By Karel Ancona-Henry
For the Appeal
The former executive director of Northern Nevada's largest nonprofit self-help home builder is the subject of a criminal investigation in Carson City into whether he committed fraud.
Ron Trunk, who led Citizens for Affordable Homes Inc. for the past five years until being fired in November, is alleged to have misappropriated funds to keep the organization afloat.
The Carson City Sheriff's Office began the investigation, which could take two months, after being approached by CAHI officials. If criminal activity is determined, the matter will be referred to the district attorney for charges.
Trunk denies any wrongdoing and said the investigation is retaliation for the grievances he filed against CAHI after his termination, seeking more than $60,000 in pay he says he is owed.
In its 11 years, CAHI has helped dozens of families obtain their first homes. The nine homes under construction now will be completed by Nevada Rural Housing Authority, which took over after CAHI shut down last month for lack of funds. There were another 34 homes planned for construction in Dayton.
According to the complaints, filed by Perry Comeaux, who has served as CAHI's interim chief executive director since Trunk's termination Nov. 21, it is alleged that Trunk "committed fraud on several occasions."
The investigation against Trunk is based on a complicated series of transactions involving two Housing Assistance Council loans. Comeaux gave the Sheriff's Office a letter dated Dec. 17, 2007, which he wrote to Jennifer Kinney of Housing Assistance Council alerting her that there had been misappropriation of HAC funds that had been provided to CAHI.
Those funds were for infrastructure and development of two separate sites - the Carson City Town Homes project and Gold Country Estates II in Dayton. Those loans were site specific, meaning they could not be used for any other site or designation without prior approval of HAC.
"Legally, you cannot take money from one project and use it for something else," said Cindy Day, CAHI's family coordinator.
The allegations begin on March 8, 2007, when Trunk withdrew $300,000 from close of escrow on the Carson City Town Homes project and paid it to the Daniel O'Callaghan Revocable Trust, which was owed money for water rights provided for CAHI's Gold Country Estates I Dayton project.
Also on March 8, Trunk withdrew $150,000 from that same escrow and paid it to the Ryan O'Callaghan Living Trust to repay a loan used for general operating costs. HAC, which is a federal government program to help fund organizations like CAHI, was told that $150,000 was used to pay for water rights.
The letter sent by Comeaux also says that on March 21, 2007, Trunk withdrew an additional $284,500 from the loan. That money was also given to the Ryan O'Callaghan Living Trust for water rights. However, Comeaux said in the letter that money was never used to purchase water rights and that it was instead deposited back into CAHI's account.
In effect, that series of transactions would have freed up money from one loan to be used for other purposes.
A similar transfer of money also occurred with another HAC loan provided for infrastructure and development or, more specifically, for a lift station for the Dayton GCEII project
On Aug. 23, 2007, Trunk withdrew $33,100 from escrow and paid it to the Ryan O'Callaghan Living Trust. HAC, the letter states, had been given an invoice "for costs associated with a lift station."
"However, Ryan O'Callaghan did not provide any services to CAHI associated with the lift station," according to Comeaux's letter. "Mr. O'Callaghan is not a contractor. The check was given to Ryan O'Callaghan as a reduction to a loan that was given to CAHI a few months prior."
No lift station was ever purchased or installed.
The same type of misappropriation is alleged to have occurred on two other dates. In the first, $156,604 was withdrawn from the loan and paid to CAHI for reimbursement of engineering costs even though those costs had been paid by Rural Community Assistance Corporation.
It was also noted that two items on the schedule, of which CAHI had no record, were both paid to John Allen, in the amounts of $12,500 and $56,790.
"CAHI," the letter stated, "has never paid John Allen these amounts."
In documents Comeaux sent to HAC along with the letter, he included a document on which the signature of William C. Allen Sr., John Allen's father, was forged by someone. William Allen died in Sept. 19, 2006, but the signature is dated Feb. 23, 2007.
The final allegation is that, on Sept. 26, 2007, Trunk withdrew $152,600 in the form of two checks, one payable to Tech Com for $123,500 and one to Ryan O'Callaghan for $29,000, even though the money wasn't used for the lift station and that O'Callaghan is not a contractor.
"CAHI is unsure if the company Tech Com even exists," Comeaux's letter said. "These two checks were mailed directly to Mr. Trunk. Somehow the checks were signed over to CAHI and were deposited to CAHI's bank account by Mr. Trunk. The staff of CAHI did not know that the checks that Mr. Trunk deposited were a result of the draw he had made from this loan."
HAC officials say they hope to work with Nevada Rural Housing Authority, which has taken over for CAHI.
"This is not a common occurrence," said Leslie Strauss, communications director for HAC, about the alleged misappropriations. "Neither the loan funding director or myself have seen anything like this before. HAC is interested in having the money go for the purpose for which it was loaned or have the money returned."
"HAC has not initiated any (action); it is in our best interests as well as theirs to work this out."