Formal Demand for Immediate Termination of DGI Contract

Dear City Manager/City Attorney/Council Members etc...,

I am writing (in an email sent 8/3/2025) to formally document multiple violations of law and contract by Downtown Greensboro Inc. (DGI) and to demand immediate termination of its July 1, 2024 agreement with the City under the “Termination for Cause” provision (#5, page 3 of 65 of the attached contract).

The evidence shows blatant misuse of public funds, illegal gift-giving to public officials, and unconstitutional self-dealing by Councilmember Zack Matheny in his dual role as DGI CEO.

1. Clause #8 of the Conflict of Interest section, (also found on page 8 and attached) explicitly prohibits any elected official of the City of Greensboro from acquiring a financial interest in the contract, holding any responsibilities related to it, participating in its decision-making process or accessing confidential information concerning it. All of which has occurred.

2. Illegal Use of Public Funds for Private Entertainment;

In addition to the excessive taxpayer-funded expenses detailed in the attached ledgers dating back to 2019, on March 26, 2025, DGI CEO and sitting City Councilmember Zack Matheny organized and financed an exclusive luxury suite event for City Manager Nathaniel 'Trey' Davis and DGI board members at the Greensboro Grasshoppers’ Opening Night on April 4, 2025. This event occurred under the current contract dated July 1, 2024, which is not reflected in any of the previously released ledgers (attached), all of which pertain to prior contracts.

DGI's Invitation Text sent by Zack Matheny (attached):

"Dear DGI Board Members,

I hope you are well. We are excited to invite you to join us for the opening game of the baseball season in our Suite at First National Bank Field. This is a wonderful opportunity to enjoy the game in a relaxed setting while connecting with fellow board members.

Date: Friday, April 4th
Time: 6:30pm
Location: First National Bank Field

We'll have food and beverages available with a prime view of the action."

This event violated:

DGI’s Contract: City funds are strictly prohibited from being used for entertainment or meals without prior budget approval (Table 2 activities ineligible, contract page 52 of 65). If City officials approved the use of public funds for entertainment in violation of DGI’s contract, which no evidence exists to date, then they would have authorized an unlawful expenditure.

The situation is further complicated by City Manager Trey Davis asking for tickets, implicating him in the misuse of taxpayer dollars.

N.C. Gen. Stat. § 133-32 (attached): Prohibits contractors from giving gifts to public officials who oversee their contracts. The suite (food, beverages, premium seating) constitutes a prohibited gift to City Manager Davis, who exercises authority over contracts that benefit DGI.

Under Article V, Section 2(1) of the North Carolina Constitution, taxpayer funds must be used exclusively for public purposes. A private, invitation-only event for select insiders and a government official does not meet this standard.

Compounding the concern, City Manager Nathaniel “Trey” Davis not only accepted the invitation but also requested two tickets, further raising questions about the potential for improper personal gain.

Zack, Davis, and other board members who personally attended the Grasshoppers event—meaning they accepted taxpayer-funded perks from a contract they oversee—may have violated state ethics laws, breached fiduciary duties, triggered federal tax penalties under IRC § 4958 for excess benefit transactions, and compromised the legal and financial integrity of both DGI and the City.

City Manager Davis not only accepted the gift but requested two tickets, amplifying the violation. As the city’s top administrator overseeing DGI’s contract, his actions violate N.C. Gen. Stat. § 133-32 (gifts from contractors) and created a quid pro quo appearance under 18 U.S.C. § 371 (conspiracy to defraud taxpayers).

3. Zack Matheny’s Unlawful Conflicts of Interest

As both DGI CEO and a Councilmember, Matheny directed public funds to benefit himself and his organization, violating N.C. Gen. Stat. § 14-234 (public office used for private gain).

On June 17, 2025, Zack voted to appropriate funds to DGI and himself (Business Improvement District Downtown) in the FY 2025-26 budget. As Matheny did not recuse himself from the vote or from involvement in the appropriation to DGI, and the budget line includes funds for DGI that funds his employment, he would have "participated in making or administering" a contract from which he directly benefits, making the contract void under N.C. Gen. Stat. § 14-234(a) and § 14-234.3.

Matheny failed to recuse himself from multiple votes involving DGI, himself and associates, breaching Greensboro’s Ethics Policy and state law.

G.S. 160D-109 expands the scope of prohibited voting to include not just direct financial interests but also situations where the official has a close familial, business or other associational relationship with the applicant, like Roy Carroll, a Matheny political donor whose employees sit on the boards of DGI and related Downtown Greensboro foundation (DGF), who Zack just voted for a zoning and development action, among multiples of other deals.

An "associational conflict" arises when a municipal official has a close personal, business, or organizational tie to someone with a pending application or business before the board, regardless of whether the official has a direct financial stake.

4. Additional Legal Violations;

Embezzlement of Public Funds (N.C. Gen. Stat. § 14-90): DGI diverted taxpayer money to non-public purposes. Unreported gifts suggest willful concealment and potential violations of 18 U.S.C. § 201 (federal bribery) and N.C. Gen. Stat. § 14-217 (state bribery). The coordinated network of donations, gifts and votes indicates a potential 18 U.S.C. § 371 (Conspiracy) charge.

IRS Private Benefit Doctrine: DGI’s 501(c)(6) status is jeopardized by private benefits to Matheny, Davis, DGI's board and whomever else attended.

NC General Statute §160A-536(d) – Transparency in Municipal Service Districts; Under North Carolina General Statute §160A-536(d), contracts with private entities like DGI managing taxpayer funds must provide detailed accounting of expenditures, including disclosure of names, locations, purposes and amounts paid. The failure of both the City of Greensboro and DGI (including DGIF) to provide such transparency indicates violations of the statute.

6. Demands for Immediate Action;

Freeze all payments to DGI pending independent forensic audit.

Terminate DGI’s contract for cause with public disclosure of findings.

Thanks,

g

The contents of this communication are based on publicly available records, statutory references, and contractual provisions. This message is intended to raise concerns in good faith regarding potential legal and ethical violations involving public funds and official conduct. Any statements of fact or opinion are made without prejudice and with the intent to promote transparency, accountability, and compliance with applicable law. If any factual inaccuracies are identified, I welcome clarification or correction.