By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
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The Harlem Renaissance Ballroom and Casino, an art deco behemoth on the corner of 138th Street and Adam Clayton Powell Boulevard, opened in 1923. With terrazzo tile, gleaming casement windows, and neon signs advertising "FUN" and "DANCING," it was the city's showcase for African-American celebrations and cultural events for decades, and the home court for the barnstorming Harlem Rens all-black pro basketball team in the 1920s and '30s.
The ballroom was closed in 1979. It was boarded up and lay fallow until the Abyssinian Development Corporation took over the property in 1991. Founded by the politically powerful Reverend Calvin O. Butts III, the longtime lead pastor of the 205-year-old Abyssinian Baptist Church on West 138th Street, ADC is Abyssinian's nonprofit community-redevelopment arm. In the early days after ADC took over the Renaissance's mortgage, Butts talked about restoring the ballroom and bringing back a gleaming entertainment venue to the very heart of Harlem.
The Abyssinian Baptist Church was founded in 1808 by parishioners who left the segregated First Baptist Church. Just after the turn of the 20th century, Adam Clayton Powell Sr. became pastor. His son, also named Adam Clayton Powell, took over in 1937, and went on to serve 26 years in Congress. He was succeeded in the church by Samuel Proctor, and then, in 1989, by Calvin Butts.
The son of a cook and a welfare worker who grew up in Queens, Butts, now 64, is nothing if not ambitious. In addition to his role at Abyssinian, he is the president of SUNY–Old Westbury and the former chair or vice chair of the boards of United Way of New York City, the Harlem YMCA, and the now-defunct North General Hospital; sits on two state development boards; and holds honorary degrees from eight colleges.
Butts founded ADC the year he arrived at the church as a way to address the large number of abandoned and decaying properties in a neighborhood crippled by drugs, crime, and a lack of investment. The organization's mission statement says it "addresses complex, interconnected challenges facing the Harlem community, increases availability of quality housing to people of diverse incomes, enhances the delivery of social services, fosters economic revitalization, and enhances educational opportunities for youth."
It also buys, develops, and sells significant pieces of real estate. During a span of time that included a dramatic rise in local property values, ADC became one of Harlem's signature institutions, a nonprofit that says it has invested some $800 million in residential and commercial real estate; building or renovating hundreds of units of housing; partnering in retail shops and a supermarket along 125th Street; and founding a charter high school, a middle school, an elementary school, and a Head Start program. From a single paid employee in 1989, the staff had swelled by 2011 to 140 people.
With his history of promoting the rebirth of Harlem, it was surprising, then, when Butts himself went down to the city Landmarks Commission in 2004 and successfully opposed a plan to preserve the historic Renaissance Ballroom building. And then in 2006, the ADC came out with a plan to demolish the structure altogether and erect a 19-story apartment building with 116 condos and 90 parking spaces. Twenty percent of the apartments were to be set aside for low to moderate income residents, as part of what's known as the 80/20 model, which is extremely favorable to developers because of the associated government subsidies and tax breaks. The "Renny," meanwhile, would be remembered with a plaque.
"The thing that's shocking to me is that here is a uniquely African-American landmark—an important element of Harlem history—and it's been diminished in an irreparable way," says Michael Henry Adams, a Harlem historian and author. "The architectural heritage of Harlem has been neglected for years and years. Something close to 40 percent of Greenwich Village has landmark protection, but just 3 percent of Harlem. Most tragic of all is that this is being participated in by African-American leaders who don't consider the value of commemorating what was archived here by protecting buildings that embodied our accomplishments."
Today, however, that tower exists only on paper. Beyond a partial demolition, the parcel still sits dormant, and insiders say that a lot of money was frittered away in the planning. "It's another one of those stories that ended up in a fishtail," a current ADC employee says.
