The Yadkin County Board of Commissioners alleged in June to the N.C. Department of Commerce that Hobbs, Upchurch, & Associates, a Southern Pines-based engineering and planning firm, falsified information in a $100,000 grant application for repairs to homes owned by low-income residents the firm submitted to Commerce last year.
Since that time, company principal Fred Hobbs and his attorney have made visits to Commerce, Carolina Journal, The News & Observer, and The Pilot of Southern Pines to dispute the claims made by Yadkin County.
“None of the charges are founded,” Hobbs said during his meeting with CJ staff. Hobbs, Upchurch assisted Yadkin County with three similar but distinct home repair grant applications in 2009 and 2010, and the programs had different guidelines. Hobbs maintains that Yadkin County didn’t understand the differences in the programs.
After reviewing documents from Hobbs and Commerce, CJ was unable to determine any wrongdoing by Hobbs, Upchurch. A News & Observer review also reached the same conclusion. ”So far, no clear evidence of wrongdoing has emerged,” reporter Craig Jarvis wrote in an Oct. 2 story.
The allegations include falsifying signatures, falsifying home inspection reports, and fabricating meeting minutes. Hobbs assembled a four-inch thick binder of documents challenging Yadkin County’s claims. He also said that the state and the federal governments audit the grant program and that his firm has never had a negative audit finding.
Yadkin County received a $100,000 grant in 2010 to repair eight low-income homes. The county’s grant application was prepared and submitted by Hobbs, Upchurch. The firm had prepared the application at no charge to Yadkin County, expecting to earn fees of 10 percent to 20 percent for administering the grant.
But Yadkin County selected a Kannapolis firm, Benchmark CMR Inc., to administer the project. Yadkin officials said that discrepancies began to surface when Benchmark began to plan for the repairs.
Hobbs said the controversy arose over a misunderstanding of the application process. His firm had applied to administer a similar grant a year earlier that the county applied for and did not receive. For the initial grant, employees of the firm collected information from homeowners seeking repairs. The timeline to receive funding for the 2010 grant was short, so the firm used information from applicants it had collected the previous year.
Benchmark discovered that least two of the applicants were no longer eligible for the program. But Hobbs said that had his firm won approval to administer the grant, it would have eliminated those candidates and verified the eligibility of every applicant before performing any work.
The allegations first were submitted to Vickie Miller, director of the Commerce Department’s Community Investment Division, in a June 2 letter from Yadkin County Manager Aaron Church. The grant money was from federal funds that were administered by Miller’s division.
In a closed session June 20, the commissioners approved $10,000 to hire attorney Brian S. Cromwell, a former federal prosecutor with the Parker Poe Adams & Bernstein law firm, to conduct a separate investigation on behalf of the county. Cromwell’s completed report, submitted to Miller by Church on July 19, contained detailed information supporting the county’s claims.
In August, Commerce Spokesman Tim Crowley told CJ that his department had forwarded information on the Yadkin County situation to the State Bureau of Investigation. State law requires Commerce to report fraud allegations to the SBI. On Oct.14, Crowley told CJ that he understood the matter is still under review. Hobbs’ attorney Michael Weisel told CJ that, to his knowledge, “The SBI has not contacted anyone … regarding this matter.”
The SBI routinely does not comment on the status of any allegations or potential investigations.
Meantime, Hobbs, Upchurch continues to administer grants. “It is a local unit of government’s option for who to hire as a grant administrator, and Hobbs Upchurch still is administering grants for those local units of government who have hired them,” Crowley told CJ.
“We have spent 30 years building our reputation for good work and integrity,” Hobbs told CJ. “Longtime clients are asking us what’s going on. They’re thinking, ‘Well, maybe where there’s smoke, there’s fire.’ But the smokescreen is coming from a competing engineering firm and a bureaucrat who for some reason seems to have a political vendetta against us.”
Don Carrington is executive editor of Carolina Journal.