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Lauderhill Officials Violated Ethics Laws with Home Loans, OIG Says

A Broward Inspector General's Office report says Assistant City Manager Kennie Hobbs and city operations manager Julie Saunders violated state ethics law by receiving loans for more than $300,000 each via a program administered by their subordinates and over which they have directional control.

Hobbs has served as the Executive Director of the Lauderdale Housing Authority, while Saunders works as the City Operations Manager serving as Lauderdale Housing Authority Deputy Director. Inspector General John W. Scott says that the loans obtained were in violation of the state law that prohibits a public employee from entering into any contractual relationship that would be a conflict between that employee's private interests and public duties. According to the report, there was a lack of internal control that led to Hobbs and Saunders' actions. 

The report says that Hobbs received a loan for $375,000 in 2014, while Saunders received a loan for $318,150 in 2012. Hobbs and Saunders also received a low six-percent interest rate on their respective loans.

The issue, the report says, is that Hobbs and Saunders were able to work out favorable loan terms due to their positions with the Lauderdale Housing Authority. Both Hobbs and Saunders authorized loan checks for one another. 

"By obtaining a loan from a program they were responsible for overseeing, they each created a conflict between their personal interests and public duties," the report says. "They further took advantage of their public position to benefit from funds, with the cooperation of the Board Attorney, for expenses not contemplated by officially sanctioned repair programs."

The report goes on to say that while only a $2,075 repair loan was recommended by the Home Inspector, Hobbs received a repair escrow of $8,920. Hobbs apparently told the State Attorney's Office that there were hollow points affecting the structure of his home's wood flooring. But, the report says, Hobbs used the money for a luxury aquarium, including wiring of the aquarium. Likewise, Saunders applied for and received her loan for $19,000 in escrow expenses to replace her roof, but used almost $9,000 to remodel her kitchen. 

Reached for comment on the report, Hobbs sent New Times a close-out memorandum from the State Attorney's Office from August of this year that claims that there is "no evidence of a violation."

The State Attorney's Office report goes on to detail how Hobbs and his wife submitted a Uniform Residential Loan Application to purchase a home in Lauderhill in 2014 and says that Hobbs was "completely transparent throughout the loan application and approval process." The report also says that there is no evidence that Hobbs ever requested or accepted any benefits not authorized by law during the loan approval process. 

"Mr. Hobbs was an employee of Lauderhill who was qualified to apply and ultimately receive a home loan from the Lauderdale Housing Authority mortgage lending program," the State Attorney's Office report says.

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Ultimately, the State Attorney's Office found no criminal violations by Hobbs and closed the case.

But, the OIG says that there are ethics violations and is referring the matter to the Florida Commission on Ethics for its independent assessment of the application of state ethics laws.

The OIG is also requesting the City to provide a status report in 90 days, or by January 5, 2016, regarding its actions in response to the findings and recommendations within the report.

Hobbs tells New Times that he would not be making any additional comments until after the conclusion of an independent assessment by the Florida Commission on Ethics. 

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