Cecily Burt

Money for nothing

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Nedir Bey, a close confidant of the late Your Black Muslim Bakery founder Yusuf Bey, received public funds for his anemic 2002 run for the Oakland City Council but faced little scrutiny from election officials for suspect political contributions and spending.

The discovery appears to be one more example of the Bey empire’s alleged scams and schemes uncovered by the Chauncey Bailey Project since the eponymous journalist’s August 2007 murder, which law enforcement sources have linked to the bakery.

For five years the Fair Political Practices Commission in Sacramento sat on a request to investigate alleged campaign finance irregularities committed by Nedir Bey — who owes the city of Oakland $1.5 million in another matter — then dropped the probe because too much time had elapsed.

Bey ran for the Oakland City Council’s District 4 seat in March 2002 but got only 268 votes. He received $14,178 in public matching funds for his campaign despite questions raised by the head of Oakland’s Public Ethics Commission about the sources of the candidate’s contributions.

In August 2007, however, the FPPC sent a letter to Bey announcing it would not be taking any action against him, “given the age of this case and our current enforcement priorities.” Bey refused to comment on any of the main points in this article.

FPPC spokesperson Roman Porter said he could not say why the investigation lagged as long as it did, other than to say that a former enforcement official refrained from pursuing the case. Porter said the official closed a large number of cases to decrease a backlog, but Bey’s wasn’t one of them.

A new chairman and enforcement team came on board last year, but by that time the statute of limitations had already expired on two of the matters contained in Oakland’s complaint and there wasn’t enough time left to investigate the third matter before the statute of limitations ran out, Porter said.

Oakland’s Public Ethics Commission executive director, Dan Purnell, passed the case to Sacramento instead of completing the investigation locally. City law gives the Public Ethics Commission the sole authority for civil enforcement of the Limited Public Financing Act, which contains regulations for disbursing matching funds.

Purnell suspected irregularities in Bey’s campaign expenditures as early as January 2002, 10 months before he asked the state FPPC to initiate an investigation.

The March 2002 election was the first in Oakland to offer public financing to candidates who agreed to abide by voluntary spending limits. Candidates in the election could qualify for up to $14,700 in matching public funds from a special account established by the city to help defray the cost of running for office.

Matched contributions had to be $100 or less. The Committee to Elect Nedir Bey reported it had raised a total of $14,517, of which $14,178 was eligible for matching funds. The campaign reported it spent a total of $39,741 on the election.

Documents obtained from the FPPC through a public records request show that of 145 contributions, 123 were made with $99 money orders with sequential numbers, all apparently purchased from the same location over a four-day period between Jan. 14 and 18, 2002. Only 22 donations to Bey’s campaign were written on personal checks.

Purnell asked Bey prior to disbursing the matching funds if the money orders were purchased at the same time in bundles and if anyone other than the donor had purchased them. Bey declined to comment for this story, but he explained to Purnell at the time that the donors were transported to the store en masse to buy the money orders, and he promised no one else had obtained them for the donors.

Bey also assured Purnell that the listed contributors were adults who gave their own money, as required by law, although 26 donors listed their addresses as either 5832 or 5836 San Pablo, locations used at that time by Your Black Muslim Bakery.

Once Bey got the money, he stopped filing required campaign finance statements with the city. When he eventually filed them in September 2002, the forms offered no detailed accounting of the $39,741 worth of expenditures. Nor did Bey explain the gap between the amount spent on his campaign and the contributions received, which came to $28,695, including the public matching funds.

Often the bulk of election costs come from fees paid to consultants, printed campaign materials, fundraising events, and office rental. Bey’s committee paid all but $500 to a person by the name of Vaughan Foster, who provided no address or further identification. Foster reportedly received $27,000 for salary, $11,000 for circuutf8g petitions, $241 for voter registration, and $1,000 for phone banking.

Bey’s birth name is Victor Foster.

