AUGUSTA, Ga. (WRDW/WAGT) – Augusta officials said a preliminary response related to an audit of the Housing and Community Development Department was received Tuesday, Jan. 27, from Cherry Bekaert.

The audit report is not yet complete, according to the city.

After initial review, the city has requested additional information to “ensure clarity and accuracy before the process moves forward.”

Hundreds of internal emails obtained exclusively by News 12 reveal how Augusta-Richmond County’s Housing and Community Development Department improperly used $5.4 million in federal Emergency Rental Assistance funds, triggering a federal investigation and U.S. Treasury penalties that have cost taxpayers millions more.

The extensive email correspondence obtained by News 12 through public records requests provides an unprecedented look inside the ongoing investigation, revealing communications between city officials, Cherry Bekaert auditors, and federal oversight agencies as the scope of financial irregularities became clear.

Treasury Demands Repayment with Penalties

According to meeting records from August 2025, the Housing and Community Development Department received $12 million in ERA1 funding. When the grant term ended on Dec. 31, 2022, the department had $5.4 million remaining unspent.

When expected HUD funding was delayed in 2024, the department decided to “borrow” against the $5.4 million sitting in its bank account and use the funds to “maintain current operations,” according to audit documents.

In November 2024, the U.S. Treasury sent a demand letter to Augusta requiring repayment of the unexpended $5.4 million from ERA1, plus a 30% penalty for failing to return the balance on time.

When HUD funds were finally awarded in 2024, they were insufficient to cover the borrowed amount. Because the city lacked sufficient cash on hand, the Treasury reclaimed $1.4 million from the city’s ERA2 grant, with Augusta covering the remaining repayment from other fund sources.

Audit Expands to Multiple Areas

The investigation has expanded beyond the ERA funding issue to include:

• Subrecipient monitoring and review of ERA1 funding to United Way
• CDBG contractor procurement and oversight review
• Cash reconciliation across multiple federal grant programs

Arnold Pierce, the department’s Fiscal Officer, has been working with auditors to provide extensive documentation, including bank statements, check registers, and general ledger details spanning fiscal years 2021-2024.

Audit Timeline and Challenges

The audit has faced multiple delays and budget increases. In December 2025, Cherry Bekaert requested a budget increase of approximately $74,700 to complete the expanded scope of work, citing the project’s evolution into a forensic accounting investigation.

Administrator Allen had pressed for completion of the audit, scheduling a presentation to the governing body for January 13, 2026. The audit was required to address:

• Proof of cash reconciliation
• Confirmation of funds used to purchase the Weed School
• Explanation of gap funding usage and eligibility

Allen said the city “remains committed to transparency and will provide further updates once the requested information is received and the audit is finalized.”

The Housing and Community Development Department’s mission statement emphasizes creating “positive change by promoting self-sufficiency through partnership in Economic Development, Quality Housing, and Neighborhood Reinvestment.”

In November, Augusta Commission members held a budget workshop session with much discussion about the Housing and Community Development Department.

That’s the department that left the city on the hook to pay back millions in federal grant money.

The city received more than $6 million in grant money during the COVID-19 pandemic, supposedly to help people who were in danger of eviction.

The city never spent the money for that purpose, so the government demanded it back.

The department didn’t have the money on hand, so the city had to repay it, and then some, from the general fund — $6.3 million of the original grant money and $2.1 million in penalties.

The scandal led to the exit of Housing and Community Director Hawthorne Welcher and sparked an audit of the department.

On Oct. 28, commissioners in closed executive session approved the payment of up to $32,237.32 from contingency funds for rental assistance previously approved by the Housing and Community Development Department.

This means leaders agreed to take the money from their emergency fund and use it to help people with their rent as part of a program the department had already put in place.

Mayor Garnett Johnson said at the time, this was an effort to address letters that were sent out, falsely leading people to believe they were getting some emergency funds.

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