KNOXVILLE, Tenn (WVLT) Knox County's Commission Chairman is calling on the County Mayor's office to stop handing out grant money until the mayor explains himself.
Volunteer TV's Gordon Boyd tells us this request comes as a response to a federal probe we first told you about this past weekend.
The mayor asked the feds to review these housing grants.
But HUD says it would have anyway, based on what it's learned in the media.
Namely that county department supervisors and workers may have awarded $840,000 in federal grants, your tax money, to groups to which they could be tied, too closely.
They're providing outstanding services to inner-city children
and inner city mothers. Her programs should be encouraged, not slandered...
Four and a half months after defending his Community Services Director, Cynthia Finch, Knox County Mayor Mike Ragsdale tells federal overseers she didn't profit from overseeing and awarding a $33,000 grant to a program her sister headed. But he admits it is a direct conflict of interest.
"I think the rules and regulations are clear, and I think the rules and regulations weren't followed," says Knox Co. Commissioner Mike Hammond.
Mark Brezina, from U.S. Housing & Urban Development: "Somebody should have known, and it was just a lack of being familiar with conflict of issues regulations.
HUD Field Office Director Mark Brezina says he doesn't believe anybody in Knox County government set out to break the law or profit illegally.
"I believe the Mayor wants to do the right thing," he says.
HUD's started reviewing the Mayor's proposed remedies. Which include: developing a plan to manage Knox County's federally-supported housing programs consistently.
Especially time-distribution sheets and other paperwork.
The Community Development department would follow set rules to check up on those gettting grant money. Several employees, will split collecting tracking and depositing program monies.
As for Ms. Finch's conflicted program, "they did violate the 33 thousand dollars and we told them they're gonna have to pay us back," Brezina says.
The Mayor proposes shifting that money to the Knoxville Academy of Medicine, which helps doctors find workers and low-income folks get care.
But some County Commissioners believe that doesn't fix what they call the Finch problem.
"It's very difficult to have condience in someone you know has violated the rules and regulations," Hammond says.
"Fire is a strong word," says Commissioner Greg "Lumpy" Lambert. "I think that will probably be the outcome. I think it's gonna be very hard for Cynthia Finch to stay with Knox County with the situations that are occurring."
Cynthia Finch hasn't commented publicly, but she remains Community Services Director. The gatekeeper and overseer of programs receiving federal money through Knox County.
Knox County Mayor's Office Spokesman Dwight Van de Vate says Mayor Ragsdale will have a full report at next month's county commission, but won't suspend block grant funds because they could
quote "jeopardize critical social programs and future federal funding."
The federal probe could be finished in 30 days.