E.M. Health, Part III: Political, racial pressure pays off for bakery
By Cecily Burt, G.W. Schulz, Judy Campbell, Thomas Peele, Josh Richman and Bob Butler, Chauncey Bailey Project
In 1996, Your Black Muslim Bakery lieutenant Nedir Bey had a wealth of ammunition with which to lobby city leaders for a $1.1 million loan to fund his health care company, E.M. Health Services.
The previous year, the city of Oakland had agreed to spend hundreds of millions of dollars to bring the Oakland Raiders back from Los Angeles, a deal that quickly soured and has cost the city and Alameda County taxpayers more than $20 million a year ever since.
The developers of a new downtown ice rink had defaulted on $11 million in bonds just three months after the facility opened.
The city had also given plenty of money to other businesses, most white-owned. As a result, the city council was getting a relentless drubbing from bakery members and black business associates who lined up at meetings to speak on behalf of E.M. Health Services and its efforts to obtain the loan.
Investigative Report: E.M. Health Services
E.M. Health, Part I
E.M. Health, Part II
E.M. Health, Part III
They argued that white business owners had an easier time obtaining credit, unsecured loans and support from the city while black-owned businesses endured undue scrutiny.
Elected officials endured hints and outright accusations of racism if they dared ask questions about the company or collateral for the loan.
Some of those accusations occurred during the June 4, 1996, council meeting where the officials discussed giving E.M. Health an interim start-up loan of $275,000 in city funds. The loan was needed because the company’s application for a $1.1 million share of federal Housing and Urban Development funds for job training programs had not yet been distributed to the city of Oakland.
During the meeting, Shannon Reeves, then-president of the NAACP Oakland chapter, accused the city’s black elected officials of forgetting where they came from.
“It’s time to deliver for the people in the community …,” Reeves said. “We need those who look like us to advocate for us.”
Beth Aaron, executive director of the Bay Area Black Contractors Association, also testified at the meeting that night. She said the record proved that white-owned businesses had a much easier time getting Oakland to open its purse strings.
“Those who are white or friends of friends get things done very quickly,” she charged. “Those of us who are of color … do not.”
Even Nedir Bey got into the act.
“A few years ago we wouldn’t have been able to come here and ask for anything without getting run out,” he said. “Cut us a check on Friday for $275,000. Compare us to other projects that you have passed.”
A decade later, E.M. Health is just an unpaid debt on the city’s books, its license suspended by the California Franchise Tax Board. Principal payments first due in May 1998 never materialized, and by the time city staff members knocked on its doors in October 1999, the offices had been cleared out.
But the story of how the business, a subsidiary of the now-bankrupt Your Black Muslim Bakery, received the money despite a flawed business plan and a disturbing criminal incident in Nedir Bey’s past illustrates the extent politics and pressure played in officials’ decision to approve the loan. Bakery members have also been linked to several violent incidents, including the shooting death of journalist Chauncey Bailey, as well as alleged real estate and welfare fraud and child rape.
“In reality it was political pressure that got them the loans,” said city council President Ignacio De La Fuente, who was a council member at the time. “Deep down inside, everybody knew it was bull—. No business plan, no records anyone could show. … And they kept saying they were failing because they didn’t get the city’s money soon enough.”
Retired council member Dick Spees, who is white, remembers how heated those meetings were, of being accused of racism because he dared question the business plan or ask about collateral or a missing business license.
Bakery members would line up along the wall and refuse to sit, he recalled.
“It sounded good (on paper), this training program to help black people who were not getting opportunities,” Spees said recently. “But there was this intimidation factor; it just didn’t feel comfortable.”
Spees said he grew suspicious when Nedir Bey started racking up ineligible expenses even before federal government lenders had determined E.M. Health’s job-training program met its criteria for financing.
Spees said he ended up voting for the loan and for several thousand dollars in advances from city coffers after he was assured by city staff on more than one occasion that HUD would approve the loan and that Bey had put up collateral.
De La Fuente said he understood that the HUD money was intended for riskier loans, but that was no reason to cave in to pressure and give the money without trying to protect the city’s resources.
“I never got their support,” he said, referring to his black council colleagues, Nate Miley, Dezie Woods-Jones, Elihu Harris and Natalie Bayton.
The city gave Nedir Bey money despite a disturbing incident that occurred on March 4, 1994, when Qiyamah Corporation, E.M. Health’s nonprofit parent company, was still in its infancy.
On that date, Nedir Bey and Abaz Bey, another spiritually adopted son of bakery founder Yusuf Bey, were arrested and charged with abducting, assaulting, torturing and robbing a man they believed had cheated them on a real estate transaction.
Abaz Bey and other members of the bakery lived in an apartment building on 24th Street in North Oakland, the same one Nedir Bey wanted to buy with his first request for city money, which ultimately was reduced in scope. The owner had hired the bakery to provide security after being sued by tenants fed up with rampant drug dealing and other crime. According to police and court records, three men, led by Nedir Bey, beat the man with a flashlight and burned him with a hot knife. The arrests sparked a tense, full-scale standoff between more than 40 police officers and a similar number of male bakery members.