The Public Ethics Commission received a complaint and ultimately voted in August 2002 to forward the matter to the state FPPC after a stormy hearing during which Bey told the commissioners he was “not a professional politician,” as the Contra Costa Times reported. He also told the commission he “would not bow down to [them].”

In an Oct. 10, 2002, letter to state authorities, Purnell wrote, “The commission believes this matter is important because the commission relies on the content and accuracy of campaign statements to help administer its matching fund program.”

The FPPC has moved to subpoena bank records and other materials during the intervening years. But in August 2007, nearly five years after Purnell’s initial request and four years after he forwarded hundreds of pages of documentation from the campaign to Dan Schek, an FPPC investigator, Bey received a letter declaring the case closed.

Jean Quan, the District 4 incumbent who ran against Bey in 2002, said she didn’t recall him stumping widely or knocking on doors in the area’s neighborhoods. She was surprised he raised $15,000 from private donors to begin with and said he didn’t appear to spend much of it on campaign signs.

“I ran into a few fliers of his,” she said, “but nothing that would cost $30,000.”

According to the city’s municipal code governing elections, the Public Ethics Commission is supposed to “promptly advise” the city attorney in writing, as well as the “appropriate prosecuting enforcement agency,” of any evidence of criminal violations.

The law states, “any person who knowingly or willfully misrepresents his or her eligibility for matching funds … is guilty of a misdemeanor.”

The law also gives the local commission broad latitude to recover the funds, including penalties and fines not to exceed $1,000 per violation, and authorizes the commission to sue the candidate.

But none of that was done in Bey’s case, Purnell said. The matter was referred to the state because the Ethics Commission does not have the authority to enforce state elections laws, which at that time appeared to be Bey’s most obvious violation, Purnell said.

“To make a criminal complaint we have to prove intent,” Purnell said.

He said he was never pressured by anyone to refer the matter to the state instead of local authorities. Back then he had no idea who Bey was, that he was connected to Your Black Muslim Bakery, or that he had defaulted on a $1.1 million economic revitalization loan from the city of Oakland just a few years before running for the Oakland City Council, Purnell said.

“I didn’t know Nedir Bey from Adam,” Purnell said, adding that he later learned of Bey’s background from a November 2002 article in the East Bay Express.

“What I recall him telling me was that it was a big grassroots effort on his part, that many of his contributors were poor and lived in a complex and he organized them to go down there [to buy the money orders],” Purnell said. “It sounded plausible.”

The city’s original public financing ordinance was less restrictive regarding matching contributions than it is now, partly because of the Bey case. Contributions made by money order are no longer eligible for matching funds and now must be made on two-party checks drawn on the bank account of the contributors.

In the past, Bey has represented himself as a “spiritual adviser” to the late Antar Bey, who was briefly head of Your Black Muslim Bakery. Other bakery associates face numerous criminal charges in Alameda County, including torture, kidnapping, real estate fraud, and the Aug. 2, 2007, killing of Oakland journalist Bailey, who was working on stories about the Bey empire.

Most recently Nedir Bey served as president of the school site council for Fruitvale Elementary School.

Bob Stern, president of the Center for Governmental Studies in Los Angeles, said the understaffed FPPC couldn’t investigate every small-time municipal election.

But, he said, “when the ethics commission realized the FPPC wasn’t acting on the case quickly, then Oakland really should have begun looking at it.”

Cecily Burt is a staff writer for MediaNews, one of the Guardian‘s partners in the Chauncey Bailey Project. For more information and to read past stories, go to www.sfbg.com/news/chaunceybailey.

How Oakland’s fearful politicos enabled waste: Part III

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In 1996, Your Black Muslim Bakery lieutenant Nedir Bey had a wealth of ammunition with which to lobby city leaders for a $1.1 million loan to fund his health care company, E.M. Health Services.

The previous year, the city of Oakland had agreed to spend hundreds of millions of dollars to bring the Oakland Raiders back from Los Angeles, a deal that quickly soured and has cost the city and Alameda County taxpayers more than $20 million a year ever since.

The developers of a new downtown ice rink had defaulted on $11 million in bonds just three months after the facility opened.

