How Oakland's fearful politicos enabled waste: Part 1

How the bakery's $1 million vanished. Along with loan from city, pledges to help community disappeared.
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Editor's note: This is the first of a three-part series examining a $1million city loan to a Your Black Muslim Bakery affiliate that was never repaid.

It was a noble cause: Train welfare recipients as home health aides and put them to work caring for homebound sick and elderly clients.

A decade ago, while Your Black Muslim Bakery founder Yusuf Bey enjoyed unwavering support and adulation from black businesses and politicians, his spiritually adopted son, Nedir Bey, pressured and shamed city leaders into giving him a $1.1 million loan to help finance the promise of black entrepreneurial independence.

But the venture, E.M. Health Services, swiftly collapsed. The failure of CEO Nedir Bey to repay a dime of the loan made headlines at the time and prompted most to assume the company's demise was caused by a combination of poor business decisions, bureaucratic hurdles and simple bad luck.

But was it?

City officials overlooked flaws in the company's business plans and relented to black community leaders who insisted they award the loan, according to interviews, documents and other correspondence reviewed by the Chauncey Bailey Project.

The loan was granted to Nedir Bey despite his well-publicized arrest for the torture and kidnapping of a man two years earlier. Bey pleaded no contest to one felony count of false imprisonment and was sentenced to three years' probation.

In awarding the loan to Nedir Bey, nearly every elected official lauded the accomplishments of Yusuf Bey in turning around the lives of troubled young men. Yet dozens of those men had armed themselves during a standoff with police two years earlier. And a few years later, Yusuf Bey himself would be accused of raping and fathering children with young girls who were placed in his care.

And the Chauncey Bailey Project has learned that in late 1999 and early 2000, the FBI investigated E.M. Health Services' loan and Nedir Bey, although it's not clear how the probe was resolved.

In the wake of reported real estate and welfare fraud allegedly committed by the wives and children of Yusuf Bey _ as well as the August arrest of a bakery member accused of the Aug. 2 shooting death of Bailey, the editor of the Oakland Post _ a deeper review of the E.M. Health Services loan reveals several questionable expenses that suggest an internal pattern of cronyism that enriched nearly every facet of the bakery empire's inner circle including:

-Tens of thousands of dollars in consulting fees paid to companies controlled by Nedir Bey and his wife, Rosemarie Boothe-Bey, as well as other bakery insiders.

-Thousands of dollars in security fees paid to yet another company controlled by Your Black Muslim Bakery and thousands more in advertising fees paid to Universal Distributors, a company operated by associates of the bakery.

-$20,000 paid to the administrator of an Oakland home health company who had urged the city to award the loan to E.M. Health Services.

-Top-end salaries paid to Nedir Bey and his wife, Rosemarie Boothe, as well as to two of the Muslim wives of bakery patriarch Yusuf Bey who are accused of receiving fraudulent welfare payments at the time, and a second woman with whom Nedir Bey fathered children. Other bakery insiders filled the company's payroll.

-15-day loans made to E.M. Health by Nedir Bey and other bakery associates that were repaid with hefty loan fees.

The beginnings

On April 30, 1996, the Oakland City Council awarded E.M. Health conditional approval for a $1.1million federal loan to establish a training program for home health aides.

According to loan documents and internal memos, the city approved that loan despite flaws in the company's business plan and no discernible collateral or equity to back up the debt.

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  • How Oakland's fearful politicos enabled waste: Part III

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