Promised Land

Ever since the city of St. Louis' airport authority wiped out much of Kinloch, the remaining residents have been hoping for a miracle to save the town. Others have been trying to turn a fast buck.

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People used to live here. Most came up from Mississippi, Arkansas and Tennessee. The town grew piecemeal, looking like so many nameless places down South. But Kinloch had a name, and it had another distinction -- people here owned their own homes.

There is nothing nostalgic about dirt roads, shotgun shacks and outdoor privies. Early residents migrated north to work in factories, trading one hardscrabble existence for another. They left poverty and racism -- and poverty and racism greeted them. Yet they endured, and successive generations built and improved a community that lasted for the better part of a century. Tens of thousands of people have called Kinloch home.

"It was a beautiful community," says 64-year-old Helen R. Fryer Jones, who moved to Kinloch from Laurel, Miss., as a child. "We had drugstores, we had furniture stores, we had bakeries, we had a high school and a grade school. We had all these things. You didn't have to lock your doors, because your neighbors watched out for your home, your children. It was like one big lovely family. We took care of each other. That's what this town is built up on -- Southern people that wanted their own. They got here, and they got their own."

Much of that city is gone now. Up and down Monroe and Scudder avenues, over on McGuire and McHenry, too, the residences have disappeared. Part of the abandoned area looks more like a park than a ghost town. The grass is cut, and ornamental trees still grow where backyards used to be. Just the people and the dwellings are missing.

The view from Freiling Avenue, one block west of Martin Luther King Boulevard, is far less bucolic. A local entrepreneur has opened an unofficial junkyard in the middle of the street. A minivan is tipped over on its side, and other derelict vehicles haphazardly line the narrow thoroughfare. Debris and broken glass are everywhere.

This empty part of southwest Kinloch, where houses once stood and families lived, has been owned by the city of St. Louis for nearly 20 years. The 175 acres of prime real estate, near the junction of interstates 70 and 170, was acquired by the St. Louis Airport Authority, ostensibly for noise mitigation, beginning in 1982. The Kinloch buyout cost upwards of $50 million, according to an airport spokesman, with most of the funds coming from the Federal Aviation Administration. But residents who sold their homes received only a fraction of this largesse, says former Kinloch City Attorney Richard Wier. The rest of the money presumably went for real-estate consultants, administrative costs and other related expenses.

"I know what the average price of the homes were selling for, and, in Kinloch, it was under $25,000 a house," Wier says. "They bought out land in Kinloch, partially because Kinloch was cheap and because the folks in there were poor black folks."

Half of the residents of Kinloch reported in the last census that they had an annual income of less than $10,000. For the residents and property owners who did not sell, the buyout progressed like a slow, invasive cancer. About 500 parcels are still in private hands, but many of those are vacant lots. Much of the remaining half of the city is now littered with the burned-out hulks of abandoned buildings. On lot after rubbish-filled lot, yellow signs are nailed to any available surface, identifying the Airport Authority as the owner.

But the squalor belies the true value of the land. Kinloch's proximity to the airport and the interstate makes its an ideal location for commercial and industrial development. With its population vastly decreased -- perhaps 1,000 people live there now -- and its tax base eroded, Kinloch's very survival depends on redevelopment of the land taken by St. Louis. That was something Kinloch and St. Louis recognized in the early 1980s, when the buyout began, but that is no longer the case.

Today, leaders of the area's oldest all-black city accuse St. Louis of turning its back on their plight. After negotiations with the Airport Authority failed earlier this year, Kinloch filed a lawsuit to regain control of the buyout property. The suit, filed in St. Louis County Circuit Court, alleges that St. Louis willfully engaged in the destruction of the town by reneging on earlier commitments to convey the land to Kinloch. The suit specifically cites a 1982 St. Louis ordinance that vowed cooperation with Kinloch's plans to regain and develop the land. The suit accuses St. Louis of misrepresenting the goals of the buyout to the FAA -- that the real reason for the land acquisition wasn't to address the noise problems caused by Lambert but, rather, to force the disincorporation of Kinloch and allow St. Louis to profit from the sale of the land to developers.

