Complaint against Cannon indicates further investigation

CHARLOTTE – A federal investigation into possible public corruption in Charlotte does not appear to end with the arrest of former Mayor Patrick Cannon.

A Federal Bureau of Investigation agent indicated in an affidavit supporting the charges filed against Cannon that the agency is also looking into allegations that Cannon “assisted and intervened in a major project – using his official position – on behalf of prominent local businessman” (sic).

FBI Special Agent Eric J. Davis states in the affidavit that an investigation by the bureau “corroborates Cannon’s assertion that he assisted the businessman and re-affirms the predication for the instant investigation. The details are not set forth in this Affidavit for ongoing investigative reasons.”

Shelley Lynch, public affairs specialist for the FBI’s Charlotte office, on Thursday said the agency would not make any comment beyond a press release issued Wednesday, but the affidavit asserts that the investigation will continue to seek business people and projects that Cannon may have assisted using the power of his position.

No evidence has been released that supports claims that Cannon, as a member of the City Council in the past and mayor since early December, has inappropriately intervened in city decisions on planning issues. And the evidence on which the charges are based resulted from an undercover FBI operation, in which agents posed as real estate developers seeking Cannon’s help with fictitious developments.

But the FBI complaint against Cannon includes transcripts of conversations the former mayor had with undercover agents and city employees that indicated he was claiming to have provided such help in the past and was promising to do so again.

At one point, when Cannon and an undercover FBI agent were trying to convince international investors (themselves undercover agents) to pony up big money for a fictional multiuse development, the two hatched a plan to tell the investors they had known each other for a few years and that Cannon had shepherded through another project for the agent.

In the fictional account, Cannon told the “investors” that he had used his official position as a Charlotte City Council member to clear city and county zoning and permitting issues related to the Metropolitan, an apartment, retail and restaurant project between South Kings Drive and Little Sugar Creek just south of the Interstate 277 loop. The city handles zoning issues, within its limits, and the county issues building permits.

“Cannon himself suggested using a mixed-use real estate project called the Metropolitan, which is located just outside of Uptown Charlotte on Charlottetown (Avenue) and Kings Drive, an area of Charlotte also known as Midtown,” the complaint says. In the complaint, Cannon said he was fabricating his involvement in the Metropolitan project.

City rezoning records show two rezonings related to the Metropolitan property. Pappas Properties Development LLC and Home Depot Expo Design Center together asked for the rezoning of 24.7 acres on which the Metropolitan sits. The request was made in 2001 and approved in February 2002, when Cannon was mayor pro-tem, according to city records.

Pappas requested in 2005 another rezoning for 26.6 acres in roughly the same spot, according to city records. That request was approved in May 2005, and FBI records show that Cannon was out of office at that time.

In its complaint, the FBI said it has conducted a detailed financial investigation for Cannon from 2010 through 2014, and that it has obtained basic financial records going back to 2007.

The complaint against Cannon, filed Wednesday in the U.S. District Court for the Western District of N.C., charges Cannon with:

• Obtaining property from another person in a manner that affected interstate commerce and which was not due to him, in return for acting on behalf of that person in Cannon’s capacity as a public official;
• Committing federal program fraud;
• Committing honest services fraud through bribery or kickbacks.

Hours after being charged, Cannon resigned as mayor by sending a letter to City Manager Ron Carlee and City Attorney Bob Hagemann.

“In light of the charges that have been brought against me, it is my judgment that the pendency of these charges will create too much of a distraction for the business of the City to go forward smoothly and without interruption,” he wrote.

The complaint states that the investigation began in August 2010 “based on a tip and information received from local law enforcement.”

“A local law enforcement officer was working in an undercover capacity on other criminal matters and learned of information that would be helpful to the FBI regarding public corruption,” wrote Davis. “Although the FBI was originally investigating other individuals and other potential criminal activities, the investigators learned that Cannon was potentially involved in illegal activity.”

The FBI then sent the undercover agent to approach Cannon about helping him on a fictional development project. Between December 2012 and March 2014, Cannon met with undercover agents at least 11 times and received $48,000 in cash, as well as airline tickets, a hotel room and use of a luxury apartment.

On Jan. 29, 2013, while on one phone with an undercover agent posing as a real estate investor, Cannon on another phone called a city “official” regarding “zoning issues” according to the complaint, and “asked about the zoning for the piece of property” the agent was asking about.

At a community meeting Thursday in response to a reporter’s question, District 4 Councilman Greg Phipps said he has never been asked to look into a rezoning for a developer in his capacity as both a councilman and a former member of the Charlotte-Mecklenburg Planning Commission. Phipps also said that he couldn’t recall a time when a council member had called city planning staff to influence them on rezoning matters.

The planning and zoning process is set up to keep planners and council members at arm’s length from each other, Phipps said.