Text messages subpoenaed by federal authorities聽related to a $6 million housing project show one of the Baton Rouge Metro Council members who voted on the deal has had a financial relationship with the developer.
In May, a federal grand jury issued a subpoena聽to all council members and other city-parish officials asking for a wide range of documents concerning KMT Holdings and Development LLC. Owned by real estate developer Bradly Brown, KMT Holdings has a contract with the city-parish for an affordable housing project in Scotlandville called "Housing for Heroes."
Among the documents handed over were text messages from the phone of Council member Cleve Dunn Jr.
The subject of the investigation remains unclear. A spokesperson for the U.S. Attorney's office in Baton Rouge declined to comment.聽
The Advocate obtained copies of the subpoenaed text messages through a public records request.聽
Texts turned over between Dunn and Brown聽capture discussion about a payment to one of Dunn's companies, a question by the councilman about a "return on invest payment" and an exchange about a property the developer calls an "ideal prospect."
Asked for comment, Dunn said he "was not in business" with Brown. He said he was providing "bridge funding" for one project, adding that it happened after the Metro Council approved the Scotlandville deal.
"We've talked about a number of deals, but never done a deal together outside of me loaning him money for bridge funding to complete a deal," Dunn said.
Another public official 鈥� former Council member LaMont Cole, who is now the Baton Rouge school system superintendent 鈥� also provided texts to comply with the subpoena. Those texts show Brown asking questions about blighted properties in Cole's district and if the councilman knew the status of the city-parish contract for the Scotlandville project.
What Dunn's texts show
Dunn turned over messages sent from July 2022 through February 2023. In them, he and Brown regularly spoke of various real estate deals, as well as the Scotlandville project, which is funded through the federal American Rescue Plan Act.
Dunn said Monday that no federal authorities have contacted him about the investigation.
The text exchanges took place months after Dunn and 10 others on the Metro Council voted in November 2021 to award Brown $6 million for the Scotlandville development. It took until July 2023 for Brown to reach a deal with聽then-Mayor-President Sharon Weston Broome鈥檚 office to get the first $1 million disbursed on the project.
Most of the texts between Dunn and Brown don't mention the Scotlandville project, and it's unclear what developments or proposed projects are being discussed.
In a text exchange on July 27, 2022, Dunn said, "we are less than a month out from the return on invest payment. How are things going with the project?"
Brown replied: "Still slow motion on the caprice project but your return is still on schedule as planned. Let me know who to write the cashier check out to. Dunn Enterprises, LLC?"
When asked about the exchange, Dunn said he didn't recall what "caprice project" referred to.
"I don't remember. I'm a real estate investor. Bradly is a real estate investor. We talk about deals and potential deals all the time. I don't even know what 'caprice project' is," he said.
Dunn said the phrase "return on invest" referred to "a bridge loan, return on investment for the loan."
On Aug. 27, 2022, Brown requested that a deadline for a payment聽be pushed back a few weeks, telling Dunn "I may need you to extend me for 2-3 weeks to get closed on the 3 pending so that I can get you cleared out and still keep things rolling.鈥� He then mentioned another project he had secured a contract for in the "2100 block of North Boulevard."
"I gotta put together $100k to close and cover predevelopment on this one. Will do direct equity on this deal if interested," Brown messaged Dunn. "Check out the property in the PDF when you get a sec."聽
Dunn replied, 鈥淚 can extend my portion, but I鈥檇 like to keep the agreement in place with the partner that I brought to the table. It鈥檚 important to me to get her return on invest to her as scheduled. Get me the $25,000 this week and let鈥檚 meet this week to discuss those other options you mentioned in person.鈥�
On Oct. 12, 2022, Brown asked Dunn about another property.
"When you get a moment fill me in on the apartments you mentioned behind the mall," the developer said.
"788 North Donmoor Baton Rouge, La. Go look at it and let talk afterwards," Dunn replied.
"That鈥檚 the ideal prospect right there. 12 units with solid structure," Brown said later that evening.
"We've never been on a deal together"
In a recent interview, Dunn downplayed the financial relationship between him and Brown. Dunn said he and Brown are both alumni of Capitol High School and are on the school鈥檚 alumni committee together.
"Bradly is a real estate investor like I am, so we talk about deals, and have talked about deals all the time," Dunn said. "We've never been on a deal together, but I have loaned him money as bridge funding, to do a deal in the past. That's the extent of our business relationship."
R. Gray Sexton, a former counsel to the Louisiana Board of Ethics, said state law generally prohibits elected officials from voting or taking any action to award a government contract to people they have, or have had, a substantial economic interest in.聽聽
Whether a loan between a council member and a developer with a city contract is an ethics violation depends on the circumstances, he said.
Sexton said an official would need to "have a bona fide loan made by duly licensed lending institution" to avoid ethics problems.
Brown, when called for comment, also classified the dealings as "bridge loans." When asked if he and Dunn ever made a loan agreement involving a bank or third party, Brown said "no."
Dunn said no bank was used when he lent Brown money. The councilman added that on one occasion he "found a third party" individual to match $25,000 he had lent to help Brown complete a project.
"Real estate investors don't always use banks and financial institutions," he said. "They're private lenders. There are other investors that come in and help you out. So, no, there was no bank involved."
Brown said he ran into financial challenges during聽the business downturn caused by Covid聽and that Dunn was "just one of a lot of people who were concerned about me that really just stepped up and tried to help me out as much as they could."
A controversial development
The Scotlandville housing project named in the grand jury subpoena created controversy on the council and, though some money has been approved, hasn't broken ground.
A two-year delay stemmed from a public dispute involving Brown, then-Council member Chauna Banks and Mayor Broome鈥檚 office over how much government oversight the project needed.
Emails obtained by The Advocate through another public records request show Broome and Banks were at odds over the council member's repeated public criticism of the mayor's insistence that certain federal requirements applied to the project.
After the council voted for the project but while the developer was still negotiating an agreement with the mayor, Brown texted Dunn on Jan. 4, 2023 that Banks 鈥� in whose district the Scotlandville project is located 鈥� asked for a meeting.
"She鈥檚 been asking us to meet too," Dunn replied. "Chauna is not letting the plan that was put in place play out."
A week later, Banks prompted a discussion about the project's funding at a council meeting.
Timestamps of text messages between Dunn and Brown show the two discussing Banks during that meeting. As Dunn sat beside his fellow council members, Brown sent him a message.
"I did tell her not to do anything to bring any attention to our project," Brown texted Dunn.