Will the Chappelle Indictment Change City Hall? // Alice Dreger

It’s painful that Jim Cuddeback, the founder of Public Response, is not alive to read the news that real estate developer Scott Chappelle has been indicted for tax and bank fraud. When it was impossible for citizen watchdogs to convince any local news organization to report the truth about Chappelle’s history, Public Response provided the space to educate the community.

Eliot Singer, above all, worked doggedly to track and expose what was really going on with the developer with whom the City was looking to partner in the biggest public-private real estate deal ever to hit East Lansing. I expect that if we could see the origins of the federal indictment, we would find Eliot’s research. 

But about that, even Eliot would say – who knows? There were so many people who knew what was really going on. And it never seemed to matter.

Again and again, citizens tried to get City Council, City staff, and the DDA to look at what we’d found. Again and again, we were treated as if we were naïve, stupid, whiny, obsessive NIMBYs.

Fortunately, this lousy treatment of intelligent citizens caused so many important alliances to form. East Lansing Citizens Concerned came together. I met Ann Nichols, my neighborhood president, and we teamed up. Public Response became the place to go for facts that mattered.

Eventually, the whole thing led to the founding of East Lansing Info – an attempt to provide nonpartisan factual news that might wake up the taxpayers and voters of East Lansing to factual reality. ELi made it possible for us to keep bringing stories that originated on Public Response, like the retaining wall case brought by Phil Bellfy, in which the Department of Justice found significant wrongdoing.

I have to wonder what the enablers of Chappelle are thinking today. My experience with them suggests they have always believed they took action at just the right time. 

But the truth is that if City leaders had taken us all seriously, and stopped averting their eyes from documentated research, they might have saved the City several years of blight and millions of dollars.

What troubles me is not even so much that history, but the way it has been repeated since. I’m not suggesting we will see more developers here indicted. There’s little reason to think they have records that would attract the feds. 

But the Center City deal had so many red flags for East Lansing’s best interests – you can see our full reporting here. Not too long after that came the Royal Vlahakis deal, which, again, did not have issues that would pique the interest of the feds, but which, well, omg

Time and again, the attitude has been that what citizens have found doesn’t matter to the equation, because we aren’t City staff, appointed to commissions, or developers.

But it feels lately like things have changed in East Lansing, for the better. Maybe that’s partly because those of us still doing public service research and reporting do it better than we used to? Maybe it’s because the public elected to office people who take facts more seriously?

There is still work that needs to be done for this City to be adequately led and advised. We can’t stop being vigilant, doing good research, demanding transparency, and asking more of our government. This feels especially important as we enter a new phase of examining and reforming the way our City treats African Americans.

But with this indictment, maybe there’s some hope that City officials will stop averting their eyes to what we find, and start realizing facts can save us.

My thanks to Matt Kazmierski for carrying on Jim’s work, and giving me a place where I can say these things. My thanks to Eliot Singer for sharing his incredible work with ELi’s reporters and readers. My thanks to Ann Nichols and Chris Root for being my colleagues in these years of work. Today, it feels like government still works sometimes. But mostly what I know is that good people doing hard research and dogged tracking can sometimes change things for the better.

-Alice Dreger

2 thoughts on “Will the Chappelle Indictment Change City Hall? // Alice Dreger”

  1. Thanks to Alice for her kind words. Of course, ELi has played an important role filling the void for a local newspaper. I’m sorry the plan from a few years ago where Public Response would provide a place for editorial and opinion to supplement ELi has not materialized.

    Sadly, not only have we lost Jim Cuddeback, Don Power passed a few months ago, without whose brief, strange bedfellows, alliance on Council with Vic Loomis, the full $30 million (nearly) in bonds for City Center II would have been approved. Also departed is Meadows’ buddy, former city manager, Ted Almighty Staton, chief enabler of CC II in city hall. Some of the other enablers, on Council and staff, have left.

    Alice is giving me too much credit. First and foremost, thanks to Phil Bellfy, who more or less stood alone trying to block an incredibly reckless project, until others, such as myself and Don, joined the battle. Phil is passionate, which tends to make him harder to follow than my, usually, more technical approach, but he has doggedly fought corruption.

    The State News was there, before ELi existed, and when LSJ was just babbling the party line. The FBI became involved over an alleged threat to a SN reporter for a story about a foreclosure filing on CC II. I was repeatedly told about intimidation of SN from city hall for writing critically about CC II. I give great credit to another SN reporter for running a story summer of 2011 (if I remember the right date) I fed him about a personal IRS tax lien on Chappelle, without which a runaway train to issuing the full $30 million in bonds, with Staton’s flight plan to Ohio already in place, would have been unstoppable. That gave time for Don to be elected, and without Staton, opposition was possible. Don’s kitchen cabinet forced tough due diligence, despite enormous resistance, that finally killed CC II.

    When it morphed in Park District, with the pretense Chappelle had nothing to do with it, the high-risk lender from Ohio finally foreclosed on the very day the DDA was going to approve. I got an urgent tip that morning and Jim had it posted within minutes on PR.

    Since I was a citizen who city hall could not threaten (what? they wouldn’t fix my broken sidewalk?), like many reporters, I had tips from people in the business community who were hesitant to speak publicly. I have heard from a few since ELi reported the Chappelle story.

    I still have no idea what is technically legal, but should not be, and prosecutable fraud. Most of the stuff in the indictment I had noted years ago, but as I told Alice, when nothing came of it, I assumed was the usual big boys get away with gaming the system at our expense.

    I’m afraid there are far more important things to worry about now, though East Lansing is still suffering from the City Center II debacle. Stay well, everybody.

    Reply
  2. Addendum on some of the history…
    —-
    When I started investigating Strathmore projects around 2011, I was not looking for possible criminal wrongdoing. The point was a more systematic uncovering of Strathmore’s track record to provide overwhelming evidence these people posed a huge risk for a project requiring bonds or public financing. I read the LSJ story on the indictment and had to laugh at the claim of successful Florida projects (LSJ never bothers to check). Every Florida project ended in foreclosure, with some really ugly legal battles with high risk lenders. Taxpayers spent a lot of money on bailouts. Ann Arbor had worse blight than East Lansing from its Strathmore project.

    Others were calling attention to Strathmore’s risk profile before I had an inkling about CC II. I happen to be a good researcher and figured out how to uncover what was happening lots of places. City officials had been provided documents of Chappelle’s tree breach fraud early on and ignored it, just as they ignored the collapse of the Strathmore house of cards, for which there was ample evidence provided before the development agreement was signed and before the intent to bond and purchase of Evergreen properties for three times market value in 2009.

    After CC II, I repeatedly provided the city with rules for doing public private development that could serve the public interest. At the top of the list is what I call the no crooks, deadbeats, or cronies rule. This starts with the moral hazard—the public doesn’t like government dealing with sleaze bags, which is why Triplett was easy to toss out, with all his money, ambition, and Democratic Party support. But it also has to do with failure and financial risk. Someone with a history of fraud, foreclosures, serial tax delinquencies, etc. is a bad financial risk. Of course, giving tax breaks or special deals to someone who doesn’t pay taxes makes people who pay their taxes pretty mad.

    Reply

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