Lawyers for Gov. Eric Greitens have requested that a Missouri House investigative committee issue subpoenas to a developer and a banker involved in low-income housing tax credits, an industry Greitens has sharply criticized and has implied may be connected to legal payments to his adversaries.
In a May 23 letter obtained by The Star, Greitens' attorneys ask House investigative committee chairman Rep. Jay Barnes and House Speaker Todd Richardson to compel testimony from Jeff Smith, Ken Poteet and Sterling Bank, all three involved in tax credits meant for the development of affordable housing.
The request came the same day Missouri Times publisher Scott Faughn testified voluntarily before the committee to address the source of $120,000 in payments to Clayton attorney Al Watkins.
Watkins, who represents the ex-husband of a woman who had an extramarital affair with Greitens, testified to the committee the next day.
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Faughn provided the payments but would not answer questions this week before the committee about the origins of the money. House committee members appeared to doubt that Faughn, who has a history of debt and tax issues, had $120,000 in cash at his disposal.
Greitens' attorneys doubt that, too. They indicated that serving Faughn and others with a subpoena would be more effective in determining how Faughn obtained the cash and delivered it to Watkins.
"Once Faughn made clear within the first few minutes that he would not answer questions about the source of the $120,000, it would have been a simple matter to serve Faughn with the outstanding subpoena and compel his response to this question — the answer to which is not privileged or protected under any principle of law," reads the letter from Greitens' attorneys Edward Dowd, Edward Greim and Ross Garber.
Dowd is on the governor's criminal defense team and says he is being paid by Greitens personally. Greim and Garber represent the governor's office in possible impeachment proceeding and are being paid by the state.
Greitens' attorneys want to subpoena Faughn's phone records, bank records and any communications he had with St. Louis Circuit Attorney Kimberly Gardner and her investigators. Gardner brought, and later dropped, a felony invasion-of-privacy charge against Greitens, who was accused of taking a photograph of the woman with whom he had an affair and blackmailing her with it.
That's in addition to Greitens' team's request for subpoenas for Poteet, Smith, Sterling Bank and others.
A spokesman for the Missouri House didn't immediately respond Friday to a request for comment.
Greitens has suggested that Missouri’s tax credit industry has conspired to exacerbate his legal problems. The Missouri Housing Development Commission, or MHDC, of which Greitens is a member, zeroed out the state’s allocation of low-income housing tax credits after the governor stacked its membership with appointees critical of the program.
Greitens at an event in Jefferson City on May 17 called those involved in Missouri’s tax credit industry “ripoff artists” and “tax credit millionaires.”
“We’re not going to let a bunch of ripoff artists continue to steal from you, so you know what we did? We stepped up and zeroed out their program,” Greitens said to a round of applause.
Greitens’ attorneys on April 30 suggested during a court hearing that Faughn had connections to the tax credit industry.
“Mr. Faughn has direct connections with a group that has been very hurt and upset that their tax credits have been taken away,” said Greitens attorney Jim Martin, according to a transcript of the hearing. “And so if Mr. Watkins has some indication that that group is behind this push to give money to P.S. (the woman's ex-husband) and others, then that is highly relevant and it’s not privileged.”
Watkins told lawmakers Thursday that Faughn made it clear to him that the money came from a wealthy, out-of-state Republican donor with a grudge against the governor.
Developers often seek low-income housing tax credits as an incentive to build affordable housing projects; they say that without them, financing for such developments is difficult to come by.
Greitens and others criticize the tax credit, saying it’s inefficient. Audits from both Democratic and Republican Missouri auditors support that claim.
One visible connection Faughn has with the low-income housing tax credit industry is with Sterling Bank, which is in Poplar Bluff, Mo.
Sterling Bank, which is highly involved in low-income housing tax credits, is a sponsor of Faughn’s weekly television show, “This Week In Missouri Politics.”
Sterling Bank officials did not return phone calls seeking comment for this story. But public records show that Sterling Bank is owned by businessmen with interests in low-income housing developments.
