Powerful NC lawmaker’s friend and co-counsel worked for developers helped by his bill
The real estate developers behind a controversial project of homes, shops and offices near Jordan Lake had won legislative approval and the governor’s signature. It was time for Durham city officials — who had opposed the project — to start moving forward with water and sewer lines for 751 South.
The developers turned to Gene Davis Jr., a Raleigh attorney, who shares legal clients with then House Rules Chairman Tim Moore, whose legislation had rescued the project.
Davis’s involvement connected three state government insiders who are fellow UNC alums. The third is Reggie Holley, a Republican lobbyist the developers hired to push for support during the legislative battle in 2012 and 2013.
Those connections show overlap between Moore’s work on behalf of the public and the business interests of Moore and his associates. They shed new light on Moore’s dual roles as a legislative leader who can kill or advance major legislation, and a private attorney in a state where many clients aren’t required to be disclosed. Moore became House speaker in 2015.
The News & Observer found:
▪ Davis and Moore have worked on several legal cases together, and Moore uses Davis’s office in Raleigh for legal work when he’s at the legislature. Clients Moore and Davis have co-represented over the years include a regional nonprofit based in Robeson County that was fighting to stay open after auditors found millions in questionable spending by its executive director and other officials.
▪ One of Davis’s companies, which also included a 751 South developer as a co-owner, has paid Moore for legal work, and Davis’s firm has paid attorney and former state Sen. Cal Cunningham for legal work. Cunningham has represented the 751 South developers for nearly a decade.
▪ Davis and Holley, business partners with offices that have long shared the same building, won legislation that created a path for state approval of a bail insurance business they had been building with others months earlier. Moore gave one of the bail business partners a heads up that the legislation would be moving forward, the partner said in an email to a lobbyist that the partner shared with The News & Observer.
▪ Holley and Davis now have influential posts in the UNC System at a time when Moore’s name continues to surface as a candidate for the system’s top jobs. Last year, the House voted Holley onto the UNC Board of Governors, and the Republican-dominated board appointed Davis, a former Wake County Democratic Party vice-chairman, to UNC-Chapel Hill’s board of trustees.
Moore, Davis and Holley did not respond to emails or phone messages from the N&O in recent weeks to talk about their business relationships.
Cunningham, also a UNC alumnus, is running in next month’s election to try to unseat U.S. Sen. Thom Tillis, who led the state House when it passed the bill to help 751 South. Cunningham’s work for the developers, and Tillis’s role in giving the development a green light, have both stuck with some South Durham residents.
The legislative battle ended seven years ago, but Cunningham continued to be paid for legal work on the 751 South development, receiving $56,000, according to his 2019 and 2020 disclosure statements. He also served as secretary to two 751 South community associations, the statements say. Those disclosure statements also show since 2017 he has received at least $5,000 from Davis’s law firm for legal work.
In an interview with the N&O, Cunningham referred questions to Davis and 751 South’s lead developer, Alex Mitchell.
Cunningham said he was not aware of Davis’s business ties to Moore. “You’re telling me things that I don’t know,” Cunningham said.
Mitchell did not return the N&O’s call or email about Davis’s work. He, too, is a House appointee to the UNC Board of Governors, put on the board in 2015 and reappointed last year.
Tight connections
Moore, Davis and Holley graduated from UNC three years apart — Holley in 1989, Davis in 1990 and Moore in 1992. All three were student government leaders. Cunningham, who served as student body president, graduated in 1996.
Moore is a Cleveland County Republican. Davis is a Raleigh Democrat. Holley, a former staffer to then U.S. Sen. Elizabeth Dole, is a Brunswick County Republican.
Rep. Darren Jackson, a Wake County Democrat and House minority leader, said he knew Davis was active in Democratic politics and that Davis and Moore were friends, but did not realize how closely aligned their business interests were until a N&O reporter informed him. Jackson said he found it troubling that Davis later did legal work on a project that needed Moore’s legislative efforts to survive.
“That’s very concerning, and I would say would warrant further investigation,” Jackson said.
