CHARLESTON, W.Va. -- Executives and other employees at a Charleston company owned by developer Douglas E. Pauley routinely falsified housing maintenance records and made false statements to inspectors as part of a scheme to ensure the property management firm continued to receive millions of dollars in federal funding, the FBI alleges in a search warrant affidavit released Thursday.
FBI agents hauled off more than 650 boxes of documents related to housing projects from Pauley's Encore Management office at 2010 Quarrier St. in Charleston last week. Federal agents also seized dozens of computer disks, more than 20 computer hard drives, file cabinets and several items taken from atop Pauley's desk at work, according to an inventory of the seized property.
The FBI retrieved only one box of documents related to Pauley's 32-unit Milton Place apartment complex in Mason County, the inventory record shows. Maps of the project also were seized.
Pauley is building the low-income housing complex for the elderly and disabled on 11 acres of land he purchased from state Treasurer John Perdue last December.
Earlier this week, Perdue, Pauley's longtime friend, acknowledged that the U.S. Attorney's Office has asked him to turn over documents pertaining to Milton Place, an eight-building complex named after Perdue's late father-in-law, Milton Burdette.
The search warrant - executed by 14-year FBI veteran Hugh Mallet -- makes no mention of Perdue or his land deal with Pauley.
The U.S. Attorney's Office and FBI "are investigating Douglas E. Pauley, Encore Management and several of their employees and individual affiliates for making false statements," Mallet's search warrant affidavit states.
The FBI returned the documents, computer files and other seized items to Pauley on Tuesday, after he agreed to cooperate with the federal investigation. The U.S. Attorney's Office said Pauley wouldn't be prosecuted if he cooperates.
The search warrant reveals that the federal investigation is targeting Pauley's use of a federal low-income tax credit program to fund his projects. The program operates under oversight by the Internal Revenue Service.
The FBI said it raided Pauley's office after talking to at least four confidential informants, including past and present Encore Management employees, as well as apartment tenants.
Mallet's affidavit alleges that Encore Vice President Jennie Curry directed employees to submit false maintenance records to Spectrum Enterprises, a private company that contracts with the West Virginia Housing Development Fund. Spectrum furnishes inspection reports to the state agency.
The Housing Development Fund awards grants, loans and tax-credit funding to help developers finance low- and moderate-income apartment complexes throughout West Virginia.