TAMPA — Authorities are investigating how a local nonprofit organization and a now-defunct steel company spent $700,000 in federal grant money.
The investigation comes as the Obama administration considers Frank Sanchez, a former member of the nonprofit's board and past president of the steel company, for a high-level position.
Kenneth Wolfe, a spokesman for the Health and Human Services Department, said the agency is "investigating allegations that the funds were misused."
The Corporation to Develop Communities of Tampa, a nonprofit with a mission to fuel economic growth in East Tampa, applied for the grant in 2005, with plans to loan some of the money to Renaissance Steel, according to the grant application.
In exchange, Renaissance promised to create manufacturing jobs in East Tampa and pay the money back over 13 years at 6 percent interest.
Investors in the company — including developers Bill Bishop and Bing Kearney and Lazydays RV Super Center founder Don Wallace — put up $2.1 million to get Renaissance Steel started. The nonprofit agency contributed nearly $300,000 in in-kind services.
Sanchez was a member of the Tampa nonprofit agency board when it applied for the federal grant in 2005, and then accepted a job as president of Renaissance Steel in 2006, and served on both organizations for several months.
When the construction industry imploded, Renaissance Steel folded in 2007, leaving behind a long list of debtors. Many of those cases were settled.
The nonprofit agency is taking Renaissance Steel to court, trying to recoup the grant money it loaned the company, according to Albert Lee, chairman of the agency board.
Also, one subcontractor, Cathy Flippo, filed a criminal complaint last year with the Tampa Police Department, saying Renaissance owed her $89,006. Her complaint named Sanchez and two other Renaissance employees, Cecilia and Don Ball.
Police launched an investigation of the company, questioning whether Renaissance operated without the proper license, a misdemeanor in Florida, said Tampa police Detective William Darrow.
In the middle of the investigation, though, Renaissance paid Flippo $42,130, saying that was all the company owed her.
She dropped her complaint.
"No charges were ever filed," said Darrow, who noted that the case was marginal because he never uncovered a contract between Flippo and Renaissance.
The case was closed in September, and determined to be a civil matter.
However, Darrow said that last week FBI agents requested copies of the investigation documents.
The FBI declined to comment on the matter, but the bureau typically runs background checks of presidential appointees.
Sanchez was one of Barack Obama's top advisers on Latin America during the presidential campaign. He has been in Washington, D.C., since December as part of Obama's transition team.
Sanchez served President Bill Clinton as a special assistant to the president in the Office of the Special Envoy for the Americas, and later as an assistant secretary in the Transportation Department.
He made an unsuccessful run for mayor of Tampa in 2003.
He declined to comment for this story.
Janet Zink can be reached at firstname.lastname@example.org or (813) 226-3401.