WASHINGTON, D.C. — Congressman John Shimkus has asked the inspector general for the U.S. Department of Housing and Urban Development to investigate bank loans that were arranged more than a decade ago by a former Vermilion County housing authority director.
The loans were never paid off, prompting the bank to file a lawsuit last month against the housing authority.
This week, Shimkus asked for an investigation into whether any federal laws or regulations were violated regarding a $1.66 million loan held by Longview Bank and Trust, which filed a lawsuit March 5 as its only recourse in recouping its investment.
Shimkus' staff discussed the case in his Washington office on April 13 with officials from Longview and HUD, as well as Vermilion County Board Chairman Mike Marron.
"Several potential violations were brought to my attention," Shimkus wrote in the letter to the Inspector General. "Accordingly, I feel it is my responsibility to request an immediate investigation."
Around 2005, former Vermilion County Housing Authority Executive Director Tony Hasbargen arranged a $1.6 million loan for renovations to housing authority properties through Hoopeston Capstone Bank, which later merged with Main Source Bank. The local housing authority, with offices based in Rossville, oversees properties in several small Vermilion County towns outside of Danville, which has its own, separate housing authority.
Hasbargen used federal funds to make some payments on the original loan, and in 2012, he had the loan refinanced by First National Bank in Georgetown, which later became Longview Bank and Trust.
In 2013, Hasbargen was fired following allegations of improper spending, and an audit by HUD's Office of Inspector General reported that the loan was not valid, because federal property cannot be mortgaged. Payments to the bank ceased at that time and have not been made since, at the directive of HUD regional officials.
In March, after nearly five years of nonpayment on its loan, Longview filed its lawsuit in Vermilion County Circuit Court, naming Hasbargen and HUD as well as the current board of commissioners for the Vermilion County housing authority. Only one of the five commissioners was on the board at the time that the loan was arranged by Hasbargen.
Frustrated with HUD's handling of the situation and with being named in the lawsuit, all five commissioners resigned two weeks after the suit was filed.