Dr. Charles Lett denied any wrongdoing in the wake of news reports Wednesday that he and his brother, Dr. Samuel Lett, have defaulted on a federal loan that the state is now having to pay back.

The Letts obtained the $2.2 million U.S. Department of Housing and Urban Development loan in 1995 to renovate the former Good Samaritan Hospital complex. The Letts obtained the loan with the help of the law firm of Chestnut, Sanders, Sanders and Pettaway.

The Alabama Department of Economic and Community Affairs guaranteed the loan as part of the community development block grant program, according to Larry Childers, director of communications for ADECA.

The Birmingham News reported that federal officials are forcing the state to make payments on the loan by withholding federal dollars intended for other water, sewer and housing projects across the state.

The state’s payments so far have totaled $1 million, and Alabama will end up paying about $4.4 million if it is forced to pay off the principle and interest over time, the newspaper said, citing court records.

State officials have sued the Letts and won a favorable judgment, but it’s not clear whether the doctors will be able to pay. The doctors defaulted on the loan in 1998 and are no longer making payments, the News reported.

The state is &uot;looking for assets but I doubt if they’re going to find any,&uot; said attorney J.L. Chestnut Jr.

The Good Samaritan Hospital complex is located at 1107 Voeglin Ave. &uot;I already owned the building,&uot; Lett said. &uot;The money was used for renovation. No money went to me, that’s for sure.&uot;

At the time of the original loan the complex consisted of three separate buildings. Two of those buildings were torn down as part of the renovation to provide increased parking space, according to Lett.

Lett denied allegations that any work was done without prior state and federal approval.

Lett said that all requests went through the city, which helped to facilitate the loan, and in turn had to be approved by ADECA and federal officials.

The project was originally intended to house a variety of outpatient health care services and diagnostic testing for low-income patients. Lett said they had hoped to secure several state and county agencies as tenets, including the Dallas County Health Department and the Selma office of the Alabama Department of Human Resources.

In addition to the Letts, who still maintain their offices in the building, current tenets are Dr. Patricia Kendrick Robinson, Alabama Reference Labs and Interlink Pharmacy.

The News reported that agency records show that former Gov. Jim Folsom Jr. approved the 1995 loan even though a top ADECA official questioned whether the doctors could repay it.

Federal and state officials are also questioning payments made to state Sen. Hank Sanders’ law firm with the federal loan money, according to the News.

The newspaper said two audits show Sanders’ firm received $33,590 from the Letts for legal work but questioned why the firm was being paid when another Selma firm also was paid for the same work.

He described Sanders’ involvement in the case as &uot;next to nothing.&uot;

ADECA’s Childers said the loan guarantee obtained by the Letts is similar to one used to renovate the St. James Hotel.

Childers said he is unaware of any criminal charges pending in the case. &uot;Basically,&uot; he said, &uot;our goal is just to recover as much money as possible to pay off the loan. It’s strictly a civil matter at this point.&uot;