Federal inquiry targets director of nonprofit

Chester M. Luney is under scrutiny for directing grant money to an agency he works for.

By JEFF TESTERMAN and CHRISTOPHER GOFFARD

© St. Petersburg Times,
published October 11, 2001

TAMPA -- The Inspector General's Office for the Department of Veterans Affairs is investigating Chester M. Luney after disclosures that he used his VA position to obtain federal grant money for a homeless veterans shelter he oversees.

Luney, who last week abruptly quit his $80,279-a-year job as a staff psychologist at the James A. Haley VA Hospital in Tampa, wrote applications leading to grants of $415,337 to the Tampa-Hillsborough Action Plan, where Luney is paid $78,000 annually as executive director.

A 31-year employee of the VA, Luney, 56, quit the same day the St. Petersburg Times requested records on the federal grants. The Inspector General's Office opened its investigation after the Times disclosed Luney's dual roles.

"The inspector general has opened an investigation focusing on Chester Luney," said Kerri Childress, a spokeswoman for the inspector general in Washington, D.C.

"They are not looking into THAP so much as at Luney," she added. "But I can't imagine how they could look at him without looking at THAP and Luney's relationship with the nonprofit."

Luney's VA supervisor, Arthur Rosenblatt, said last week he had no idea Luney was involved with THAP, which runs the Veterans Village shelter for homeless veterans with the VA grant money. When news stories reported Luney's links with THAP and embattled city housing chief Steve LaBrake, Rosenblatt said he questioned Luney and "he categorically denied" that he worked for THAP.

Luney did not have an office at the VA hospital and did not keep regular hours. He spent his time writing grants, Rosenblatt said, but also was supposed to counsel veterans at THAP's shelter.

Yet several vets said they rarely saw Luney and were generally unable to reach him for counseling.

"I called Luney 20 times and never got through to him once," said Roger Barnes, 43, a naval veteran fighting alcoholism when he lived at Veterans Village in 1999 and 2000.

"I saw Luney one time and that was when he came over to tell us the VA people were coming, and we were told to make everything look good."

Five separate nonprofit organizations are affiliated with THAP, providing medical services and housing to low-income residents. THAP's 1998 tax return describes Luney as its executive director and says he provides his services "to any one of the entities in the THAP group."

"Now that I know he's involved with THAP, it definitely looks like a conflict of interest," said Lynn Leftwich, 34, a U.S. Navy veteran who lives at Veterans Village.

That and the flow of federal dollars to THAP for its homeless vets program in the past four years are the likely subjects of the inspector general's inquiry.

The VA has paid THAP $19 a day for each of 23 vets housed in small two-bedroom apartments at 1911 137th Ave. E -- a subsidy that amounts to $570 a month per veteran. THAP also has required the vets to pay $150 a month in rent plus all utility bills -- all paid in cash.

The VA subsidy and the rent payments to THAP total $16,560 a month. But THAP's monthly mortgage on the complex is just $2,076.50.

Under the federal grant program, the vets are supposed to pay no rent and get free meals, Rosenblatt said. Leftwich and other residents at Veterans Village say they have never received any food from THAP.

Begun in 1994, the federal grant program was designed to help public and nonprofit organizations provide transitional housing for some of the estimated 250,000 homeless veterans in the U.S. The money paid to THAP is part of $53-million awarded across the U.S. The grant program helps provide shelter to homeless veterans for up to 24 months.

However, Kenneth Shackleford, a 65-year-old Korean War veteran who collects cash rental and utility payments for THAP, said he has lived at Veterans Village for four years.

Luney offered no reason for his sudden resignation from the VA. He departs with an annual pension of about $46,000, VA officials said.

Luney has been under fire in recent weeks for a series of favors he provided to LaBrake, Tampa's housing boss, and Lynne McCarter, LaBrake's aide and girlfriend. A federal grand jury and the Florida Ethics Commission are looking into the circumstances behind the couple's building a 4,200-square-foot home in South Tampa.

The Times revealed that Luney signed a lease to help McCarter qualify for a $230,000 mortgage, agreed to have THAP buy $34,100 in gift baskets from her and used THAP money to buy out her car lease and pay her for new tires. Luney also facilitated several services for the couple's W Corona Street lot, including paying a moving company $22,000 to remove an old home from the property, getting a pool dug and having construction debris removed by THAP employees.

Luney referred a request for comment to Warren Dawson, a Tampa attorney named by THAP's board to undertake an internal review of the nonprofit agency following the news stories concerning Luney's favors.

Dawson could not be reached for comment Wednesday.

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