Harris County DA investigating deal at center of allegations that Turner steered money to developer – Houston Chronicle

The Harris County District Attorney’s office is investigating the deal at the center of allegations that Mayor Sylvester Turner steered affordable housing money to a certain developer, according to two sources with direct knowledge of the investigation.

Two developers included in the deal, who McCasland did not name, are the mayor’s former longtime law partner, Barry Barnes, and another partner at Barnes’ law firm, Jermaine Thomas. The lead company in the deal is MGroup, a Montrose-based firm founded by Laura and Mark Musemeche.

Neither Barnes nor MGroup immediately responded to a request for comment.

Turner, who left the law firm when he was elected mayor in 2015, has denied wrongdoing and said he did not know Barnes and Thomas were involved. He said he prioritized the senior housing deal in Clear Lake, called Huntington at Bay Area, because it is in City Council District E, a relatively wealthy district where the city has not placed an affordable development in six years. The project would serve only seniors, however, while three of the four bumped projects are for low-income families — the city’s stated preference for affordable housing investments.

An investigator from the district attorney’s office also visited McCasland’s former house in the East End, looking for the former housing director, according to a neighbor who spoke to the investigator. The neighbor showed the Chronicle a picture of the business card the investigator left for McCasland.

The sources were granted anonymity because they are not authorized to discuss the investigation publicly.

McCasland declined comment and would not say whether he has been approached by investigators or any other law enforcement officials. He was careful in his comments last month to say he was not alleging fraud, leaving that determination up to investigators. Turner fired McCasland shortly after he made the allegations during a City Council committee meeting.

District Attorney Kim Ogg’s office declined comment.

“Out of fairness to all involved, we neither confirm nor deny potential investigations into any matter until and if a charge is filed,” said Dane Schiller, Ogg’s spokesman.

The mayor’s office said it welcomes all reviews and has not done anything illegal, although it has not been notified of this investigation.

“The city has received no notice of an investigation. The DA asked through an informal request for all city policies and procedures related to procurement and the letting of contracts. We provided that information to the office,” said Mary Benton, Turner’s communications director. “It is important to note that the Huntington recommendation process is not a procurement nor have contracts been let.”

The district attorney’s office has a public corruption division where prosecutors traditionally have presented cases to grand jurors to determine if criminal charges are warranted.

Sources declined to confirm that a grand jury investigation is underway.

The query is one of several potential probes into McCasland’s allegations. The U.S. Department Housing and Urban Development, which provides the Hurricane Harvey recovery funds the city proposed using in the deal, has said it would work with its Office of the Inspector General to review the matter. The OIG combats waste, fraud and abuse in HUD programs by deploying both financial auditors and criminal investigators.

The Texas General Land Office, which administers the funds in Texas and frequently has clashed with the city over them, has said it would review funding requests from the city in light of the allegations.

Turner also has directed the city attorney, who reports to him, to conduct an internal investigation into the allegations.

McCasland went to a City Council committee last month and said Turner was bankrolling the developers to the detriment of families who need affordable homes.

Housing staff recommended using $16.2 million in Harvey housing money to fund four projects that would provide 362 units of affordable housing. Turner overrode the recommendation and chose the Huntington project, which would use $15 million to fund 88 affordable units.

McCasland accused the mayor of manufacturing a “Notice of Funding Availability,” with the intent of giving the funds to Huntington, undercutting what is supposed to be a competitive process to award the housing dollars. He called that NOFA process a “charade” with a predetermined outcome.

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Turner has said his administration will present information about McCasland’s management of the city Housing and Community Development Department this week that will help explain the allegations. Three officials are expected to present that information to a joint City Council committee meeting Thursday at 2 p.m.