FBI searches Charleston developer's office
CHARLESTON, W.Va. -- Federal agents raided the Charleston offices of a politically connected housing developer Tuesday, hauling away dozens of boxes of documents and computer software.
The FBI and U.S. Attorney General's Office are investigating Charleston developer Douglas E. Pauley, who owns more than 40 apartment complexes across West Virginia.
Pauley's numerous companies, which include Harbinger Development and Encore Management, have received tens of millions of dollars through the West Virginia Housing Development Fund and the rural rental housing program of the U.S. Department of Agriculture.
Pauley formerly worked as development director at the state Housing Development Fund, which assists low-income housing projects.
For hours Tuesday, FBI agents hauled out boxes of records from Pauley's office at 2010 Quarrier St., a block away from the state Capitol building. The boxes -- stamped "evidence" -- were loaded into 14-foot U-haul rental trucks. Several truckloads of records were taken from the building.
Pauley's lawyer, John Poffenbarger, declined comment Tuesday.
"There's an investigation going on, so it would be inappropriate for us to comment at this time," said Poffenbarger, former general counsel and acting secretary of the state Department of Administration. "We don't know anything."
The U.S. Attorney's Office previously issued a subpoena to the state Housing Development Fund and retrieved records from the state agency, state officials familiar with the probe said.
Tracy Webb, assistant counsel at the Housing Development Fund, said she couldn't comment on the subpoena or investigation's details.
"I can't address anything the U.S. Attorney's Office is doing," Webb said. "I can only confirm that Doug Pauley is a client of ours."
Pauley primarily develops apartment complexes using the national Low-Income Housing Tax Credit Program. The program helps developers defray the cost of building affordable housing for people who earn too much to qualify for subsidized housing but don't earn enough to pay market-value rents.
Many of boxes the FBI removed from Pauley's office listed names of the Charleston developer's projects. Other boxes were marked "computer software," "lawsuit settlements," "housing complex reports," "management files" and "West Virginia Housing Development Fund." Some of the boxes were dated as far back as 1992.
Pauley submits applications for low-interest loans and tax credits to the West Virginia Housing Development Fund.
The fund's board members approve the loans, allowing Pauley to compete for tax credits allotted to housing projects in West Virginia. Pauley trades those credits for money from investors, who use those credits as a tax write-off. Pauley uses that money to lower rents.
Pauley has developed more tax-credit financed housing projects over the past decade than any other tax credit program recipient in the state, according to the Housing Development Fund.
West Virginia has received more than $60 million in federal tax credit allocations that were used to build low-income housing units.
The state Housing Development Fund's board includes state Treasurer John Perdue, a longtime friend of Pauley.
Pauley has been one of Perdue's largest campaign contributors in recent years. In March, Pauley gave $1,000 to Perdue's unsuccessful campaign in the Democratic gubernatorial primary.
Perdue has spoken at several groundbreaking ceremonies for Pauley's projects, according to news accounts.
Diana Stout, general counsel for the state Treasurer's Office, said Tuesday that Perdue typically sends a designee -- an assistant treasurer -- to West Virginia Housing Development Fund meetings.
Stout said Perdue's office hasn't received a federal subpoena in connection with the FBI investigation.
About a month ago, Housing Development Fund officials notified Perdue and other Housing Fund board members they might receive questions about Pauley, Stout said. Housing Fund administrators asked board members to refer those questions to the housing agency.
Pauley has built tax-credit-financed apartment complexes in Charleston, Parkersburg, Lewisburg, Huntington, Beckley, Clarksburg and Weston.
The developer doesn't just build housing for lower-income tenants.
Pauley also developed the upscale Hemingway Place townhouses on Greenbrier Street near Yeager Airport. U.S. Sen. Joe Manchin owns a house in the complex.
Pauley gave $24,000 to Manchin's Senate campaign last year.
While serving as governor, Manchin appointed Pauley to the West Virginia Athletic Commission.
Booth Goodwin, U.S. Attorney for West Virginia's Southern District, could not be reached for comment Tuesday.
FBI agents conducting Tuesday's raid on Pauley's office referred questions to their Pittsburgh regional office. A spokesman there did not return a phone message.
Other members of the Housing Development Fund's 11-member board include Attorney General Darrell McGraw, Agriculture Commissioner Gus Douglass and Gov.-elect Earl Ray Tomblin's chief of staff, Rob Alsop.
Reach Eric Eyre at firstname.lastname@example.org or 304-348-4869.