Indeed, like its derailed ballroom project, ADC is looking shaky, despite regular and generous infusions from government and private entities. Tax returns suggest the organization is nearly out of cash. Other high profile projects have also been shelved. And on April 1, former ADC president and CEO Sheena Wright, who now serves as president and CEO of United Way NYC, was subpoenaed by federal prosecutors to discuss ADC's sale of a brownstone to a wealthy member of the church.
From the church pulpit, like the Powells before him, the always crisply attired Butts has talked his way into a role as one of Harlem's key political power brokers—a position that is not without its benefits. In 1998, Butts endorsed the Republican incumbent governor, George Pataki. The following year, Pataki appointed him president of SUNY–Old Westbury, where he continues to earn $200,000 a year. And while he was a harsh critic of Mayor Rudolph Giuliani, once calling him a "racist," Butts not only endorsed the Republican Michael Bloomberg, but has said hardly a word against his policies. Bloomberg's City Hall has lavished $68.6 million in government money on the organization, according to the city comptroller's office. The mayor himself has made repeated charitable donations to ADC, and once sat down at a fundraiser and wrote out a $1 million check on the spot. After Senator Hillary Clinton secured $1.5 million in earmarks for ADC, Butts endorsed her for president.
Corporate largesse has also flowed toward Butts's nonprofit, from the likes of Citibank, Boston Properties, Coca-Cola, Starbucks, and other companies looking to stay relevant uptown. In 2011, ADC took in $3.8 million in private gifts. In 2012, the organization reported donations of more than $200,000 from Deutsche Bank, more than $150,000 from Bank of America, more than $100,00 from TD Bank, more than $60,000 from Wachovia, and more than $50,000 from Bloomberg LLC. Similarly, M&T Mortgage Bank has also been a generous contributor, donating more than $20,000 just in 2012. And on March 22, M&T approved a $1 million loan to Butts on his regal $1.2 million brownstone on St. Nicholas Avenue. Butts had already renovated the home at least once, via two prior loans for substantially less than $1 million.
ADC's tax returns also show that from 2007 to 2011, program revenue—money ADC takes in from services it provides—came close to tripling: from $6.9 million to $19.3 million, including rental income, which doubled.
Meanwhile, an ADC subsidiary called Harlem Village Homes II was also doing well. Harlem Village buys dilapidated or foreclosed properties for a pittance, renovates them, and resells them at a large profit. In 2007, just to take one example, Harlem Village bought eight brownstones from the federal Department of Housing and Urban Development for a grand total of $10, property records show—and then renovated the buildings and resold them in 2011 and 2012 for an average of $1 million apiece—or $8.5 million in all.
It was a similar Harlem Village sale in 2006—to Todd Hunter, the son of former NBA players' union head Billy Hunter, who is under investigation for fraud—that led federal investigators to order Wright to speak with them earlier this month. Those homes are intended for buyers making less than $130,000 per year; that year, Todd Hunter was vice president at investment firm Prim Capital.
"That's not community development, that's real estate development," says one longtime observer of ADC. "At some point you have to wonder if it violates their non-profit status, or at least the spirit of it."
All of which would suggest that business—even the not-for-profit kind—was booming uptown. "Based on my experience, if you had invested $100 million in Harlem development," says Ronald Gold, a real estate appraiser and member of the Greater Harlem Real Estate Board, over the course of a decade "it would be worth around $600 million in the open market."
And yet, if you click on the "Financial Highlights" link on ADC's website, the page is blank. The most recent press release posted to the site is more than a year old.
The Voice reviewed six years' of ADC's tax returns and found that, in 2008, ADC posted a surplus of nearly $11 million, but one year later, a deficit of $4.2 million. The trend continued in 2010, with a $5.3 million deficit, and in 2011—the most recent year available, the same year program money nearly tripled and ADC was flipping all those brownstones—with a $1.1 million deficit.