The city had also given plenty of money to other businesses, most white-owned. As a result, the City Council was getting a relentless drubbing from bakery members and black business associates who lined up at meetings to speak on behalf of E.M. Health Services and its efforts to obtain the loan.

They argued that white business owners had an easier time obtaining credit, unsecured loans and support from the city while black-owned businesses endured undue scrutiny. Elected officials endured hints and outright accusations of racism if they dared ask questions about the company or collateral for the loan.

Some of those accusations occurred during the June 4, 1996, council meeting where the officials discussed giving E.M. Health an interim start up loan of $275,000 in city funds. The loan was needed because the company’s application for a $1.1 million share of federal Housing and Urban Development funds for job training programs had not yet been distributed to the city of Oakland.

During the meeting, Shannon Reeves, then-president of the NAACP Oakland chapter, accused the city’s black elected officials of forgetting where they came from.

“It’s time to deliver for the people in the community…,” Reeves said. “We need those who look like us to advocate for us.”

Beth Aaron, executive director of the Bay Area Black Contractors Association also testified at the meeting that night. She said the record proved that white-owned businesses had a much easier time getting Oakland to open its purse strings.

“Those who are white or friends of friends get things done very quickly,” she charged. “Those of us who are of color… do not.”

Even Nedir Bey got into the act.

“A few years ago we wouldn’t have been able to come here and ask for anything without getting run out,” he said. “Cut us a check on Friday for $275,000. Compare us to other projects that you have passed.”

A decade later, E.M. Health is just an unpaid debt on the city’s books, its license suspended by the California Franchise Tax Board. Principal payments first due in May 1998 never materialized, and by the time city staff knocked on its doors in October 1999, the offices had been cleared out.

But the story of how the business, a subsidiary of the now-bankrupt Your Black Muslim Bakery, received the money despite a flawed business plan and a disturbing criminal incident in Nedir Bey’s past illustrates the extent politics and pressure played in officials’ decision to approve the loan.

Bakery members have also been linked to several violent incidents, including the shooting death of journalist Chauncey Bailey, as well as alleged real estate and welfare fraud and child rape. ‘Intimidation factor’

“In reality it was political pressure that got them the loans,” said now-City Council President Ignacio De La Fuente, who was a councilmember at the time. “Deep down inside everybody knew it was bull—. No business plan, no records anyone could show. … And they kept saying they were failing because they didn’t get the city’s money soon enough.”

Retired councilmember Dick Spees, who is white, remembers how heated those meetings were, of being accused of racism because he dared question the business plan or ask about collateral or a missing business license. Bakery members would line up along the wall and refuse to sit, he recalled.

“It sounded good (on paper), this training program to help black people who were not getting opportunities,” Spees said recently. “But there was this intimidation factor, it just didn’t feel comfortable.”

Spees said he grew suspicious when Nedir Bey started racking up ineligible expenses even before federal government lenders had determined E.M. Health’s job training program met its criteria for financing.

Spees said he ended up voting for the loan and for several thousand dollars in advances from city coffers after he was assured by city staff on more than one occasion that HUD would approve the loan and that Bey had put up collateral.

De La Fuente, now council president, said he understood that the HUD money was intended for riskier loans, but that was no reason to cave in to pressure and give the money without trying to protect the city’s resources.

“I never got their support,” he said, referring to his black council colleagues, Nate Miley, Dezie Woods-Jones, Elihu Harris and Natalie Bayton.

Kidnap, torture

The city gave Nedir Bey money despite a disturbing incident that occurred on March 4, 1994, when Qiyamah Corporation, E.M. Health’s nonprofit parent company was still in its infancy.

On that date, Nedir Bey and Abaz Bey, another spiritually adopted son of bakery founder Yusuf Bey, were arrested and charged with abducting, assaulting, torturing and robbing a man they believed had cheated them on a real estate transaction.

