Source: FBI nixed $15M for Northern Market after fraud investigation

The federal government stopped a $15 million loan guarantee Northern Market LLC planned to use to build its Dededo shopping center after an FBI investigation revealed irregularities and allegations of fraud, according to a highly-placed source of information.

The source was a cabinet member in the Calvo administration.

Northern Market LLC in 2013 won a request for proposal from the Guam Ancestral Lands Commission to lease more than 13 acres of prime real estate fronting Route 3 and Marine Corps Drive Dededo. According to its proposal, Northern Market planned to build a shopping center at the site. Construction never started, and Northern Market has received six dispensations from the GALC that allowed the company to avoid paying rent in full throughout this time.

According to the source and to a former Guam Economic Development Authority manager, Northern Market was banking on funding – a loan guarantee – from the U.S. Department of Housing and Urban Development Community Development Block Grant program to jump start construction in the beginning stages of its planning. The program was administered by the Guam Housing and Urban Renewal Authority.

“There was an application that was put forth under the Calvo administration to borrow $15 million for that particular project,” the source said. “It was actually approved by GHURA under Mike Duenas, I think probably in 2015.”

Champ Calvo

Around the same time, GHURA was embroiled in a controversy involving its board of commissioners and its legal counsel, Mark Smith. Mr Smith at the time was then-Gov. Eddie Calvo’s brother in law. Part of the controversy not connected to the crimes for which Mr. Smith recently was convicted in federal court was scrutiny in the award of Low Income Housing Tax Credits. That matter involved more of the Calvo family, including the former governor’s first cousin, attorney Eduardo “Champ” Calvo.

“The [Northern Market loan guarantee] project was moving forward, then when all this stuff came down regarding the previous board and counsel, the FBI investigated this particular application and determined it to be fraudulent,” the source said. “It’s my understanding that the initial application that was approved did not indicate that Champ Calvo was part of the ownership.”

Kandit previously reported results from an exhaustive review of Northern Market’s ownership since its creation in June 2013. Beginning November 1, 2013 (nearly two months prior to the signing of the GALC lease for the 13 acres), the company has been owned and controlled by the Calvos. According to its latest filings, Champ Calvo is the company’s duly authorized representative.

In fact, all three rent abatements for Northern Market occurred during the administration of Champ Calvo’s first cousin, Eddie Calvo. The GHURA approval of the CDBG loan guarantee also occurred during the Calvo administration.

“The project was scrapped when federal authorities determined it to be fraudulent,” the source said.

Ray Topasna

U.S. HUD waited for the new administration to take office, then informed GHURA’s new director, Ray Topasna, that GHURA had little time to obligate the $15 million loan guarantee appropriately.

Mr. Topasna confirmed this fact to Kandit.

“We got HUD to approve $12 million of that $15 million for the iLearn Academy charter school, which hopefully will open in August this year,” Mr. Topasna said.

The new facility for the iLearn Academy is being constructed by Core Tech International. CTI also is the lender in the project. The developer is the non profit Learning Institute.

“If it wasn’t for Core Tech and the iLearn Academy, and the governor’s request for an extension on that money, Guam would have lost that $15 million,” Topasna said. “Honestly, this money for the charter school is the best deal you could get with a loan. We’re talking less than one percent interest.”

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