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Housing Fund spends $302K on outside lawyers amid investigation

CHARLESTON, W.Va. -- The West Virginia Housing Development Fund has spent more than $302,000 in outside legal fees during an ongoing federal investigation.

The state housing agency's legal expenses have more than tripled since late January.

"We're trying to be good citizens and cooperate with the investigation," said Erica Boggess, the Housing Development Fund's acting executive director. "As an accountant, I obviously would rather not see us having to incur these costs."

The Housing Development Fund has paid the bulk of the legal fees to the Jackson Kelly law firm, whose attorneys have been advising Housing Development Fund executives and in-house agency lawyers during the investigation.

Other payments went to six private lawyers representing agency staff members and a lone board member's representative. The agency also paid about $13,000 to an out-of-state forensic computer firm that's retrieving emails and documents from employees' computers.

What's more, the Housing Development Fund spent $24,750 for legal advice on whether they should release documents in response to Freedom of Information Act requests, agency officials said.

The FBI and U.S. Attorney's Office are investigating state Treasurer John Perdue's sale of an 11-acre property in Mason County to Charleston developer Douglas E. Pauley. Perdue serves on the Housing Fund's board of directors.

In December 2010, the agency awarded Pauley a $3.67 million federal stimulus grant. Pauley paid Perdue $215,000 for the property, located about six miles north of Point Pleasant.

In recent months, agency executives have been responding to federal prosecutors' subpoenas and questions.

The Housing Development Fund's outside legal fees are already 250 percent over budget for the fiscal year, which started July 1.

"The process to continue to cooperate with the U.S. Attorney has been more time consuming than we anticipated," Boggess said Monday. "Unfortunately, it's a cost of doing business."

Last fall, the Housing Development Fund hired outside lawyers to represent five employees and Perdue's top aide, Danny Ellis, who attends agency board meetings as Perdue's delegate.

The six lawyers specialize in criminal defense work. Four of the attorneys formerly served as federal prosecutors.

In addition to Ellis, the lawyers are representing former executive director Joe Hatfield and four agency administrators -- Sherry Bossie, Mary Mason, Michelle Wilshire and Nancy Parsons.

Boggess said Ellis and the five employees are potential witnesses, not targets of the investigation. The lawyers accompany employees during interviews with federal investigators.

The Housing Development Fund did not provide a breakdown of legal expenses charged by the six private lawyers or the Jackson Kelly firm.

However, Boggess said the agency has paid Jackson Kelly $24,750 for "FOIA matters."

The Housing Development Fund has received at least 15 requests for documents under the state Freedom of Information Act since the investigation became public in late October. The Gazette filed 13 of those requests.

Boggess said Jackson Kelly lawyers charged the agency for advice on whether releasing documents would interfere with the federal investigation. Most of those legal fees were paid to Mike Fisher, a former federal prosecutor who now works for Jackson Kelly, Boggess said. 

"It relates to how we responded to FOIA matters related to the investigation," Boggess said. "We had questions. We wanted to see if this was going to interfere with the investigation."

The Housing Development Fund has released hundreds of pages of records to the Gazette, but also denied numerous documents, citing exemptions in the FOIA law.

Most recently, the Housing Development Fund refused to release low-income housing project inspection reports, saying federal prosecutors directed the agency to withhold the information.

Agency executives declined to disclose Jackson Kelly's hourly rate for legal services. If the firm charged $350 an hour -- a typical rate in Charleston  -- Jackson Kelly lawyers would have had to bill for 70 hours for the cost of 15 FOIA requests to total $24,750.

The Housing Fund's in-house lawyer, not Jackson Kelly lawyers, wrote the FOIA responses.   

The Gazette asked Boggess to double check the $24,750 charge, and she confirmed the expense with the agency's accounting department.

The newspapers tried to contact Fisher about the FOIA advising fees, and he forwarded questions to Tracy Webb, the Housing Fund's general counsel.

"Our expenses have been quite high," Webb said Monday. "I don't think any attorney is going to respond to a question about their legal services, and we are not authorizing him to talk about it."

Federal investigators also have asked for thousands of agency documents and computer records.

To comply with the request, the Housing Development Fund hired Washington, D.C.-based Driven Inc. to scan some employee computers -- a $13,000 expense. 

"They do electronic discovery of documents," Boggess said. "It's pulling computer files. It's all in our legal expense line item."

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.

 


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