In a detailed memo he emailed to his executive team last September, Kids Hope Alliance CEO Joe Peppers said Mayor Lenny Curry's two highest ranking officials told him to give certain grant applicants "preferential treatment."

In the waning hours of a Saturday night last September, the CEO of the Jacksonville Kids Hope Alliance typed on his smartphone a memo leveling an explosive allegation: Mayor Lenny Curry's office was exerting “undue influence” on him to give preferential treatment to a hand-picked group of organizations that would soon seek grant money from the city agency.

In the memo, Joe Peppers described a tense meeting with Brian Hughes, Curry's political operative turned chief of staff, and Sam Mousa, then the city's top administrator, that happened the previous week to discuss the city's Stop the Violence initiative, a bundle of small grants Curry and the City Council funded in response to a deadly shooting at a Raines High School football game, a tragic lowpoint to an already violent summer.

The $10,000 “microgrants" were to be awarded to dozens of nonprofits and faith-based organizations, which would have free reign to spend the cash on whatever programs they believed would steer kids away from violent crime.

Peppers planned to hire a contract manager to oversee the $364,000 program. Hughes and Mousa didn't like that idea, according to the Sept. 8 memo, which the Times-Union obtained a copy of this week.

Hughes asked another city employee attending the meeting, Damian Cook, to step out of the room, according to the memo. He then told Peppers he “didn't understand” why he was trying to hire a contract manager.

Mousa spoke next, explaining to Peppers there wouldn't be any need to do that, according to the memo. Instead, Mousa said he wanted Peppers “personally involved” in scoring the grant applications.

“'This is family talking; this is political!,” Mousa said, according to Peppers' memo.

“To reiterate, both Brian and Sam stated that there would be designated applicants that would get preferential treatment during the application process," the memo said.

On Wednesday, Hughes and Mousa both denied ever instructing Peppers to give preferential treatment to grant applicants. Hughes said in an interview that many parts of the meeting Peppers described never happened and that Peppers greatly misinterpreted a "completely legitimate" conversation.

"I can tell you unequivocally that nothing in that meeting, or any other meeting, with him or anyone else in city government, would involve undue influence or preferential treatment in procurement and contracting," Hughes said. "The laws are clear. We follow the laws." 

In a written statement, Mousa said Peppers' recollection of the events were "completely separate from reality."

"It appears statements are attributed to me that I never made nor would anyone who knows me imagine me speaking that way," according to the statement. "Any implication of inappropriate action by me is 100 percent wrong."

Peppers stood by his recollection of the events in an interview on Wednesday. He said he discussed his concerns with Kevin Gay, the chairman of KHA's board of directors. He said they decided that Peppers wouldn't score the grant applications and handed the responsibility to Jennifer Blalock, a member of his executive team who reported to him. He said the arrangement was enough to alleviate his concerns.

An assistant for Gay said he was traveling out of the country and wouldn't be available for an interview.

Peppers said he never discussed his concern of being asked to give preferential treatment to grant applicants with Mousa and Hughes again.

"I raised concerns because I had them, and I alleviated them because I tried to do my job," Peppers said. "Ultimately, that memo was never shared with anyone because the concerns were alleviated."

• • •

In his memo, Peppers wrote that he never agreed with or challenged Hughes and Mousa during the meeting, but the conversation left him feeling “very uncomfortable.” His discomfort grew when he later heard rumors that a group of local pastors were conspiring to blackmail him over a purported picture of him attending a rally for President Donald Trump.

Peppers said he shared some of his concerns with Lawsikia Hodges, an attorney with the city's Office of General Counsel, after his meeting with Mousa and Hughes. She instructed him to “not make a big deal” about it, according to the memo.

“She stated that the $350k was insignificant compared to the $32 mm we received and that I shouldn't 'openly question the mayor.' That I shouldn't 'bite the hand that feeds me,'” he wrote, referencing the total amount of the grant program and the $32 million KHA received from the city that year. “I didn't tell her about my conversation with Brian and Sam, but I did ask what I should do if I felt like I was under undue influence. She said 'we will cross that bridge if we get to it.'”

In a written statement, Hodges said she "completely refuted" the statements attributed to her in Peppers' memo and that his recollection was a "complete misrepresentation" of their conversation.

"To the best of my recollection, the discussion generally involved the City/KHA grant application process and there were no discussions of undue influence or anything of the sort," according to the statement. "In that discussion there were no issues or facts provided to me that raised any legal, ethical or inappropriate flags in any way."

The interactions left Peppers so unsettled that he emailed two versions of the memo to Blalock and Mary Tobin, another member of his executive team, and instantly transformed his detailed recollection of the meetings into a public record.

“I am stating for public record that I do not agree with the approach dictated to me by the mayors office,” he wrote. “Two of the mayor's direct reports have intimated to me that they expect me to pass certain applicants based on their discretion regardless of how they score on the (request for proposals.)”

A year after putting those accusations into writing, Peppers remains at the helm of the agency, which oversees city-funded children's services and is controlled by a board of directors appointed by the mayor.

Hughes said Peppers or Gay never shared the concerns that arose from the Sept. 6 meeting and that he didn't see the memo until Wednesday. He said he was "very concerned" Peppers misinterpreted the conversation "so badly."

