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Housing Informer Protected Own Firm

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By JOHN W. ALLMAN and MIKE SALINERO

The Tampa Tribune

Published: June 15, 2008

Updated: 06/15/2008 12:14 am

TAMPA - A whistleblower whose allegations triggered a federal investigation into Hillsborough County's affordable housing office was fighting to protect her own multimillion-dollar, nonprofit company.

Sylvia Alvarez, executive director of Housing and Education Alliance, turned her small agency into a thriving business that, in less than four years, received more than $5.2 million in state and federal housing grants through its county contracts.

Alvarez's agency had the contract to educate thousands of low-income, first-time homebuyers, who were required to attend the class before they could receive any down-payment money. But Housing and Education Alliance did more than just teach the basics of home ownership to prospective buyers.

It processed mortgage loans for more than 200 graduates of the classes taught by HEA instructors. And it built houses that some of those graduates bought.

The agency's meteoric rise, which began in 2002, came to a halt last year when HEA canceled its county contract to educate first-time homebuyers.

Alvarez blames three county employees, two former and one current, for creating a hostile environment that made it impossible for her agency to continue assisting low-income homebuyers.

Her allegations - that the three torpedoed her business because they wanted to create a company that would compete for the same contracts - spurred a county investigation in 2007. The investigation concluded in April, but three weeks ago, the U.S. attorney's office agreed to launch an inquiry into the charges with help from the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development's inspector general.

Alvarez's success was due, in part, to a shrewd business strategy that saw HEA expand its nonprofit base to include for-profit components, including a development company that built a small subdivision for low-and-moderate-income homebuyers. The nonprofit business also bought a mortgage company owned and operated by Alvarez's fiance, Philip Tagliarini. The two businesses share the same office.

The county does not have a policy prohibiting a nonprofit company that has a housing contract with the county from owning a for-profit company.

Critics Point To Money Sources

HEA's rapid ascent wasn't without critics, who said the group had the potential to make money not just from clients who took its education class, but also from those who got financing from HEA's mortgage company.

The county paid HEA for each person who attended the education class and later bought a house. American Liberty received a commission for each loan it made. The development company pocketed more than $2 million from the sale of 25 houses in Amber Place, a subdivision built near Orient Road and Dr. Martin Luther King Jr. Boulevard.

Some of those critics filed complaints with the county and Tampa's housing office that Alvarez was steering people to Tagliarini's mortgage company, a charge she denies.

Alvarez said the mortgage company, American Liberty Funding, handled about 19 loans for people who attended HEA classes. But 16 of those were referred to HEA by American Liberty rather than the other way around, she said.

"We terminated the contract because our lives were miserable. They were harassing us like you wouldn't believe," Alvarez said. "They were calling everybody: 'We're stealing and steering clients.'"

Housing and Education Alliance was created in February 2002 by three employees of another nonprofit agency that also had assisted low-income homebuyers.

Alvarez said she was a volunteer with the Alliance for Affordable Housing, teaching first-time homebuyer education classes in Spanish. She and two other Alliance workers left to form HEA.

By June 2002, the new nonprofit had received a county contract to teach classes and process loan applications. HEA would share the contract with two other agencies until 2005, when it was awarded the contract to be sole provider of the county's education classes.

Agency's Rapid Growth

The agency grew at a rapid clip from 2002 to 2006, expanding its county contracts and adding a similar agreement with the city of Tampa to provide homebuyer education. Thousands of people attended HEA's classes and several hundred bought homes.

Alvarez beefed up her staff, adding Jose Garcia, a former housing director and grant specialist from Washington, D.C.

And she studied ways nonprofits could enhance the services offered. "I thought, what about our own mortgage company?" she said.

By 2005, the agency had brought American Liberty into the fold.

The agency also entered into an agreement with the county to build affordable housing and created two for-profit development arms, the Housing and Education Redevelopment Team I and Team II, to develop Amber Place, which was slated to include 53 houses in two phases.

The second phase of Amber Place fell through, but the agency constructed 26 houses in the first phase, selling 25 and giving away one to a low-income family.

The agency made about $2.6 million on Amber Place home sales in 2005 and 2006, according to its federal tax returns.

American Liberty, per the 2006 tax return, received $37,562 on loans it made.

Alvarez profited as well, receiving a substantial salary bump in 2006.

Alvarez said she and the other employees worked without pay when they created the nonprofit company. By 2006, she was making $75,583, $18,000 more than the previous year. "That's not uncommon if you've got a successful agency," Alvarez said.

Despite the success in placing low-income people in homes, Alvarez and her agency encountered criticism.

In 2005, city officials outlined problems with the English and Spanish manuals the agency used in its homebuyer education classes.

Statements in the manual about down payment assistance and selecting a home "could be considered steering," underwriting supervisor Fred Meyer concluded.

"Overall, the Spanish manual has been poorly put together," Meyer concluded in a March 2005 memo.

In 2006, city and county officials received e-mailed complaints that people attending the education classes were being steered to American Liberty and away from other mortgage brokers.

"It simply is not fair that I am forced to send them to a training class that is allowing certain lenders and brokers to solicit my customers like tuna in a shark tank," mortgage broker Melissa Bujok wrote to the city in September 2006.

