The affidavit alleges that Encore officials submitted the false reports to Spectrum to avoid having to make necessary repairs at Encore-managed housing projects. Encore manages more than 45 apartment complexes in West Virginia.
Spectrum and the Housing Development Fund accepted the false reports and notified federal officials that Encore's units had no "physical deficiencies," according to the search warrant.
The falsified reports ensured that Pauley's future applications for funding through the Housing Development Fund would be "evaluated favorably," the affidavit says.
The FBI also alleges that Curry and Pauley "cannibalized" appliances, fixtures and other items from vacant apartments, then used them to replace broken equipment and parts at occupied rental units.
"At least three confidential informants state that during a period from at least 2009 through the present, Encore frequently has submitted to Spectrum false maintenance records purporting to show that units are suitable for occupancy when in fact they have been cannibalized," Mallet wrote in his request for the search warrant.
The affidavit alleges that employees improperly used notary stamps and falsified signatures on records submitted to Spectrum and the Housing Development Fund. Encore executives directed the practice, according to the search warrant.
In short, Encore officials and staff members defrauded the state and federal government, and conspired to make false statements, the FBI alleges.
Pauley's projects have received tens of millions of dollars in federal funding loans, grants and tax-credit programs distributed by the West Virginia Housing Development Fund.
The affidavit also reveals that the FBI previously obtained records from federal, state and local agencies with a grand jury subpoena, but it doesn't name the specific agencies.
U.S. Magistrate Judge Mary Stanley signed off on the search warrant. Mallett said the warrant "does not include all of the facts that have been learned during the course of this investigation."
Pauley has declined to comment on the federal investigation. His lawyer, Ben Bailey, could not be reached for comment Thursday. Curry also could not be reached.
Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.