• • •

Curry was gearing up for his reelection campaign at the time of the Raines shooting, although a challenger had not stepped forward yet.

Still, Curry was elected in 2015 on a campaign promise to lower violent crime, and violent crime numbers were moving in the wrong direction. The number of murders in the previous two years — 106 and 112, respectively — were the highest recorded since 2008, and the number of rapes during the same years hadn't been higher since 2000.

The 19-year-old killed in the Aug. 24 shooting at the Raines football stadium pushed the 2018 homicide count to 82. Two other teens were injured during the shooting.

According to Peppers' memo, Hughes and Mousa expressed a keen interest in the microgrant program during their meeting.

According to the memo, Hughes told Peppers that he'd normally expect him to measure the outcomes of any programs the agency funded — a talking point Curry often mentioned when discussing children's services — but this case was different.

“'We want this to be something that happens fast,'” Hughes said, according to the memo.

Mousa then asked Peppers why he met with Councilman Danny Becton and planned another meeting with Councilwoman Anna Brosche, according to the memo. Mousa erupted after Peppers asked whether he should cancel the meetings.

“He said no and got very angry with me,” according to the memo.

Hughes said he remembers meeting with Peppers to discuss several items and that he remembered Cook leaving the room after the business involving him was completed.

He said he also remembers questioning Peppers about his desire to hire a contract manager and requesting the grants to be disbursed as quickly as possible. He said the city and KHA had enough people to oversee the small-scale grant program and the goal of the program was to impact at-risk children and teens as soon as possible.

He said he would never suggest Peppers do anything improper.

"I can't tell you why he felt what he felt," Hughes said. "I believe somehow he thought the rejection of a contract manager somehow meant we didn't want some level of oversight."

He said the rest of Peppers' recollection of the meeting was wrong.

Peppers ended his memo by stating he planned to meet with Hughes on Monday to tell him he wouldn't give preferential treatment to applicants. Both Hughes and Peppers confirmed meeting that day, and they both said the topic wasn't discussed.

• • •

Peppers emailed two versions of his memo to his executive team members on Sept. 8 a few hours apart. The two versions were nearly identical, although the second version contained additional details about meetings and conversations with Hodges and then-Councilman Matt Schellenberg that weren't in the first one.

Hughes said he had only seen copies of the first version, which Peppers provided to a city attorney in response to a records request from the Times-Union. The Times-Union obtained a copy of the longer version of the memo from a source outside City Hall.

On Wednesday, Schellenberg said he recalled speaking with Peppers last year about his concerns. He said Peppers didn't go into specifics, but he was "incredibly concerned" that the grant money was going to be awarded without going through the proper procedures.

"He indicated to me that he was being pressured to do something that wasn't ethical," Schellenberg said. "That's when I told him you have to do the right thing despite the consequences. That's your requirement of being the leader of the KHA." 

A month after Peppers' purported meeting with Mousa and Hughes, 100 local organizations applied for the micro grants. KHA later awarded a total of $364,000 to 37 groups. The city provided on Wednesday copies of the grant scoring results and a list of recipients.

• • •

Peppers has led the agency since April 2018, and the board's decision to hire him was a controversial one.

Curry appointed Peppers to the agency's board in November 2017. A few months later, Peppers applied for the CEO position while he was still a board member. He resigned before receiving the job after the move was criticized as a potential conflict-of-interest.

An operations manager for a local Amazon facility and an Army veteran who served three tours in Iraq and earned a Bronze Star, Peppers had the least amount of relevant experience among the five finalists for the job. Still, he received high scores from the board's selection committee, which prompted another candidate to withdraw her application due to the “inherent relational advantages” she believed Peppers possessed.

The board later chose Peppers to lead the agency in a split vote and gave him a salary that was $30,000 higher than the executive director of the agency that the KHA replaced when it was formed in 2017.

Earlier this year, Peppers took a leave of absence due to “long-standing health issues,” according to an Action News Jax report. Peppers has returned to work, although Tobin and Blalock both resigned this summer. Peppers hired Tobin, a long-time friend, and Blalock, who also applied for the CEO position, to help him oversee the agency.

Peppers is the latest person to accuse Hughes of using his position to pressure or intimidate them while conducting city business. In early 2018, an aide to City Councilwoman Anna Lopez Brosche filed a complaint against Hughes, claiming she felt unsafe after he angrily confronted her on the fourth floor of City Hall. An internal review by the general counsel's office, which was based on a review of surveillance video footage, cleared Hughes of breaking any laws or city policy.

In April, Schellenberg said Hughes threatened retaliation after he publicly criticized an incentives-rich deal to redevelop downtown's vacant Berkman II property that soured after the Mississippi-based developers walked away.

Hughes sent Schellenberg a screenshot of a comment he made in the Times-Union expressing disappointment that the city's Downtown Investment Authority didn't discover more than $11 million in financial judgements filed against companies tied to the developers before asking the council to approve the deal.

Hughes followed up with a cryptic statement: “I hope Matt gets everything he needs prior to June 30.” June 30 was Schellenberg's final day in office.

Hughes denied threatening Schellenberg. Instead, he said he was simply telling him he hoped all of his concerns that he raised in the story were addressed before he left office.