Lee Zurik Investigation: $85,000 for an empty lot? Treasurer demands answers

We took state Treasurer John Kennedy on a short walk from the FOX 8 studios to show him the result of a nearly-six-figure investment by Louisiana taxpayers.

"Your tax dollars at work," Kennedy comments as we arrive at an empty lot on S. Jefferson Davis Parkway. "I'll be darned."

Five years ago, the legislature voted to give state money to a non-profit, formerly called Basic of Louisiana, to fix up their building. An empty lot is all that's left of that investment.

"They asked the legislature for $85,000 to fix a building that was damaged by Katrina," Kennedy tells us. "Basic said it was in the business of education New Orleans citizens about drug and alcohol abuse."

Basic of Louisiana is what lawmakers call an NGO or non-governmental organization. Dozens of NGO's receive money every year, and each one signs a contract with John Kennedy's office.

Kennedy says, "They have to agree in writing, in my office, that they would send me four reports a year, one a quarter, about what they spent the money on, who got the money, did they achieve the purpose for which money was given to them... they have to send me invoices, documentation, cancelled checks. Many of them refuse to comply."

Basic never did submit cost reports to the state. It has shown the state treasurer no documentation of how the state's money was spent.

"They won't even answer any of our letters or phone calls," says Kennedy. "The document that they signed is very clear. And the law's very clear, that if they become non-compliant, they got to give the money back… that means if they don't file quarterly progress reports, even if everything they say is true, if they don't file those reports, they've got to give the money back."

It's Kennedy's job to go after them. He is, and he could turn over his findings to a new state office, the Office of Debt Recovery.

"If they don't comply and they don't prove that they spent the money on the purpose for which it was intended by the legislature, then I'm going to turn them over to the Office of Debt Recovery and recommend we sue to get the money back," Kennedy says.

A few months after receiving that state money, Basic's building caught fire. We don't know if they received any insurance money.

Less than two years later, at the end of 2010, records show Basic sold the building to Xavier University for $350,000. Xavier demolished the building. Basic abandoned Louisiana and returned full time to Missouri.

Kennedy tells us, "They've got to show me contracts, they've got to show me cancelled checks, they've got to show me documentation, they've got to show me the contract with the contractor who did the work, they've got to show me the report from fire department where it burned down. And I want to know what happened to the $350,000 that they got from Xavier."

Basic is one of 36 NGO's that are non-compliant with the state. 10 have gotten in touch with Kennedy's office.

Kennedy says 26, including Basic, have not responded to emails and letters they've sent for years. In this case, Kennedy wants to know how $85,000 of tax money produced an empty Mid-City lot.

"And that's why so many taxpayers are so cynical about government, and I don't blame them," Kennedy says, during our brief walking tour. "We got school teachers that are coming out of pocket to buy school supplies. And we're going to give $85,000 to a group, supposedly going to fix a building. The building is gone, but they've got $350,000 - including the $85,000 from the Louisiana taxpayers. And they live in Missouri. You know, we're going to get to the bottom of it."

We reached out to Oval Miller, the head of Basic, earlier this week he returned our call Thursday evening.

Miller says he spent all the state money before the fire on the building and has documentation to prove it. He promised to send that documentation to us and the state next week.

If Basic did spend the money, questions still remain about the sale of the building, whether he received any insurance money for the fire, and whether the state should be reimbursed any or all of the $85,000.