Cover Story: Dale's Deals

Impeached and under investigation, Mallory still has a good chance to win state rep race

Geoff Raker

M.I.A.: Dale Mallory

When voters go to the polls Nov. 7, it's highly likely they will elect to the Ohio Statehouse a person facing a criminal investigation by Cincinnati Police who has rarely campaigned publicly and who dodges questions about his involvement in secret lobbying for a controversial project proposed for the city's West End neighborhood.

Such is the power of the Mallory family name in Cincinnati politics.

Dale Mallory, brother of Cincinnati Mayor Mark Mallory, is the Democratic candidate for the 32nd District seat in the Ohio House of Representatives. His father, William Mallory Sr., held the seat for 28 years before he retired in 1994. Mark Mallory then held the office for four years before jumping to the state senate, which he left last year to run for Cincinnati mayor.

William Mallory Sr. also serves on the mass transit board that oversees Cincinnati's Metro bus system and is a member of the Ohio Elections Commission.

Although Dale Mallory's brother and father are perhaps the best-known members of the political dynasty, others also hold influential positions. Dale's brother William Jr. is a Hamilton County Municipal Court judge; another brother, Joseph, is an elections administrator for the county's Board of Elections.

Dale's mother, Fannie, is a longtime fixture in the West End and remains a much-beloved figure there.

But the attitudes of many West End residents toward the Mallory clan have soured in recent months due, in large part, to Dale Mallory's actions as president of the West End Community Council and, as later revealed, a paid consultant to the Cincinnati Empowerment Corp.


Double agent?
The controversy began late last year when a coalition of 10 churches and social service organizations, none from the West End, unveiled a proposal to build the City Link Center, a one-stop social-services mall, in the neighborhood. The 100,000-square-foot facility on five acres at 800 Bank St. would provide health care, job training, drug counseling, a food pantry and other services.

It would be aimed at helping people who are homeless or have substance abuse problems, backers said.

Many West End and University Heights residents who live near the proposed site opposed the $12 million project, stating it would lower property values, pose a danger to children at nearby schools and hamper efforts to attract new homes and businesses to the struggling neighborhoods.

Backers of the City Link project include Crossroads Community Church in Oakley, CityCURE of Mount Auburn and churches in Mason, Springdale and other suburban areas outside the city of Cincinnati.

When residents tried to gather more information about the project and discuss it at meetings of the West End Community Council, Dale Mallory — the group's then-president — repeatedly delayed placing it on the agenda. As more information about City Link seeped out, some members began calling for the group to vote on whether it supported or opposed the project, a decision that would wield some clout as city officials decided on rezoning and other approvals that would be needed. Mallory blocked those efforts, too.

As Mallory delayed the discussion, community council members were unaware that he also had a $40,000 yearly contract as a part-time consultant for the CEC, a non-profit agency that administers federal anti-poverty funds. Mallory's job was to identify potential development projects that the agency could undertake in the nine poor neighborhoods it serves, including the West End.

Although Mallory told the community council he had no connection to City Link and was personally undecided on the issue, he privately advocated the project as a CEC consultant. Mallory's reports to the agency outline more than 20 appointments or telephone calls with City Link's president, including one where Mallory introduced him to Harold Cleveland, the CEC's chief executive officer.

Moreover, Mallory billed the CEC for meetings with local and state officials to discuss City Link, including at least one session with his brother, then-State Sen. Mark Mallory, and at least two meetings with Hamilton County Commissioner Phil Heimlich.

The tangled web of connections meant that Dale Mallory, as West End Community Council president, appointed some of the board members to the CEC. Those board members, in turn, hired him as a consultant for the agency.

In at least one instance, Mallory billed the CEC for attending a meeting of the community council, which is supposed to be a volunteer position.

"It was all very underhanded and deceptive," says Dave Petersen, a West End resident and former Mallory family friend who is now among their harshest critics. "It's a prime example of self-dealing and misusing taxpayer money. All through this time, he was working on City Link's behalf and enriching himself while he was lying to the faces of people who live in the West End about it."

'No improprieties'
The strange situation, however, still had more bizarre twists and turns to take that ultimately would involve local police and the FBI.

Mallory's employment with the CEC and lobbying for City Link came to light only after angry West End residents voted in February to impeach him as community council president. Mallory was ousted in a 31-10 vote, with 76 percent of the group's membership favoring his removal.

A month later, in March, Mallory filed paperwork to declare his candidacy for the state legislature. On required disclosure forms submitted to the Ohio Ethics Commission, he for the first time listed the CEC as a source of income.

When West End residents found out, they initially filed a public records request with the CEC for more details about Mallory's contract and invoices. But they were blocked by the agency's attorneys even though Mallory was paid using taxpayer money, which typically would classify the documents as public records under the law.

Petersen and others later filed a public records request with the city, which oversees the CEC's activities, and finally learned more about Mallory's work on City Link's behalf.

"The facts outlined in those documents completely contradict everything that Dale had told to the community," Petersen says.