Abaz Bey and other members of the bakery lived in an apartment building on 24th Street in North Oakland, the same one Nedir Bey wanted to buy with his very first request for city money, that ultimately was reduced in scope. The owner had hired the bakery to provide security after being sued by tenants fed up with rampant drug dealing and other crime.

According to police and court records, three men, led by Nedir Bey, beat the man with a flashlight and burned him with a hot knife. The arrests sparked a tense, full-scale standoff between more than 40 police officers and a similar number of male bakery members.

According to news reports, then-Mayor Elihu Harris agreed to meet the demand of bakery patriarch Yusuf Bey to discuss the standoff and the arrests.

Nedir Bey pleaded no contest to one felony count of false imprisonment. He was sentenced to three years’ probation after a veteran Oakland police officer and members of the community wrote a support letter on his behalf.

The probation report noted that two other prominent Oakland residents acted as character references for Nedir Bey: Alameda County Supervisor Keith Carson and Larry Reid, then aide to Mayor Harris. However, Reid, now an Oakland city councilmember, said he never wrote a letter or served as a reference for Nedir Bey.

When Tribune reporters Diana Williams and Paul Grabowicz questioned whether the the arrest should impact his loan application, Nedir Bey said such details were irrelevant.

“Nelson Mandela spent 27 years in prison, and he was respectable enough to become president of South Africa,” he was quoted as saying in a June 1996 Oakland Tribune article.

Unapologetic support

Alameda County Supervisor Nate Miley, who was an Oakland council member and pushed hard for the E.M. Health loan, said recently that he never knew about Nedir Bey’s felony conviction or other clashes between bakery members and the police.

“Then-police chief Richard Word and I chaired the Public Safety committee and I didn’t know about it,” Miley insisted. “Clearly, I had a sense that the police had some concerns (about bakery members), but not how it’s been depicted recently.”

Miley is unapologetic about his unflinching support of E.M. Health during his time on the council. He wasn’t overly concerned when the company defaulted, he told his colleagues at the time, because the federal money was intended to fund higher-risk ventures.

He recalled in a recent interview that African-Americans had good reason to believe black businesses weren’t getting a fair share of city contracts or loans. Oakland’s leaders had poured millions in public money into bringing the Raiders home from Los Angeles and bailing out the Ice Center, Miley said, and African-Americans never let them forget it.

It’s also possible that city staff and some council members were intimidated by the accusations of racism, he added.

“I think we were very sensitive (about accusations) of being racist and Uncle Toms,” said Miley, who is African American.

“When E.M. came in to get a loan … on the face of it that looked like very worthy cause, something that would serve the public. So we decided to give them a chance,” Miley said, adding that there was some concern over the money being used for a car and consultants.

“We gave them some technical assistance and guidance rather than pulling the rug out from under them completely,” Miley recalled. “Still, even if it’s federal money they got, it’s still public taxpayer dollars down the toilet.”

Miley said he admired Yusuf Bey and the way he preached self-reliance, spirituality and discipline. Oakland was suffering record homicides and here was someone who was reaching out to ex-cons or those who might otherwise get caught up in the cycle of violence and helping them turn their lives around and earn money legitimately for their families, Miley said.

In February 1996, a smiling, soft-spoken Nedir Bey stood before the City Council and told them as much.

“This is an excellent program and it will target men and women who are not working presently and have no job skills,” Bey said. “We can train them in the home health care field and start them on a better way of life.”

‘Brilliant’ concept

Redevelopment Agency Director Gregory Hunter said the company’s goals were hard to turn down even if E.M. Health’s promises lacked details.

“The concept was brilliant, absolutely brilliant,” he said, adding that the business proposal drew applause from as far away as Washington, D.C. “Unfortunately, the execution fell somewhat short of the expectations the city had.”

Elihu Harris, now the chancellor of Peralta Community College District, was reluctant to discuss the matter recently because he said he did not recall many details. Harris said his dad received home health care from employees of E.M. Health, but it was his mother who handled the contract.