Bob Hall, the retired executive director of Democracy North Carolina, said the tight connections between Moore, Davis and Holley need more scrutiny.
“You are laying out a very tight network of a small number of players — attorneys, lobbyists and Tim Moore — who are involved in business interests together and changing laws to serve the purpose of those business interests,” Hall said.
Moore spoke about his legal work with Davis in a 2018 interview. At that time, the N&O reported Moore had taken on one of the 751 South developers as a client two years after pushing through the state legislation it needed. In 2017, KNOW Bio, a biotech company founded by the developer, Neal Hunter, paid Moore $40,000 in legal work that the company’s CEO later questioned.
“We’re not part of the same law firm,” Moore said then of Davis. “I do occasionally work out of his law office there in Raleigh and use that as a satellite office for legal cases that I handle. But I work with Gene all the time.”
Some of that work with Davis largely coincides with the legislative battle that began in 2012, when Cunningham and the developers were stymied by Durham city council members who sided with neighbors to the property. The 166-acre project would place 1,300 residences and 600,000 square feet of offices and shops near Jordan Lake, drawing traffic and pollution worries. Cunningham turned to Moore to run the legislation that would negate Durham’s control over the development.
Moore’s bill narrowly lost that year in the Republican-controlled legislature, but in 2013 he succeeded.
During much of those two years, Moore and Davis were representing Four-County Community Services, a nonprofit whose top officials had drawn fire in two state audits over how it spent public money, state records show. Now operating as Southeastern Community and Family Services, it disperses Head Start money for seven rural counties mostly along the state’s southern border, many of them among the state’s poorest. It also distributes federal grants for home weatherization and low-income housing.
A state Department of Health and Human Services audit in 2013 found misspending, and a State Auditor’s investigation in 2014 identified $4.9 million in questionable costs. The executive director, for example, leased a $60,000 Chevrolet Suburban SUV that had such luxuries as temperature-controlled seats, a third-row DVD screen and retractable steps; approved $10,000 in pay and benefit increases for his wife; and gave no-bid contracts to vendors who paid to sponsor him in fishing tournaments.
Bail legislation
Moore, Davis and Holley also were involved in the bail business during those years. In early 2012, the N.C. Bail Agents Association, a nonprofit that earns fees training bail bondsmen, paid Moore $10,000 to persuade the state insurance department to shut down a for-profit competitor. Holley was the association’s lobbyist.
Mark Cartret, an association past president, was involved in the effort and wanted Moore to take the lead, insurance department records show.
“My thoughts are that we may, at some point, start looking like the ‘bad guy’ here,” he wrote in an email to Melissa Seiler, the bail association’s president, dated Feb. 23, 2012. “I don’t like this situation any more than anyone else but if we start grilling the Commissioner’s staff, we may look like something we aren’t. Perhaps it would be best to let Mr. Moore deal with the DOI from beyond the scenes. Just saying.”
A year later, on Oct. 17, 2013, Davis filed incorporation papers for two companies: Cattlemen’s Surety, an insurer for bail agents, and Judicial Associates, which would serve as Cattlemen’s parent. His law office served as the “registered” office for both companies.
He was listed as the sole organizer for both, but on Oct. 28, 2014, Cattlemen’s listed Cartret as the managing member and changed its name to Agent Associates Insurance. Subsequent filings show Cartret became the CEO.
Cartret declined to be interviewed by phone, but in email responses to the N&O he said Davis and Holley approached him about forming the business in 2013. Cartret identified Davis as the organizer, attorney, registered agent and initial insurance manager.
“They asked that I meet with four clients who intended to start an insurance company,” Cartret said. “I was reluctant and very busy but was offered a 10 percent buy-in with no money down.”
The state legislature had passed the North Carolina Captive Insurance Act that year, which opened the door for the creation of captive insurance companies that typically serve a narrow purpose, such as insuring the actions of a parent company or group of members. Cattlemen’s Surety would be providing insurance to bail agents to cover their losses if clients skipped court hearings.
The legislation — House Bill 473 — sailed through both chambers and became law. It includes a provision prohibiting the state insurance department from identifying the owners of such companies.
