More on Ford-Connected Corporations - | Nashville News, Weather & Sports

NewsChannel 5 Investigates: Capitol Hill Corruption

More on Ford-Connected Corporations

(Story created: 5/2/05)

Here's what our NewsChannel 5 investigation discovered about the companies that have received your tax dollars.

West Tennessee Venture Capital Corp. 

A for-profit corporation formed in 1981, WTVCC is operated out of Banks & Holeyfield Management Co., 5 N. Third St., Memphis.  The last annual report filed by the corporation in 1998 lists Frank Banks as president and TennCare figure Osbie Howard as secretary.

Both Banks and Howard have been affiliated with the controversial TennCare contractor OmniCare; Howard has also been linked to the consulting firm Managed Care Services Group that includes state Sen. John Ford.  Banks is Ford's campaign treasurer, while Howard has prepared the senator's tax returns.

WTVCC's stated mission is "to identify and provide financing for minority owned or controlled ventures." 

In 1998, a proposed $1.5 million grant to WTVCC was included in the Sundquist administration's budget for the Department of Economic and Community Development (ECD). 

After some debate, lawmakers adopted language appropriating that amount only to "a qualifying organization."  The clause stated that the money was "for the purpose of demonstrating the beneficial impact of capital enhancement on minority business enterprises."  It required ECD officials to adopt rules that set loan guidelines and required annual audits.  In fact, the department adopted rules for an "enterprise demonstration project," but did not openly advertise availability of the money for competing organizations to offer proposals.  In July 1999, the Sundquist administration signed a contract, making the $1.5 million grant to WTVCC.  Under that agreement, the corporation can use 2% of project funds annually for salaries and other administrative costs. 

That contract requires annual audits, but state officials say they cannot find any such documents. 

Banks says at least one audit was filed during the year of the contract, but officers did not believe they were obliged to continue reporting what they had done with the money.  Annual audits are still completed, Banks said, but he refused to provide them.

Limited available documents indicate that WTVCC has loaned money to Ashaun LLC, a telephone call center owned by Anthony Tate (who is a member of the board of MemphisFirst Community Bank, which is headed by Banks).

Tennessee Valley Center for Minority Economic Development 

A non-profit corporation formed in 1979, it is operated out of Banks & Holeyfield Management Co., 5 N. Third St., Memphis.  The last annual report filed by the corporation in 2003 lists Aubrey Howard as president, Osbie Howard as secretary, and Banks as registered agent.

Its stated purpose is "to encourage full participation by minority and disadvantaged persons in the free enterprise system and provide ways and means for each person to accomplish this goal, to provide affordable and safe housing."

In 1979, Sen. Ford's brother, Congressman Harold Ford Sr., helped secure $875,000 from Tennessee Valley Authority to start the center.  A controversy developed in January 1980 when it was learned that John Ford had been hired as a "special assistant" to the center.  The congressman told reporters that his brother was involved in planning the center.  Reports indicated that Ford's position was later eliminated by budget cuts.

The Tennessee Valley Center previously had an ownership interest in a downtown Memphis hotel now owned by Banks.

Tennessee lawmakers appropriated $100,000 to the center in 1994, $65,000 in 1996, and $125,000 in 1998.  A 1999 news article specifically noted that Ford had filed a budget amendment to direct $125,000 to the center, which was apparently not approved that year.

Southern Cooperative Development Fund 
Banks describes his operation at 5 N. Third St. as the Memphis office of SCDF. That's a for-profit organization based out of Lafayette, La., that also assists minority businesses. Banks signs documents as office manager, while Aubrey Howard signs as chairman.

SCDF also previously had an ownership interest in the downtown Memphis hotel now owned by Banks. The organization has previously been cited by the U.S. Small Business Administration over alleged insider dealings. 

In documents filed with the state, Banks says the organization has assisted "many community-based organizations and small business enterprises in the Memphis area.  Under the management of Banks & Holeyfield Management and Business Development Co., SCDF Memphis office has served as a technical and support arm to West Tennessee Venture Capital Corp., including the Enterprise Demonstration Project and the Tennessee Valley Center for Minority Economic Development."

State records show the company's corporate status was revoked by the state Department of Revenue in July 1995 for failure to pay state taxes.

SCDF has received about $95,000 a year since first being placed in the Sundquist administration's ECD budget as a recurring expenditure back in 1998. The most recent budget submitted by Banks shows the funds are expended as follows:

  • Management fee, $48,000
  • Clerical salaries, $15,000
  • Payroll Tax, $1,500
  • Postage and FedEx, $600
  • Telephone and Fax, $3,500.  (SCDF's phone number is the same as used by Banks & Holeyfield's other operations.)
  • Rent, $6,000
  • Travel, $1,000
  • Duplicating, $1,200
  • Office Supplies and Equipment, $1,400
  • SCDF Administrative Cost, $16,800 

In August 2003, Bredesen ECD officials asked Banks to submit to the department's new "partnership protocols" designed to impose stricter controls over use of state funds.  After apparently being rebuffed by Ford, ECD officials backed down.

Memphis Business Development Corp.

A for-profit consulting firm incorporated in 1998, it grew out of the Banks & Holeyfield operations at 5 N. Third St., Memphis.  It shares offices at 283 N. Bellevue, Memphis, with the non-profit Black United Fund of Tennessee.  Corporate records list its president as Gary Rowe (who has previously served on Ford's campaign committee) and its secretary as Minous R. Powell.

Its brochures say MBDC is "comprised of consultants" who offer services to minority entrepreneurs.

The company received $100,000 in 1998 and $100,000 every year since 2000 through budget amendments. 

Rowe says MBDC is reorganizing as a non-profit, Minority Education Development Week. 

In response to inquiries by ECD officials about the use of state funds, Rowe submitted financial information relating to Minority Enterprise Development Week activities.  But a 2003 tax return for MBDC, provided by Rowe to NewsChannel 5, shows $55,000 went to "compensation of officers" - Rowe says $30,000 to himself, $25,000 to Powell.  (That's in addition to an estimated $53,000 that Rowe receives from Black United Fund of Tennessee.)

State records show the company's corporate status was revoked by the state Department of Revenue in February 2003 for failure to pay state taxes.

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