U.S. Department of Housing

and Urban Development

Office of Inspector General

Semiannual Report to Congress

October 1, 2009, through March 31, 2010
Audit profile of performance 

for the period October 1, 2009, through March 31, 2010

Results This reporting period

Investigation profile of performance 

for the period October 1, 2009, through March 31, 2010

Results This reporting period

Hotline profile of performance 

for the period October 1, 2009, through March 31, 2010

Results This reporting period

1 The total recoveries include $135,947,782 in conventional mortgages. 

2

 Included in the arrests is our focus on the nationwide Fugitive Felon Initiative.

3

 Administrative sanctions include limited denials of participation, relocations, removal from program participation, 

restraining orders, and systemic implication reports submitted.

4

 Personnel actions include reprimands; suspensions; demotions; or terminations of the employees of Federal, State, or local 

governments or of Federal contractors and grantees as the result of OIG activities. 

Profile of Performance

$36,504,550

$392,531,068

612

480

509

50

203

49

46

30

42

790

Funds put to better use

Recoveries/receivables1

Arrests2

Indictments/informations

Convictions/pleas/pretrial diversions

Civil actions

Administrative sanctions3

Suspensions

Debarments

Personnel actions4

Search warrants

Subpoenas issued

Recommendations that funds be put to better use

Recommended questioned costs

Collections from audits

Administrative sanctions

$588,128,115

$45,269,113

$18,555,934

1

Funds put to better use

Recoveries/receivables

$363,780

$75,082
Inspector General Message

iii

I am pleased to present our Semiannual Report to Congress, which 

summarizes the activities and accomplishments of the U.S. Department 

of Housing and Urban Development, Office of Inspector General (HUD 

OIG), for the first half of fiscal year 2010. HUD OIG employees—auditors, 

agents, attorneys, analysts, and support staff—continue their critical efforts 

to improve economy and efficiency in programs administered by HUD.

This has been an exceedingly busy and productive period for our office 

and our key divisions, working collaboratively in a cross-disciplinary 

fashion and achieving significant results on behalf of HUD beneficiaries 

and American taxpayers. As an active partner in the newly formed 

Financial Fraud Enforcement Task Force, our office has been at the forefront 

of getting the message out to our communities about improving efforts 

across the Government, with our State and local partners, in investigating 

and prosecuting significant financial crimes, ensuring just and effective 

punishment for those who would perpetrate such crimes, and providing 

critical training in areas of our expertise.

During the last 6 months, we have focused on our widely enhanced Civil Fraud Initiative, in which we 

have dedicated a cadre of forensic auditors to focus on recovering the ill-gotten gains of those who commit 

civil fraud against HUD programs.

During this reporting period, we had $588 million in funds put to better use, questioned costs of $45 

million, and $392 million in recoveries and receivables. Using all means available to remove bad actors 

from HUD activities, we have closed more than 500 criminal cases and 50 civil actions and facilitated more 

than 200 administrative sanctions.

The effective implementation of the American Recovery and Reinvestment Act of 2009 (ARRA) and 

protecting these funds are discussed in the nearly 50 audits of communities, which address their capacity 

to administer additional funds received under ARRA. Recommendations for improvements in protecting 

these funds are continually provided to the Department.

One of our highlighted audits is the audit of HUD’s controls over the low-income rental subsidy 

program, the Housing Choice Voucher program. Our audit uncovered payments for deceased tenants 

and tenants with invalid Social Security numbers and made recommendations that will correct HUD’s 

monitoring deficiencies. 

Further, a key investigation exemplifies our commitment to pursuing fraud against the Federal Housing 

Administration’s (FHA) mortgage insurance program. The principals of GreatStone Mortgage received 

stiff prison sentences when it was proved that they altered appraisals and other loan documents used by 

unqualified borrowers to obtain FHA-insured mortgages. More than 900 fictitious loans were created that 

were securitized by the Government National Mortgage Association (Ginnie Mae) and sold to investors. 

HUD and Ginnie Mae realized losses of $77.9 million after the mortgages defaulted.

Our investigators have also been focused on public corruption. We were able to successfully build a 

case against the assistant executive director of the Alamosa Housing Authority in Colorado, in which we 

showed that he and coconspirators embezzled more than $1.8 million from the Authority and engaged in 

money laundering and tax evasion.

Inspector General Message
iv

Inspector General Message

These examples show the exceptional work done by our staff that has resulted in a significant positive 

impact on fraud and against the misuse of taxpayer dollars. I am grateful to all of our employees nationwide 

who worked so tirelessly during this period.

The enhancement of OIG operations comes at an especially important time for the oversight community. 

Every day, HUD OIG increases its dedication and commitment to becoming a more efficient and effective 

organization, becoming better at recovering taxpayer funds, and working with our partners to bring those 

to justice who seek to harm our vital programs. We look forward to continuing to fulfill our responsibilities 

in oversight of all of the programs administered by HUD, and we appreciate the dedicated funding that 

Congress has furnished to our office to carry out our important work.

As we address a very large and expanding mission to protect the much-needed programs of HUD, 

I would once again like to express my appreciation to Congress and the Department for their sustained 

commitment to supporting the important work of our office.

Kenneth M. Donohue

Inspector General 
Audit reports issued by program

Single-family housing, 11%

Multifamily housing, 10%

Public and Indian housing, 25%

Community planning and 

development, 43%

Other programs, 11%

Audit monetary benefits identified by program

Single-family housing, 2%

Multifamily housing, 2%

Public and Indian housing, 9%

Community planning and 

development, 5%

Other programs*, 82%

Audit monetary benefits identified in millions of dollars

$700

$600

$500

$400

$300

$200

$100

$0

Single-family 

housing

Multifamily 

housing

Public and 

Indian housing

Community 

planning and 

development

Other 

programs

$15.8 $12.0 $53.8 $29.9

$521.9

v

Audit Charts

* Other programs include CFO and CIO related audits.
Investigative cases opened by program area (total: 642)

Single-family housing, 39% (251)

Public and Indian housing, 37% (236)

Multifamily housing, 8% (49)

Community planning and 

development, 11% (72)

Other, 5% (34)

Investigative recoveries by program area (total: $392,531,068)

