Nearly $90,000 was diverted from a public housing development in Auburn Gresham run by a nonprofit long tied to the Rev. Leon Finney Jr., with payments including $50,000 to Finney’s church and $4,000 to Finney himself, court records show.
The series of payments came to light in a recent court filing by an accounting and management firm as part of the bankruptcy case involving the Woodlawn Community Development Corporation, which was run by Finney for decades.
The firm called the payments “inappropriate/unsubstantiated” but indicated it was still reviewing the books and records of the development called Anchor House, a 115-apartment building at 1230 W. 76th St.
Almost all of the units are reserved for low-income tenants and subsidized through the Chicago Housing Authority.
Anchor House is owned by a limited partnership that is controlled by Woodlawn. The nonprofit filed for bankruptcy in October after the IRS slapped a lien on its bank accounts for owing millions in payroll taxes, the Sun-Times reported earlier this month. The bankruptcy judge in the case has accused Finney of fraud, self-dealing and mismanagement.
Court records show it was not disclosed that Woodlawn controlled Anchor House until late April, nearly two months after a federal bankruptcy judge appointed U.S. trustee Gina Krol to take over the nonprofit.
Before Krol seized control of Anchor House, several payments were made from its bank account totaling $87,313.03, according to a report filed Sept. 24 in the bankruptcy case.
The Metropolitan Apostolic Community Church, a congregation Finney founded and continues to lead, received $50,000.
A property manager hired by Woodlawn to oversee Anchor House collected $14,677.03. A former general manager of Finney’s media venture, Urban Broadcast Media, received $11,500 as compensation. The media company itself was paid $7,136.
And Finney got $4,000, according to records.
Through a spokesman, Finney declined to comment on the payments or answer questions. He has previously pointed to his recent poor health when asked about Woodlawn’s financial issues. The report does not accuse anyone of wrongdoing.
High Ridge Partners, the firm hired by Krol to sift through Woodlawn’s finances and conduct the audit, didn’t respond to questions about the payments.
Krol said the payments came when Woodlawn was “insolvent” but did not offer a clearer timeline of when they were made. The firm’s report does not say who authorized the payments.
The report details allegations of mismanagement at Anchor House.
High Ridge Partners said its review was hindered by “old and completely inaccurate hard copies” of financial reports. The firm also found checks that were “stamped with stamps kept in unlocked drawers.”
By the time Krol took over the property, Anchor House owed nearly $138,000 on its mortgage and had racked up almost $70,000 in unpaid utility bills, according to court records. Previous management also failed to collect nearly $28,000 in rents.
The large commercial space on the ground floor was vacant for more than a decade, according to the report. So were 14 of the building’s units.
The former Anchor House property manager “made little to no effort to find new tenants,” “provided little direction” to its three onsite employees and “resigned immediately without notice” after Krol took over the property, the report states.
The report goes on to say Finney “apparently” handed out seven apartments in the building to “various individuals” who didn’t sign leases, put up security deposits, submit to background checks or pay rent, in some cases for several years.
Anchor House used to be the Continental Can Factory. The building was converted into apartments in 1996 at a cost of $25 million, the Sun-Times reported at the time.
The building is a “project-based voucher” site, meaning each of the building’s 108 subsidized units are reserved for low-income tenants. Those tenants pay a portion of the rent, and the CHA picks up the difference through federal housing assistance payments.
Project-based vouchers were linked to widespread fraud in the late 1980s and were generally discontinued but the U.S. Department of Housing and Urban Development made an exception for Anchor House.
Woodlawn, now under Krol’s control, collects $49,000 a month in rental subsidies for Anchor House, records show. That contract with the CHA runs until 2030. High Ridge Partners said in its report it is working on “filling vacant units . . . cleaning out and marketing the vacant commercial space, the vacant offices, unused land and basement storage area.”
In a statement, the CHA distanced itself from the diverted funds, saying “HUD does not require housing authorities to track [housing assistant payments] after they are made.”
Finney’s church, 4100 S. King Drive, faces foreclosure after Lakeside Bank filed suit in July contending it was owed more than $500,000.
That same month, U.S. Attorney John Lausch’s office sent a subpoena to the Illinois secretary of state seeking a wide-range of records involving groups tied to Finney as part of a criminal investigation.