Inspector General Issues Report on Sale of AFRH Property to Warr

GCN Exclusive

Federal Inspector General Issues Findings on Sale of AFRH Property to Former Gulfport Mayor Brent Warr
Inquiry Initiated by Cong. Gene Taylor

by Keith Burton - GCN 3/1/10

The Inspector General of the Department of Defense has issued a report on their findings in connection with the sale of property formerly owned by the Armed Forces Retirement Home in Gulfport and sold to former Gulfport Mayor Brent Warr. The property is located on Scenic Drive in Gulfport and includes two homes that have extensively been modified since hurricane Katrina. The report is dated February 22, 2010.

The investigation into the transaction was initiated by Congressman Gene Taylor over questions about the purchase and sale of the AFRH property. Taylor sent a letter to the Department of Defense about his questions, and later, added a provision to a major defense authorization bill to make sure the investigation was approved by Congress and signed by the president to be funded.

The IG found that the AFRH could have made substantially more money in the transaction.

Taylor had specific questions regarding the property sale that occurred in 2003 to Warr who at the time was facing a 20 count indictment for Katrina fraud and other charges and was awaiting trial. In a letter to Defense Secretary Robert Gates on February 3, 2009, Taylor wanted to know:

"1. At the time the AFRH purchased the original 10.02 acres, what was the property's total appraised value, including acreage and all structures on the property?

2. What was the size of the smaller parcels sold to the Warrs? What, if any, portions were retained by the AFRH after the sale?

3. What was the appraised value of the property that the AFRH sold to the Warrs?

4. What was the sale price of the AFRH property that the AFRH sold to the Warrs?

5. According to the the 2003 letters, $1 million was to be deposited into the AFRH Trust Fund. "If there was a discrepancy between the sale price and the sum deposited in the AFRH Trust Fund for these properties, what became of the balance?

6. Where are these properties located in respect to the original purchase? Are these parcels within the boundaries of the 10.02 acres in the original purchase?"

The IG answered all the question in the report including the value of the properties in question.

The AFRH initially purchased the land, some 10.02 acres from the previous landowners in 2001 to use for an expansion of the AFRH facilities. The IG report states that the AFRH initially expected to pay $1-million to $2 million for the purchase, but as negotiations with the landowner progressed, the property was purchased by AFRH for $5.7 million.

But even prior to the initial purchase of the 10 acres, the Board of Directors of the AFRH sent letters recommending that the property not be purchased, though it was anyway. The IG report said that purchase cut into a construction budget, and soon after, the AFRH decided to sell the property and the land was subdivided into three parcels and offered for sale.

In the subsequent sale to Warr less than two years later, in 2003, the IG found that the property was not appraised prior to the sale. Warr purchased two of the beachfront properties that contained existing homes.

The IG found in that transaction, that the AFRH lost a considerable amount of money in the manner in which the sale was made.

"As a result, AFRH officials purchased the 10.02-acre parcel for about $5.7 million and subsequently sold the two beachfront parcels for about $1 million. However, if AFRH officials had required appraisals of the two beachfront properties before the sale, officials may have been able to sell the properties for a higher amount, resulting in additional money for the AFRH Trust Fund," reads a portion of the IG report.

The IG recommended that the AFRH tighten its procedures to disposing property in the future, to which the AFRH promised they would.

On August 25 last year, Warr plead guilty in a plea bargain offered by government prosecutors on one count of Katrina fraud, all other charges were dismissed by the trial judge and he is currently serving three years of probation.

A copy of the IG's report can be read in full by clicking on the link below.

More Information:

To read the entire IG Report on the AFRH property issue - CLICK HERE - .pdf file

Congressman Gene Taylor Wants Details on Warr Purchase of Home Property from AFRH - GCN 2/5/09

Warr Archives - GCN