"I think what offends me the most is that St. Louis apparently believes that it has the right and the authority to decide which communities surrounding the airport survive and which don't survive," says Al Johnson, Kinloch's current city attorney. "I find it offensive and the height of arrogance that they come out here and criticize our city, essentially telling us, 'Kinloch, we don't think you can govern yourself -- so we're going to buy you out, and we're going to take control of your land.'" St. Louis Mayor Clarence Harmon refuses to comment on Kinloch's plight, saying that it is the subject of current litigation.

Mike Donatt, an airport spokesman, also declines to comment on why the city has not conveyed the land back to Kinloch, because, he, too, says that it is the subject of a pending lawsuit. "Over the last 18 years, hundreds of families in communities, including Kinloch, have chosen to be bought out under the noise program," Donatt says. "They have chosen to move elsewhere. It was not a situation of the city of St. Louis and Lambert Airport dictating where people move. The noise buyout is all in accordance with a federally approved program. People can allege anything they want in a lawsuit -- that's why they litigate."

Another St. Louis city official, speaking on background, says there have been no broken promises; they say that Kinloch homeowners willingly sold their properties; they say St. Louis is being blamed for Kinloch's internal problems and legacy of poor leadership. In addition, the city blames at least part of the current flap on meddling by Bridgeton, the St. Louis County municipality that has long opposed the airport-expansion program and supported Kinloch's fight against the city.

Regardless of who is to blame, it's safe to say that St. Louis has spent a fortune to acquire the Kinloch property, and Kinloch has borne the cost of the ensuing social disintegration. Meanwhile, investors who have sought to capitalize on these deplorable circumstances have lost millions of dollars at the hands of unscrupulous local businessmen.

The desolation and grinding poverty of Kinloch weren't on the agenda when a group of worried investors gathered on Dec. 8, 1998, at Magna Bank in Creve Coeur. Instead, two prominent and connected St. Louis businessmen -- dentist Kenneth S. Powell and nightclub owner Ronald L. Roberts -- sought to reassure an audience of two dozen people that plans for a major land deal in which they had invested, one that would garner huge profits, were still on track. One investor says Powell, who spoke reassuringly for the better part of an hour, conceded that the return of some investors' money had created a cash shortage. He alluded vaguely to some political stumbling block but offered few, if any, details about the problem. Powell's sales pitch was enough to convince the leader of one investment group to ante up another $125,000.

Since 1996, Powell and Roberts had represented themselves as principal players in a development deal involving land in Kinloch. They made an unusual pair -- Powell, 52, professional and conservative in demeanor; Roberts, 40, flashy, a bit of a rogue. Wier, the former Kinloch attorney, recalls meeting Roberts for the first time last year: "He comes in, he's wearing a green suit, black-and-white spectator shoes with purple socks. If you wanted to look like a two-bit hoodlum, you couldn't have dressed better." How Powell and Roberts came to be partners is unclear, but together they attracted millions of dollars from investors, who were lured by promises of fantastic returns.

That investment scheme began to unravel last summer, when the Missouri secretary of state's office ordered them to stop selling unregistered securities to investors. Last month, Powell, Roberts and a third businessman, Mark E. Williams, were named in a 32-count federal indictment accusing them of mail and wire fraud, money-laundering and interstate transportation of property obtained through fraud. Williams, who is a partner with Roberts in a nightclub at 7555 Olive Blvd. called Another Nite, is alleged to have played the role of bagman, laundering money for Roberts by withdrawing it from the Alton Belle Casino after Roberts had deposited it there. All three defendants have pleaded not guilty to the charges.