Single-family housing, 94% 

($370,940,227)

Public and Indian housing, 2% 

($6,831,610)

Multifamily housing, 1% ($2,090,908)

Community planning and 

development, 3% ($12,629,681)

Other, 0% ($38,642)

Investigation Charts

vi

Investigative cases closed by program area (total: 1032)

Single-family housing, 23% (231)

Public and Indian housing, 51% (528)

Multifamily housing, 10% (105)

Community planning and 

development, 13% (136)

Other, 3% (32)
Acronyms List

AIGA Assistant Inspector General for Audit

AIGI Assistant Inspector General for Investigation

ARIGA Assistant Regional Inspector General for Audit

ARRA American Recovery and Reinvestment Act of 2009

ASAC Assistant Special Agent in Charge

CDBG Community Development Block Grant

CMP Civil Money Penalties

CFR Code of Federal Regulations

CPD Office of Community Planning and Development

DRGR Disaster Recovery Grant Reporting system

FEMA Federal Emergency Management Agency

FERA front-end risk assessments

FFI Fugitive Felon Initiative

FFMIA Federal Financial Management Improvement Act of 1996

FHA Federal Housing Administration

FICO Fair Isaac Credit Organization

FISMA Federal Information Security Management Act

FOC Financial Operations Center

FTE full-time-equivalent

FY fiscal year

Ginnie Mae Government National Mortgage Association 

HECM home equity conversion mortgage

HERA Housing and Economic Recovery Act of 2008

HOME HOME Investment Partnerships Program

HOPWA Housing Opportunities for Persons with AIDS

HUD U.S. Department of Housing and Urban Development

IDIS Integrated Disbursement and Information System

IG Inspector General

IRS Internal Revenue Service

IT information technology

MAP multifamily accelerated program

NAHASDA Native American Housing Assistance and Self-Determination Act of 1996

NAHRO National Association of Housing and Redevelopment Officials

NSP Neighborhood Stabilization Program

OA Office of Audit

vii

Acronyms List
viii

Acronyms List

OAM Office of Asset Management

OAHP Office of Affordable Housing Preservation

OI Office of Investigation

OIG Office of Inspector General

OMB Office of Management and Budget

PFCRA Program Fraud Civil Remedies Act

PHA public housing agency

PIH Office of Public and Indian Housing

RIGA Regional Inspector General for Audit 

SA Special Agent

SAC Special Agent in Charge

SBA Small Business Administration

SFA Senior Forensic Auditor

SSA Senior Special Agent

SSA Social Security Administration

SSN Social Security number

U.S.C. United States Code

USPS United States Postal Service
ix

Table of Contents

Table of Contents

Executive Highlights 1

Chapter 1 - HUD’s Single Family Housing Programs 7

Audits 8

Investigations 13 

Inspections and Evaluations 23

Chapter 2 - HUD’s Public and Indian Housing Programs 25

Audits 26

Investigations 32

Chapter 3 - HUD’s Multifamily Housing Programs 47

Audits 48

Investigations 52 

Inspections and Evaluations 58

Chapter 4 - HUD’s Community Planning and Development Programs 59

Audits 60

Investigations 65 

Chapter 5 - American Recovery and Reinvestment Act of 2009 71

Introduction and Background 72 

Audits 73 

Investigations 86 

Inspections and Evaluations 87

Chapter 6 - Disaster Relief Oversight 89

Audits 90 

Investigations 93 

Inspections and Evaluations 102

Chapter 7 - Other Significant Audits and Investigations/OIG Hotline 103

Audits 104

Investigations 106

OIG Hotline 107

Chapter 8 - Outreach Efforts 109

Chapter 9 - Review of Policy Directives 127

Enacted Legislation 128

Notices and Policy Issuances 128

Chapter 10 - Audit Resolution 129

Audit Reports Issued Before the Start of the Period With No Management Decision 130

Significantly Revised Management Decisions 134

Significant Management Decision With Which OIG Disagrees 135 

Federal Financial Management Improvement Act of 1996 135

Appendix 1 - Audit Reports Issued 137

Appendix 2 - Tables 145

Appendix 3 - Index 167

HUD OIG Operations Telephone Listing 171
The specific reporting requirements as prescribed by the Inspector General Act of 1978, as amended by 

the Inspector General Act of 1988, are listed below:

Source/Requirement Pages

Section 4(a)(2)-review of existing and proposed legislation and regulations. 128

Section 5(a)(1)-description of significant problems, abuses, and deficiencies relating to 1-108, 128

the administration of programs and operations of the Department.

Section 5(a)(2)-description of recommendations for corrective action with respect to 7-108

significant problems, abuses, and deficiencies.

Section 5(a)(3)-identification of each significant recommendation described in Appendix 2, Table B 

previous semiannual report on which corrective action has not been completed. 

Section 5(a)(4)-summary of matters referred to prosecutive authorities and the 7-108 

prosecutions and convictions that have resulted.

Section 5(a)(5)-summary of reports made on instances in which information or No Instances

assistance was unreasonably refused or not provided, as required by Section 6(b)(2) of 

the Act.

Section 5(a)(6)-listing of each audit report completed during the reporting period and Appendix 1 

for each report, where applicable, the total dollar value of questioned and unsupported 

costs and the dollar value of recommendations that funds be put to better use.

Section 5(a)(7)-summary of each particularly significant report and the total dollar value 7-108 

of questioned and unsupported costs.

Section 5(a)(8)-statistical tables showing the total number of audit reports and the Appendix 2, Table C 

total dollar value of questioned and unsupported costs. 

Section 5(a)(9)-statistical tables showing the total number of audit reports Appendix 2, Table D 

and the dollar value of recommendations that funds be put to better use by 

management.

Section 5(a)(10)-summary of each audit report issued before the commencement Appendix 2, Table A 

of the reporting period for which no management decision had been made by the 

end of the period.

Section 5(a)(11)-a description and explanation of the reasons for any 132 

significant revised management decisions made during the reporting period.

Section 5(a)(12)-information concerning any significant management decision with which the 135

Inspector General is in disagreement.

Section 5(a)(13)-the information described under section 05(b) of the Federal Financial 135

Management Improvement Act of 1996.