Poteet was formerly the chief executive of Sterling Bank. His LinkedIn profile makes references to the bank's involvement in low-income housing tax credits.
Poteet, who owns 9.85 percent of shares in Sterling Bancshares, did not immediately respond to a message left at his new bank, M1 Bank.
Smith, a Columbia developer with JES Holdings Inc., owns 13.65 percent of shares in Sterling Bancshares, the holding company for Sterling Bank. That’s according to records on file with the Federal Reserve Bank in St. Louis.
Smith, an Army veteran once dubbed by the St. Louis Post-Dispatch as “Missouri’s king of tax credits,” is described on his website as having 30 years of experience in the real estate and housing industries, including his activity with low-income housing tax credits since the Tax Reform Act in 1986.
Smith, who has a real estate institute named after him in the University of Missouri Robert Trulaske School of Business, did not return a phone message placed to JES Holdings.
Smith gave a maximum $5,000 donation to Missouri Attorney General Josh Hawley’s U.S. Senate campaign. Hawley has investigated Greitens for his use of social media and allegations that he used a charity’s donor list for political purposes, and Hawley has called for Greitens to resign.
Hawley, who has a seat on the MHDC, supported the move to end the low-income housing tax credit program.
Asked for comment, Hawley's campaign spokeswoman Kelli Ford replied: "If Dowd Bennett is interested in the motivations of low-income housing tax credit developers, it begs the question of why Joe Shepard, one of the biggest (low-income housing tax credit) developers in the state with connections to Sterling Bank, was left out of the subpoena request."
Joseph Shepard, a low-income housing developer in St. Louis, is married to U.S. Sen. Claire McCaskill, D-Mo. Hawley is running to unseat McCaskill in November.
"This is an absurd and outrageous accusation that the Attorney General knows is not true," said Meira Bernstein, a spokeswoman for McCaskill's campaign. "This is clearly a statement that was written by his political handlers because no real prosecutor would be this irresponsible."
Public records in Missouri and Georgia show that Sterling Bank is a creditor with several corporate entities associated with Shepard's businesses. Shepard also has a substantial number of investments in companies connected to James Maddox, another owner of Sterling Bank, according to McCaskill's personal financial disclosure report.
A spokesman for Shepard's company, Tony Wyche, said that Shepard hasn't done any business with Sterling in Missouri in years and very little business with Maddox recently. Wyche said Shepard's investments in Maddox's companies are a very small percentage of his overall business.
He added that Shepard had nothing to do with the Watkins' money.
Maddox, a businessman in Clarkton, Mo., owns 21.16 percent of shares in the holding company for Sterling Bank.
Maddox is tied to MACO Companies, which is involved in low-income housing tax credit projects in Missouri.
Faughn has been a critic of Greitens, particularly for his decision to zero out Missouri’s allocation of low-income housing tax credits. He said during his testimony this week that he did not know about Sterling Bank's involvement in tax credits.
Among those Greitens' attorneys hope the House will subpoena to testify is Thomas Robbins, a Missouri Capitol lobbyist whose clients include Sterling Bank.
Robbins works at the lobbying firm owned by Steve Tilley, a former House speaker who is also registered to lobby for Sterling Bank.
Tilley was frontrunner for the GOP lieutenant governor's nomination in 2012 when he dropped out of the race and resigned from the Missouri House five months before his term ended to become a political consultant and lobbyist.
He's also a longtime adviser to Lt. Gov. Mike Parson, a Republican next in line to become governor if Greitens is removed from office.
Parson, also a member of the Missouri Housing Development Commission, opposed last year's vote to zero out Missouri's low-income housing tax credit program.
Parson's association with Tilley was purportedly the reason Parson lost his bid to become majority floor leader in the Missouri Senate in 2012.
MACO Development, an affiliate of MACO Companies, is also among Tilley's lobbying clients.
During his testimony Wednesday, Faughn was asked by lawmakers whether he'd discussed the payment to Watkins with Tilley.
“I don’t think I’ve ever brought it up to Steve,” Faughn said.