The indictment says Powell and Roberts bilked investors from Missouri, Illinois and other states of an estimated $12 million. Victims ranged from senior citizens to professional athletes. The scores of investors identified in the indictment includes a local landfill operator, a car dealer, mortgage brokers and a building contractor. All of these investors, and perhaps others unknown, were promised an exorbitant return on their money. One St. Louis pawnshop owner was told he'd realize $2 million in return for a $40,000 investment. An elderly investor from Cicero, Ill., was promised $500,000 for an investment of $28,000. Former New Orleans Saints halfback Vaughn Dunbar was promised $5 million-$6 million within 72 hours for putting up $260,000.

How those investors became convinced a piece of Kinloch could fetch such a profit is uncertain. Roberts and Powell, according to the indictment, claimed they controlled 400-500 tracts of land in Kinloch but that they needed additional funds to buy the remaining property. Once those sales closed, Powell and Roberts said, they would sell the land to a waiting developer. At one point, the buyer was to be St. Louis-based Stifel Nicolaus & Co. The indictment also alleges that Roberts and Powell told investors that they were hammering out a sales agreement with Steffen Group Inc., a Phoenix-based developer -- a deal that would net an incredible $920 million.

The two partners met with investors at a mortgage company in Creve Coeur and conferred with others at a Clayton attorney's office. They met at the Sheraton Plaza Hotel on New Year's Eve 1998. They wined and dined prospects at Ruth's Chris Steakhouse and J.P. Fields restaurant. They kept in touch with their deep-pocketed investors by telephone. They wrote them letters. And they inevitably asked for more money. When the deal never closed, Roberts and Powell always had an explanation: They needed to get yet another government agency's approval; they needed to pay off an unexpected tax obligation; an obstinate landowner was holding out for more money.

To gain the trust of jittery investors, Roberts and Powell offered to turn over land deeds as security. They assured investors that their money had been placed in escrow accounts. They promised to reward patient investors with luxury cars. Some investors were shown a St. Louis County property-tax receipt that had been altered to show that the partners had paid more than $816,000 in taxes on their Kinloch properties. The actual tax bill, according to the federal indictment, was a little over $16,000.

To keep things quiet, Powell and Roberts told investors they were bound by a confidentiality agreement and also advised them, if asked, to tell law-enforcement officials and regulators that the funds they handed over were unrestricted loans rather than investments. They leaned on others to help lure new investors. In St. Louis, two men -- Mark Johnson of Creative Mortgage Concepts in Creve Coeur and Peter Schaefering of Magna Bank -- directed investors to Powell and Roberts. Both became inextricably tangled in the scheme and were named in the cease-and-desist order issued by the Missouri secretary of state's office last summer.

Powell and Roberts opened bank accounts at Mercantile (now Firstar), Allegiant and Royal banks. Investors were asked to make payments using cashier's checks issued by these banks; Roberts then deposited the checks at the Alton Belle and Williams later withdrew the cash. In this way, the money could be written off as gambling income.

As the money poured in, Roberts began acquiring the accouterments of wealth, according to the indictment.

In August 1998, for instance, he plunked down $57,000 for a 1998 Lexus LX470. A year later, he spent more than $65,000 for a 1999 Jaguar XK8. When FBI agents arrested him last month at his home in Florissant, they seized $300,000 in cash from the trunk of his silver Porsche Boxster, according to published reports. Nearly two dozen other expensive vehicles were seized by federal authorities from the three defendants, according to the indictment.

As the months turned into years, the investors began to express their doubts. Lawsuits were filed. One method Roberts and Powell allegedly devised to alleviate this problem was to simply pay off the disgruntled party with new investors' dollars -- robbing Peter to pay Paul. This constant juggling act required finesse and more than a little moxie, and eventually it became impossible to keep word of the scheme from leaking out. Acting on a tip from its Illinois counterpart, the Missouri secretary of state's office began to investigate last year.

Raymond Lahner, a 61-year-old investor from Cicero, wonders why state and federal law-enforcement authorities took so long to act. The indictment lists Lahner's losses at more than $57,000, but he says he made several investments totaling $200,000.

