The city of Durham is urging residents facing bankruptcy to seek advice from a private credit counseling firm that has struggled to manage its own finances.

Now operating under the name Durham Regional Financial Center, the company filed for Chapter 7 bankruptcy protection in 2003 and lost its downtown headquarters building, bought and renovated with a $600,000 city-supervised grant, when creditors foreclosed. The national agency that reviews credit counselors revoked the firm's accreditation in 2002.

Earlier this year, the Durham nonprofit garnered further scrutiny when newly hired administrators at the city's troubled housing authority discovered a sweetheart deal under which the firm was paid $88,720 for doing little or no documented work.

Reports in The News & Observer that the housing authority's former leader, Frank Meachem, had also served on the private firm's board of directors helped spur federal authorities to ban him from working for organizations that receive government money for three years.

But none of that stopped the city of Durham from inviting a representative of Durham Regional to accept a public proclamation marking Dollar Wi$e Week, a nationwide financial literacy effort. At a Sept. 18 meeting of the City Council, Durham Regional employee Vivian Timlic decried the frequency of bankruptcies in the United States and recounted how many families fail because of money problems.

"It keeps us awake at night. It causes us to look at our caller ID before we answer the phone, am I right?" asked Timlic, who shook the hand of Durham Mayor Bill Bell and received the bound proclamation. "We take financial literacy very serious at Durham Regional Financial Center. And our CEO, Ms. Glyndola Massenburg-Beasley, has very high standards. ... We want to truly thank you for recognizing us."

Space at City Hall

A media release issued by the city's public affairs office Friday urged those needing help to call the credit firm, which holds bimonthly homeownership workshops in a basement conference room at City Hall. Though other firms were mentioned, Durham Regional was promoted most prominently in the release.

"Bell and Durham Regional Financial Center ... are committed to providing a variety of personnel finance seminars and events throughout the year -- many held at Durham's City Hall -- to help residents avoid financial scams, learn to manage and save money, reduce credit card dependency and invest in ways to provide assets for their families and their community," said the media release, which provided contact information for those seeking help to call Durham Regional.

The mayor said Wednesday he relied on the city staff to recommend someone to accept the proclamation and to promote in the media release. Though he reviewed the release before it was distributed, he said he did not remember the past, well-publicized financial problems with the firm and its chief officer, Massenburg-Beasley.

"It was a goof," Bell said. "I thought the name sounded familiar, but I didn't think any more about it. What I should have done and didn't do was ask the staff how we selected the group to receive the proclamation."

Massenburg-Beasley did not respond to calls Wednesday. Over the past 15 years, she has operated credit counseling and economic development firms under several different business names that public records and tax returns show have won well in excess of $1 million in taxpayer-funded grants and contracts.

In 1999, records show U.S. Rep. David Price shepherded a bill through Congress that earmarked $600,000 for "economic development" purposes by Durham Regional. Reached by The N&O last spring, the congressman's office said it had no records regarding the money or why it was granted. The congressman had no recollection of Massenburg-Beasley, a spokesman said.

The federal money was distributed to the city's Office of Economic Development, which was responsible for monitoring its use. With city approval, Massenburg-Beasley spent $414,415 of that money to buy a building at 413 E. Chapel Hill St. Much of the rest of the grant was reportedly spent on renovations to the three-story, 18,183-square-foot building.

According to a 2003 petition filed in federal bankruptcy court, Massenburg-Beasley's firm soon ran up nearly $1.5 million in debts -- including $740,000 in mortgages secured on the building that was bought free and clear with taxpayer money just three years earlier. In addition to a bevy of banks and creditors seeking repayment, some of Massenburg-Beasley's employees also filed claims, saying they were owed thousands in back pay.

The city still awarded the firm $75,000 in grant money in 2004 and another $5,000 in 2005 -- both disbursements approved by the City Council. A request from Durham Regional for additional funds earlier this year was rejected, but the firm holds classes on city property free of charge.

Deputy City Manager Wanda Page said Wednesday that she had seen media reports in the past about financial problems with Durham Regional, but that did not raise red flags when it came time for the city to recommend a debt counselor to its residents.

"The media release was what it was," Page said.