"The GRO-Warren Defendants deny all allegations...of improper or impermissible expenditure of grant funds."
That's the crux of the arguments laid out in a 25-page court filing on behalf of GRO-Warren, Christine Cheronis and James Cheronis that counters a civil action filed by the City of Warren in January that alleges misspent grant funding, the largest of which is a $500,000 anchor building grant from the state Department of Community and Economic Development, for the failed Allegheny Center for the Arts project on Liberty Street.
The response was filed with the Warren County Clerk of Courts on May 3 by Attorney George N. Stewart of the firm Zimmer Kunz of Greensburg, Pa.
The city's original lawsuit listed Warren Business District Coalition (WBDC), Inc. as an additional defendant, but the recent filing draws a distinction that "GRO-Warren and WBDC are and were separate corporate entities." The response does not address any of the allegations levied against WBDC or Main Street, Inc.
In conjunction with a denial of any misappropriated grant funds, the filing also lashes out at the city for a failure of oversight. The brief states, "The Anchor Building Grant awarded to the City of Warren and/or pertinent related documents were not provided to GRO-Warren contiguous with said grant award, nor in a timely fashion by the City of Warren.... Furthermore, the City of Warren failed to provide within any relevant time frame the alleged guidelines or restrictions (for the use of grant funding) upon which it now seeks to rely, to GRO-Warren."
Claiming that a certain percentage of the grant money could be kept back for administrative expenses, the response alleges that Jim Nelles, the city manager at the time, "requested said payment upon the transmittal of the grant funds (of a loan to the city Redevelopment Authority), as well as issuance of a payment for administrative fees to the city."
Instead, "Defendant GRO-Warren avers that it complied with any asserted obligation pursuant to the grant and/or loan program to utilize the grant funds in proper furtherance of the programs subject thereto."
However, if payments were made "to or on behalf of the City of Warren, the City of Warren Redevelopment Authority, and toward the Streetscape Program, such was done at the request of and/or with full knowledge of the City of Warren or its representatives.... Further, any duty to assure and/or provide evidence that grant funds were expended in a manner consistent with the city contract with the Commonwealth of Pennsylvania rested with the City of Warren and its oversight responsibilities.
"Additionally, it is noted that the Plaintiffs (City of Warren) through Plaintiffs' representatives, directly sought the utilization or application of grant funds to uses which Plaintiffs now characterize as impermissible."
As a result of a state DCED fiscal monitoring report conducted last year, which alleged that the majority of the anchor building grant was not spent within program guidelines, the City of Warren has since agreed to, in essence, pay itself back for the $500,000 grant. The filing clearly articulates that "it is denied that these answering defendants were in any way the proximate cause of any obligation which now rests with the City of Warren."
An additional charge levied by the city claimed that James and Christine Cheronis loaned, and subsequently reimbursed themselves, for the purchase of the ACA building out of grant funds. The suit acknowledges the existence of such a loan but stated, "The Warren Main Street Program board was fully aware of such loan.... Christine and James Cheronis accepted repayment of the emergency loan, without any interest or fees. Any suggestion that there was any conversion or misuse of funds accordingly is denied in its entirety."
The defendants are demanding a trial by jury.