INC NEWS - Durham Dismisses Bennett Civil Lawsuit

[Blalock, Amy]

CITY OF DURHAM

Office of Public Affairs

101 City Hall Plaza

Durham, NC 27701

 

 

News Release

 

For Details, Contact:

Amy C. Blalock

Senior Public Affairs Specialist

(919) 560-4123 x 253

(919) 475-7735 (cell)

Amy.Blalock at durhamnc.gov <mailto:Amy.Blalock at durhamnc.gov> 

 

For Immediate Release:  February 15, 2008

 

City of Durham Dismisses Bennett Civil Lawsuit

Taxpayers Receive Financial Restitution for Small Business Loan Program
Fraud

 

Durham, N.C. - The City of Durham has decided to dismiss its civil
lawsuit against Anita Fenner Bennett, the central figure in the small
business loan program fraud uncovered by City officials in the summer of
2001. 

 

According to City Manager Patrick W. Baker, with Bennett in state prison
and with substantial restitution ordered to be paid to the City -
$50,000 of it already paid - the civil lawsuit was no longer necessary.
"We feel that we have sent a strong message to anyone that handles or
will handle taxpayer dollars on behalf of this organization and this
community - you will be held accountable for your actions," Baker said.
"We also feel that justice has been served in this instance and this
organization - and our citizens - are ready to move forward and focus on
the many positive things happening in our community."

 

In mid-October 2007, Bennett went to prison, guilty of 20 counts of
felony fraud for obtaining property under false pretenses. She will be
in jail for a minimum of 38 months. At the end of her active jail time,
she will have a minimum of 36 months of supervised probation. Bennett
was also sentenced to repay $180,789 in restitution to the City, $50,000
of which she was required to pay to the City before going to prison.

 

The restitution amount represents all of her Small Business Loan Program
contract fees, kickbacks that she obtained from each borrower, plus the
two loans for which the District Attorney's Office found clear evidence
that loan proceeds went to Bennett's bank accounts. 

 

According to Baker, special thanks are due to the stellar financial
detective work of Investigator Arthur Holland, Jr. with the Criminal
Investigation Division's Fraud Unit of the City of Durham Police
Department (DPD). "Durham's taxpayers can thank our police department,
especially Investigator Holland, for his diligent and persistent
detective work that lead to the repayment of taxpayer money," Baker
said.

 

Bennett's sister, Kathy Fenner, was also found guilty of two felonies -
obtaining property under false pretenses and fraudulent conspiracy to
obtain property under false pretenses.  She was sentenced to two
consecutive 6-8 month sentences, both suspended, and supervised
probation for 60 months.  Fenner was ordered to pay $42,400 in
restitution to the City as a term of her probation, plus work 100 hours
of community service, and spend three days in the county jail, which was
served the weekend of October 26, 2007.  She was also ordered to pay a
$200 community service fee, and $240.50 in court costs, for a total owed
to the court of $42,840.50. Should Fenner breach any of the court's
orders, or fail to make restitution payments as ordered, her probation
may be revoked and her prison sentences activated.

 

According to Sherri Zann Rosenthal, senior assistant city attorney with
the City Attorney's Office, the City filed its civil lawsuit against
Bennett when it was uncertain whether criminal prosecution would occur.
This loan program was turned over to the Federal Bureau of Investigation
(FBI) for investigation in August 2001. One month later, the FBI's
attention was diverted to the September 11th attack investigation. The
City Attorney's Office then filed the civil lawsuit, and through
depositions of Bennett in the discovery phase of the civil matter,
uncovered enough admissions to turn the matter over to Investigator
Holland of the DPD for criminal investigation. The depositions and the
police investigation of financial accounts provided enough evidence for
the District Attorney's Office to seek an indictment.  The criminal
convictions of Bennett and Fenner three months ago were the ultimate
result.

 

According to Rosenthal, this seven-year process can now come to a close.
"We as a City pursued the civil case because we could not let this
matter go unanswered.  There had to be consequences for the frauds
committed by Bennett and Fenner," Rosenthal said.  "With the felony
convictions, prison sentence for Bennett and appropriate restitution to
the City ordered by the court, we advised City Council that there is now
nothing more to be gained from civil litigation in the matter. They
agreed. Therefore, the City has taken a voluntary dismissal of the civil
lawsuit against Bennett and closed this chapter in our history."

 

Additional Background Information

*         Summer 2001, small business loan program problems were
uncovered.

*         Bennett was paid approximately $83,000 for loan administration
and services.

*         24 loans were made, for a total of $828,000.

*         Approximately $132,000 has been repaid, plus the City
Attorney's Office obtained sheriff's execution to sell personal property
to satisfy judgments, netting another $1,714, for a total of $133,700
obtained from borrowers so far. 

*         Add to this $50,000 restitution from Bennett and the City has
regained $183,700 so far. 

*         In addition, approximately $1,250 in loan payments on three
performing small business loans is paid each month to the City's Office
of Economic and Workforce Development.

*         The City Attorney's Office has handled 21 loans, litigating to
judgment on 17, and litigating or repackaging the other four.  

*         The Small Business Loan Program as it existed in 2001 is now
defunct and no longer in operation.  

*         Costs for the City Attorney's Office litigation have been
approximately $9,500, which includes the Bennett civil suit plus small
business loan collection.

 

Questions about the defunct Small Business Loan program should be
directed to Beverly B. Thompson, director of the City's Office of Public
Affairs, at (919) 560-4123, extension 229 or via e-mail at 
beverly.thompson at durhamnc.gov.  Any additional questions regarding the
City's civil suit against Anita Bennett should be directed to Sherri
Zann Rosenthal at (919) 560-4158, extension 239 or via e-mail at 
sherrizann.rosenthal at durhamnc.gov. 

 

About the City Attorney's Office

The City Attorney's Office provides legal counsel and representation to
the Council, city manager, departments of City government, and
City-appointed boards and commissions. The office provides legal advice
at Council meetings, performs legal research and offers advisory
opinions, and responds to requests from Council and City staff to draft
or review contracts, ordinances and other legal documents. The office
represents the City in litigation and provides assistance to the risk
manager in the retention of outside counsel for the Risk Management
program.  To learn more about this office, visit the City's Web site at 
www.durhamnc.gov/departments/attorney. 

 

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