Greensboro’s Rhino Times has broken a story about an FBI and IRS probe into real estate deals involving the Guilford County manager and former county commissioner (and 1996 GOP nominee for Lt. Governor) Steve Arnold:
Guilford County Manger Brenda Jones Fox is the subject of an investigation of the Federal Bureau of Investigation (FBI) and the Criminal Investigation unit of the Internal Revenue Service (IRS).
The questions being asked by federal authorities revolve largely around three deals Fox was at the center of: the $6.9 million purchase by the county of a building at 325 E. Russell Ave. in High Point; another real estate deal Fox made with High Point real estate agent Dian Brigman, now deceased; and a 2008 deal Fox made with Wachovia Bank for a $5.1 million loan used by Guilford County to buy the BB&T building in downtown Greensboro when Fox was the county’s finance director.
This week, Commissioners Carolyn Coleman, Kirk Perkins and Billy Yow said they were aware of a federal investigation.
Coleman said she had first learned about the investigation when a former county employee, who she declined to identify, informed her of being questioned by federal authorities on a several actions by Fox that have been reported in The Rhino Times over the last two years.
Coleman said that, after she knew of the investigation, she spoke with another commissioner who also indicated being aware that federal authorities were conducting an investigation of the county manager.
One commissioner who asked not to be identified said he had spoken with an investigator from the IRS, but not with anyone from the FBI.
In 2010, Fox signed a deal with a real estate agent, Brigman, that gave Brigman – who was at one time an employee of former Guilford CountyCommissioner Steve Arnold – the exclusive rights to find property forGuilford County to purchase, and it called for Brigman to get a commission on any property or buildings that the county purchased.
The contract, which was signed in secret, was potentially worth millions. However, the Board of Commissioners voted to cancel the contract when they learned that Fox had made the highly irregular deal.
Fox said at that time that Brigman came to her office on a cold call and convinced her to enter into the contract that gave Brigman the exclusive county real estate rights. Fox claims she had never met Brigman before the meeting in her office. Fox and Arnold were close friends and political allies.
The county has an entire Property Management Department that handles real estate purchases and, when the county’s property management director at the time, David Grantham, found out about the deal, he and other county officials said they were very disturbed that Fox had entered the county into the deal.
There were also many questions about the way the county purchased the building on Russell Avenue in High Point that is now home to the county’s Department of Social Services (DSS). In July 2010, the county paid $6.9 million for the building as part of a land swap deal.
In that deal, the county reversed course after voting to build a new DSS building on the county’s governmental campus in downtown High Point. At the strong urging of Arnold, the county abandoned plans to build the new building and instead bought the Russell Avenue building from Arnold’s friend and business associate. At that time, the county’s business – especially the real estate deals – were being managed largely by Fox and Arnold.
When Grantham, now retired, was asked by The Rhinoceros Times if he had been contacted by the FBI or the IRS regarding the investigation, Grantham said that he had. “I was contacted by the criminal investigation unit of the IRS,” Grantham said.
Grantham said the IRS investigator phoned him and asked if he would be willing to answer questions, and the agent said he would like to bring along an FBI agent who was also looking into the case. Grantham said he told the IRS agent he would answer questions of both investigators to the best of his ability.
Grantham said the FBI agent was female.
“She was a special agent of the Charlotte FBI office,” he said.
Grantham said the two agents came to his house and questioned him for about an hour and a half.
When The Rhino Times asked Grantham the nature of the questions the IRS and FBI agents asked, Grantham said they centered on three deals, including the county’s purchase of the Russell Avenue building in High Point.
“They were very interested in Brenda Fox as to her role, and Steve Arnold’s role, in the county’s purchase of the DSS building in High Point,” Grantham said.
Grantham said the agents also had a great many questions about the now well-publicized deal with Brigman, a High Point real estate agent who died of cancer earlier this year.
In December of 2009, a few months before the Brigman deal was signed, Arnold was going through highly public bankruptcy proceedings, but a judge ruled Arnold was “not entitled to receive a bankruptcy discharge.” The judge found Arnold violated the bankruptcy code and had displayed “multiple badges of fraud in this case.”
Grantham said the federal agents also asked details about the deal that Fox made with Wachovia Bank regarding a $5.1 million loan the county used to purchase the BB&T building in downtown Greensboro.
“They asked me about the Wachovia deal, and I told them I knew absolutely nothing about that,” Grantham said.
As the county’s former property manager, Grantham said he had no familiarity with that $5.1 million loan contract with Wachovia other than what he knew from media accounts. That bid process was handled out of the county’s Finance Department, which Fox headed at the time.
Fox conducted a sealed bid process and, after the deadline for bids had passed, she allowed Wachovia to raise its bid to the point where it was just under the second lowest bid, but was still the winning bid. That caused the county to pay about $200,000 more to Wachovia than it would have had to pay if the county had used Wachovia’s initial bid.
Perkins, who is a real estate appraiser, said he had recently become aware of the federal investigations, and, he said, he had always had a great many questions about the nature of both the Russell Avenue deal and the Brigman deal.
When asked if he was concerned about the county manager being investigated by federal authorities, Perkins said, “Hell yes I’m concerned.”
At the time of the county’s purchase of the Russell Avenue building, Perkins asked county staff why there was no appraisal. He said that was highly irregular.
The Guilford County Board of Commissioners had already voted to build a new DSS building on the county’s campus in downtown High Point – and had already paid an architect about $40,000 to begin the project, but Arnold pushed hard for the county to reverse its prior decision and instead purchase a building from his close business associate. After strong lobbying by Arnold, the board did reverse itself and purchased the Russell Street building.
Perkins said many things about it felt very wrong at the time.
“I raised all these questions and everybody looked at me like I was stupid,” Perkins said. “We didn’t get an appraisal? We always get an appraisal when we buy a building. Everybody in the room was telling me, ‘DSS is behind it and the High Point commissioners are behind it’ – I felt like some kind of orphan idiot.”
Perkins said he later spoke with some other appraisers about the deal and said he is convinced the county paid much more than it should have for that building. Despite all his questions, he eventually voted to support the move.
“Later, I was kicking myself in the ass for voting for that,” Perkins said.
Perkins also said he, like the other commissioners, had a great many questions about Fox’s deal with Brigman.
According to Grantham, the IRS and FBI agent had many questions about the Brigman deal as well.
“I told them this is the most unusual contract I’ve seen in 35 years,” Grantham said.
Grantham said he conveyed to the FBI and IRS agents the same concerns he had given to county officials after he found out about the deal Fox signed with Brigman without informing Grantham or the commissioners.
Grantham said the county’s purchase of the Russell Avenue building was equally as perplexing.
“There was no appraisal; there were no negotiations,” he said, adding that it was unlike any other county property purchase he had been part of in his more than three decades working in the county’s real estate department.
According to Grantham, the two agents did not convey much information to him but instead merely asked questions.
Grantham said he did discern that he was not the first person the agents had spoken with about Fox and the events in question – because one of the agents told him that someone had told them that he, Grantham, would be a good person for them to speak with given the nature of their investigation.
Guilford County Sheriff BJ Barnes said he cannot comment on any ongoing investigation being conducted by his office or other agencies, but he would say that his office did not begin any investigation into these matters.
“It is not something that was initiated from this office and I don’t comment on investigations by other agencies if there are any,” Barnes said.