He added that a community loan advisory committee _ a body the federal lenders required _ had voted to fund E.M. Health, and the council debated that recommendation back and forth for many months. He said the council was not provided with a lot of details about the company.

“The (loan committee)… had really done the research,” Harris said. “The council was between a rock and a hard place.

“(E.M. Health) had made some mistakes and they were going to try and rectify those mistakes,” Harris said. “There was a lot to be concerned about, but they had strong community support.”

One supporter who turned out early and often to lobby for Nedir Bey was Theodora Marzouk, an administrator for Oakland-based Community Care Services, Inc.

She testified more than once about the shortage of training programs for nurses’ aides and said her own company couldn’t supply enough of them. She urged Oakland’s leaders to fund E.M. Health.

But Marzouk ended up on E.M. Health’s payroll for the last two quarters of 1996 earning more than $20,000, city records show.

Marzouk refused to comment for this story, but she sounded surprised to hear that she’d once been listed as an employee.

In any case, by 2000, the company’s business license was suspended, and by 2003, Alameda County records show, state and federal tax officials during the intervening years had imposed tax liens on the company’s assets totalling nearly $200,000.

But today, E.M. Health’s motto “Big enough to serve, small enough to care” is little more than a failed promise.

MediaNews investigative reporters Thomas Peele and Josh Richman, KQED reporter Judy Campbell, and radio reporter Bob Butler contributed to this report. Cecily Burt is a MediaNews staff writer. G.W. Schulz is a staff writer at the San Francisco Bay Guardian.

How Oakland’s fearful politicos enabled waste: Part 1

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Editor’s note: This is the first of a three-part series examining a $1million city loan to a Your Black Muslim Bakery affiliate that was never repaid.

It was a noble cause: Train welfare recipients as home health aides and put them to work caring for homebound sick and elderly clients.

A decade ago, while Your Black Muslim Bakery founder Yusuf Bey enjoyed unwavering support and adulation from black businesses and politicians, his spiritually adopted son, Nedir Bey, pressured and shamed city leaders into giving him a $1.1 million loan to help finance the promise of black entrepreneurial independence.

But the venture, E.M. Health Services, swiftly collapsed. The failure of CEO Nedir Bey to repay a dime of the loan made headlines at the time and prompted most to assume the company’s demise was caused by a combination of poor business decisions, bureaucratic hurdles and simple bad luck.

But was it?

City officials overlooked flaws in the company’s business plans and relented to black community leaders who insisted they award the loan, according to interviews, documents and other correspondence reviewed by the Chauncey Bailey Project.

The loan was granted to Nedir Bey despite his well-publicized arrest for the torture and kidnapping of a man two years earlier. Bey pleaded no contest to one felony count of false imprisonment and was sentenced to three years’ probation.

In awarding the loan to Nedir Bey, nearly every elected official lauded the accomplishments of Yusuf Bey in turning around the lives of troubled young men. Yet dozens of those men had armed themselves during a standoff with police two years earlier. And a few years later, Yusuf Bey himself would be accused of raping and fathering children with young girls who were placed in his care.

And the Chauncey Bailey Project has learned that in late 1999 and early 2000, the FBI investigated E.M. Health Services’ loan and Nedir Bey, although it’s not clear how the probe was resolved.

In the wake of reported real estate and welfare fraud allegedly committed by the wives and children of Yusuf Bey _ as well as the August arrest of a bakery member accused of the Aug. 2 shooting death of Bailey, the editor of the Oakland Post _ a deeper review of the E.M. Health Services loan reveals several questionable expenses that suggest an internal pattern of cronyism that enriched nearly every facet of the bakery empire’s inner circle including:

-Tens of thousands of dollars in consulting fees paid to companies controlled by Nedir Bey and his wife, Rosemarie Boothe-Bey, as well as other bakery insiders.

-Thousands of dollars in security fees paid to yet another company controlled by Your Black Muslim Bakery and thousands more in advertising fees paid to Universal Distributors, a company operated by associates of the bakery.

-$20,000 paid to the administrator of an Oakland home health company who had urged the city to award the loan to E.M. Health Services.

