The Rev. Leon Finney Jr. built a name for himself in the 1960s by fighting slumlords and helping to save his Woodlawn community from being swallowed by the University of Chicago.
The community group he came to lead, The Woodlawn Organization, became a national model as Finney built a network of social programs and gained control of millions of dollars in publicly funded development.
But now Finney’s business dealings are being questioned on a number of fronts.
Federal housing authorities are investigating allegations that the Gary Housing Authority was overbilled by $850,000 for payroll expenses related to public housing projects managed by the Woodlawn Community Development Corp., where Finney is chief executive.
A federal lawsuit filed by Finney’s former chief financial officer alleges a host of financial improprieties, from ghost payrolling to the use of government money for Finney’s private pursuits, including a family-owned restaurant.
In addition, government-mandated audits, court records and other documents obtained by the Tribune show:
*A federal housing consultant lived in a Woodlawn apartment owned by a company run by Finney while in charge of monitoring property management contract awards in Gary. During that time several contracts went to the Woodlawn Development Corp. Court records show the consultant failed to pay $17,000 in rent on the apartment.
*In several instances, government subsidies awarded to one low-income housing development were used to pay the utility bills and other expenses of unrelated properties, a violation of federal rules governing those funds.
*The Woodlawn Organization, headed by Finney’s wife, Georgette Greenlee Finney, spent $132,000 to lease office space from a real estate company owned by Finney, a 2008 audit shows.
Finney, 73, declined to comment on the Gary investigation, as well as most of the allegations made in the federal lawsuit filed by his former chief financial officer, Virgil Savage. His attorney, Devlin Schoop, also declined to comment.
However, Finney acknowledged financial problems at The Woodlawn Organization and its network of nonprofits and property management companies, which have been sued for a host of unpaid bills.
That has led to a scramble to “keep it all together” by shifting money from one organization’s bank account to another’s in an effort to pay bills, Finney said.
Finney’s network of organizations and companies runs seven social services programs and manages or owns roughly 5,000 subsidized apartments in Illinois and northwest Indiana.
“When you have no stockholders to go to get an additional capital infusion, in an effort to try to keep it all working, in instances you borrow from one property to another in order to keep the whole working and you hope that in the interim you can pay it back,” he said.
But, Finney insisted, “No money has gone into my pocket or anybody’s pocket.”
Attorneys with the Gary Housing Authority confirmed the agency is cooperating with an investigation by the federal department of Housing and Urban Development. HUD officials declined to comment.
Gary housing officials said the investigation is largely based on allegations made by Savage, who in 2010 was fired as chief financial officer for The Woodlawn Organization and its affiliated entities after about 2 1/2 years.
In his lawsuit, filed last winter, Savage, 53, claims he was fired shortly after he sent an internal memo to the organization’s board members that accused Finney of using money budgeted for federally subsidized properties for his personal benefit and to pay employees of Finney’s church.
“That’s when our relationship began to sour,” Savage said.
To support the lawsuit’s claims, Savage and his attorney, John Davis, provided the Tribune with canceled checks, internal emails and other documents on The Woodlawn Organization letterhead that Savage said he kept after leaving the organization.
Finney said some of the allegations made in Savage’s lawsuit and in independent audits resulted from the confusion common to nonprofits that have to scramble to help people in emergencies.
For instance, a $12,000 canceled check provided by Savage indicates the Woodlawn Community Development Corp. paid a Peoples Gas bill tied to Finney’s home.
Finney said the check covered a bill for a building on Maryland Avenue owned by the Woodlawn Community Development Corp. that was used in 2006 to house refugees from Hurricane Katrina. He said the utility company would hook up the vacant building only if Finney opened an account in his name, using his credit rating.
“On the record, it will look like (the gas bill) was paid for me, but it wasn’t me,” Finney said. A Peoples Gas spokeswoman declined to comment, citing customer confidentiality.
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The 2008 audit of The Woodlawn Organization noted a potential conflict over $69,322 that was paid the year before to Finney’s church by the organization and the Woodlawn Community Development Corp for “services rendered.” Finney said the money was used to rent the church’s gym and basement for a student tutorial program and an HIV prevention program.
Finney also said, in an email, that he has never received a salary from the church.
Other documents from Savage show that family health insurance was provided to Woodlawn Organization board members who were not on the organization’s payroll. Board Chairman Leon Jackson was provided with $75,000 worth of coverage between 2005 and 2010, the documents show.
Both Finney and Jackson declined to comment on this allegation by Savage, whose wrongful termination lawsuit seeks $1 million in punitive damages.
Some of Savage’s allegations are similar to those made in a 2007 wrongful termination lawsuit filed by a former minister at Finney’s church who oversaw the organization’s violence prevention program. That suit, which was settled for $37,500 in 2009, also claimed people who did not work for the state-funded program run by the organization were improperly placed on the program’s payroll.
It’s also not the first time Finney has faced scrutiny from government officials.
In the late 1970s, federal investigators looked into charges that The Woodlawn Organization, with Finney as director, had diverted $200,000 in government grants through a dummy corporation to political candidates. That investigation was dropped, but led federal authorities to briefly suspend funding.
In 2005, the Woodlawn Community Development Corp. had to repay the Chicago Housing Authority $50,000 after the agency’s inspector general’s office found that Finney’s group was billing the CHA for work being done on his church.
