Posted December 20, 2016 11:24 am - Updated December 20, 2016 06:04 pm
By David Bauerlein david.bauerlein@jacksonville.com
Federal agents haul boxes from business co-owned by City Council member Katrina Brown
An FBI agent leaves Cowealth on Commonwealth Avenue with a box in hand. (David Bauerlein/Florida Times-Union)
The FBI evidence response team van arrives at the Commonwealth Avenue location of Cowealth Tuesday morning. (David Bauerlein/Florida Times-Union)
Cowealth is the business co-owned by City Council member Katrina Brown. (David Bauerlein/Florida Times-Union)
District 8 City Council member Katrina Brown. (Will Dickey/Florida Times-Union)
Federal agents converged Tuesday on a business co-owned by City Council member Katrina Brown, spending several hours inside the Commonwealth Avenue building before taking boxes from the business and loading them into an FBI evidence truck.
The FBI did not say why they were at the business.
The U.S. Small Business Administration’s Office of Inspector General was among that agencies that went to the Commonwealth Avenue building. The Small Business Administration backed a $2.65 million loan for Cowealth, the company that owns the building that houses the manufacturing operation for Jerome Brown Original BBQ Sauce.
The inspector general is responsible for conducting audits and investigations of Small Business Administration programs.
The criminal investigation division of the Internal Revenue Service also was on hand, along with the the U.S. Department of Housing and Urban Development, according to FBI agent Christine Windness.
Cowealth already is in default on a separate $590,000 agreement with the city of Jacksonville for the barbecue sauce plant.
The FBI has not contacted the city about an investigation in connection with Cowealth, said city spokeswoman Tia Ford. The FBI has not served any subpoenas to the city.
Katrina Brown did not return a phone call to her City Council office. She co-owns Cowealth with her mother JoAnn, who did not return a phone call or respond to an email seeking comment. Katrina Brown’s father, Jerome, is the namesake for the barbecue sauce.
In addition to co-owning Cowealth, Katrina Brown is one of the guarantors for the loan the city made to the business.
Ford said the city still has a Dec. 31 deadline for Cowealth to pay off delinquent property taxes, catch up on repaying a city loan, and turn over documents such as annual financial reports and income tax returns. A Dec. 2 letter to Cowealth from the city’s Office of Economic Development said the city will take legal action if Cowealth fails to meet that deadline.
The Duval County Tax Collector’s website shows Cowealth still owes about $22,000 in back taxes from 2015. Ford said as of Tuesday, Cowealth still has outstanding loan payments and has not provided the financial documents sought by the city. The Dec. 2 letter said if Cowealth fulfilled the requirements by the end of the month, the city would consider “potential term modifications” to the economic development agreement.
That agreement got approval in 2011 from City Council in the closing months of John Peyton’s term as mayor. The money came from the Northwest Jacksonville Economic Development Fund, a program intended to stimulate job-creating activity in hard-pressed neighborhoods with high unemployment rates.
Katrina Brown, who was not yet on City Council, worked with her parents to tout the potential for mass-manufacturing the barbecue sauce, which her father had created at backyard picnics and then served at Jerome Brown BBQ and Wings, a drive-through restaurant on Edgewood Avenue.
The barbecue sauce manufacturing venture lined up more than $3 million in financing: the $2.65 million loan backed by the Small Business Administration, a $380,000 loan from the city of Jacksonville, and a $210,500 grant from the city.
Cowealth used the city’s funding to purchase help purchase and renovate the large warehouse building at 5638 Commonwealth Ave. for production of the barbecue sauce, which is sold at almost 100 Winn-Dixie stores as part of the grocer’s program promoting locally products.
Cowealth was supposed to create 56 jobs at the plant, but when that deadline arrived in April, the business did not show the city it had created even a single job, which led to the city declaring the company in default.
On Tuesday, federal authorities entered the picture. A truck marked FBI Evidence Response Team was parked for several hours in the morning outside the plant, along with a Jacksonville Sheriff’s Office squad car.