-Top-end salaries paid to Nedir Bey and his wife, Rosemarie Boothe, as well as to two of the Muslim wives of bakery patriarch Yusuf Bey who are accused of receiving fraudulent welfare payments at the time, and a second woman with whom Nedir Bey fathered children. Other bakery insiders filled the company’s payroll.

-15-day loans made to E.M. Health by Nedir Bey and other bakery associates that were repaid with hefty loan fees.

The beginnings

On April 30, 1996, the Oakland City Council awarded E.M. Health conditional approval for a $1.1million federal loan to establish a training program for home health aides.

According to loan documents and internal memos, the city approved that loan despite flaws in the company’s business plan and no discernible collateral or equity to back up the debt.

The money was part of a $44 million pot — half loan, half grant — awarded to the city by the federal Department of Housing and Urban Development to fund start-up ventures or help expand existing businesses in three distressed areas of Oakland with high unemployment rates. The federal money was supposed to create jobs, and it was intended for borrowers who could not qualify for conventional loans.

E.M. Health’s share of that pot — through the leadership of then-bakery lieutenant Nedir Bey — would further Yusuf Bey’s efforts to empower poor black residents and ex-cons by giving them training and job opportunities at various bakery outlets and private security companies affiliated with the patriarch’s expanding empire.

The loan proceeds were supposed to be used for start-up costs to recruit workers and patients, establish the home health training program and provide ongoing operating expenses.

The company never lived up to its promise. Ten years have passed and still not a cent has been repaid. The equipment pledged to secure the proceeds never surfaced. The promised jobs for low-income residents, as well as the promised services for sick and elderly clients, evaporated. The Oakland city attorney sued to recoup the debt, plus interest, but the city’s finance department has not been able to collect.

Nedir Bey, whose last listed occupation is business development consultant, would not answer questions about the business operations or why the company failed to take hold, saying that was “in the past.” In a brief telephone conversation, Bey said there were other Oakland businesses that defaulted on city loans and he asked if they were receiving the same level of scrutiny. Bey remains in Oakland but says he is no longer affiliated with the bakery.

Former bakery associate and businessman Ali Saleem Bey has spent the last several months trying to save the heavily indebted bakery enterprise from liquidation. Saleem Bey said he hasn’t spoken to Nedir Bey in years, but he defended E.M. Health’s efforts to provide job training and services to poor Oakland residents.

Saleem Bey, reached by phone, said the city subjected the business to undue scrutiny compared with others seeking public money. That scrutiny also led to the company being underfunded, Saleem Bey said, and contributed to its demise.

“We really felt we were sabotaged by the city, …” said Saleem Bey, who worked alongside other bakery associates to help launch the business.

“Politically, they never wanted to give us the money … and when it came time to work with us and make it go, they made it as hard as possible,” Saleem Bey said. “They wanted to wag their fingers at us.”

But the only thing that remains today from the ashes of E.M. Health is a considerable outstanding debt to taxpayers — a debt that could have been much larger.

Big plans, big loan requests

The Qiyamah Corp., E.M. Health’s nonprofit parent company, first filed state business registration papers in October 1993. The nonprofit organization was formed to expand the bakery’s community work and job training programs, and it wasn’t long before bakery members sought the city’s help in financing a new home health care venture.

Nedir Bey originally approached the city in approximately 1994 for a $3.4million loan to buy an apartment building on 24th Street in North Oakland. That would be used, he said at the time, as a base for his home health care program.

The building purchase didn’t qualify for HUD funds, and over time it was dropped from the plan. The loan request was whittled down to the $1.1 million, which was conditionally awarded to Qiyamah’s for-profit subsidiary, E.M. Health.

The company promised to create 32 full-time jobs, more than half of which would be filled by residents of West Oakland, East Oakland or San Antonio/Fruitvale — the three economically depressed areas targeted by HUD.