Once Mallory's contract became publicly known, the city temporarily suspended funding to the CEC, and the agency hired two independent attorneys — Steve Goodin and Greg Berberich — to review Mallory's invoices as well as other matters, such as the CEC's business loan program, which involved numerous past due loans. Goodin and Berberich eventually issued a report stating that Mallory's work was "troubling" but probably legal.

The contract raised the appearance of a conflict of interest that should be avoided, the report said. The attorneys recommended a new policy that the agency not award contracts to elected officials or candidates for public office, a policy the CEC board has since adopted.

The legal review concluded Mallory should repay the board for about nine hours of work, totaling $225. After initially refusing, Mallory returned the money.

"Our attorneys found there was nothing improper or any illegality," CEC's Cleveland says. "(Mallory) did actually do legitimate work and was paid for legitimate work. There were no improprieties involved."

The consulting job that went to Mallory was advertised in a newspaper, Cleveland adds, and other applicants were interviewed. Mallory was selected partially because of his role with the West End Community Council.

"He was hired, quite frankly, for his ability to connect with the neighborhoods we serve," Cleveland says.

He notes that when Mallory was hired he wasn't yet a candidate for public office and his brother wasn't yet mayor.

Mallory was hired by the CEC in April 2005, and his contract expired in June 2006. During that time he was paid $770 for working 30 hours each week over 13 months — a total of $40,040. During this period, Mallory's only other source of income was a retirement pension he receives from General Electric.

Mayor is silent
The CEC is facing other problems. At one point, four out of every five loans in the agency's E-Fund program were behind on payments. Since 2001, the E-Fund program has made 22 loans, totaling almost $3 million, to help spark business start-ups in poor neighborhoods.

State Rep. Bill Seitz (R-Green Township), whom the CEC recently hired as its attorney, says the E-Fund's nature lends itself to a high delinquency rate.

"It's certainly true that a number of loans aren't current, but the Cincinnati Empowerment Corp. is taking steps to sue those people and get repayment," Seitz says. "It should come as no surprise, because they are lending to people who are hard to serve and can't borrow at (the) prime (interest rate) from their local bank. There is some risk involved."

Critics also say the CEC wastes money that's supposed to pay for development projects and job training programs to benefit poor people. A recent report by city officials who oversee the CEC found excessive spending on inter-office administrative costs. From June 2004 through December 2005, the CEC spent $1.7 million on administrative costs and $1.2 million on the agency's programs combined — or 59 percent of its funds for administration and 41 percent for programs.

Typically, most non-profit groups spend around 20 percent of their budgets on administrative expenses. Non-profits affiliated with the United Way, for example, are required to file a written explanation for any such expenses that exceed 25 percent.

Meanwhile, critics question a contract the CEC has with the Mallory Center for Community Development, a non-profit agency formed by William Mallory Sr. that's located outside the empowerment zone's boundaries.

Cleveland, however, stresses that two separate audits in 2004 and 2005 found nothing improper at the agency.

Asked if Mallory should have revealed his CEC work to the community council, Seitz replies, "I don't represent Dale Mallory, and I can't speak to what he did or did not disclose."

As this article was being prepared, Mallory initially indicated by telephone in mid-August that he was willing to do an interview. Since that time, however, attempts to contact him have been unsuccessful.

Mayor Mark Mallory has refused to discuss the various issues involving his brother when asked at his weekly City Hall press briefings, saying they aren't connected to any official city business or the mayor's office.

If the mayor hasn't been directly involved in the City Link and CEC disputes, though, people closely associated with him have been.

Petersen's e-mail inquiries about City Link to Fannie Mallory were handled by Jason Barron, Mayor Mallory's press secretary. Additionally, Dan Phenicie, who worked on Mallory's mayoral campaign, also had a contract as a consultant for the CEC. It was signed after the mayor's unsuccessful attempt to get Phenicie a job at the Cincinnati Film Commission, another agency that receives city funding.

More importantly, City Link opponents wonder why Cincinnati officials didn't follow the usual procedures and hold a public hearing when the project's backers sought to rezone the old manufacturing site. Dale Mallory's invoices to the CEC show he met with the city's Community Development and Planning Department to check on the status of the rezoning in November 2005, and the rezoning request was granted a month later.

"No reasonable explanation has ever been given by the city how or why this happened," says resident John Walter. "(Dale Mallory) was being paid by our tax dollars to work behind the backs of members of his own community council."

After Mallory was impeached as community council president, he filed an "emergency lawsuit" in March to regain the office. The suit, filed against the community council in Hamilton County Court of Common Pleas, alleged the group violated its by-laws when it ousted him.

After the group challenged the lawsuit's venue, it was switched to the Court of Appeals. In late April, facing the prospect of being questioned under oath for a deposition, Mallory abruptly switched course and dismissed the lawsuit.

Court documents filed by Mallory's attorney stated he "has no intention of remaining president of the West End Community Council."

Criminal probe
On May 19 Mallory wrote checks totaling $1,119 that emptied the West End Community Council's bank account — more than three months after his impeachment and a few weeks after his lawsuit was dropped. Mallory said the money was for an arts program at the YMCA the council authorized in February, but group leaders said no vote was ever taken.