The tax returns also show that from 2006 to 2011, ADC's total debt more than doubled, to $117 million from $58 million. Total assets did not increase at nearly the same rate, so it wasn't as though ADC was taking on debt strategically, as a way of, say, increasing its real estate portfolio. And its cash reserves were simultaneously draining fast: At the beginning of 2007, the agency had $6.5 million in cash on hand; by the end of 2011, there was just $860,000. A stock fund worth $7 million in 2007 had plummeted to just $1.2 million by the end of 2011. ADC is said to owe its attorney, Charles Simpson, as much as $2 million in legal fees. ("No comment," Simpson replied when asked about the debt.)
Meanwhile, projects like the ballroom and others have stalled. A highly touted plan to build a new facility for the elementary school, announced in 2007, has yet to get off the drawing board, and one ADC employee says "millions" were wasted on an unusable architectural design. "There were meetings where the plans were shown," the employee says, "and none of it ever materialized."
It is a strange predicament: A prominent institution, dialed in to government and private largesse, buttressed by a revenue-generating real estate portfolio, is nevertheless in such financial trouble that on multiple occasions, according to three current and former employees, it actually had to borrow money, or divert money earmarked for other purposes such as Head Start, to meet payroll. Why were there layoffs at ADC in February? Why have a number of board members resigned in discontent?
The answers to these questions are apparently so sensitive that few current or former board members—a roster of distinguished New Yorkers—would return phone calls, let alone talk on the record. Calls and e-mails to Reverend Butts were not returned.
ADC president Ralph Dickerson, who was appointed only a couple of months ago, told staff in one of his first meetings, according to an employee who was present, that "he is not trying to do anything miraculous, he just wants to keep the doors open because they are in a fiscal crisis." In a telephone interview with the Voice, Dickerson said that he did not recall making that statement, but acknowledged financial strains and the recent layoffs, calling them part of an "austerity program." Asked what the state of ADC was when he arrived, Dickerson demurred. "This organization deserves to continue, and I can't afford to look back. I've got to go forward with it."
Some of the losses at ADC may well have been due to the financial meltdown. Its $7 million stock fund, for example, wasn't the only one to take a dive in those years. But ADC is primarily a real estate developer and Harlem real estate has been solid since 2009—and up substantially over the past year or two. Why the crisis?
There are signs that even during the city's lean years, ADC officials lived it up, spending more than $500,000 on out-of-town trips. While one former ADC executive says the trips were cost-effective and for legitimate reasons such as "team-building," "leadership retreats," or conferences, some insiders contend that many of them amounted to junkets or vacations for favored senior staff—to the Bahamas, Jamaica, and Martha's Vineyard. "The vacations would be very elaborate with maids and butlers and cars," says one former ADC employee. "They would go under the guise of business conferences, and then just swim and go diving or parasail." The Martha's Vineyard trip, an attendee says, was about partying: "There was no conference."
Present during those high-flying trips with the butlers and the parasailing was ADC's CEO and president, Sheena Wright. Wright left ADC in November after a decade to run United Way NYC. An attractive 43-year-old woman who wears her hair in signature braids, Wright was raised in the South Bronx by her mother while her father was in prison. At age 16, she went to college at Columbia University, and then attended law school and worked for a prominent law firm before going to work for ADC.
During her tenure, a number of high-profile Harlem projects were developed, including 800 units of housing and the Thurgood Marshall Academy Lower School, an offshoot of the Thurgood Marshall Academy High School, which was also founded by ADC. Governor Andrew Cuomo appointed Wright to his New York City Regional Economic Development Council.
In the announcement for her new post, Wright said of her ADC tenure, "In the 10 years that I was there, we were focused on continuing to build on the mission of making sure that the community evolved." In an e-mail she sent to ADC staffers, she thanked God for her decade of service and a city "where all can reach their full potential."