The company also promised to train 120 low-income residents and welfare recipients as home health workers, who would in turn provide services to Medicare and MediCal patients and other clients who were privately insured. According to E.M. Health’s business plan accepted by the city, insurance reimbursements would be more than sufficient to repay the loan. It might have worked if Nedir Bey had started small.

Instead, he purchased expensive office furniture and loaded the payroll with bakery insiders, most of whom had no health care experience, while spending little initially on actual medical supplies, according to loan documents.

Bill Claggett, the former director of Oakland’s Community and Economic Development Agency who inherited the E.M. loan in late 1997, said he couldn’t believe the city gave the company “a dime,” let alone $1.1 million.

“They didn’t know what they were doing,” Claggett said. “The cost per person served was much higher than any other similar business. It was clear (Bey) didn’t have the kind of staffing he needed for that operation.”

E.M. Health opened its doors on July 10, 1996, in an office storefront on Grand Avenue. That first year’s tax return posted income of $6,007 and a loss of $437,802. It spent $85,886 on consultants, $10,600 on security and only $5,708 for medical supplies. It survived almost exclusively on the city loan.

The list of employees included Nedir Bey’s wife, Rosemarie Boothe; and another woman, Kathy Leviege, with whom he has two children; family associate Janet Bey; and Madeeah Bey and Farieda Bey, two wives of bakery patriarch Yusuf Bey who are alleged to have received illegal welfare payments at the time, according to civil depositions taken recently in an unrelated case.

Within three months of receiving start-up funds from the city, Nedir Bey was on track to earn $108,000 a year, a figure that was out of line with what similar agencies in the Bay Area paid their CEOs, according to a spring 1997 memo in the city’s loan files.

Quarterly wage reports filed with the state show that Nedir Bey’s wife earned $47,000 as the assistant administrator, and Yusuf Bey’s wives — whose occupations were listed as marketing director and LVN/outreach coordinator — earned nearly $60,000 each, the same as Janet Bey, a registered public health nurse. Other than Janet Bey, none of the women had nursing degrees or related licenses, according to a review of state documents. Saleem Bey said it should not seem suspicious that members of the bakery’s extended family ended up on E.M. Health’s payroll. He said they worked many different jobs to help support the bakery empire and to further Yusuf Bey’s edict to be self-reliant.

He said they also worked alongside Nedir Bey to try and make the enterprise a success. To infer otherwise would be a mistake.

“It behooved the organization to be successful, so it wasn’t as if everybody was just eyeing this money and they wanted to steal a million,” Saleem Bey said. “If the business plan was successful, by this time it would have created 10 times that amount of money and created many jobs.”

Even so, the city’s loan staff requested that the compensation for E.M.’s three top executives be reduced by 20 percent, a move Nedir Bey protested in a memo to city officials.

Other questionable expenses

There were other missteps and invoices that city officials questioned before the city received the HUD proceeds, including a lease on a Cadillac and reimbursements to a security company controlled by the bakery.

One city staffer flagged the vehicle lease, $64,000 in consulting contracts, and thousands budgeted for security as ineligible uses of the federal funds. “Staff is exploring options for recovering these costs,” reads one memo from April 1, 1997.

That same year, in addition to their salaries, E.M. Health paid approximately $40,000 in consulting fees and service payments to Nedir Bey and relatives either directly or through companies that he and other associates of the bakery controlled, according to records on file with the city of Oakland.

Bakery associates also made 15-day loans to E.M. Health to cover operating expenses and charged substantial interest fees in return. Nedir Bey earned a $750 fee for a $9,000 loan he made to the company, and Ali Saleem Bey charged $1,000 interest for a $13,750 loan. Time after time, city staff questioned the invoices E.M. Health submitted for reimbursement, asking for more details or supporting documentation. But the money was never withheld for long.

MediaNews investigative reporters Thomas Peele and Josh Richman, KQED reporter Judy Campbell and freelance radio reporter Bob Butler contributed to this report. Cecily Burt is a MediaNews staff writer. G.W. Schulz is a staff writer at the San Francisco Bay Guardian.