By Edward T. Pound, National Journal
© National Journal Group Inc.
Tuesday, Feb. 5, 2008

When federal officials took over the Housing Authority of New Orleans in February 2002, the public housing projects managed by HANO were a mess -- neglected, crime-ridden, many of the apartments boarded up. Alphonso Jackson, then the deputy secretary of the Housing and Urban Development Department and now its secretary, would later put the takeover in perspective: "These properties," he said, "suffered from neglect and deterioration; many were over 70 years old." In fact, he went on, "of the 7,379 units in the public housing inventory of [HANO], only 5,146 were occupied."

	Records show that Marcia Jackson was a consultant for two firms that worked on projects in New Orleans. Alphonso Jackson's defense lawyer has been calling witnesses to find out what they know about a federal probe.

When Hurricane Katrina struck the Gulf Coast in August 2005, the storm waylaid HUD's redevelopment plans, at least for a time. Now Jackson and other housing officials are pushing a controversial proposal to demolish more than 4,000 units in four big housing projects and build mixed-income neighborhoods.

But Jackson's focus on New Orleans may, in the end, prove to be his undoing. Federal investigators and a grand jury in Washington are exploring the secretary's ties to contractors who have been handed lucrative business at HANO under HUD. In at least one case, Jackson helped a friend, William Hairston, obtain contracting work, according to an account that Hairston has given to National Journal. Jackson testified before a Senate panel last year and during an earlier federal inquiry that he never intervened in awarding contracts.

Jackson's problems may be growing. It turns out that his wife, Marcia, a consultant in Washington, had financial ties to at least two companies that did business at HANO. In one case, a St. Louis company won a $2.4 million architecture-engineering contract in 2003 for a housing development under HANO's control; the second company was a subcontractor on that job. In another instance, the St. Louis firm was part of a team selected to redevelop a major public housing project for the New Orleans agency. In each case, Jackson's allies played important roles in choosing the firm.

Public records show that Mrs. Jackson has worked as a consultant for the two companies, but National Journal could not determine what she did for them or what they paid her. She and Jackson did not return a phone message or respond to written questions. Jerry Brown, a HUD spokesman, said that Jackson would not comment because of the ongoing criminal investigation.

Meanwhile, the grand jury has begun calling witnesses, including a senior HUD contracting official, according to a person familiar with the matter. Additionally, Jackson has hired prominent St. Louis criminal defense lawyer James Martin to represent him. Martin, a former federal prosecutor, did not respond to phone messages and written questions. According to several people, he has been interviewing witnesses in the case in an effort to find out what they know about the investigation.

Nadine Jarmon, a former receiver at HANO, said that Martin phoned her in December to ask what federal investigators were up to and what she knew about Hairston, the Jackson friend who was paid more than $485,000 for working at HANO during an 18-month period. "He asked me all about William Hairston," Jarmon said. "He asked me what the investigators wanted to know from me."

Hairston, a stucco contractor, is a central figure in the probe. In interviews with NJ late last year, Hairston said that Jackson helped him to land the job as a construction manager at HANO around January 2006. Although court records indicate that Hairston has struggled financially in recent years, he maintained that his contracting business was doing well when Jackson asked him to help out at HANO.

Hairston also said he understood that Rep. James Clyburn, D-S.C., who is now majority whip, had recommended him to Jackson for the HANO post. He described both Jackson and Clyburn as friends. And Hairston said that the Jacksons and Clyburn were guests at a holiday party he gave at his Hilton Head Island, S.C., home in December 2006. Clyburn's office did not answer questions relating to Hairston. The Jacksons own a vacation home at the resort.

Despite the criminal inquiry, which involves federal prosecutors, the grand jury, the FBI, and HUD investigators, Jackson has remained in the Cabinet post he has held since 2004. That is not entirely surprising. He is a close friend of President Bush's from their days in Texas. Jackson's wife is a friend of first lady Laura Bush's and often attends social functions at the White House. In 2001, President Bush appointed Mrs. Jackson to the Commission on Presidential Scholars.

