SBI to investigate grant linked to former lawmaker

State Commerce Department spokesman Tim Crowley confirmed today the DOC has asked the SBI to investigate a federal grant application submitted by a consulting firm headed by a former lawmaker.

Crowley said the application for a $100,000 in Recovery Act (stimulus) funds was prepared on behalf of Yadkin County by Michael Walser, a consultant at Hobbs, Upchurch and Associates' Lexington office. Former Democratic state senator Fred Hobbs is one of the firm’s principals, but Crowley stressed Hobbs’ name was not on the application.

The application sought federal money for housing repairs in Yadkin County. It listed 8 homeowners who would be eligible for the repairs, and 4 alternates. Hobbs Upchurch prepared the application at no charge to the county, hoping they might win the contract to administer the grant if the county won it.

The proposal wasn’t chosen in the initial round of funding in 2009, but Hobbs Upchurch resubmitted it in August 2010 after they were notified by Commerce officials that other federal money was still available. (The Dept. of Commerce administered the federal grant.)

The second time was more successful: Yadkin County won its $100K grant in March 2011. But Hobbs Upchurch did not win the county contract to administer it. Yadkin officials chose competing firm Benchmark instead.

In the process of verifying the grant, Benchmark notified county officials it found that two of the homeowners listed on the application as potential recipients were deceased, and the house of another had burned down.

In early June, after hiring Raleigh law firm Parker Poe to investigate, Yadkin County officials notified the Dept. of Commerce of their concerns about potential fraud. Crowley says his department froze Yadkin County’s grant on June 13th, conducting its own probe before referring the matter to the State Bureau of Investigation in July.

Hobbs Upchurch attorney Michael Weisel issued the following statement this afternoon:

Today, serious charges were leveled against Hobbs, Upchurch & Associates, a Southern Pines-based engineering and planning firm headed by Fred Hobbs. Mr. Hobbs stated, “We categorically deny all Yadkin County’s allegations as totally baseless and false.” He further added, “We have no knowledge of any investigation other than what has been speculated about in the press.”

Hobbs, Upchurch & Associates learned of the accusations from press reports and was not contacted by Yadkin County or Parker Poe Adams & Bernstein law firm during the course of their “investigation.”

Fred Hobbs stated, “We will issue a full and complete refutation of these unwarranted and unfounded allegations at the appropriate time and place.”

Weisel also confirmed Michael Walser is still employed by the firm.

Hobbs was fined $150,000 last December by the State Elections Board for improper campaign donations - the largest fine the Board has ever imposed - for evading contribution limits by funneling contributions through employees of Hobbs Upchurch to high-ranking Democratic candidates, including former governor Mike Easley and current governor Bev Perdue.