More recently, Finney’s organizations have been accused of failing to maintain buildings they own and manage. In December, four buildings on Kimbark Avenue were on a city building department list of “building code scofflaws” that charged the Woodlawn Redevelopment Corp., of which Finney is chairman, with mismanagement.
Through it all, Finney, a well-connected political insider, has maintained ardent supporters.
“You can’t have accomplished all of what they’ve done and been out there as long as he has without taking some hits,” said the Rev. Marshall Hatch, who went through an African-American leadership program on community revitalization that Finney launched at the McCormick Theological Seminary.
“Leon has been very creative with how he’s blended his community organizing background with his ministry,” said Hatch, pastor of the New Mount Pilgrim Missionary Baptist Church in West Garfield Park.
Starting out in the ’60s
When Finney started as a civil rights activist during the 1960s, Woodlawn was filled with taverns and run-down graystone buildings, many of them burned out in “insurance fires.”
Back then, Finney was poised to take over his father’s Leon’s Barbecue chain of restaurants.
But, as part of what The Woodlawn Organization co-founder Bishop Arthur Brazier dubbed “a revolution of rising expectations,” Finney instead helped beat back plans by the U. of C. to tear down those buildings and expand its campus south into Woodlawn.
The organization also chased out local grocers who price-gouged their African-American customers and, for a brief period, convinced the Blackstone Rangers gang to contribute toward neighborhood improvements. That effort dissolved in 1972, when four of the gang’s leaders were found guilty of using $1 million in federal grants for a phony job training program.
Finney and Brazier, who died in 2010, also laid the foundation for what is now a constellation of government-subsidized residential developments in the neighborhood. Some still anchor quiet, tree-lined blocks.
During a recent tour of Woodlawn, Finney pointed to a tidy, blue wood-paneled house that sat among similar single-family homes.
“That was the Blackstone Rangers’ headquarters,” he said.
Along 63rd Street, a cluster of town houses, whose development Finney oversaw, look out on blocks of vacant land. Finney blames the incomplete project on the bad economy.
Finney’s critics say he is a master of the inside deal and has parlayed his political and governmental contacts into meaty public contracts and positions.
He sat on the city planning commission for 32 years, resigning in December 2010. That year, he completed two years as chair of the Chicago State University Board of Trustees. In the 1980s, Finney was a Chicago Housing Authority board member for five years.
Millions in business
Today, the Woodlawn Community Development Corp. manages 4,600 Chicago Housing Authority apartments, that involves controlling $17 million in operating budgets, for annual fees of up to $2.26 million.
His organizations also manage eight buildings in Gary, where competitors have complained that Finney’s group appeared to have the inside track on annual contracts for as much as $600,000.
Larry Bernstein, owner of the Gary-based Residential Management Co., said the federal consultant who monitored the contract procurement process for the Gary Housing Authority, Ronald Carter, was close to Finney.
Bernstein said his company was edged out by Finney’s Woodlawn Community Development Corp. on several Gary contract bids.
“With their past history and us being a Gary firm and us having an unblemished history and employing a lot of minorities it was interesting that Woodlawn always got it,” Bernstein said.
Since 1999, Carter has lived in the Jackson Parkside Apartments in Woodlawn, overseen by Finney’s Jackson Parkside Apartments LLC, public records show. By December 2009, he had run up unpaid rent of $17,460.
Carter, a former NBA basketball player, said that debt was paid off after he became city manager for Benton Harbor, Mich., in September 2009, a position he left a little more than a year later amid the city’s financial problems.
Carter said he had been contracted by HUD to monitor the procurement process in Gary and never had a say in who won contract bids.
“I never signed any contract, I never had a single vote, I never sat on any selection committee,” Carter said.
Finney said he was not aware that Carter wasn’t paying his rent, and otherwise declined to comment.
Finney also is named in several lawsuits related to a low-income apartment project on the South Side that he organized with former CHA Chairman Vince Lane.
The project was subsidized by $1.8 million in state credits and about $25 million in federally backed loans that the investment group led by Finney and Lane promptly defaulted on, court records show.
The investment group also reneged on a $1 million loan from a Chicago broker who helped close the deal, according to a lawsuit filed by the broker.
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Savage provided a canceled check for $100,000 written on the project’s bank account that was addressed to “The Woodlawn Organization Payroll.” Finney declined to comment.
The 25 buildings have since been foreclosed, according to another lawsuit filed by Fannie Mae.
Lane, who in the 2000s served 2 1/2 years in federal prison for lying in his effort to secure loans for a South Side shopping center, also declined to comment.
“There’s a lot of things going on with Dr. Finney and I can’t, at this point, discuss it,” Lane said.
Pastor to keep at it
Finney said he has perpetually placed himself at financial risk for The Woodlawn Organization and the Woodlawn area. He blamed the group’s current problems on evaporating compassion for the nation’s poor amid a sluggish economy.
“We have lost our public will of compassion and it’s about: ‘What’s good for me and my investment portfolio and everything else,'” Finney said.
The still-energetic pastor vowed to stay in his leadership position as long as he’s physically able. He laid out plans for a new venture to use government funds to purchase as many as 300 foreclosed properties in the area and rent them until they can be sold.
“We’ll do that,” Finney said, acknowledging the financial risks involved. “From this base, we will do it. If we can do it, then we’ll be able to train other people to do it.”