Reporting Requirements

x

Reporting Requirements
Executive

Highlights
HUD Strategic Goal: Increase Homeownership Opportunities

OIG Strategy: Contribute to the reduction of fraud in single-family insurance programs

• Audits uncovering single-family and loan origination abuse

• Audits of the U.S. Department of Housing and Urban Development’s (HUD) internal policies to 

determine whether controls are adequate

• Strategy for civil fraud initiatives

• National strategy for single-family mortgage fraud task forces

• Investigations focusing on home equity conversion mortgages (HECM)

• Outreach to industry and consumer groups and the Department

Highlights: Results or impact of significant OIG work

• Audits of eight Federal Housing Administration (FHA) single-family mortgage 

lenders found that lenders did not follow HUD requirements when underwriting 

loans and performing quality control procedures. 

• HUD’s Philadelphia Homeownership Center did not always ensure that required 

background investigations were completed for its contracted employees. 

• Florida mortgage fraud schemes cause HUD and the Government National Mortgage 

Association (Ginnie Mae) losses in excess of $77 million.

• Reverse mortgage fraud scheme is unraveling in Atlanta, GA.

• Lend America is assessed more than $500,000 in civil penalties.

• A Chicago, IL, man was indicted for the alleged fraudulent resale of HUD real estateowned (REO) properties.

• Mortgage fraud is described for more than 230 concerned citizens attending a “town 

hall” meeting in Bakersfield, CA.

page 9

page 9

page 14

page 17

page 19

page 22

page 113

Emerging Issues: Areas of OIG interest

• Initiated “Operation Watchdog” and served subpoenas on the corporate offices of 15 mortgage 

companies across the country demanding documents and data related to failed loans, which 

resulted in claims paid out by the FHA mortgage insurance fund

• Investigations focusing on HECM for Purchase program and on refinanced HECMs

• FHA’s ability and capacity to oversee its expanding market share

• Effect on FHA programs from vulnerability and manipulation of Fair Isaac Credit Organization 

(FICO) scores

• Using civil remedies to recover losses resulting from mortgage fraud

• FHA’s refinancing of riskier loans than it has historically had in its portfolio

• Strategy for housing counseling

• Loan limit increases opening new metropolitan areas with unknown risks

2 Strategic Initiative 1

Executive Highlights
HUD Strategic Goal: Promote Decent Affordable Housing

OIG Strategy: Contribute to the reduction of erroneous payments in rental assistance programs

• American Recovery and Reinvestment Act of 2009 (ARRA) – to focus on grantee capacity to 

administer ARRA funds

• Reduce erroneous payments

• Contribute to improving the performance of entities managing rental assistance programs

• Investigative initiatives involving corruption in the management of troubled public housing 

authorities and multifamily developments

• Public and Department-wide outreach initiatives

• Rental assistance fraud initiatives targeting public housing agencies in receivership or on the HUD 

troubled list

Highlights: Results or impact of significant OIG work

• Audits of six Section 8 Housing Choice Voucher and leased housing activities found 

that the housing agencies were not following HUD’s requirements for administering 

the program. 

• The State of Connecticut Department of Social Services’ Section 8 housing units did not 

always meet HUD’s housing quality standards.

• An audit of the Philadelphia Housing Authority’s controls over the housing assistance 

payments showed that the housing authority did not always calculate housing 

assistance payments accurately.

• HUD was not effective in recovering the New London Housing Authority from 

troubled status and did not take the required regulatory or statutory action.

• HUD improperly paid an estimated $7 million in housing assistance for deceased 

tenants. 

• Former Alamosa Housing Authority officials were ordered to pay HUD more than $1.2 

million.

• A former Newark, NJ, U.S. Attorney’s Office legal assistant allegedly obtained more 

than $100,000 in housing assistance through fraud.

• HUD’s performance-based contract administration contract was not cost effective.

• A former HUD multifamily contractor was sentenced to home detention for 

committing a conspiracy to commit mail fraud. 

• HUD needs to ensure that the Housing Authority of New Orleans strengthens its 

capacity to adequately administer recovery funding. 

• The New York City Housing Authority had the capacity to administer capital funds 

provided under ARRA. 

• Tenant fraud was explained for more than 450 National Association of Housing and 

Redevelopment Officials members meeting in San Marcos, TX. 

• OIG oversight of ARRA funding was illustrated for 120 community planning and 

development grantees meeting in Chicago, IL.

page 27

page 27

page 28

page 29

page 30

page 33

page 41

page 49

page 53

page 75

page 76

page 118

page 119

Emerging Issues: Areas of OIG interest

• Rental assistance fraud initiatives targeting public housing agencies in receivership or on the HUD 

troubled list

• Eligibility of grantee expenditures

• Eligibility of grantee ARRA expenditures

• HUD’s oversight of performance-based contract administrators

Strategic Initiative 2 3

Executive Highlights
HUD Strategic Goal: Strengthen Communities

OIG Strategy: 

• Promote integrity, efficiency, and effectiveness of programs

• Contribute to the reduction of fraud, waste, and abuse

• ARRA - focus on capacity audits for Neighborhood Stabilization Program (NSP) and Community 

Development Block Grant (CDBG) grantees

• Audits of the CDBG, Supportive Housing, and HOME Investment Partnerships programs

• Audits of disaster activities

• Investigative initiative to fight corruption in the administration of State or local community 

programs 

• Disaster relief fraud in HUD CDBG-funded programs

• Public dissemination of HUD OIG activities and outreach activities 

• U.S. Department of Justice Financial Fraud Enforcement Task Force and mortgage fraud working 

groups 

• Vulnerability of fraud in REO sales due to increased REO inventory

Highlights: Results or impact of significant OIG work

• A payroll supervisor was sentenced to prison for stealing CDBG and Supportive 

Housing funds.

• OIG conducted capacity reviews of 24 entities to determine whether they had the 

capacity to manage the NSP and ARRA funds they will be receiving.

• Miami-Dade County, FL needs to strengthen controls over its NSP.

• The City of Atlanta, GA, needs to improve certain aspects of its NSP to meet the 

program’s 18-month obligation deadline. 