Marcia Jackson, who ran a small marketing and development firm in Texas before moving to Washington, has represented only a few companies during her husband's time at HUD. Alphonso Jackson's public financial disclosure reports identify his wife as a "marketing consultant self-employed specializing in municiples & cities."

There is no indication that Mrs. Jackson is a target of the federal inquiry. Nonetheless, investigators recently began asking questions about two minority-owned companies that have worked on HANO projects and that have also used Mrs. Jackson as a consultant, according to a person familiar with the probe. The companies are Kennedy Associates, a St. Louis architectural and engineering concern, and MetroplexCore, a Houston environmental and industrial services company once known as Metroplex Industries. Both firms are run by men who have had ties to the HUD secretary.

MetroplexCore's chairman and CEO is Willard L. Jackson Jr., a close Jackson friend (but not a relative). In 1995, then-Gov. Bush appointed the two men to the Board of Regents of Texas Southern University. According to MetroplexCore's website, President Bush appointed Willard Jackson to the Federal Home Loan Bank Board of Dallas in 2002. Willard Jackson, sources said, frequently visits the HUD secretary at his office in Washington, and has lobbied HUD officials in behalf of other companies. Willard Jackson did not respond to requests for comment.

Meanwhile, Kennedy Associates has been a big winner in New Orleans. The company was selected by HANO as the architect to design the Guste low-rise development in November 2003. Last year, Kennedy Associates, operating under the name KAI Design & Build, was part of a team led by another St. Louis firm, McCormack Baron Salazar, chosen to redevelop the C.J. Peete public housing project.

In the case of the Guste development, the Kennedy firm was awarded a $2.4 million design contract on November 6, 2003. At the time, Kennedy Associates was no longer a client of Mrs. Jackson's; however, public records show that the Kennedy firm still owed her an undisclosed amount of consulting fees. Willard Jackson's company at the time, Metroplex Industries, worked as a Kennedy Associates subcontractor at Guste, HANO records show.

Kennedy Associates beat out other competitors for the Guste design contract. The firm was selected by an evaluation team that included Lori Moon, an old friend of Alphonso Jackson's who worked with him at public housing authorities in St. Louis, Washington, and Dallas. Jackson, then HUD's deputy secretary, dispatched Moon to HANO in early 2002 to serve as deputy receiver, according to people familiar with his actions.

Moon and Jackson have given differing accounts of their actions at HANO, and she has emerged as an important witness in the government's investigation. In a statement issued in response to questions from National Journal, Moon said she was aware at the time of the Guste award in 2003 that Alphonso Jackson knew Michael E. Kennedy, the company's president and CEO. But she emphasized she was not aware that Mrs. Jackson had financial ties to Kennedy Associates. Moon said that any firm with such ties to Jackson or his wife should have been disqualified from doing business at HANO "given Mr. Jackson's involvement in the management decisions" at the New Orleans agency.

As for the C.J. Peete housing project, the team of McCormack Baron Salazar and Kennedy Associates was selected by an evaluation panel that included Scott Keller, then Jackson's deputy chief of staff. Keller, who supported the McCormack-Kennedy proposal, declined to comment for this story. Michael Kennedy did not respond to written questions or return phone messages. A McCormack Baron Salazar officer said he knew of no impropriety in the selection process.

Marcia Jackson's dealings with Kennedy Associates are not clear. Alphonso Jackson's public financial disclosure reports show that Kennedy Associates was a client of Mrs. Jackson's in 2001 and 2002. For 2003, the firm was described as a "former client." Kennedy Associates still owed her between $1,000 and $15,000 in fees in 2004, Jackson's filings show. Separately, Metroplex Industries, which later changed its name to MetroplexCore, became a client of Mrs. Jackson's several years ago, but there is no information in Alphonso Jackson's filings about her financial arrangements with that company.

At his confirmation hearing to be HUD secretary in February 2004, Jackson reported that Kennedy Associates was involved in a housing project funded by HUD. He vowed to recuse himself "from participating in any particular matter that may have a direct and predictable effect on the financial interest" of Kennedy Associates or any other of Mrs. Jackson's clients.