"It sounded like a good deal, but it just never ended," says Lahner. "They really didn't say what it (the money) was to be used for. I thought it was for buying up property by the airport. They were supposed to have a contract with buyers. They always had some kind of excuse. They always needed money for something -- for taxes or to buy property, or somebody wanted their money back. So we kept giving them more money. There was always a snag; they could never close."

Lahner, who has never been to Kinloch, says the money he invested came from an inheritance. He says he learned of the opportunity through Ismael Covarrubias, the brother of Lahner's son-in-law. St. Louis County property records show that Covarrubias owns parcels in Kinloch on Warwick Street and Granberry Drive, near properties controlled by Roberts and Powell. Covarrubias, who lives in the Chicago area, could not be reached for comment.

Lahner knows Anthony Pope, another investor, because the accountant helped out with his estate planning, he says. Pope, acting as an agent for many Chicago-area investors, gave Roberts and Powell two installments in 1999 worth a total of $1.1 million, according to the indictment. That amount represents the largest single investment in the scheme. County property-tax records provide an Elmhurst, Ill., mailing address for one of Powell's investment companies. DuPage County, Ill., property records list Anthony Pope as the owner of the building where Powell's tax bills are sent. Pope could not be reached for comment.

Others aren't talking much either. Neither Powell nor his lawyer, Paul J. D'Agrosa, could be reached for comment. Richard Sindel, a defense lawyer who represents Roberts, says he's inclined to believe that the case may boil down to an elemental point in common law -- caveat emptor, or "buyer beware." "These people who were involved in this investment are very intelligent, capable individuals," Sindel says. "It's not like a bunch of senior citizens, where he's getting their last bits of money. These are land developers, real-estate developers, people who make their money by making good, solid investments."

Investors may have felt they were on solid ground because of Powell's long history with Kinloch. In 1990, the dentist formed Airport Industrial Redevelopment Corp. (AIRCO) with real-estate developer Mark A. Turken and Kinloch granted AIRCO exclusive rights to redevelop the 175 acres bulldozed by the Airport Authority.

Turken's business relationship with Powell dates back to the mid-1980s, when the two were investors in the Gateway Mall project in downtown St. Louis.

Under the agreement, Kinloch relinquished future control of the property to AIRCO. The plan hinged, of course, on St. Louis' agreeing to convey the land to Kinloch. A measure to authorize the land transfer languished in a St. Louis aldermanic committee for months, in part because it was tied to a proposal to expand the Kinloch buyout to include the entire city. Eventually the buyout was expanded, but the St. Louis Board of Aldermen declined to authorize the return of the 175 acres that Kinloch wanted. Kinloch sued in 1993, and St. Louis was forced to enter into a consent decree, but St. Louis has continued to refuse to transfer the land back on the grounds that it had been acquired with FAA funds and that the federal government required that the land be resold at fair market value.

The real reason for the delay in the conveyance of the land to Kinloch is a little more complicated. Under the terms of the consent decree, Kinloch and St. Louis were supposed to negotiate a sales price, which likely would be significantly below the current commercial value of the property. On the basis of his talks with developers, Wier, the former city attorney, estimates the actual value of the Kinloch property at $100 million. "They got a problem," says Wier, "because federal law says if you buy out land with federal money and then the land is returned, as it would be in this case to Kinloch, the city of St. Louis has to return that money to the FAA. The city of St. Louis woke up and said, 'We're going to lose $100 million.' They don't want to do that, obviously. (So) they tap dance a lot about it."

In fact, Kinloch's lawsuit alleges an ulterior motive on the part of St. Louis, the disincorporation of Kinloch: "This will permit the City of St. Louis to sell the property to private development concerns at a substantial profit to the City of St. Louis."

Kinloch's efforts were further hampered in May 1990 when attorney Charles L. Bussey Jr. was convicted of federal income-tax evasion. Bussey had been instrumental in bringing Turken and Powell together, according to Wier. Moreover, according to a news report from the time, the AIRCO deal was orchestrated while Joseph Williamson, a lawyer from Bussey's firm, was the acting Kinloch city attorney. Another attorney who once worked at Bussey's firm is former St. Louis Mayor Freeman Bosley Jr., who served from 1993-97. Bussey's partner Lloyd Jordan, who lobbied on behalf of the AIRCO deal, later served as a Bosley's chief of staff.