Agents conducting the investigation emerged from the building about 12:30 p.m. carrying a few boxes that they loaded into their vehicles before departing. None made any comment, and no one from the business emerged to offer a statement as to what had happened there.
Earlier this year, Cowealth put the 34,000 square foot building up for sale with an asking price of $1.5 million. Biz Capital Bidco 1 LLC, which is based in New Orleans, provided a $2.65 million loan and has the first mortgage on the building, meaning the city would not receive anything until Biz Capital’s loan is paid off.
Even as Cowealth put the building up for sale, Jerome Brown BBQ opened a sit-down restaurant Aug. 12 in the front portion of the big Commonwealth Avenue building. A customer showed up Tuesday interested in buying barbecue sauce, only to find the front door locked after federal agents had left the scene.
Barbecue sauce plant timeline
May 2011 – City Council agrees to use Northwest Jacksonville Economic Development Fund to assist in purchase and renovation of building at 5638 Commonwealth Ave. Cowealth, company owned by JoAnn Brown and her daughter Katrina Brown, agrees to create 56 jobs.
2014 and 2015 – Cowealth doesn’t submit required annual audited financial statements.
May 19, 2015 – Katrina Brown is elected to the City Council.
June 2 – City’s Office of Economic Development sends Cowealth a letter declaring the business in default of the economic development agreement and demands the company repay a $210,550 city grant tied to creating the jobs. Cowealth never submits documentation by the April deadline demonstrating the company created any jobs. A letter gives Cowealth 15 days to clear up its problem or the city would “pursue all available remedies.”
July 11 – Cowealth counters it wants to convert the grant into a loan the company could repay.
July 12 – City responds it needs Cowealth’s tax returns for the past two years and financial statements from 2014 and 2015, and any interim financial statements for 2016. The city also requests income tax returns from the guarantors for the loan: Katrina Brown, KJB Specialties and Basic Products LLC. The Office of Economic Development receives some financial documents Sept. 15.
Aug. 12 – Jerome Brown BBQ opens a sit-down restaurant in the front portion of the large warehouse building on Commonwealth Avenue.
September – Cowealth confirms it has put the building at 5638 Commonwealth Ave. up for sale for $1.5 million.
Dec. 2 — The city tells Cowealth it is giving its “last and final notice” for the company to comply with the city’s demands by Dec. 31, or else the city will take legal action to enforce the development agreement.
Tuesday – Federal agents remove boxes from the warehouse on Commonwealth Avenue.
Barbecue sauce plant timeline
May 2011 – City Council agrees to use Northwest Jacksonville Economic Development Fund to assist in purchase and renovation of building at 5638 Commonwealth Ave. Cowealth, company owned by JoAnn Brown and her daughter Katrina Brown, agrees to create 56 jobs.
2014 and 2015 – Cowealth doesn’t submit required annual audited financial statements.
May 19, 2015 – Katrina Brown is elected to the City Council.
June 2 – City’s Office of Economic Development sends Cowealth a letter declaring the business in default of the economic development agreement and demands the company repay a $210,550 city grant tied to creating the jobs. Cowealth never submits documentation by the April deadline demonstrating the company created any jobs. A letter gives Cowealth 15 days to clear up its problem or the city would “pursue all available remedies.”
July 11 – Cowealth counters it wants to convert the grant into a loan the company could repay.
July 12 – City responds it needs Cowealth’s tax returns for the past two years and financial statements from 2014 and 2015, and any interim financial statements for 2016. The city also requests income tax returns from the guarantors for the loan: Katrina Brown, KJB Specialties and Basic Products LLC. The Office of Economic Development receives some financial documents Sept. 15.
Aug. 12 – Jerome Brown BBQ opens a sit-down restaurant in the front portion of the large warehouse building on Commonwealth Avenue.
September – Cowealth confirms it has put the building at 5638 Commonwealth Ave. up for sale for $1.5 million.
Dec. 2 — The city tells Cowealth it is giving its “last and final notice” for the company to comply with the city’s demands by Dec. 31, or else the city will take legal action to enforce the development agreement.
Tuesday – Federal agents remove boxes from the warehouse on Commonwealth Avenue.
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