But current and former employees of ADC paint a less flattering picture of their former CEO, and they lay the blame for ADC's woes with Butts for ignoring internal concerns over Wright's stewardship. They say Wright hired unqualified cronies for senior jobs, including a high school classmate and her former hairdresser, whom she employed as a special assistant. They say she was behind the expensive junkets. And during her reign, a number of board members resigned, as did at least one chief financial officer, with a number of other top officials leaving on less-than-positive terms. One departing vice president is said by a former employee to have excoriated management on his way out the door. The former human resources manager was pushed out, the same ex-ADC worker says, for inquiring into a possible labor law violation.
"What killed me is that they would sit at staff meetings talking about integrity and transparency, but you never knew what exactly what was going on," an employee says.
Asked about the changes, Wright sent the Voice a written statement listing her accomplishments and claiming that companies invested with ADC because "they knew their dollars were being used wisely, efficiently, and effectively."
Wright's departure was presented as a promotion to a larger and higher-profile nonprofit. Robert Kueppers, chairman of the board of United Way NYC, said that the agency went through a rigorous process to select her and was impressed with her accomplishments at ADC.
But ADC insiders say it was Butts, a former vice chairman of the United Way NYC board, who found Wright the new role after ADC board members grew weary of the problems she created. And it was Butts who found her replacement in Ralph Dickerson, an Abyssinian Church parishioner who had previously run United Way NYC.
It was a curious form of what might be called executive laundering. Back in 2006, after Dickerson had retired from United Way NYC, an internal review disclosed that he had improperly used $227,000 of the charity's assets for personal expenses, such as hotel stays, dry-cleaning, and paying parking tickets. As a member of the United Way NYC board, Butts must have known about the review. So even as he moved Wright over to United Way NYC, quietly papering over any issues of alleged impropriety, he was bringing in a replacement with a very public—if largely forgotten—history of the very same behavior. A 2006 Times article noted pointedly that Dickerson was a protégé of William Aramony, who led United Way of America for many years until he was sent to prison in 1995 for fraud, tax evasion, and conspiracy. (In 2004, another Aramony protégé, Oral Suer, pleaded guilty to theft of $500,000.) The Times story also noted that Dickerson had outfitted his United Way NYC office à la Tyco's Dennis Kozlowski, with a "large Persian rug, a floor-to-ceiling fountain of cavorting dolphins, and a Tiffany-style lamp." Dickerson insisted to the Voice that his time at United Way NYC is "not at all related to this situation" at ADC, and that those earlier issues had been "resolved."
In fact, after the evidence emerged, United Way demanded that Dickerson repay $325,000 to do just that. Dickerson stalled for more than a year, and then finally agreed to a settlement in 2007, court records show. But in 2008, he balked at repaying the remaining sum of $84,000, and United Way sued him for defaulting on the agreement.
To defend himself, Dickerson hired a lawyer, Charles Simpson, who also works for Butts at ADC. Despite his written agreement to pay back all the money, Dickerson resisted through 2008 and into 2009. Finally, a judge had to order him to fork over the $84,000, the records show. Dickerson and the lawyer would work together again in 2012, when Dickerson's ex-wife, Gloria, filed a claim that "Abyssinian Development Corp. was the 'private lender' indicated in court papers agreeable to loan Dickerson up to $500,000" and that Butts "committed fraud with her former husband in an attempt to steal her residence, and [Butts] offered to purchase the home without her knowledge." She added that "This happened after I sought personal and spiritual counsel over a period of time from Rev. Butts. He used my personal and confidential information for his personal, unjust interest." Simpson, representing both Butts and Dickerson, rebutted the allegations in a court filing, and told the Voice the claim that ADC loaned money to Dickerson is simply not true. The case is still open.
Securing Wright's new job at United Way NYC wasn't Butts's last favor for his protégée. On the evening of Jan. 5 the reverend made calls to a top police official on her behalf after she was arrested for assaulting her husband, Gregg Walker.