• HUD’s Office of Healthy Homes and Lead Hazard Control awarded grants to 

ineligible applicants. 

• A St. Vincent de Paul case worker was indicted for allegedly committing theft of 

ARRA funds.

• The State of Iowa misspent CDBG disaster assistance funds and failed to check for 

duplicate benefits. 

• OIG audited the Lower Manhattan Development Corporation’s use of CDBG 

Disaster RecoveryAssistance funds.

• A Mississippi couple who stole more than $150,000 in CDBG Disaster Recovery 

Assistance and Federal Emergency Management Agency funds get jail time.

• HUD OIG, NeighborWorks® America, and others hold a public education event to 

illustrate loan modification fraud schemes.

page 66

page 80

page 81

page 81

page 84

page 86

page 90

page 91

page 93

page 112

Emerging Issues: Areas of OIG interest

• Audits and investigations of ARRA funding and NSP

• Investigations of loan modification and foreclosure rescue frauds against consumers

4 Strategic Initiative 3

Executive Highlights
5

HUD Strategic Goal: Embrace High Standards of Ethics, Management, and 

Accountability

OIG Strategy: 

• Be a relevant and problem-solving advisor to the Department

• Contribute to improving HUD’s execution of and accountability for fiscal responsibilities

• Referring audits and investigations to the Departmental Enforcement Center and other 

management officials to ensure the accountability of individuals and firms committing fraud

• Suspension and debarment referrals to the Departmental Enforcement Center to ensure the 

accountability of individuals and firms committing fraud

• Audits of HUD’s financial statements

• Audits of HUD’s information systems and security management

Highlights: Results or impact of significant OIG work

• Mortgage industry personnel in Newark, NJ, and Denver, CO, were suspended or 

debarred from procurement and nonprocurement transactions with the Federal 

Government. 

• Personnel from New Jersey housing authorities were suspended or debarred after 

admitting to stealing government funds.

• A Kansas City, KS, housing director is suspended from transacting government 

business after she pleads guilty to making false statements.

• OIG reviewed HUD’s process for monitoring recipient reporting for ARRA. 

• OIG completed audits for HUD, FHA, and Ginnie Mae financial statements for 

fiscal year 2009. 

• OIG reviewed Ginnie Mae’s controls over its information technology resources. 

pages 14 & 19

pages 35 & 43

page 53

page 74

pages 104 & 105

page 105

Emerging Issues: Areas of OIG interest

• Issuer accountability in loan portfolio defaults in the Ginnie Mae Mortgage-Backed Securities 

program

• Continued modernization and enhancement of HUDs information systems

• Impact of nonconveyance claims (short sales and loan modifications) on the FHA fund

• Quality control review of independent public accountants for Ginnie Mae issuers

• Audits of Ginnie Mae issuer reviews

Strategic Initiative 4

Executive Highlights

Chapter 1

Single-Family

Housing Programs
The Federal Housing Administration’s (FHA) single-family programs provide mortgage insurance 

to mortgage lenders that, in turn, provide financing to enable individuals and families to purchase, 

rehabilitate, or construct homes. In addition to the audits and investigations described in this chapter, 

the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), has 

conducted numerous outreach efforts (see chapter 8, page 110).

Audit

Strategic Initiative 1: Contribute to the reduction of fraud

in single-family insurance programs

Key program results Questioned costs Funds put to better use

$5.9 million $9.9 million

Page 9

Page 9

Audit 9 audits

Our

focus

• Homeownership center’s processing of Federal Housing 

Administration loan applications

• Mortgagees, loan correspondents, and direct endorsement 

lenders

Chart 1.1: Percentage of OIG single-family housing audit reports

during this reporting period

Region 1 - 0%

Region 2 - 34%

Region 3 - 33% 

Region 4 - 11%

Region 5 - 11%

Region 6 - 0%

Regions 7/8/9 - 0%

Region 10 - 11%

Region 11 - (N/A)*

* This does not include disaster relief audits. See chapter 6 for these reviews.

8

Chapter 1 - Single-Family Housing Programs
Homeownership Center’s Processing of Federal Housing 

Administration Loan Applications

HUD OIG audited HUD’s Philadelphia, PA, Homeownership Center to determine whether the Center 

processed Federal Housing Administration (FHA) loan applications in accordance with applicable policies 

and procedures and ensured that required background investigations were completed for its contracted 

employees that performed functions associated with FHA loans.

The Center generally processed FHA loans in accordance with applicable policies and procedures. However, 

it did not always ensure that required background investigations were completed for its contracted 

employees that were responsible for processing FHA loan applications and monitoring the quality of 

lenders’ underwriting. Of the Center’s 29 contracted employees responsible for performing functions 

associated with FHA loans, 16 had not been through minimum background investigations required by 

contract clauses and HUD’s policies on personnel security/suitability. HUD spent more than $5.4 million 

on services from contracted employees who may not have been eligible to access its computer systems and 

other information sources containing sensitive, personally identifiable information.

OIG recommended that HUD direct the Center to (1) initiate and follow up on the required minimum 

background investigations for its contracted employees that had not been investigated to justify funds spent 

on the related contracts and (2) develop and implement controls to ensure that its contracted employees 

comply with contract terms and applicable HUD security policies. (Audit Report: 2010-PH-0001)

Mortgagees, Loan Correspondents, and Direct Endorsement 

Lenders

Audits to uncover loan origination abuses by single-family lenders continued to be a priority during 

this semiannual period. Lenders are targeted for audit through the use of data mining techniques, along 

with prioritizing audit requests from outside sources. During this period, HUD OIG reviewed eight FHA 

single-family mortgage lenders. While the objectives varied by auditee, the majority of the reviews were 

to determine whether the auditees originated FHA-insured loans in accordance with HUD requirements. 

The following section illustrates some of the audits conducted in the single-family mortgage lender area. 

ppp

HUD OIG audited Somerset Investors Corporation, dba Somerset Mortgage Bankers, an FHA-approved 

direct endorsement lender located in Melville, NY, and found that Somerset did not always originate 

refinanced loans in accordance with HUD/FHA requirements. Specifically, 8 of 11 loans reviewed exhibited 

underwriting deficiencies significant enough to warrant indemnification as did 6 loans subject to Somerset’s 

quality control review. Consequently, 14 mortgage loans with an outstanding principal balance of more than 

$4.6 million were improperly approved, which presented an unnecessary risk to the FHA insurance fund. 