Attempts to contact Bujok were unsuccessful.

Alvarez dismissed the complaints. She said participants must sign a form saying they can choose whomever they want to handle their loans. When students asked HEA to recommend a lender, Alvarez said, the agency provided three to five companies, including American Liberty.

She sees nothing wrong with American Liberty handling the loans, even if it meant her agency essentially profited twice if the loan was finalized.

"What is so wrong with that, with both of us making a fee?" she asked.

Hillsborough County's housing office includes conflict-of-interest clauses in all agreements with nonprofit organizations, said Valmarie Turner, the office's contracts unit manager. The clauses have been strengthened in the past year, she said.

"Do we have one that specifically says that a nonprofit cannot own a for-profit entity? No we don't," Turner said. "But in terms of monitoring, we do monitor their activities when they teach a homebuyers education course."

Turner said the county prohibited HEA from talking about American Liberty Funding in the classes.

Ties With Housing Officials Falter

At the heart of Alvarez's allegations against the county were her deteriorating relationships with officials in the affordable housing office: manager Maggie Tagliarini, executive planner Michael Rowicki and their supervisor, Frank Turano.

Her initial dealings with housing employees, however, were helped by another type of relationship - family.

Alvarez's fiance, Philip Tagliarini, is a cousin of James Tagliarini, Maggie Tagliarini's husband. As of April 2008, Philip Tagliarini is listed as the registered agent for American Liberty Funding.

The two men hadn't seen each other in years before HEA started work with homebuyers, Alvarez said.

Alvarez said Maggie Tagliarini treated her poorly until she learned that Alvarez and Philip Tagliarini were engaged.

"Then she was trying to be my best friend," Alvarez said. "I think she thought we had a gold mine of clients coming through the classes."

Alvarez declined to speak specifically about what happened to cause a rift between her agency and the county housing office. But the investigative report, prepared by the county's Consumer Protection and Professional Responsibility Agency, contains an 11-page breakdown of allegations provided by Alvarez.

Alvarez said her problems with the affordable housing office date back to a "plan," hatched by Maggie Tagliarini in 2006, to help Rowicki become head of Affordable Housing.

According to Alvarez, Maggie Tagliarini planned to leave the agency and become a consultant for developers. If Rowicki got the top spot at affordable housing, he could help Maggie Tagliarini get business for her developer clients.

In her breakdown to investigators, Alvarez said Maggie Tagliarini told her HEA's for-profit lending arm, American Liberty Funding, "could do all the mortgages."

"It was after we refused to participate in the 'plan' that HEA started to feel that these two staff members had an agenda to discredit, diminish and damage HEA's reputation and projects," Alvarez said in her statement in the investigative report.

Alvarez said Rowicki and Maggie Tagliarini started putting "unrealistic expectations" on HEA in the way it administered the education program. They withheld or delayed payments to HEA, saying invoices were lost or incomplete.

Rowicki never got the top job at Affordable Housing, but Maggie Tagliarini left the county housing office in September 2006. In June 2007, she formed a for-profit company, GRT Housing Consultants.

Maggie Tagliarini listed Rowicki and Alvarez's former deputy at HEA, Jose Garcia, as partners in the company, though both had their names removed from the company's corporate filings a day later.

Garcia said he didn't know his name was put on GRT incorporation papers and asked Maggie Tagliarini to remove it.

Maggie Tagliarini said Friday she could not comment for this article. But in an earlier interview, she called Alvarez "a troublemaker."

Rowicki's attorney, Ron Cacciatore, said his client would not comment. Rowicki is on administrative leave from the county without pay.

Turano declined comment on advice of his lawyer. He retired from the county in 2007.

Alvarez also alleged Maggie Tagliarini and Rowicki tried to block HEA from receiving the city's homebuyer education contract by telling city housing officials HEA was steering clients to its mortgage company.

She said that prompted the city, in October 2006, to exclude bids from any agency owning a mortgage company.

Alvarez, according to the investigative report, said she asked city housing manager Sharon West why only mortgage companies were singled out and suggested other related businesses be added.

Why would she seek to expand the prohibition rather than eliminating it so her business wasn't affected? Because Maggie and James Tagliarini owned a real estate company, and Alvarez said she wanted to block them as well. "That's right," Alvarez said. "That's what they were doing to me."

West told The Tampa Tribune she never spoke to Rowicki about HEA. West said she did hear one comment from Maggie Tagliarini, but only in passing. She said she didn't remember what was said.

West said the comment didn't prompt the change to the proposal. It was other complaints received about HEA, she said.

Alvarez followed up by requesting a meeting with Mayor Pam Iorio and Cynthia Miller, growth management and development services director.

Miller said the request for proposals was changed to require full disclosure by agencies bidding for the contract if they had a relationship with any housing-related industry, including mortgage, real estate and other companies.

"From my standpoint, it was the right thing to do regardless of any person or personalities involved," Miller said.

Reporter John W. Allman can be reached at (813) 259-7915 or jallman@tampatrib.com. Reporter Mike Salinero can be reached at (813) 259-8303 or msalinero

@tampatrib.com.

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