- Associated Press - Tuesday, February 18, 2014

RALEIGH, N.C. (AP) - Nearly $400,000 in government grant money allocated to improve housing in poor communities was paid to a company owned by a man who was helping administer those funds, and some of it was for work his company was not qualified to do, according to a state report released Tuesday.

The review found dozens of work invoices worth a total of $397,171 submitted by Tri-County Development “for services they were not qualified to perform, work which was unnecessary or services which were disallowed,” the report by the state Office of State Budget and Management said.

The Budget and Management office was asked in December 2012, before former Gov. Beverly Perdue left office, to check the flow of Community Development Block Grant money to more than two dozen central North Carolina communities over a five year period, said Kim Genardo, a spokeswoman for the state Commerce Department, which released the report.

Michael Walser of Lexington was employed by Hobbs, Upchurch & Associates to oversee the grant money, the report said. He also operated Tri-County Development on the side, the report said. Tri-County submitted scores of bills for lead paint removal and other work, and the bills were paid by the grants landed by 10 towns like Madison and Yanceyville, the report said.

Communities use CDBG funds for projects like rehabilitating run-down homes, resurfacing streets or installing water lines. Towns then often hire third-party administrators like Hobbs, Upchurch & Associates to manage the projects and money.

Messages left at Hobbs, Upchurch and another Walser company, Carolina Governmental Services, were not returned Tuesday.

The report on how the money was handled was turned over to the State Bureau of Investigation earlier this month, the Commerce Department said in a written statement. SBI spokeswoman Noelle Talley did not respond to a message seeking comment.

The Commerce Department also asked the SBI in 2011 to investigate Walser and Hobbs, Upchurch over an application for $100,000 in federal stimulus funds prepared on behalf of Yadkin County, WRAL reported at the time. The SBI conducted a limited inquiry and provided records to the local district attorney, The News & Observer of Raleigh reported in 2012.

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Emery Dalesio can be reached at http://twitter.com/emerydalesio

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