Even though he was on the inside now, Ray Devlin wasn’t in a position to say. It would take some law enforcement agency six months of poring over the bank records to figure it out. But to Devlin, that was the whole point: Without proper records or internal controls, there was no way to know where the money had gone, or would go in the future — and if the money wasn’t going into keeping the buildings safe, or to the employees, or the health-care premiums, or the pencils and books for the charter school, then it was going somewhere else, in which case “the only moral course of action” in Devlin’s mind was to declare bankruptcy, so that Settlement’s properties could be off-loaded into the hands of owners who would take care of them.
Devlin called a meeting with the chairman of the GGHDC board and told him what he knew. The next day, Freeman called Devlin and said, according to Devlin, “Don’t you ever go behind my back again.” Next, Devlin went to officials at PIDC and told them why Settlement was missing its mortgage payments on the PIDC loans. “I thought I had a fiduciary responsibility to our lender,” Devlin told me. That was on a Wednesday. On Friday, Freeman fired Devlin.
AT THIS POINT, Freeman was telling the city he was so broke that he couldn’t make payroll. If you’re the city, what do you do?
One: You pay him more.
Two: You pay him faster.
In late 2006, the city, at Donna Reed Miller’s urging, lent Freeman $1.3 million to acquire a historic building: the Germantown YWCA. The state kicked in $500,000.
It was a Hail Mary, a way to get Settlement on its feet; the idea was that Freeman could take his scattered operations, house them all in the Y, add a gym and some retail shops, and claw his way out of the hole. But Freeman missed his very first mortgage payment on the Y. He would never make a single payment. By August 2009, the Germantown Chronicle would report that the Y’s ground-floor windows were smashed and there was a “gaping, unsecured door into the basement of the building,” attached to a stairway littered with trash.
Also in 2006, a city worker in the managing director’s office — I’ll call him David Smith — started to get phone calls “like clockwork” from the office of Mayor Street, from Miller, and from Smith’s boss, Pedro Ramos, the managing director.
These high-ranking officials wanted Smith to process a series of expedited “emergency” payments to Settlement on its existing contracts with Commerce, the Department of Human Services and the Department of Public Health. (By now, OHCD was no longer funding Freeman, due to his repeated failure to submit audits and tax returns.) When I asked Street about the emergency payments, he responded via e-mail, “I’m not sure I have much to offer as it was my practice to allow the departments to manage their contracts.” But his chief of staff at the time, Joyce Wilkerson, told me that she made the calls, and Pedro Ramos told me he would get calls from either the mayor’s office or the departments asking for the expedited payments. Says Wilkerson, “I remember [Settlement] was having a hard time making payroll.” She got involved because “somebody called” her and asked for a “turnaround” — she says she doesn’t remember who. Settlement’s clients were “people you want to receive services,” Wilkerson says, “so you end up in kind of a catch-22.”