The Trenton Times published the following article on July 10, 2013. To read the full article, click here.

Federal agents question city officials as part of investigation of Palmer administration housing development projects

By Alex Zdan/The Times 
on July 10, 2013 at 6:40 AM

TRENTON — Federal agents were in City Hall yesterday as part of an ongoing criminal investigation of housing development projects that began during the administration of former Mayor Douglas Palmer, who left office three years ago.

Housing and economic development director Walter Denson said the agents interviewed several city officials. A federal subpoena issued in December demanded information on funding for five housing projects involving developer Robert Kahan and his company Tara Developers. FBI agents interviewed at least one official just before Christmas as part of the probe.

The agents left yesterday after a 40-minute meeting in the housing department offices, and were not seen carrying out any seized documents or paperwork.

Kahan was at Tara Developer’s West State Street office yesterday afternoon, where he refused to discuss the investigation or comment on any connection to Palmer.

“I’m not interested,” he said. “No comment.”

Asked if he was a cooperating witness in the federal investigation, Kahan again said he would not comment.

Kahan was one of two city developers who did most of the city’s housing development during the second decade of Palmer’s 20 years in office, former planning director Andrew Carten said. The city’s reliance on Kahan and Leewood Development’s Michael Fink drew complaints from other developers, he said.

“They were up at the plate more so than others,” Carten said.

Palmer said yesterday he has not been contacted by any law enforcement agencies about Kahan, and did not know if former members of his administration had been interviewed as part of the probe.

“This has never been about me or my administration,” Palmer said.

The federal subpoena focused on the Pennington Housing Project on Titus Avenue off Pennington Avenue, Southwest Village I and II on Passaic Street and Spring Street, Canal Plaza near the Battle Monument, and Catherine S. Graham Square on the former Magic Marker industrial site.

The subpoena ordered the city to turn over voluminous documentation on the funding sources, communications between Kahan, the city, and various companies he formed for each projects, construction audits and any evidence public or private funds were repaid. The FBI had initially subpoenaed the information nearly three years ago.

The two agents who arrived at City Hall yesterday appear to be from the Internal Revenue Service, arriving in a sedan with a Treasury Department placard in the window with the IRS seal. An IRS spokesman was unable to offer any comment yesterday.

Kahan has at least one $45,132 lien against him from the Titus Avenue project, issued by Maryland firm Shelter Systems Limited. The claim dates back to 2006, according to documents filed with the Mercer County Clerk.

The Kahan investigation appears to have no connection to the FBI’s probe of Mayor Tony Mack, which began weeks after the mayor took over from Palmer in July 2010 and resulted in Mack’s indictment on six counts of bribery, extortion, wire and mail fraud last December. Mack’s trial is scheduled to begin in early January.

While all the development project began under Palmer, work on some continued into Mack’s term, and two of the projects were never completely realized. Many of the 63 homes built and rehabilitated on Passaic and Spring Streets as part of Southwest Village I and II remain empty, having never been sold in the city’s effort to create a homeownership zone.

“I don’t think even Bob Kahan is satisfied with how things turned out on Passaic and Spring,” Carten said. “Of all the projects he did, it’s the one that stands out as one that did not meet his expectations and the city’s expectations.”

Palmer said he could not remember if he spoke with Kahan after he left office, and has since lost Kahan’s phone number. But the federal investigation does not change his view of Kahan’s work, he said.

“All I can say is he’s done great projects,” Palmer said.

Contact Alex Zdan at azdan@njtimes.com or (609) 989-5705.