Alan Steinberg, an attorney who has represented Turken, Powell's AIRCO partner, also served as a lawyer for the city of Kinloch in the early 1990s, according to news accounts. As a Kinloch counsel, Steinberg tried unsuccessfully to negotiate the reacquisition of Kinloch properties from the Airport Authority. Steinberg refuses to comment about his representation of Turken and Kinloch.

Turken, who says he's retired, now dismisses the AIRCO agreement as inconsequential. "The only thing that we had was a development company that had a piece of paper that said if Kinloch ever acquired this ground from the Airport Authority, we would have the first right to develop it," he says. "It never happened. I haven't had anything to do with this in years."

Wier, however, recalls discussing the AIRCO agreement with both Turken and Roberts on separate occasions only a few months apart. Wier says he sat in on a meeting in late 1998 or early 1999 with Powell, Turken and then-Kinloch Mayor Bernard Turner. At the meeting, Powell and Turken expressed indignation about the revocation of their redevelopment rights, Wier says. The Kinloch Board of Aldermen passed an ordinance severing the city's agreement with AIRCO on Dec. 21, 1998.

After mayoral candidate Keith Conway defeated Turner last year, Wier continued as legal counsel to the city during the transition. The lawyer remembers another meeting about the AIRCO rights -- this time, with Powell and Roberts. At the meeting, which took place in April 1999, Mayor Conway reiterated the city's position that the AIRCO agreement was dead, Wier says. Just to make sure, the Kinloch Board of Aldermen passed a resolution in July 1999, declaring that AIRCO had breached its contract with the city by "assigning stock and interest in the corporation without first seeking the prior approval" of the city.

In short, two different Kinloch mayors renounced the AIRCO agreement on two separate occasions -- during the same period in which Powell and Roberts were allegedly bilking investors. The AIRCO agreement, however, isn't mentioned in the indictment, and Assistant U.S. Attorney Rosemary Meyers, the federal prosecutor, refuses to comment on any aspects of the case, other than what is outlined in the federal charges.

"We went back and looked at the deal," Wier says. "Mayor Turner and I and the city clerk spent hours going through whatever city records we had." A diligent search failed to turn up a scrap of evidence that the Kinloch Board of Aldermen had ever approved the AIRCO agreement, he says.

"We checked out other places, and we got word back from highly placed federal sources who said the FBI was very interested in Dr. Powell," Wier says. Kinloch officials were also advised by St. Louis Mayor Clarence Harmon's office and the Airport Authority to steer clear of Powell and his associates. Wier says Kinloch contacted both Turken and Powell about the matter and ultimately told them this: "It is our position that this contract is revoked. If you don't like it, you can sue us." He says, "That's where we left it. The last I heard of it was that in the summer of 1999, the FBI had talked to (airport director Col. Leonard) Griggs and his people," Wier says.

For his part, Turken says the agreement forged between AIRCO and Kinloch in 1990 had no connection whatsoever to the land scheme later hatched by Powell and Roberts. As for Roberts, Turken says: "I wouldn't know him if he bit me on the leg."

Faced with the airport buyout in the early '80s, Kinloch drew up an ambitious plan that called for redeveloping the former residential properties into an industrial park. The plan, christened Kinloch Tomorrow, called for the return of the 175 acres of buyout property to Kinloch and relocating displaced residents to the northeast portion of Kinloch. In 1982, the St. Louis Board of Aldermen formally approved the plan and pledged to cooperate with its tiny neighbor in implementing it.

