A 2009 memo written by then-Deputy Attorney General William Davis Jr. says investigators "uncovered what appeared to be questionable spending" of state money by Mondesire.
Kane, a Democrat, is now trying to determine what happened with the Mondesire investigation. Gov. Corbett, a Republican, was the attorney general at the time.
Mondesire, 64, says he was never questioned and denies any financial wrongdoing.
The 2009 Davis memo detailed for his bosses what had been uncovered about Mondesire and Garrett, who worked at the Philadelphia Sunday Sun, a weekly newspaper Mondesire publishes.
A nonprofit called Next Generation Community Development Corp., which is operated by Mondesire, held a state-government grant for a jobs-training program in 2004 and 2005, but handed it off to Garrett, who ran another nonprofit called Creative Urban Education Systems, or CUES, according to the Davis memo.
Mondesire was listed as chairman of the CUES board, the memo noted, while Garrett served as the treasurer for Next Generation's board.
Davis wrote his memo to then-Chief Deputy Attorney General Frank Fina and then-Senior Deputy Attorney General E. Marc Costanzo.
Corbett, as attorney general, named Fina in 2006 to head a new public-corruption unit and Costanzo to work on cases for the unit in the Philadelphia region.
Fina and Costanzo now work in a similar unit for District Attorney Seth Williams.
In the memo, Davis wrote:
* Next Generation's bank-account records, obtained with a grand-jury subpoena, showed deposits of $1.3 million in government grants in a one-year period.
Another $521,000 in the account came from political campaigns, rent payments and the intermingling of money from the Sunday Sun, which is owned and operated by Mondesire, the memo said.
* Next Generation paid $2,273 to the Philadelphia Club, a private and exclusive club in Center City.
* Next Generation spent "tens of thousands," writing checks to pay Mondesire's American Express bill for "clothes, food, lodging gas and entertainment" and a loan from Mellon Bank. There were also checks written to Mondesire and to "cash."
* Next Generation wrote checks for $169,960 to Charles and Claudia Tasco and their company, C&C Construction. (Charles Tasco is the son of City Councilwoman Marian Tasco, a friend and political ally of Mondesire's for more than three decades.)
* $6,431 in CUES money was given to Mondesire for what Garrett called consulting. That type of expense was not allowed, according to the rules of the grant.
* In "various correspondence" between Garrett and Mondesire discovered by investigators, she questioned payments of more than $70,000 he made to Claudia Tasco.
* CUES paid $1,099 for health insurance for Mondesire.
* Davis wanted to question Mondesire - and possibly subpoena him for sworn grand-jury testimony - about Garrett, CUES and Next Generation.
Mondesire, a former Inquirer reporter who served as the top aide to the late U.S. Rep. Bill Gray, said no one from the A.G.'s Office ever questioned him.
"We didn't use any money for personal gain," Mondesire said.
He said that he has not seen the A.G. Office's documents and twice declined an offer from the Daily News to review them.
Mondesire said C&C Construction worked on four properties, including the NAACP headquarters and his newspaper office, where the Next Generation non-profit is also located.
"We bought supplies with my American Express card for construction," he said.
"They never asked me a single question back in 2009. We rehabbed the buildings. We spent money buying stuff for the buildings, construction and paying off developers."
Garrett declined to comment about the investigations. Her daughter did not respond to requests for comment.
The May 2010 news release about Garrett's arrest featured Corbett laying out the charges.
Corbett did not respond this week to two questions: Was he briefed on the Mondesire investigation and did he play a role in deciding what happened with that probe?
Mondesire was suspended by the NAACP's national headquarters in April after he feuded publicly with board members about the finances of the local chapter and Next Generation.
Those board members - Sid Booker, Donald "Ducky" Birts and the Rev. Elisha Morris - also were suspended.
Booker and Morris, who say they are still Next Generation board members, are now asking a Common Pleas judge to force Mondesire to show them the nonprofit's financial records.
As a judge considers that request, Kane's staff is reviewing what became of the 2009 Mondesire probe.
David Peifer, who heads the A.G.'s Bureau of Special Investigations, on March 21 interviewed Michael Miletto, the special agent who investigated Garrett and Mondesire.
The Daily News obtained a transcript of that taped interview.
Miletto told Peifer that he subpoenaed Next Generation's bank account, the transcript shows.
"When I did that, I found that there was a whole bunch of money that appeared to me to be donations to the NAACP, not [Mondesire], and they were going into Next Generation's account and they were being used for [Mondesire's] lifestyle - much of it," Miletto told Peifer.
Miletto said he was taken off the case after Fina and Costanzo were told about the probe, according to the transcript.
Miletto said "criminal activity was just ignored" after that. He added that two accountants who had worked for Mondesire had provided taped statements, with one asking for immunity and the other asking for protection.
Fina and Costanzo declined to comment about the Mondesire investigation, citing the secrecy of grand-jury proceedings.
Davis, now in private practice, also declined to comment, citing the same restriction.
Miletto, who still works for the A.G.'s office, also declined to comment.
Peifer referred questions to Kane's communications staff.
J.J. Abbott, a spokesman for Kane, declined to comment.
The Kane-Fina feud
Fina and Costanzo have a complicated and controversial relationship with Kane.
Kane criticized Corbett's tenure as attorney general when she ran for office in 2012, specifically targeting the Penn State child-abuse scandal that sent former assistant football coach Jerry Sandusky to prison.
Kane's staff is now conducting an extensive review of that investigation.
Fina led the Sandusky probe.
Kane, on Feb. 5, issued a statement noting that her office's Sandusky review had been underway for one year, adding that delays in the undertaking "will be described in more detail when the report is made public."
A month later, the Inquirer reported that Kane declined to pursue an investigation previously led by Fina and Costanzo, starting in 2010, that used Philadelphia lobbyist Tyron Ali as a confidential informant to tape conversations with four Philly state representatives and a former Traffic Court judge. On the tapes, the representatives and judge accept cash or gifts from Ali.
Kane has said Fina dropped 2,033 criminal counts against Ali, who had been charged with stealing $430,000 from a state program, 24 days before she was sworn into office.
She said that "extraordinarily lenient" deal "crippled the chance of this case succeeding in prosecution."
Fina, in a letter published by the Inquirer a week after the first story ran, called on Kane to explain her decision.
The Inquirer also published a letter that day from Fina's boss, Williams, critical of Kane.
Kane eventually turned over the Ali case file to Williams, who is now examining whether charges can be brought against the four representatives and the Traffic Court judge, who is currently on trial in an unrelated federal corruption case.
On Twitter: @ChrisBrennanDN