"Majority of the receipts, there was no way to tie it to a property," Luker said. "Any receipt he submitted we took it at face value, and we still saw issues with receipts."
Luker said that in April 2011, Pinebelt had a negative bank account of -$35.22 and then in May, it went to $987.00.
Luker referenced a $50,000 total that was from NICE to rehab the two homes.
Another $10,000 and $5,000 both went to Mt. Carmel out of Pinebelt's fund, according to Luker.
Luker testified to bid requests:
One bid request form for $54,956.50 that was signed by Fairley and Elaine Chase, Fletcher's mother was referenced again.
Luker addressed the 2013 civil complaint filed by Fletcher.
"It outlined the fraud that took place," Luker said. "Taking the difference in the bid and use it for things not approved by HUD and not to rehab homes in the program."
Another $18,000 was mentioned being "operating costs" and that one cannot make a profit off a rehab.
Roughly $100,000 was mentioned by Luker, breaking it down to $50,000 per house.
The breakdown of that being: $46,703.50 and $51,296.50, totaling $98,000.
"Fairley submitted a request for funds to the city of Hattiesburg," Luker said.
That money is earmarked in a separate account, which has to be requested from the city and approved by HUD.
"That request is submitted, then a draw is made, the money is wired to the city then to the Hattiesburg as a Community Housing Development Organizations (CHDO)," Luker said.
Luker said the money should not go from NICE to Fletcher.
"$60,000 is the difference," Luker said. "That's the theft of government funds that Mr. Fairley said he spent that he didn't."
Luker testified to money that was used on the two homes, along with money that was sent to Mt. Carmel.
"The government paid (Fairley) $98,000 in two checks," Luker said. "After he paid a $72,000 check to Artie Fletcher and Interurban, which initiated the next influx of money to Mt. Carmel."
Luker was cross examined by Fairley's legal counsel for roughly two hours, continuing to argue the difference in the $38,000 and where it was actually spent.
Luker while being questioned stated that Mt. Carmel used the money that Fairley received to pay the mortgage, because Seaway National Bank holds the mortgage for the church and Fairley owed $60,000 before it was foreclosed on.
Noteworthy spectators in the audience were Hattiesburg City Councilwoman Deborah Delgado, University of Southern Mississippi Dean of Students Eddie Holloway and Mayor Johnny DuPree and his wife Johniece.
Court will resume Friday at 8:30 a.m.