Somerset’s written quality control plan complied with HUD/FHA requirements; however, the quality 

control reviews conducted did not comply with HUD’s and its own quality control requirements regarding 

sample size and reporting. Consequently, there was less assurance that Somerset’s quality control process 

would identify and address underwriting problems in a timely manner and thus protect Somerset and FHA 

from unacceptable risk.

9

Chapter 1 - Single-Family Housing Programs
OIG recommended that HUD require Somerset to (1) indemnify HUD for potential estimated losses of 

nearly $2.8 million for 14 loans with significant underwriting deficiencies, (2) strengthen controls over its 

underwriting procedures to provide assurance that HUD/FHA requirements are met, and (3) implement 

procedures to ensure that quality control reviews comply with HUD/FHA requirements. (Audit Report: 

2010-NY-1009)

ppp

HUD OIG audited FHA-insured loan processes at two DHI Mortgage Company, LTD, branches in 

Scottsdale, AZ, and found that DHI Mortgage did not follow HUD requirements for originating, approving, 

or closing FHA-insured loans. Specifically, all 20 of the loans reviewed contained underwriting deficiencies, 

and 12 had significant deficiencies that impacted the insurability of the loan. The significant underwriting 

deficiencies included improper calculation of income, inadequate documentation of income, inadequate 

determination of credit and/or debt, and inadequate compensating factors when the debt-to-income ratio 

exceeded HUD’s benchmark ratio. OIG also reviewed all of the loans in the audit period that were either 

“new construction” or “new condo” to determine whether improper restrictive covenants were recorded 

against the FHA-insured properties and identified eight loans that had prohibited restrictive addenda to 

the purchase contracts. 

OIG recommended that HUD require DHI Mortgage to (1) indemnify HUD for more than $2.5 million 

for loans that did not meet FHA insurance requirements and (2) reimburse HUD more than $265,000 for 

the amount of claims and associated fees paid on loans that did not meet FHA insurance requirements. 

(Audit Report: 2010-LA-1009)

ppp

HUD OIG audited Jersey Mortgage Company, a nonsupervised lender located in Cranford, NJ, and 

found that Jersey Mortgage did not always approve FHA-insured loans in accordance with the requirements 

of HUD/FHA. Specifically, it approved 13 loans in which there were significant underwriting deficiencies 

such as (1) inadequate verification of borrower’s credit, (2) inadequate compensating factors for loans with 

high debt-to-income ratios, (3) inadequate verification of funds to close loans, and (4) improper verification of 

employment and income information. As a result, loans were approved for potentially ineligible borrowers, 

which caused HUD/FHA to incur an unnecessary insurance risk. Jersey Mortgage also did not ensure that 

its quality control plan was implemented in accordance with HUD/FHA’s requirements. Consequently, the 

effectiveness of its quality control plan, which was designed to ensure accuracy, validity, and completeness 

in its loan underwriting process, was lessened. 

OIG recommended that HUD require Jersey Mortgage to (1) indemnify HUD against future losses 

of nearly $1.3 million on 12 loans with significant underwriting deficiencies, (2) reimburse HUD more 

than $96,000 for the amount of claims and associated fees paid on one loan with significant underwriting 

deficiencies, and (3) implement quality control procedures to ensure compliance with the requirements to 

review early defaults and rejected loans. OIG also recommended that HUD’s Homeownership Center’s 

Quality Assurance Division follow up with Jersey Mortgage within 6 months to ensure that quality control 

review procedures have been properly implemented. (Audit Report: 2010-NY-1002)

ppp

HUD OIG audited Residential Home Funding Corporation, Gaithersburg, MD, a nonsupervised lender 

approved to originate FHA single-family mortgage loans, and found that Residential Home Funding did 

not always comply with HUD requirements in its origination of FHA loans. For five loans reviewed, it did 

not properly verify or support the borrowers’ income. As a result, the FHA insurance fund was exposed to 

an unnecessarily increased risk.

10

Chapter 1 - Single-Family Housing Programs
OIG recommended that HUD require Residential Home Funding to indemnify more than $1.6 million for 

five loans, which it issued contrary to HUD’s loan origination requirements, and refer the lender’s principals 

and underwriting staff to HUD’s Mortgagee Review Board for administrative sanctions as appropriate. 

(Audit Report: 2010-PH-1004)

ppp

HUD OIG audited Ark Mortgage, Incorporated, a nonsupervised direct endorsement lender located 

in North Brunswick, NJ, and found that Ark Mortgage officials did not always comply with HUD/

FHA requirements in originating 11 of 12 loans reviewed. Specifically, (1) four loans exhibited significant 

underwriting deficiencies such as inadequate verification of funds to close, insufficient cash reserve for 

certain property, and inadequate verification of income and liabilities; (2) two loans, including one loan with 

a significant underwriting deficiency, were not closed as they were underwritten; and (3) the six remaining 

loans had technical deficiencies. As a result, loans were approved for potentially ineligible borrowers, 

causing HUD/FHA to incur an unnecessary insurance risk. Further, Ark Mortgage officials did not ensure 

that the lender’s quality control plan had been implemented in accordance with HUD/FHA requirements. 

OIG recommended that HUD require Ark Mortgage to (1) indemnify HUD against future losses of more 

than $672,000 on four loans with significant underwriting deficiencies, (2) buy down one loan so that the 

value of insurance equals 75 percent of the value of the property if HUD is not provided with the additional 

documents to support that the property was owner occupied, and (3) implement its quality control plan to 

fully comply with HUD’s requirements. OIG also recommended that HUD follow up with Ark Mortgage 

officials within 6 months to ensure that quality control reviews have been properly implemented. (Audit 

Report: 2010-NY-1004)

ppp

HUD OIG audited Mortgage Counseling Services, Inc., College Park, GA, an FHA-approved 

nonsupervised lender, and found that Mortgage Counseling Services did not follow HUD requirements 

when underwriting 8 of 16 FHA loans reviewed. HUD insured the eight loans, which unnecessarily 

placed the FHA insurance fund at risk for nearly $434,000. Mortgage Counseling Services did not conduct 

its quality control reviews in a timely manner. In addition, the lender did not report a significant quality 

control violation to HUD. As a result, it did not ensure the accuracy, validity, and completeness of its loan 

originations. Also, Mortgage Counseling Services did not fully comply with HUD requirements in closing 

two loans and collected an uncustomary and unreasonable appraisal fee after loans closed. As a result, 

HUD could not be assured that loans were properly closed, and the risk to the FHA insurance fund could 

be increased.

