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Show Fraud investigation heats up By JUDY JENSEN Editor CLEARFIELD The City Housing Authority is gearing up for a court battle to find the missing $7.5 million that was to have built a low income housing project. City Attorney Larry Waggoner said, "We're starting at square one in trying to locate the bond proceeds. pro-ceeds. In the next four to six weeks ity at a recent public meeting, "I have an entirely different view of the transaction. There are a number num-ber of problems regarding what has happened to the bond proceeds." He explained that Residential Mortgage was no longer in business busi-ness at the time Mr. Routh claims to have delivered the bond proceeds pro-ceeds to the company. Mr. Parsons also claimed that the $26,800 check that the city was fraud. They somehow have my financial statement. I want you to know that I was not involved in Heather Estates knowingly," he concluded. Both attorneys have filed suits and counter suits in an effort to get to the bottom of what may be part of a larger nation-wide bond fraud scheme. The bonds were issued by the Housing Authority in December 7 did not sign anything knowingly, but my signature is all over those documents' Edwin Higley we should be able to locate the money and the people responsible its disappearance." J Attorneys representing the developer de-veloper and the property owner have conflicting stories as to the whereabouts of the missing funds. According to William Parsons, attorney for the developer, Heather Heath-er Estates Inc., which is owned by Gary Routh, the money was delivered deli-vered into an account at Residential Residen-tial Mortgage in Layton. That firm was owned by the development's property owner, Edwin Higley. Mr. Higley's attorney, Harold Stevens told the Housing Author- to have received as a fee for issuing the bonds, has been written and endorsed by Mr. Higley, but he admitted that he had not seen the back of the check. He had only a photocopy of the front of the check. The city has not received the money. An additional $209,000 was to have gone to Mr. Higley to pay for the land purchase. Mr. Higley, who attended the meeting, claimed he had not received the money. "I did not sign anything knowingly, but my signature is all over those documents. We're now investigating investigat-ing them (Heather Estates Inc.) for 1985. Proceeds from the sale of the bonds were to be used to build the 180 unit Heather Estates apartments apart-ments at 100 E. 1800 S., Clearfield. The development was to have been completed by December 1988. To date, ground has not been broken on the project. The housing authority first became be-came aware of problems regarding the development about four months ago when, according to city manager Don Baird, the bond documents were seized by FBI officials. A spokesman for the Fed- CONTINUED ON PAGE 2 Bond Fraud CONTINUED FROM PAGE 1 era! Bureau of Investigation verified veri-fied the fact that the Clearfield project pro-ject is one of many across the United Un-ited States under investigation for fraud. It seems that the bond proceeds were to have been used solely for the development of Heather Estates and recent investigations have indicated that the money was invested in an account that would bring a greater return of interest than the 7.75 percent guaranteed on the bonds. If this is true, the "Non Arbitrage" agreement signed by the Housing Authority and Mr. Routh has been violated. That agreement was issued to guarantee that the bonds would not be resold for a profit, and that the money would be available to build the low income housing project. Documents indicate that the money is tied up for the life of the bonds in an investment at the rate of nine percent at MONY of New York, an insurance company. The Housing Authority fears that the IRS will rescind the tax-exempt tax-exempt status of the bonds, which may leave the city liable in future law suits from angry investors who assumed they had placed money in a tax free investment. The major players in the Clearfield Clear-field project are also the principals in the Pioneer Village development in Salt Lake City. Mr. Higley is the developer of that project, which currently is tied up in bankruptcy proceedings. As with Heather Estates, the Salt Lake project involved Matthews Matth-ews and Wright, Donaldson Lufkin and Jenrette and Imperial Securities Secur-ities as underwriters. Unified Capital Corporation, Southwest Capital Corporation, Commercial Bank of the Americas, Heritage National Bank Austin, Mercantile Capital Corporation and InterFirst Bank Houston N.A. Matthews and Wright has been investigated by the FBI in connection connec-tion with "dubiously issued bonds totaling more than $2 billion." It has been learned that the Commercial Commer-cial Bank of the Americas, the bank to which the bond proceeds from Clearfield were allegedly deposited, de-posited, was nothing more than an offshore shell institution. Jenny Montoya, the director of the Ogden City Housing Authority, also attended the Clearfield meet ing. She explained that an Ogden development, Fox Hollow, that was to have been built with $11 million in tax free revenue bonds issued by the city of Ogden, is under investigation. That project also lists Mr. Routh as one of the associates. Rulon C. Cummings, chairman of the Clearfield City Housing Authority, Au-thority, said they wanted to "officially "offi-cially advise the builder that we're looking at this thing. We care about our citizens and we want the builder buil-der to know we're taking action to protect the city. We don't want to disturb our bond rating and we want to get to the bottom of this as soon as possible." Q He expressed concern over what- had happened to Mr. Higley and his family during the ordeal. Mr. Higley, 68, has long been a respected re-spected member of the building community. He has lost nearly $5 million of his personal wealth in the Clearfield and Salt Lake projects. The city has not yet decided if the project will be built, when and if the bond money is found. According to Mr. Cummings, "we'd have to take a long, hard look at it. We're not sure who we would let build it, but from what I know of Mr. Routh, if he gave me the time of day I'd double check it." |
