Developer's company falsified records, defrauded government, FBI alleges CHARLESTON, W.Va. -- Charleston housing developer Douglas E. Pauley offered to drop a federal discrimination complaint he filed against Mason County commissioners if the commission paid him $30,000, according to a letter sent to county officials by the county's prosecutor. "It was, 'You pay us, or we'll be after you,'" said Mason County Commissioner Rick Handley, who also was named personally in the September 2009 complaint. Pauley filed the discrimination charges after commissioners rejected his request to build a 32-unit apartment complex for seniors and the handicapped on land owned by state Treasurer John Perdue and his wife, Robin. The FBI is investigating the property deal. Later in 2009, the U.S. Department of Housing and Urban Development sent investigators from its Philadelphia office to Mason County. HUD agents interviewed Handley and Commissioners Miles Epling and Bob Baird. Epling, a Marine Corps veteran who received a Purple Heart for injuries he received during the Vietnam War, lost both of his legs in battle. Baird was 76 years old when Pauley filed his discrimination complaint. "Mr. Pauley was bringing discrimination charges against an older man and a paraplegic," Handley said Thursday. "It's bad that someone would have to go to such lengths to get what they want." What Pauley wanted was commissioners to write a letter of support for his apartment complex to the West Virginia Housing Development Fund, which would administer tax-credit funds that would finance the apartment complex. Pauley, a Perdue campaign donor, also offered to withdraw his discrimination complaint if county commissioners issued the support letter, according to Mason County Prosecuting Attorney Damon Morgan's September 2009 letter to the commission. Morgan was representing the commission in the dispute with Pauley. Earlier that year, Pauley and the Perdues asked Mason County commissioners to write the letter supporting Pauley's project. Commissioners voted 3-0 against the request, saying the project was "out of character" with the rural area. Pauley's offer to drop the discrimination charges didn't persuade commissioners to change their mind about supporting the project. "Our reaction was, "We're not signing anything,'" Handley recalled. "Right is right, and wrong is wrong." Commissioners also refused to pay Pauley the $30,000, which Pauley said would reimburse him for the expenses he incurred "formulating and designing the plan" for the apartment complex, the prosecutor's letter states. Pauley has declined to comment on the investigation. His lawyer, Ben Bailey, was out of his office Thursday and could not be reached for comment. In his Sept. 2, 2009, complaint to HUD's Office of Fair Housing and Equal Opportunity, Pauley alleged that Mason County residents who opposed his project did not want the apartment complex because "mentally handicapped" people would live there. Homeowners with property near the Perdues' land also did not want the elderly living there because "they would marry younger people with children," according to Pauley's complaint. Other neighbors who spoke at an April 2009 commission meeting said seniors at Pauley's apartment complex "could get Alzheimer's and deteriorate rapidly and cause problems," according to Pauley's complaint filed with HUD. Handley said Pauley's allegations in the discrimination complaint took homeowners' statements out of context. Handley said such allegations had nothing to do with the commission's decision to vote against the project. "If they would have put it closer to town, near facilities, then we would have supported it," Handley said. "They had no transportation, no way to get to town. I don't care who owned the property, it just wasn't the right place to have seniors or the handicapped, six miles out of town." Handley said HUD investigators never returned to Mason County or issued a report on their findings. The initial letter from HUD to the commission notes that the federal agency would charge the commission with a violation if investigators determined an "unlawful discrimination housing practice has occurred." In the letter, federal housing officials also said they would dismiss the complaint, if there was "no reasonable cause." Either way, federal officials said, they would notify Mason County commissioners in writing. Commissioners never received a follow-up letter, Mason County Administrator John Gerlach said Thursday. Gerlach and Mason County's three commissioners met privately for more than two hours Thursday with federal prosecutors and FBI agents at the Robert C. Byrd Courthouse in Charleston. Mason officials were interviewed individually about Pauley's land deal with Perdue. After the meetings, Handley declined to comment on the interviews. "Due to the ongoing investigation, we were asked not to make any comment," he said. Federal agents raided Pauley's Charleston office last week, hauling away boxes of documents over three days. The FBI returned the documents earlier this week. Bailey, Pauley's lawyer, released a letter from the U.S. Attorney's office that says Pauley won't face criminal charges, provided he continues to cooperate in the investigation. Last December, the Perdues sold an 11-acre property to Pauley for $215,000. Later that month, Pauley received $3.67 million in stimulus funds through the West Virginia Housing Development Fund to build the apartment complex, called Milton Place after Robin Perdue's late father, Milton Burdette. Perdue sits on the Housing Development Fund's board of directors. He and his designee to the board never voted to approve Pauley's project. That decision was made by two Housing Fund staff members, both certified public accountants, who reviewed and scored project applications. The Housing Fund awarded $18 million to 11 projects -- including Pauley's apartment complex -- across West Virginia. Perdue and Pauley are longtime friends. Perdue has spoken at several groundbreaking ceremonies for Pauley's projects in recent years. Pauley has made at least two $1,000 contribution's to Perdue election campaign's since 2007, campaign records show. Perdue, who has agreed to provide documents to the U.S. Attorney's Office, has said he followed "all legal procedures" during his property deal with Pauley. Reach Eric Eyre at email@example.com or 304-348-4869.