FBI and IRS at Carabetta Office Building on Center and Pratt Streets - Update 4:38 p.m. Wednesday

Updated 4:38 p.m.

Federal agents descended on the office of the Carabetta Companies in what appears to be a raid of the company's offices at the corner of Center and Pratt streets in Meriden. 

FBI and IRS agents on scene would not speak to the press. U.S. Attorney General spokesman Thomas Carson said the action was part of an ongoing federal investigation, but wouldn't comment further. IRS special agent Jessica Crocker said her agency was there "in the course of official duties," but said she couldn't reveal any more information. 

Agents have been carrying out what appear to be boxes of files from the company's management offices since at least 10 a.m. Witnesses place federal agents at the scene before 9 a.m.

The Carabetta Management Company is a family-owned private real estate firm dating back to the 1950s and in Meriden. The company maintains 20,000 property units throughout the U.S., according to its website. In Connecticut, it is one of the largest management companies, with properties in Meriden, Middletown, Bristol, Hartford, New Haven, New Britain, New London, Norwich, Vernon, Wallingford, Waterbury and Willimantic.

The firm also has a large presence in Massachusetts, where it has properties in Malden, Revere, Wakefield and Worcester. 

City officials said they were not forewarned about the investigations, and have no information about them other than what they've learned through the press.  

"It's a very large taxpayer," City Manager Lawrence Kendzior said. "We will be watching further developments on this issue."

Carabetta Enterprises is the seventh largest taxpayer in the city. Its assessed property value in 2010 was $15,121,590 according to the city. And that figure doesn't include branch companies and LLC's affiliated with the company. 

This is not Carabetta's first brush with federal investigators – and it has drawn criticism from the U.S. Senate. 

In 2007, U.S. senators Saxby Chambliss (R-Ga.) and Mark Pryor (D-Ark.) censured the company for its stalled work on military base housing projects in their states. 

The company, in partnership with the Shaw Group, a firm out of Louisiana, was given a government contract to build and renovate housing units at Hanscom Air Force Base in Mass., Patrick Air Force Base in Fla, Little Rock Air Force Base in Ark, and Moody in Ga, according to the Army Times.  But the units were reportedly plagued by delays, and the project was taken over by another company.  

In 1995 federal housing officials reached a settlement with Carabetta in connection with allegations that the firm diverted some $8 million from 40 federally insured subsidized housing developments it owns in Massachusetts and Connecticut. Investigators at that time accused the firm of more than 800 violations of its regulations, according to archive reports by the Boston Globe. Under the $12 million settlement Carabetta reached with the government, the firm was allowed to use a tax-exempt federal loan, federal rent subsidies and rent hikes to pay off the penalties, the newspaper reported.

HUD fined the company was $4 million in 1993 in connection with the financial irregularities, the paper wrote. In an earlier report, the newspaper said that the Carabetta diverted the funds to its struggling parent corporation, Carabetta Enterprises Inc., which was in the midst of bankruptcy.

 The company in the 1980s and 1990s went through a federal Chapter 11 bankruptcy, a move that scuttled a long-anticipated multi-million dollar luxury condominium project in Asbury Park, N.J., a project New Jersey and Asbury Park officials had hoped would help revitalize the waterfront area.

However, Carabetta's financial difficulties lead to the company walking away from the project halfway through its construction. After lengthy legal wranglings over it, the development rights were ultimately taken away from Carabetta and given to another management firm.

In a  related move, Carabetta sued Bank of Boston for $560 million, claiming the bank reneged on its promise to loan the Meriden firm some $41 million that would be used on the Asbury Park project and costing the firm more than $500 million in profits.

Carabetta also operates numerous low-income housing projects across the state under federal Housing and Urban Development programs and succesfully sued HUD 2003 for breach of contract when the agency refused to back equity loans on some of the HUD properties Carabetta owns, claiming the company was not in compliance with certain HUD regulations. 

A U.S. Postal Worker who walked in the Management Office to deliver mail at about 11:25 a.m. said that no employees were in the office, and agents were working at office computers. 

At about 9:15 a.m. several people in business casual clothing were outside in the parking lot, standing near their cars. Some were hugging.

Details will come as they are available.

Middletown Patch Editor Cassandra Day assisted with reporting.