By Tom Embrey

Senior Writer

Fred Hobbs vehemently denies any wrongdoing in the way his engineering firm handled the application process for two grants for Yadkin County.

He said accusations that the firm filed false applications for federal stimulus funds "came out of left field."

"I believe us to be innocent in every respect," Hobbs said Thursday.

The state Department of Com-merce has turned over information to the State Bureau of Investigation.

"There is definitely some concern there because it was turned over to the SBI," said Tim Crowley, a spokesperson with the state Department of Commerce.

The applications in question were discovered when a competing firm, Benchmark CMR, of Kannapolis, which won the contract to administer the federal grants, attempted to verify information that Hobbs Upchurch had used in preparing the applications, The News & Observer reported.

Yadkin County hired a Charlotte-based law firm, Parker Poe Adams & Bernstein, "to gather, review and analyze the facts and information surrounding allegations of forged signatures of middle to low-income grant applicants on documents submitted to the N.C. Department of Commerce," according to a release from Yadkin County officials.

The release said the investigation "confirmed the signatures on Income and Need Surveys currently in the CDBG-ER grant application filed with the N.C. Department of Commerce appear to be inconsistent with the signatures of the homeowner applicants."

The release asserts that "two signatures purporting to be those of applicants appear on a document that was dated subsequent to the death of the individual purported to be the signer."

The information from the investigation was turned over to the state Department of Commerce, which looked into the matter, ultimately deciding to freeze the grant money and turn over information to the SBI for further review.

The release also alleges that three people listed as members of a selection committee that met Sept. 9 to select homeowners for the recipients of the grant denied the existence of that committee and denied attending a meeting.

Hobbs said Michael Walser handles the grant programs for his firm. Hobbs said he has had discussions with Walser over the allegations and believes his firm has done nothing wrong.

"We're not going to lay down on this," Hobbs said. "This is not going to be a mea culpa. This is going to be a vigorous defense. We did not do the wrongful things that are alleged. We simply didn't do them, unless I am being lied to."

The allegations center around a grant application filed in September on behalf of Yadkin County by Hobbs Upchurch & Associates. Hobbs Upchurch had been authorized by the Yadkin County Board of Commissioners to apply for the grant, which it did without charge in hopes of winning the contract to administer the money.

Hobbs Upchurch had also prepared applications for stimulus grants issued in 2009, but those applications were not funded, the newspaper reported. The Parker Poe investigation raised the suspicion that Hobbs Upchurch resubmitted the names from 2009 for the 2010 grants - which were to go to communities that didn't receive the first round of funding - but never actually interviewed those people or visited their homes in either year. The county was authorized to receive $100,000 in 2010.

The contract went to Benchmark CMR in the spring. When Benchmark began administering the grant, it found inconsistencies in the application and informed the county, the N&O said.

Walser, Hobbs said, worked for Benchmark prior to coming to Hobbs Upchurch eight years ago.

"Yadkin County was distressed to discover that fraudulent or misleading documents have been submitted on its behalf," said Yadkin County Manager Aaron Church in the release.

Church, who worked as a congressional aide for U.S. Congresswoman Virginia Foxx for two years, added: "We have not approached Hobbs Upchurch & Associates with our findings so as not to impede a potential investigation by the State Bureau of Investigation or other law-enforcement entities Hobbs Upchurch & Associates no longer administers grants on behalf of Yadkin County."

Hobbs said neither he, nor anyone representing him or the firm has been contacted by the SBI or the investigators hired by Yadkin County.

"If there were questions, certainly my expectation would have been that the questions be asked, and we welcome the questions to be asked and answered," he said.

Hobbs, who was a Democratic state senator in the 1990s, was fined $150,000 last year for illegal campaign contributions to Gov. Bev Perdue, former Gov. Mike Easley, former Senate President Pro Tem Marc Basnight and former Lt. Gov. Dennis Wicker. He was also charged with a misdemeanor for the contributions.

Hobbs said he is worried about the damage the allegations could have on his reputation and his business.

"I believe at the end of the day, whenever the end of the day is, we will be found to be absolved of any wrongdoing," Hobbs said. "And I don't intend to roll over and just say, we'll sit back and see what happens."

Contact Tom Embrey at tembrey@thepilot.com.