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Administrators testify before legislative committee

July 16, 2018

CHARLESTON — It took two subpoenas, but a legislative committee strong-armed the first public statements about a stalled flood recovery program Thursday from its administrators in the West Virginia Department of Commerce.

Both Mary Jo Thompson, a former senior official with RISE West Virginia, and Andrew Mihallik, a program specialist with the bungled, federally funded effort, appeared before the Joint Legislative Committee on Flooding for its investigatory session. Both were subpoenaed last week.

Their testimony wound up clashing with the narrative set forth by Brian Abraham, general counsel for Gov. Jim Justice, as to how a series of bureaucratic missteps and blunders slowed a $150 million grant to a trickle when it came to building homes for victims of the deadly June 2016 flood.

Thompson, who gave about 145 minutes of sworn testimony in a six-hour marathon meeting, said she resigned from her job as director of the office of Community Advancement and Development and that her hand was not forced in doing so.

She said that by the time she left her post in late June, RISE had finished building 11 new houses for families, more than two years after the flood hit.

Despite this, in answering a question from Sen. Glenn Jeffries, D-Put-nam, Thompson said she believes that RISE was in compliance with its grantor, the U.S. Department of Housing and Urban Development, and could withstand the likelihood of a federal audit.

“Senator, I can tell you that we were in absolute compliance, as of Feb. 20, 2018, when the presiding agency gave us an order to start moving the money,” she said. “If we were not in compliance, we would not have received that.”

However, Abraham later contradicted this line, stating that HUD was not aware of the contract procurement issues and did not look into them as an inspector general would. HUD authorized the state to begin its spending on Feb. 20.

Thompson’s claim also butts heads with the findings of a legislative audit that identified a number of state disbursements executed outside of HUD guidelines.

“The West Virginia Development Office entered into seven construction contracts for the housing reconstruction program prior to receiving authorization from HUD to commit or expend the Disaster Recovery Funds,” the audit states.

A third Commerce employee, Josh Jarrell, who was fired in May as RISE fallout began, disputed the auditor’s finding. Jarrell signed off on the $17 million in consulting contracts with Home LLP that skirted purchasing rules, slogging down RISE in the first place. He said the state had latitude under HUD’s rules to spend money on preparatory pieces of construction contracts.

Another flash point arose regarding an internal memo within Commerce detailing the effects of an operational pause Justice placed on RISE in late February. Abraham alleged, in testimony corroborated by Mihallik, that the data within the letter about houses completed by RISE was bunk.

The memo, prepared by Mihallik and addressed to Thompson and Russell Tarry, deputy director of the

Development Office, states that 55 houses were “in construction” as of Feb. 28. The memo wound up on the desk of recently ousted Commerce Secretary Woody Thrasher and then in the Governor’s Office.

Mihallik said it was incorrect that 55 houses were under construction, as the memo states.

“We were stating that there was 55 homes that were in construction; that should have been worded better. That should have said ‘in the construction phase,’” he said.

He said Home provided the data for the contract. According to National Guard Adjutant General James Hoyer, who has taken on oversight duties of RISE from Commerce, 31 houses were in construction as of the end of June.

In a pivot, Sen. Craig Blair, R-Berkeley, asked Thompson if she had ever asked to change documents that were requested via a Freedom of Information Act request, which she answered with an unequivocal “no.”

However, in a June statement to the Charleston Gazette-Mail, Thompson confirmed that she had recreated and altered the signatures of documents after the originals could not be located.

“At that time, we realized we could not locate a copy of the original letter, dated March 30, 2018, that was delivered by interdepartmental mail to Sen. (Ed) Gaunch and Del. (Roger) Hanshaw,” she said. “The letter was reprinted on new letterhead and signed using Secretary Thrasher’s electronic signature. Secretary Thrasher was aware of the differences in signatures and letterhead.”

That statement came after requests from the Gazette-Mail for documents, obtained via FOIA, bearing two demon-strably different signatures for Thrasher.

During the session, two lawmakers expressed frustration with the hearing and accused Thompson of evading and deflecting in her responses. When Del. Kayla Kessinger, R-Fayette, asked Thompson how much of her time with RISE she spent with flood survivors, Thompson estimated about 10 percent. Kessinger responded in force.

“That is very disappointing to me, because I would think that, if I was running a program that was civically intended to help people that were impacted by a natural disaster, the first thing that I would want to do — and the majority of the time that I would want to spend — would be with the individuals who were directly impacted, the families that lost their homes,” she said. “And Fm losing my patience.”

Similarly, Blair said he was hearing Thompson speak without cohesion to explain just how things went so wrong.

“I hear a lot of words. It’s a tornado of words and information, but it’s not fitting together the way that I need it for me to be able to understand what’s going on,” he said.

Before the committee began interviewing RISE officials, Marty Wright, general counsel for the state auditor, and a staffer presented findings from its investigation of RISE.

According to data Wright presented, at this point RISE has expended $1.4 million to date, which is on par with HUD’s latest estimate.

Of the $1.4 million, Commerce spent about $570,000 on administrative expenses, $785,000 on payments to construction vendors and $43,500 on payments to individuals for assistance.

Home received the bulk of the administrative costs, having taken in about $541,000.

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