The FBI is looking into land deals by the family of Wayne County Treasurer Eric Sabree, including an allegation that interest and penalties were waived on his son's delinquent properties, The Detroit News has learned.
Investigators have contacted a former Sabree staff member who complained to human resources about suspicious activity on the accounts of Sabree family properties, according to two sources familiar with the federal review. They would only speak on the condition of anonymity.
Sabree's lawyer said he was not aware of an FBI investigation, but he said it was discovered in 2017 that the treasurer's family underpaid taxes on their delinquent property bills by $13,000, which is around the time of events the former staffer describes in her complaint.
Thomas attributed the shortfall to a mistake by Sabree's staff involving about a dozen family properties. The treasurer's wife paid the bills on May 24, 2017 shortly after they were recalculated, he said.
“It is our position that nothing inappropriate was done by Mr. Sabree,” said attorney Philip Thomas. “It was a mistake.”
The disclosures of a federal inquiry and irregularities with his family's properties come amid a Wayne County ethics board review of Sabree's activities. It was sparked by a Detroit News investigation that, among other findings,showed a company Sabree founded and his wife participated in the county's tax foreclosure auction in violation of county rules.
Sabree responded to the ethics complaint earlier this week, denying any conflict of interest but expressing regret for his wife's purchases that may appear to run afoul of county policy.
His lawyer said Friday that he didn't know how the miscalculation of $13,000 with properties tied to Sabree happened or who found it. He said he was still gathering information and wasn't sure how far back the debt went back. Some of the properties included vacant lots on Wyoming and houses in Harper Woods, Thomas said, which Sabree's wife purchased from the annual tax auction.
The News asked Friday for a copy of the payment receipt, but Thomas declined to supply it because it contained his notes.
Sabree joined the office in 2011 as a deputy and has been treasurer since 2016. He makes $115,891 a year.
It is unclear if the FBI has launched a full investigation. FBI Special Agent Mara Schneider would neither confirm nor deny the existence of an investigation or discuss the bureau’s interest in the real estate dealings.
The News' investigation found, through multiple Freedom of Information Act requests, other county sales involving his son and nephew, along with family properties purchased at auction that later racked up enough tax debt that they could have been seized but weren't.
The former staffer sent a complaint in February 2018 detailing the allegations to Steve Mahlin, Wayne County's director of the county's personnel and human resources department, which The News obtained through the Freedom of Information Act.
The former clerical employee alleges that Sabree requested she reapply interest and penalties to his son's delinquent properties.
"Once I started to process a few, I noticed it was for his son," the woman wrote in the email. "This made me very uncomfortable."
Sabree later gave her an explanation of "why he waived" the interest and penalties, but "I didn't believe it," she wrote.
"I told him all I wanted was not to be asked to do something like this in the future."
The staffer's complaint was referred to the Wayne County Prosecutor's Office, which determined it had a conflict of interest. The treasurer's office funds the prosecutor's office.
The employee wasn't sent notice of that decision until a year later, the same day The News published the investigation into Sabree's family real estate dealings.
The prosecutor's office sent her a letter detailing their belief of a conflict of interest and recommending she contact the Michigan State Police. The number they suggested she call was a fax number.
The former staffer sent the complaint to human resources after she put in a request to rejoin the treasurer's office and was denied, in part because she was told she had confrontations with coworkers. She had left the office for another job but it didn't pan out, she wrote.
The former staffer said in the complaint that she believed she was blocked from returning because she expressed concern over Sabree's son's interest and penalties.
Sabree's lawyer, Thomas, said he wasn’t aware of the specific allegation by the female staffer regarding Sabree’s son’s properties.
Taxes are often recalculated at the treasurer’s office to correct mistakes, Thomas said.
"Mistakes happen everywhere, in every office, everyday," said Thomas, who has been retained personally by Sabree and is not being paid through county funds.
Former Chief Deputy David Szymanski said that the correction of "clerical errors are not unusual" in the office, for example if a property mistakenly had a principal residency exemption reserved for owner occupants.
Jerry Paffendorf, a critic of the annual auction and co-founder of Loveland Technologies which has studied the effects of foreclosure, said the Sabrees' family real estate transactions further erode trust in what he called a flawed process.
"There has been a loss of trust for a long time," Paffendorf said. "There is not a consistent policy on why properties are foreclosed or not. ... I hope this is a gateway to a wider investigation that (the county isn't) following the law. "
The auction is controversial because the county seizes properties with delinquent tax bills and resells them to the highest bidder, a process that costs homeowners their equity and increases the risks associated with speculation.
Thomas said he doesn't want to comment on specifics about the pending ethics board review but said that Sabree is an “honest man.”
“I don’t think there is a shred of evidence to show he participated in improper conduct as Treasurer,” Thomas said. “Every allegation has turned out to be completely and utterly false. I haven’t seen any allegation that is troubling to me.
“There is an explanation for everything.”
County rules ban family members of Treasurer’s Office employees from participating in the auction, which seizes properties from delinquent taxpayers and resells them to the highest bidder. Sabree has said the family ban was removed in 2015 and 2016 but is not sure why it was reinstated in 2017 and 2018.
The Detroit News investigation found that a company Sabree formed in 2002, which he says is now run by his wife, bought three Harper Woods homes from the auction in 2011, when he was deputy treasurer coordinating the sale. Sabree’s son Yusuf now lives in one of the homes; the other two are owned by the company Sabree formed. That company, U.S. Development Services LLC, later violated a requirement that tax payments for the homes remain current for at least two years.
Sabree’s son Adam, an attorney, was listed as a successful bidder for a Detroit home in 2017, although he said that it was an error probably caused by him helping a client register to bid. Both Adam and his brother Yusuf were registered bidders in 2016, although county records don’t suggest they were successful in purchasing property that year, The News found.
The investigation also found that 10 properties owned by Sabree, his wife or U.S. Development owed nearly $29,000 in delinquent taxes as of November, debts that were paid off 10 days after The News made inquiries about them. One of those properties by law should have been resold at auction because of the debt, but was not because of an error, Sabree said.
Wayne County Executive Warren Evans filed an ethics complaint against Sabree citing articles by The News and Detroit Free Press on the real estate dealings, which he called "extremely troubling." County Commission Chairwoman Alisha Bell requested the commission's Auditor General start its regular audit of Sabree's office several months early to look into the real estate deals.
The Wayne County Ethics Board's next meeting is March 20, but it's not clear if they will publicly review Evans complaint then. Sabree responded to the complaint on Tuesday.
In the response, Thomas reiterated earlier denials to The News that that there was any conflict of interest in the family real estate dealings and blamed Sabree's political enemies.
"He truly regrets this situation which has allowed his political adversaries to peck through his past for ammunition to use against him in an attempt to belittle the job he has done as Deputy Treasurer and more recently as the Treasurer," the written response reads. "He is genuinely sorrowful for the shadow that the media reports have cast over his distinguished career."
The activist group, Coalition to End Unconstitutional Tax Foreclosures, has called for the ethics board to investigate as well.
"Given that the Wayne County Treasurer’s office has foreclosed on one in four Detroit properties from 2011 to 2015, the problem is systemic," the group's statement reads. "If in fact systemic violations are discovered, this will support the Coalition’s call for a moratorium on selling owner-occupied homes in the tax foreclosure auction."