Barry Smith, an insurance department spokesman, cited that law in denying a request for any information regarding whether Davis had ownership in a captive insurance company. Smith said ownership information for other types of insurers is public record in North Carolina.
Cartret said the new law still didn’t allow Cattlemen’s Surety to operate. The following year, lawmakers passed a second bill amending the act. Among the changes: Language allowing “special purpose” captive insurance companies for the bail business to form and operate in the state.
Legislative records show that second bill, House Bill 267, began as legislation dealing with turnpike tolls. It had passed the House in 2013, but it remained parked in the Senate Rules Committee when the 2014 session began.
Cartret provided the N&O an email dated May 22, 2014, between him and a lobbyist, George Teague, in which Cartret referred to Moore informing Teague to be on the lookout for a legislative fix. The email was dated nine days after Cartret and a family member of Larry Powell, another bail bonds businessman involved in Judicial and Cattlemen’s, had each given Moore’s campaign $2,000.
“I believe you heard Tim say that this could happen in 2 weeks or on the front end of this session,” Cartret wrote. He confirmed in an email to the N&O that “Tim” refers to Moore, but he did not say whether Moore also pushed the legislation.
Teague registered on behalf of Judicial Associates a day later. Listed as the company’s manager in the lobbying reports is Susan Mullins. She does not turn up on incorporation papers for that company. She is the executive assistant of The Longmire Group, which is Holley’s lobbying business. Mullins referred questions to Davis and her boss.
On June 17, 2014, the Senate Rules Committee moved the toll bill to the Senate Insurance Committee. Eight days later, the committee voted to replace it with the captive insurance amendments, which subsequently passed through both chambers with wide support.
The state insurance department recommended the amendments, said Debra Walker, a senior deputy insurance commissioner who oversees captive insurers. She did not recall a request from a particular business in drawing up the legislation.
Then Rep. Jeff Collins, a Rocky Mount Republican, introduced the amendments bill in the Senate Insurance Committee. He said he had little recollection about the bill, other than then Rep. Linda Johnson, a Cabarrus County Republican and a top budget writer in the House, had asked him to take it up. Johnson was a lead sponsor of the 2013 law. She died earlier this year.
“She was really kind of the driving force behind this whole thing,” Collins said of the captive insurance legislation.
The N&O couldn’t determine whether Holley ever had ownership of the bail company.
State law prohibits attorneys and the spouses of judicial officials from having financial interests in bail companies. Holley’s wife was Ola Lewis, a state Superior Court judge who died late last year.
Teague said in an interview that Judicial Associates hired him to “monitor” legislation and that he mostly dealt with Davis. Teague said he could not remember whether Moore had discussed the bill with him. Legislative records show Moore voted for it.
Cattlemen’s Surety was the first special purpose captive insurer in the state, gaining approval three weeks after then-Gov. Pat McCrory signed the amendments into law.
Cartret said he grew concerned about the company when he learned the identities of the four clients who sought to start it, some of whom were tied to the for-profit bail company offering training. It led to a dispute in which two of the clients stepped away. Davis and Holley also left, Cartret said.
Cartret then renamed the company. He also took over Judicial Associates, and renamed it North State Holding Group in 2016.
Further business ties
State incorporation records also show Davis and Holley were vice president and president, respectively, of another business formed in 2013, Swift Recovery Company, which listed its purpose as providing “storm and disaster” recovery. It was suspended last year after the state Department of Revenue said the company hadn’t followed state law in providing a tax report or return, or paying a required tax or fee.
Moore and Davis are also co-counsel representing the estate of a Cleveland County farmer against Duke Energy. The farmer was electrocuted in April 2016 after his equipment came into contact with a powerline, WRAL reported last year.
Davis’ work on the 751 South project became public in October 2013, when The Herald-Sun reported that he had filed a letter with Durham city officials certifying that the developers had recorded a utility extension agreement with the city. Cunningham had requested the extension the previous month.
That wasn’t the only work Davis did that helped the developers. Bryan Wardell, a Durham County senior assistant attorney, said on at least one occasion in the past few years, Davis delivered a six-figure check to the county from the developers as part of a series of payments totaling $850,000 for watershed improvements that would offset stormwater runoff from the project.
