The indictment of the former executive director of the nonprofit El Paso Empowerment Zone, Phyllis Rawley, is arguably a public corruption case on the city’s doorstep and is, so far, as close as such a case has come to City Hall.

But, City Manager Joyce Wilson and other city officials have been quick to point out that the city alerted federal authorities to the problems at the empowerment zone in the first place.

“We were the ones who started this. If we hadn’t, Phyllis would still be there,” City Rep. Susie Byrd said.

Rawley, who moved to Los Angeles to take another job after resigning as Empowerment Zone director, was arrested last Thursday in Culver City, Ca., as a result of the 10-count indictment accusing her seven counts of wire fraud and three counts of theft from the federally funded program.

“The city should get the credit for blowing the whistle and uncovering it,” Wilson said. “We were the ones that went in with a special audit when we started noticing patterns of expenditures over the 18 moths before we shut it down.

“We were getting lots of push back from the empowerment zone staff as we tried to get information. You can see now why we were getting that resistance.”

Originally, the city had applied to HUD for the establishment of an Empowerment Zone and when HUD approved the application and funded it a $25 million grant for economic development, the city created an independent 501c3 nonprofit corporation to run it.

The zone’s board was evidently less than vigilant, set up few financial controls and allowed the chief financial officer to serve in the dual capacity as the agency’s loan officer.

“When you’re in a situation where there aren’t a lot of controls, you can get away with a lot of stuff,” Wilson said. “They began issuing higher risk loans sand getting commissions off those loans.

“We flagged things early on, and when there was a vacancy on the board, we tried to make an appointment and Phyllis was fighting us.”

Wilson said the person she was trying to have placed on the board was Bill Lilly, director of the city's Community and Human Development Department, but Rawley and her board refused to seat him. [This paragraph was corrected at 4:55 p.m., Aug, 3 to correct the name of the official whom the city attempted to place on the board.]

“They didn’t want anyone from the city to see what was going on because, obviously, stuff was going on,” Wilson said.

When the city began moving to take over the empowerment zone, Rawley charged that they city was really after the millions of dollars to which the enterprise zone had access.

“When we did the special audit and found discrepancies, we called HUD right away and froze everything and shut them down. That’s when Phyllis got a new job.”

Rawley could not be reached for comment, but after she left the city and as the level of investigations of the Empowerment Zone escalated and began to focus on her activity, Rawley said she could explain the money questions if the city would give her the chance.

* * *

To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605, ext. 30, or 630-6622.