OIG recommended that HUD require Mortgage Counseling Services to (1) indemnify HUD for the 

potential loss of nearly $434,000 on the eight loans with material deficiencies, (2) reimburse HUD for 

overinsuring one loan, and (3) ensure that Mortgage Counseling Services conducts quality control reviews 

in a timely manner as required. OIG also recommended that HUD take appropriate action against Mortgage 

Counseling Services for its noncompliance in closing two loans. (Audit Report: 2010-AT-1001)

ppp

HUD OIG audited Infinity Home Mortgage Company, Inc., in Cherry Hill, NJ, a nonsupervised lender 

approved to originate FHA single-family mortgage loans, and found that Infinity Home Mortgage generally 

complied with HUD requirements, procedures, and instructions in the origination of FHA loans. However, 

it had not implemented a quality control plan in accordance with HUD requirements. It did not review all 

loans that defaulted within the first six payments as required by HUD or follow HUD requirements related 

11

Chapter 1 - Single-Family Housing Programs
to the minimum percentage, frequency, and timeliness of quality control reviews. In addition, Infinity Home 

Mortgage was not able to support all of the quality control reviews that it stated it performed. 

OIG recommended that HUD direct Infinity Home Mortgage to implement its quality control functions 

as required and follow up in 6 months to ensure the lender’s compliance. (Audit Report: 2010-PH-1005)

ppp

HUD OIG audited Leader Financial Services in Parma, OH, a Government National Mortgage Association 

(Ginnie Mae) issuer servicing FHA-insured loans, and found that Leader complied with HUD’s requirements 

in the purchase and transfer of Fidelity Home Mortgage Corporation’s loan-servicing portfolio. However, 

it failed to perform an adequate due diligence review. The loans contained a number of unacceptable 

compliance-related underwriting deficiencies, such as excessive borrower qualifying ratios without valid 

compensating factors, inaccurate borrower asset and income determinations, and/or credit deficiencies. As 

a result, Leader subjected itself to unnecessary risks.

OIG recommended that HUD determine the appropriate actions for the two underwriters that improperly 

underwrote 69 percent of the loans cited and implement adequate procedures and controls to safeguard the 

FHA insurance fund. (Audit Report: 2010-CH-1004)

ppp

12

Chapter 1 - Single-Family Housing Programs
13

Chapter 1 - Single-Family Housing Programs

Investigations

Some investigations discussed in this report were generated from leads provided by HUD single-family 

housing program staff and conducted jointly with Federal, State, and local law enforcement agencies. The 

results of various significant investigations are described below.

Strategic Initiative 1: Contribute to the reduction of fraud

in single-family insurance programs

Key program 

results

$ 

recovered

Convictions/pleas/ 

pretrials

$370,940,227* 127

Page 14

Page 18

Page 19

Page 20

Investigations 231

Our

focus

• Loan origination fraud

• Identity fraud and false Social Security numbers

• Civil and administrative actions

• Other single-family fraud

Cases 

closed

Admin/civil 

actions

94

Chart 1.2: Percentage of OIG single-family housing closed investigation cases

during this reporting period

Region 1 - 4%

Region 2 - 5%

Region 3 - 9%

Region 13 - 12% 

Region 4 - 9%

Region 14 - 6%

Region 5 - 6%

Region 15 - 10%

Region 6 - 5%

Regions 7/8 - 18%

Region 9 - 8%

Region 10 - 7%

Region 11 - 1%

* The total recoveries include $135,947,782 in conventional mortgages.
Loan Origination Fraud

Jorge Socorro, a former manager for Foundation Funding, doing business as GreatStone Mortgage 

(GreatStone), was charged in U.S. District Court, Tampa, FL, with allegedly making false statements and 

committing a conspiracy and fraud against HUD. In addition, the former GreatStone owner and underwriter 

Corey and Sandi Brower were collectively sentenced to 105 months incarceration and 72 months probation 

and ordered to jointly pay HUD and various financial institutions $77.9 million in restitution for their 

earlier guilty pleas to making false statements and committing a conspiracy and fraud against HUD. From 

August 1999 to May 2001, Socorro and others allegedly and Corey and Sandi Brower admittedly altered 

appraisals and other loan documents used by unqualified borrowers to obtain FHA-insured mortgages 

that were eventually packaged and securitized by Ginnie Mae. In addition, Socorro and others allegedly 

and Corey and Sandi Brower admittedly created 930 bogus loans that were securitized by Ginnie Mae and 

sold to investors. HUD and Ginnie Mae realized losses of $77.9 million after 3,164 mortgages defaulted.

ppp

John Varner, the former president for Mortgage One Corporation, was sentenced in U.S. District Court, 

Riverside, CA, to 156 months incarceration and 5 years probation and ordered to pay a number of victims 

not yet identified more than $29.7 million in restitution for his earlier conviction of committing a conspiracy, 

filing false Federal income tax returns, and aiding and abetting. Varner and others caused the submission of 

fraudulent loan applications used by unqualified borrowers who obtained FHA-insured mortgages. HUD 

realized losses exceeding $29.7 million after more than 900 mortgages defaulted. 

ppp

Consuela Cisneros and Blanca Torres, former employees for Energy Homes, were each indicted in the 

86th District Court, Kaufman, TX, for allegedly engaging in organized criminal activities. In addition, 

Kally Marriott, the former president of Energy Homes, was sentenced to 5 years supervised release and 

ordered to perform 300 hours of community service for her earlier guilty plea to engaging in an organized 

criminal activity. From July 2006 to September 2008, Cisneros and Torres allegedly and Marriott and others 

admittedly forged signatures or provided fraudulent documents used by unqualified borrowers to obtain 

FHA-insured mortgages. HUD realized losses of $4.3 million after 74 mortgages defaulted. 

ppp

Amer Mir, a loan officer for United Home Mortgage Company, and Frederick Ugwu were each convicted 

in U.S. District Court, Newark, NJ, of committing money laundering and a conspiracy to commit wire fraud. 