Kinloch and St. Louis agreed to hire a planning agency, Fleming Corp., to draw up a 10-year, $21.4 million redevelopment plan that dovetailed with the airport's expansion plans. The plan called for the creation of a private redevelopment corporation that would include representatives of McDonnell Douglas (now Boeing), Emerson Electric, Anheuser-Busch and Mark Twain Bank. The companies, it was hoped, would work in concert with government agencies to create a new Kinloch from the shell of the old.

A survey by Fleming showed that more than half of the affected households in Kinloch wanted to stay in the community. To satisfy that demand, houses in the southwest part of the town were slated to be moved to the northeast section. Those that couldn't be moved would be replaced with new housing. The plan also called for the construction of a retail shopping area, new community center and city hall and retirement apartment complex.

A news photo from the era shows airport director Griggs with then-Kinloch Mayor Joseph L. Wells and other officials at a groundbreaking for new housing. They're standing around a sign that proclaims: "Kinloch Tomorrow, the Future is Now."

But as early as the spring of 1981, Griggs had expressed doubts about the project because of the Reagan administration's newly imposed emphasis on reducing federal spending. As a result, the anticipated private support for the plan never materialized, either. The Kinloch Housing Authority did build a number of retirement housing units with federal housing grants, but otherwise, only a handful of houses were ever built or relocated. The grand plans for a new city hall and community center also fell by the wayside.

Without the redevelopment plan, the buyout acted as a one-two punch in the municipal breadbasket, doubly hurting Kinloch by depopulating half of the city and simultaneously destroying a large part of its none-too-hefty real-estate-tax base. To longtime residents, it appeared that the very foundations of their community were being disassembled by outside forces.

Kinloch Tomorrow was an ambitious proposal that envisioned a bright future that never came. In many respects, the plan has been more of a prolonged nightmare than a dream deferred, mired in political conflicts, jurisdictional wrangling, land schemes and more than a few broken promises.

The cascade of problems that Kinloch faced were not all pouring in from the outside, however. After the buyout destroyed some of the best housing stock in the city, crime began to increase -- most notably, drug dealing and illegal dumping. The problem was compounded, during the first half of the 1990s, by a series of political scandals. City officials, including the police chief, were cited for various infractions. Money confiscated from drug and gambling raids disappeared from City Hall. Some aldermen were charged with and convicted of receiving stolen goods. And former Mayor Charlton Clay was convicted of extorting funds from a city contractor in 1993.

"The scheme was to take this town," says Helen Fryer Jones, who has watched Kinloch's slow decline. "This town is wanted. It's valuable property. You know, dollars will make a lot of folks change their minds and do things that they shouldn't do. That's why my town is like it is."

Virgil Jones, who is a plaintiff in Kinloch's current lawsuit against St. Louis, agrees. "When all that land got vacant, that's when everything hit the fan," he says. Jones is the last resident in his subdivision. Everybody else sold out to the airport. The 78-year-old World War II veteran bought his house in 1967 with the help of a GI loan. He has been watching the antics of Kinloch officials, the Airport Authority and real-estate pitchmen for decades.

"They would tell a lot of people lies," he says, referring to tactics used to induce property owners to sell. "They would tell them that their water would be cut off. That was a lie."

The money that the airport has offered Kinloch homeowners in the past hasn't been enough to buy affordable housing elsewhere, Jones says. "My sister, I know for a fact, she got $25,000. A majority of poor people out here -- they're taking advantage of (them)," Jones says. "A lot of them never saw a $100 bill in their life. See, they sucked them in. Money excites them. The dollars started flying around. Even some of the officials here in Kinloch started taking money under the table. There was a whole lot of stuff that went on. People's lives were involved. A lot of them wish they hadn't left. But they did leave. And it's too late."

These days, the number of churches in Kinloch rivals the number of houses. The congregations arrive for funerals and weddings and worship services. When the sermons and ceremonies are over and the benedictions are all said, the churchgoers get in their cars and leave the place they used to call home.

The residence next to Jones' is now vacant and will soon be razed. The pink house on Rev. Dr. Earl Miller Street will then stand alone. For more information, see sidebar, Raising the Stakes.

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