JACKSONVILLE, Fla. – The city of Jacksonville is suing one of its own council members, Katrina Brown, over hundreds of thousands of dollars her family’s business owes the city.
In 2012, the city loaned $380,000 to CoWealth LLC, which is owned by Brown and her mother JoAnn. The company took out loans to finance opening a barbecue sauce manufacturing plant on the Westside that was supposed to create 56 jobs.
According to the lawsuit, called a complaint for breach of guaranty of payment, the company hasn’t made any loan payments since Jan. 1, 2017, and the company owes more than $357,000 in principal and interest.
On April 24, a law firm hired by the city sent Brown a letter demanding payment within 15 days.
The I-TEAM has asked Brown for comment.
Brown, who represents Jacksonville's District 8 and is on the City Council's Finance Committee, has denied a conflict of interest even though she is a principal in the barbecue business that has failed to repay loans approved by the city.
"When you’re talking about taxpayers' dollars, spending those dollars, not producing the jobs you promised to create, defaulting on that loan and bankruptcy -- that’s very problematic," said News4Jax political analyst Rick Mullaney, director of Jacksonville University's Public Policy Institute. "I suspect it’ll be a problem in next year‘s elections for her.”
Mullaney said the lawsuit could determine whether Brown will run for her seat next year.
“As far as her political fortunes go, this is obviously very problematic for her politically. It may affect her decision to run," he said. "It clearly is going to affect others in their decision whether to try and represent that district in the future.”
Background
The I-TEAM has documented financial problems of the Brown family's barbecue business, which has now declared bankruptcy. Jerome Brown's Barbeque was also under federal investigation.
The federal judge's bankruptcy order attempts to get the financial houses of Brown and her parents', Jerome and JoAnn Brown, in order, professionally and personally.
The Brown family runs Jerome's Barbeque and Wings in the Moncrief area. When they opened a warehouse to bottle barbecue sauce, and because they promised to create dozens of jobs, it received a city grant. The I-TEAM learned that not a single employee was hired by the April 2016 deadline established by the Northwest Jacksonville Economic Development Fund.
By December 2016, the FBI, the Internal Revenue Service, the U.S. Department of Housing and Urban Development, the Small Business Administration and the Jacksonville Sheriff's Office raided the warehouse.
While we still don't know what's come of that joint investigation, the bankruptcy judge spelled out a restructuring plan to pay back a portion of what's owed.
The Brown family companies operate two businesses and owe the city a total of $572,000. The city is suing them separately over the $220,000 grant and a $350,000 loan. Of that, the judge ordered the family to pay back the city only $80,000 the next seven years.
That leaves city taxpayers $490,000 short.
Katrina Brown’s parents also owe $2.5 million on a separate Small Business Administration loan tied to the business.
The I-TEAM searched financial records and found Jerome and JoAnn Brown filed for bankruptcy four times in the 1990s.
Katrina Brown’s debt to pay off her Porsche was also in the settlement. She got an insurance payout enough to cover the outstanding car loan. Documents don’t disclose why, but sometimes you see payouts after an accident.