In addition, Mir, Ugwu, and Michael McGrath, Jr., the former president of U.S. Mortgage Corporation and its 

subsidiary, CU Nations Mortgage, LLC, who previously pled guilty to committing a conspiracy to commit 

money laundering and mail and wire fraud, were each suspended from procurement and nonprocurement 

transactions with HUD and throughout the Executive Branch of the Federal Government. From 2002 to 

2006, Mir and Ugwu conspired with others and provided fraudulent information used by unqualified 

borrowers to obtain FHA-insured and conventional mortgages, and from January 2004 to February 2009, 

McGrath and others fraudulently sold credit union mortgage loans to Fannie Mae and used $139 million in 

illicit proceeds to fund personal and business investments. HUD realized losses of $2.7 million after about 

100 mortgages defaulted. 

ppp

14

Chapter 1 - Single-Family Housing Programs
Copyright 2009. Naples Daily News. Naples, FL. Reprinted with permission.

Chapter 1 - Single-Family Housing Programs

Martha Amaya was sentenced in U.S. District Court, Los Angeles, CA, to 30 months incarceration and 

3 years supervised release and ordered to pay HUD more than $1.9 million in restitution for her earlier 

guilty plea to committing wire fraud. Amaya and others created or provided fraudulent documents used 

by unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses in excess of $1.9 million 

after 25 mortgages defaulted.

ppp

Maria Contreras, a loan officer for Atlantic Pacific Mortgage Company, doing business as America’s First 

Mortgage, was charged in U.S. District Court, Fort Myers, FL, with allegedly committing loan and credit 

application fraud. In addition, America’s First Mortgage owner and loan officer Juan Gonzalez and Mark 

Willberg each pled guilty to committing loan application fraud or making false statements. From June 2006 

to December 2007, Contreras allegedly and Gonzalez and Willberg admittedly created and submitted false 

information or documents used by unqualified borrowers to obtain FHA-insured mortgages. HUD realized 

losses of more than $1.5 million after nine mortgages defaulted. 

ppp

Real estate investor Maria Alonso pled guilty in U.S. District Court, Riverside, CA, to committing a 

conspiracy. Alonso provided fraudulent documents and downpayment funds used by unqualified borrowers 

to obtain FHA-insured mortgages. HUD realized losses of more than $1.2 million after 38 mortgages 

defaulted. 

ppp

Lynn Ingle and Anthony Nagle, former loan officers 

for The Mortgage Group, and David and Angie Metts, 

the owners of Home and Note Solutions, each pled guilty 

in U.S. District Court, Fort Worth, TX, to committing 

a conspiracy or making false statements to HUD. In 

addition, former Mortgage Group loan officer Dena 

Musgraves was sentenced to 18 months incarceration 

and 2 years supervised release and ordered to pay 

HUD $214,837 in restitution for her earlier guilty plea to 

committing a conspiracy to make false entries to HUD. 

The above defendants conspired and created or provided 

15

Copyright 2010. Fort Worth Star Telegram. Fort Worth, TX. 

Reprinted with permission.
fraudulent documents used by unqualified borrowers to obtain FHA-insured mortgages. HUD realized 

losses of $964,814 after 21 mortgages defaulted. 

ppp

Michael O’Keefe, Jr., the president and owner of Citywide Mortgage Company, 

remitted $200,000 to HUD and was sentenced in U.S. District Court, New Orleans, LA, 

to 18 months incarceration and 12 months supervised probation and ordered to pay 

HUD an additional $486,566 in restitution for his earlier guilty plea to making a false 

statement to HUD. O’Keefe and others recruited straw buyers, inflated appraisals, 

and provided fraudulent documents used by unqualified borrowers to obtain FHAinsured mortgages. HUD realized losses of $686,566 after 11 mortgages defaulted. 

ppp

Juan Garcia and Yenisley Acosta, a former loan officer and employee of All Star 

Mortgage, were collectively sentenced in U.S. District Court, Miami, FL, to 105 months 

incarceration and 6 years supervised release and ordered to pay HUD $672,142 in 

restitution for their earlier guilty pleas to committing wire fraud or a conspiracy to 

commit wire fraud. Garcia, Acosta, and others provided fraudulent information used 

by straw borrowers to obtain FHA-insured and other mortgages, supplied the straw 

borrowers with closing funds and compensation, and paid some of the fraudulent 

mortgages to prevent early defaults. HUD realized losses of $672,142 after three 

mortgages defaulted. 

ppp

Real estate closing attorney Daniel Fox was sentenced in U.S. District Court, 

Newark, NJ, to 6 months incarceration and 24 months supervised release and 

ordered to pay HUD $603,074 in restitution for his earlier guilty plea to making false 

statements to HUD. From October 2000 to November 2008, Fox and others created 

and provided fraudulent documents used by unqualified borrowers to obtain FHAinsured mortgages. HUD realized losses of $603,074 after 11 mortgages defaulted. 

ppp

Wayne Puff, the former owner of the now-defunct N.J. Affordable Homes 

(Affordable Homes); former Affordable Homes employees Lucesita Santiago and John 

Kurzel; real estate appraisers Michael Meehan and William Page; closing attorneys 

Mitchell Fishman and Anthony Natale; paralegal Sydney Raposo; and real estate 

appraisal coordinator John Morris were collectively sentenced in U.S. District Court, 

Newark, NJ, to 391 months incarceration, 6 months home confinement, 288 months 

supervised release, and 36 months probation and ordered to pay HUD $124,000 and 

a number of victims more than $99.7 million in restitution for their earlier guilty pleas 

to making false statements to HUD, submitting fraudulent claims, or committing a 

conspiracy to commit mail or wire fraud. The above defendants and others provided 

false information to lure investors or provided fraudulent appraisals and other loan 

documents used by unqualified borrowers to obtain FHA-insured and conventional 

mortgages. HUD realized losses of $327,839 after three mortgages defaulted. 

ppp

16

Chapter 1 - Single-Family Housing Programs

(2009) The TimesPicayune Publishing 

Co. All rights reserved. 