It was actually Walker, a senior vice president with Sony, who had first called Harlem's 30th Precinct that night, to report his wife for the alleged assault. Wright filed a cross-complaint against Walker and, while she was detained, her mother made calls to a range of influential New Yorkers, including Butts, who called then-New York Police Department Chief of Community Affairs Phillip Banks. Banks, who was recently promoted to chief of department, the No. 3 official in the whole NYPD, is the brother of David Banks, the founder of the Eagle Academy Foundation, the creator of Mayor Bloomberg's Young Men's Initiative, and a close friend of Wright's.
After those calls, the charge against Wright was dropped the same night. The charge against Walker, however, was allowed to stand. Walker has pleaded not guilty and the case is still pending. Neither Walker nor his attorney would comment for this article, but people close to Walker believe pressure was brought to get the charge against Wright dropped.
Deputy Commissioner Paul Browne, a police spokesman, denied that Banks intervened in the arrest. "He was, however, contacted by the Reverend Calvin Butts and other clergy asking—not that the woman's arrest be voided—but that her arrest processing be expedited," Browne said. "Chief Banks was subsequently informed that the woman's arrest had been voided."
But the next morning, Jan. 6, Wright was arrested again. She had allegedly drilled through the lock on Walker's 68-year-old mother's door and attacked her, according to a criminal complaint filed by the Manhattan District Attorney's office. Walker's mother alleges that Wright slapped her in the face, scratched her arm, and pushed her. Misdemeanor counts of harassment and attempted assault against Wright are still pending. She has pleaded not guilty.
A police source questioned why 30th Precinct cops took Wright's word in the dispute with Walker: "Normally, the one who makes the initial report has greater credibility." As for Banks's role, the source says that even if he had merely inquired about the arrest and done nothing else, the precinct would have taken that as a signal. "Everyone reads between the lines," the source says. "It's a form of influence-peddling."
Back in 1973, a Bronx man named Buster Green bought the small parcel of vacant land from the city at 119 West 138th Street. He paid about $750. The property lay nearly untouched as the decades passed—a narrow slice of real estate just down and across the street from Abyssinian Church, on a block named for Odell Clark, an early Abyssinian deacon. Then, says Green, in a lawsuit filed last year, ADC officials swindled him out of that land, which by that point was worth close to $1 million.
Now 80 and a janitor at the Malcolm Shabazz Mosque on 116th Street and volunteer handyman elsewhere, Green alleges that in December, 2007, ADC filed a deed with the New York City Department of Finance that claimed ownership of his property. In a second filing that December, ADC reported that it had secured a $17 million loan from Wachovia Bank. It was only then, Green says, that ADC contacted him to ask him to turn over his interest in the property.
And so it was that on Jan. 25, 2008, at a mosque named in honor of Malcolm X's contributions to African-American civil rights, Green sat across a table from two ADC representatives. They wanted his land as part of a plan to build an apartment building there. The land isn't worth all that much, they told him. Maybe $2,500. Green didn't have a lawyer in attendance. He mulled it over for a moment, and then signed away the parcel on the spot. The document that Green signed—known as a quitclaim deed—had been prepared that July, six months earlier, court records show.
Two identical parcels directly adjacent to his, at 121 and 123 West 138th Street, were sold for a lot more money—$800,000 and $980,000, respectively. And ADC allegedly knew that, too. Both adjoining lots had been sold four months before he signed away his ownership, Green's complaint says.
Green's lawyer, Simcha Schonfeld, noted in his complaint against ADC and Wachovia that not only had ADC outmaneuvered Green, it borrowed $17 million from the bank without actually being the owner of the property. "ADC engaged in procedurally unconscionable practices by misrepresenting the value of the property, failing to disclose the value of the property," Schonfeld wrote. "The disparity is overwhelming and unconscionable. The conduct was fraudulent, willful, malicious, and oppressive beyond the bounds of common decency."
In a response, ADC's Simpson—who must be getting used to defending against fraud charges—denied the allegations. "There is a case pending, and I would need permission from my client to comment further," Simpson said. Apparently that permission is not forthcoming.