JACKSONVILLE, Fla. – The owner of several federally subsidized housing complexes in Jacksonville who has come under fire for deplorable living conditions at the apartments is facing a federal lawsuit and more opposition from federal lawmakers.
According to sources on Capitol Hill, Sen. Marco Rubio, R-Fla., who has been vocal in his criticism of both the owner and the Department of Housing and Urban Development's oversight process, is exploring ways to get the U.S. Treasury and Justice departments involved.
At the same time, the Rev. Richard Hamlet's Global Ministries Foundation is being sued in federal court by the Bank of New York Mellon, a major bank in the Big Apple that is accusing GMF of fraud and breach of contract.
On the line is $11.8 million in housing bonds in Tennessee.
The I-TEAM first reported last month that the Memphis housing bonds were downgraded to junk bond status -- or triple Cs -- when HUD vacated its housing contract with Global Ministries, taking millions of taxpayer dollars from rent subsidies away from GMF.
The bond values tanked to 21 cents on the dollar.
In the lawsuit, the bank outlines how GMF breached its contract with investors by not telling them about a serious warning letter from HUD, which came nine months before the Memphis contract was voided. The letter detailed deplorable conditions like bug infestations, leaking sewage, broken windows and broken glass on the ground, and even squatters living in vacant units.
The bank also accuses GMF of fraud for misappropriating a check for more than $625,000 in insurance money from a fire last June.
The lawsuit claims the money was stuffed in GMF's pockets instead of going in the proper financial account.
The bank also says GMF has missed critical payments owed to its investors.
Hamlet is now trying to sell 11 troubled properties, including the Tennessee properties that are the focus of the lawsuit. All of GMF's Jacksonville complexes, including the troubled Eureka Gardens and Washington Heights, are also up for sale.
The bank is asking the court to stop GMF in its tracks and ban the sale because millions of investor dollars are on the line and could be lost -- not to mention the health and safety of more than a thousand people who have called the complexes home under the management of Hamlet's now embattled company.
The bank wants GMF out of the equation for good and wants a third party to take control of the Tennessee properties.
Ultimately the bank hopes to save its investment of $11.8 million.
HUD agrees with the bank’s request.
A hearing is set for Thursday in federal court.
GMF released a statement Monday about the lawsuit:
“While we disagree with many of the allegations in the complaint and will respond accordingly when we file our answer, we are supporting the appointment of the receiver because it is in the best interest of the properties and the residents. GMF has invested millions of dollars in these historically troubled properties but unfortunately we were not successful. Going forward, GMF will continue to work closely with HUD and the Trustee to market these properties and find a new owner who is willing and able to rehabilitate the properties for the benefit of the residents and their neighboring communities.”