According to news reports, then-Mayor Elihu Harris agreed to meet the demand of bakery patriarch Yusuf Bey to discuss the standoff and the arrests.
Nedir Bey pleaded no contest to one felony count of false imprisonment. He was sentenced to three years’ probation after a veteran Oakland police officer and members of the community wrote a letter of support on his behalf.
The probation report noted that two other prominent Oakland residents acted as character references for Nedir Bey: Alameda County Supervisor Keith Carson and Larry Reid, then an aide to Harris. However, Reid, now an Oakland city council member, said he never wrote a letter or served as a reference for Nedir Bey.
When Tribune reporters Diana Williams and Paul Grabowicz questioned whether the arrest should affect his loan application, Nedir Bey said such details were irrelevant.
“Nelson Mandela spent 27 years in prison, and he was respectable enough to become president of South Africa,” he was quoted as saying in a June 1996 Oakland Tribune article.
Alameda County Supervisor Nate Miley, who was an Oakland council member and pushed hard for the E.M. Health loan, said recently that he never knew about Nedir Bey’s felony conviction or other clashes between bakery members and the police.
“Then-police chief Richard Word and I chaired the Public Safety committee, and I didn’t know about it,” Miley said. “Clearly, I had a sense that the police had some concerns (about bakery members), but not how it’s been depicted recently.”
Miley is unapologetic about his unflinching support of E.M. Health during his time on the council. He wasn’t overly concerned when the company defaulted, he told his colleagues at the time, because the federal money was intended to fund higher-risk ventures.
He recalled in a recent interview that African-Americans had good reason to believe black businesses weren’t getting a fair share of city contracts or loans. Oakland’s leaders had poured millions in public money into bringing the Raiders home from Los Angeles and bailing out the ice center, Miley said, and African-Americans never let them forget it.
It’s also possible that city staff and some council members were intimidated by the accusations of racism, he added.
“I think we were very sensitive (about accusations) of being racist and Uncle Toms,” said Miley, who is African-American.
“When E.M. came in to get a loan … on the face of it, that looked like very worthy cause, something that would serve the public. So we decided to give them a chance,” Miley said, adding that there was some concern about the money being used for a car and consultants. “We gave them some technical assistance and guidance rather than pulling the rug out from under them completely,” Miley recalled. “Still, even if it’s federal money they got, it’s still public taxpayer dollars down the toilet.”
Miley said he admired Yusuf Bey and the way he preached self-reliance, spirituality and discipline. Oakland was suffering record homicides, and here was someone who was reaching out to ex-cons or those who might otherwise get caught up in the cycle of violence and helping them turn their lives around and earn money legitimately for their families, Miley said.
In February 1996, a smiling, soft-spoken Nedir Bey stood before the city council and told them as much.
“This is an excellent program and it will target men and women who are not working presently and have no job skills,” Bey said.
“We can train them in the home health care field and start them on a better way of life.”
Redevelopment Agency Director Gregory Hunter said the company’s goals were hard to turn down even if E.M. Health’s promises lacked details.
“The concept was brilliant, absolutely brilliant,” he said, adding that the business proposal drew applause from as far away as Washington, D.C. “Unfortunately, the execution fell somewhat short of the expectations the city had.”
Harris, now the chancellor of Peralta Community College District, was reluctant to discuss the matter recently because he said he did not recall many details. Harris said his dad received home health care from employees of E.M. Health, but it was his mother who handled the contract.
He added that a community loan advisory committee, a body the federal lenders required, had voted to fund E.M. Health, and the council debated that recommendation back and forth for many months. He said the council was not provided with a lot of details about the company.
The loan committee “had really done the research,” Harris said. “The council was between a rock and a hard place.
“(E.M. Health) had made some mistakes and they were going to try and rectify those mistakes,” Harris said. “There was a lot to be concerned about, but they had strong community support.”
One supporter who turned out early and often to lobby for Nedir Bey was Theodora Marzouk, an administrator for Oakland-based Community Care Services, Inc.
She testified more than once about the shortage of training programs for nurses’ aides and said her own company couldn’t supply enough of them. She urged Oakland’s leaders to fund E.M. Health.
But Marzouk ended up on E.M. Health’s payroll for the last two quarters of 1996, earning more than $20,000, city records show.
Marzouk refused to comment for this story, but she sounded surprised to hear that she’d once been listed as an employee. In any case, by 2000, the company’s business license was suspended, and by 2003, Alameda County records show, state and federal tax officials during the intervening years had imposed tax liens on the company’s assets totalling nearly $200,000.
But today, E.M. Health’s motto of “Big enough to serve, small enough to care” is little more than a failed promise.
MediaNews investigative reporters Thomas Peele and Josh Richman, KQED reporter Judy Campbell, and radio reporter Bob Butler contributed to this report. Cecily Burt is a MediaNews staff writer. G.W. Schulz is a staff writer at the San Francisco Bay Guardian. Butler produced this story as a 2007-08 fellow of the George Washington Williams Fellowship, a program sponsored by New Voices in Independent Journalism.