“Based upon my recollection, he delivered at least one check, maybe two, and it was to satisfy the payments under the stormwater agreement,” Wardell said in an interview.
Davis and Moore have another financial connection to the developers — a company called Impact Performance Lighting. Davis formed the company in 2014, incorporation papers show, and Mitchell was a minority owner. Moore said in the 2018 interview that the company, which sold LED lighting, paid him “less than $5,000” for a “one-shot deal” to review a contract.
After the N&O reported Moore’s legal work for Hunter and his KNOW Bio company, Wake County District Attorney Lorrin Freeman launched an inquiry that also looked into his role helping the bail agents association. Three months later, she ended the inquiry finding no evidence that any laws had been broken.
State ethics laws do not require lawmakers who are attorneys to disclose their clients. Federal law requires it in many cases of congressional candidates, who are seeking a full-time job, while state lawmakers are part-time. State lawmakers are required to recuse themselves from legislation involving their clients.
Moore disclosed in his 2012 ethics statement that he was a “contract” attorney for Four-County, which has since renamed itself Southeastern Community & Family Services. State ethics laws require public officials to disclose work as “independent contractors” for nonprofits or organizations operating in the state “primarily for religious, charitable, scientific, literary, public health and safety, or educational purposes.”
Davis’s ethics statements from the period he did legal work for Four-County do not mention the nonprofit. (His statements do identify him as an owner of Impact Performance Lighting.) Moore did not disclose his Four-County work in statements after 2012.
Failing to knowingly disclose required “material” information in an ethics statement is a misdemeanor in North Carolina.
Were Moore and Davis legally required to disclose their Four-County involvement? Kathy Edwards, the State Ethics Commission executive director, declined to comment on Davis and Moore’s disclosure statements, pointing to state law that prevents her from saying whether complaints exist. She referred an N&O reporter to the law and an ethics advisory opinion that said a failure to disclose is a misdemeanor.
Moore said in the 2018 interview with the N&O that Davis has never asked him for legislative help.
Angry neighbors
The 751 South development broke ground two years ago. Much of the construction so far has been residential.
It continues to stoke anger among neighboring residents, who well remember Cunningham’s role in making the development happen. Tillis has sought to draw attention to Cunningham’s work on 751 South and his campaign staffer’s attempts to shut down an N&O reporter’s questions following a recent meeting of the N&O’s editorial board.
Cunningham acknowledged that the 751 South development could hurt him in one of the biggest Democratic strongholds in the state, one that gave Gov. Roy Cooper his margin of victory late on Election Night in 2016. Cunningham emphasized that he was the hired lawyer with real estate experience, helping Mitchell, a friend he knew while growing up.
“That project ... has divided Durham,” Cunningham said at the meeting. “I’m hopeful that today after a lot of months and years of effort by the developer and that team that they are in a better place with the leadership in Durham than they have been in the past, because it was incredibly divisive, and it wasn’t good for Durham that it was divisive, and I think hopefully everyone has learned and moved on and is ready for the next challenge to come.”
To one of the South Durham residents who fought against 751 South, Davis’ work on behalf of the developers just adds more sneaky behavior to a project that survived through what the residents view as a series of actions that circumvented rules and regulations meant to protect the public’s interest. At one point, the developers deeded a slice of their property to the state to prevent neighbors opposed to the development from filing a protest petition.
“The fact that none of them will admit the reasons why (Davis) came on board and has these connections is suspicious,” said Carolyn Aaronson, an artist and former art teacher who lives near the project. “But they were like this the whole way.”
She’s still not voting for Tillis. As speaker, Tillis controlled what made it to the floor of the chamber. He allowed votes on the legislation in 2012 and 2013.
“If he was so ethical, why did he let it go through?” she said. “It’s a bad reflection on both of them. They both crossed lines.”
This story was originally published October 27, 2020 at 5:21 PM with the headline "Powerful NC lawmaker’s friend and co-counsel worked for developers helped by his bill."