As a result, the community council filed a complaint in June with Cincinnati Police that alleged embezzlement. A month later Police Lt. Col. James Whalen told the council that the Mallory investigation was turned over to the FBI to avoid a possible conflict of interest; Mayor Mallory has oversight responsibility for the police department.

FBI agents, though, later said the allegations didn't involve enough money to merit their involvement and handed the case back to police.

In the past few weeks detectives have been questioning community council members about the incident. The case likely will be presented to a grand jury some time within the next month to consider whether criminal charges are warranted.

Petersen and others, who have copies of the cancelled checks signed by Mallory, are angry that it's taken so long for police to respond.

"I can't believe this case is that complicated," he says. "It's taken four months for what looks like an open and shut case."

As outrage in the West End mounted over Mallory's actions, the Hamilton County Republican Party sensed a vulnerability in the Ohio House seat that's long been a lock for Democrats. GOP leaders replaced Mallory's original opponent, a North College Hill cooking-oil salesman largely selected as a token candidate, with West End resident Kimberly Hale.

"Dale Mallory's troubles will haunt him in this election," says Brad Greenberg, the local GOP's executive director. "Any voter that pays attention to the issues will vote for Kim Hale."

Referring to the ongoing police investigation, Greenberg says, "A person is innocent until proven guilty, but I think it's a better practice to field candidates who are above suspicion."

Hale, who lives on Dayton Street just a few blocks from one of the Mallory family's homes, manages a graphics printing company.

"When it became clear that Dale was going to run unopposed, a lot of people couldn't sit back and just watch that," Hale says. "This seat is such an important position because the 32nd District includes the central business district and many, many neighborhoods. To entrust Dale Mallory with that isn't a good idea."

Mallory hasn't done any campaigning in recent weeks and hasn't agreed to any candidate forums or debates with Hale. He doesn't have a campaign Web site and did not provide information for the Cincinnati League of Women Voters' election guide.

Dan Hurley, host of Channel 12's Newsmakers program, tried to arrange a joint appearance with Hale but was rebuffed.

"Dale has such a powerful family name, I don't think he believes he has to do anything to win," Hale says.

Just as some high-powered officials have helped to push for City Link, West End residents also have marshaled some support. Other City Link opponents include Cincinnati City Council, several local ministers, Sheriff Simon Leis Jr. and 11 community groups located in and around the West End.

Some of the opposition stems from what critics call the exclusionary and heavy-handed method in which City Link backers, many of whom are suburbanites, tried to impose the facility on the inner-city neighborhood without getting input or hearing concerns. The coalition behind City Link repeatedly ignored requests for meetings with residents, lacked any ties with local government agencies they believe would be needed for the program's success and didn't have the support of the neighborhood or its churches.

Ironically, Dale Mallory lodged similar complaints against Cincinnati City Council two years ago. In May 2004 he complained to city officials about the lack of neighborhood input when he asked that funding be restored to the West End Community Council after a series of spending scandals years earlier.

Criticizing a plan for Fifth Third Bank to oversee the council's spending, Mallory told council, "We are ready to determine our own destiny and guide our own community. Who are these people, who don't live in the community, telling us how to spend our money?"

'I was a fan'
Mallory was among a slate of new officers elected in June 2001 to lead the West End Community Council after city council froze its funds based on questionable spending by a previous board. Mallory and the other officers were part of a group that was endorsed by Heimlich, who was a city councilman then and now is a Hamilton County commissioner.

Heimlich's efforts, which included several highly publicized council hearings, were instrumental in overhauling the neighborhood group.

Now several people connected to Heimlich and the Republican Party are involved with Mallory's campaign or the City Link project.

Heimlich's father, Dr. Henry Heimlich, and donated $1,000 to Mallory's campaign. Conservative GOP activist Christopher Finney, Heimlich's political mentor, served as the attorney to incorporate City Link. Dick Weiland, a well-connected lobbyist and frequent Heimlich contributor, unsuccessfully tried to negotiate a settlement between Mallory and the West End council.

Other local movers and shakers also are involved behind the scenes. Among them is Tim Burke, who as Hamilton County Democratic Party chair shepherded Mallory's state rep candidacy; he was hired as an attorney for City Link in zoning matters.

City Link's backers have taken the fight for the project's future to the courts. In August, a Hamilton County magistrate upheld an earlier decision by the Cincinnati Board of Zoning Appeals to deny a permit for the project, stating it doesn't qualify as an allowable use in an area zoned as a manufacturing district.

City Link is asking a Hamilton County Common Pleas judge to overrule the decision and allow the project and is considering other legal options.

For Petersen, whose family once spent Thanksgiving and Christmas celebrations with the Mallorys, the turn of events over the past year has been a bitter lesson about the abuse of power and public trust.

"I was a staunch supporter of the Mallorys," Petersen says. "I was a fan. But this has really changed my perspective. It's appalling on so many levels. The corruption is almost beyond belief." ©

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