Used with permission 

of the Times-Picayune.
Calvin Wheeler, a former loan officer for HomeLoans USA, was charged in U.S. District Court, Atlanta, 

GA, with allegedly submitting false statements to HUD and committing bank and wire fraud. From April 

2004 to March 2005, Wheeler allegedly submitted fraudulent loan applications for unqualified borrowers 

who obtained FHA-insured mortgages. HUD realized losses of $277,200 after seven mortgages defaulted. 

ppp

Jessica Caplan and Cheri Decker were collectively sentenced in Adams County District Court, Brighton, 

CO, to 90 days incarceration and 20 years probation, ordered to perform 400 hours of community service, 

and fined $10,000 for their earlier conviction of or guilty plea to committing forgery or theft by receiving. 

Caplan and Decker provided fraudulent information or documents used by them or other unqualified 

borrowers to obtain FHA-insured and conventional mortgages. HUD realized losses of $153,814 after three 

mortgages defaulted. 

ppp

Thelonius Clark, the owner of Quantum Builders, LLC, was indicted in U.S. District Court, Atlanta, 

GA, for allegedly committing bank fraud. In August 2005, Clark purchased an investment property and 

allegedly flipped the property at an inflated value to a borrower who obtained and later defaulted on an 

FHA-insured mortgage. HUD realized a loss of $118,628 after the mortgage defaulted. 

ppp

Rebecca Loeffler, also known as Rebecca Bischoff, pled guilty in U.S. District Court, Kansas City, MO, 

to making a false statement. Loeffler provided fraudulent information to obtain an FHA-insured mortgage. 

HUD realized a loss of $115,051 after her mortgage defaulted.

ppp

Gia Harris, Kelsey Hull, and Jonathan Kimpson were each arrested, charged, or indicted in U.S. 

District Court, Atlanta, GA, for allegedly committing identity theft or wire fraud or attempting to commit 

or committing a conspiracy to defraud a financial institution. From October 2007 to February 2010, the 

above defendants and others allegedly conspired and submitted false information or documents used by 

elderly borrowers to obtain about 45 fraudulent FHA-insured reverse mortgages through the HUD Home 

Equity Conversion Mortgage program. In addition, the above defendants and others allegedly diverted the 

unlawfully acquired equity proceeds into accounts they controlled. HUD losses have not yet been determined.

ppp

Jairo Nunes was arrested and charged in U.S. District Court, Newark, NJ, with allegedly committing 

wire fraud, and real estate agents Genilza Nunes and Lillian Veras were each arrested and charged with 

allegedly committing theft by deception and money laundering. Jairo, Genilza Nunes, and Veras allegedly 

conspired, created, and provided fraudulent income, identity, and other documents used by unqualified 

borrowers to obtain FHA-insured and conventional mortgages. HUD losses have not yet been determined. 

ppp

General contractor David Vickers was arrested after his indictment in U.S. District Court, Jacksonville, 

FL, for allegedly committing a conspiracy to commit wire and mail fraud. Vickers allegedly provided 

downpayment funds used by unqualified borrowers to obtain FHA-insured and conventional mortgages. 

HUD losses have not yet been determined. 

ppp

17

Chapter 1 - Single-Family Housing Programs
Mark Barnett, a loan officer for Golden First Mortgage, was indicted in U.S. District Court, Manhattan, 

NY, for allegedly committing a conspiracy to commit wire and bank fraud. Barnett allegedly assisted straw 

buyers who provided fraudulent documents to obtain FHA-insured mortgages. HUD losses have not yet 

been determined. 

ppp

Vandelette Ware, a former real estate agent for Realty Executives, was sentenced in U.S. District Court, 

Norfolk, VA, to 4 months home detention and 5 years probation and ordered to pay Wells Fargo Bank 

$255,983 in restitution for her earlier guilty plea to committing wire fraud. In May 2008, Ware submitted 

false documents and obtained an FHA-insured mortgage. HUD losses have not yet been determined. 

Identity Fraud and False Social Security Numbers

Louis Luevano, also known as Ray Luevano, a former real estate broker for Harvest Realty, was sentenced 

in Adams County District Court, Brighton, CO, to 6 years incarceration and 5 years parole for his earlier 

conviction of offering a false instrument for recording and committing theft, a conspiracy to commit theft, a 

conspiracy in an attempt to influence a public servant, forgery, and computer crimes. Luevano and others 

provided false Social Security numbers (SSN) and fraudulent documents used by unqualified borrowers to 

obtain FHA-insured mortgages. HUD realized losses of $378,045 after five mortgages defaulted. 

ppp

Kenya Hedges, also known as Kenya Ramos, a former loan officer for Alliance Mortgage Capital, was 

sentenced in Jefferson County District Court, Golden, CO, to 6 months probation for her earlier guilty plea 

to committing compounding. Hedges and others provided fraudulent SSNs and other documents used 

by unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses of $281,156 after two 

mortgages defaulted. 

ppp

Eight FHA-insured borrowers were each charged in Harris County District Court, Houston, TX, with 

allegedly making false statements to obtain credit. The above defendants allegedly used false SSNs to obtain 

FHA-insured mortgages. HUD realized losses of $210,905 after four mortgages defaulted. 

ppp

Former real estate agent Xochilt Alamillo, former Prestige Capital Funding loan officer Macarena 

Villalobos Javalera, Alfredo Gomez-Rosales, and Alma Peralta-Lopez were collectively sentenced in 

Adams County District Court, Brighton, CO, to 75 months probation and ordered to perform 30 hours 

of community service for their earlier guilty pleas to offering false instruments for recording, committing 

perjury, or possessing forgery devices. Javalera used a fraudulent SSN to obtain her FHA-insured mortgage, 

and Alamillo and Javalera assisted Gomez-Rosales, Peralta-Lopez, and other undocumented immigrants, 

who used fraudulent SSNs or documents to obtain their FHA-insured mortgages. HUD realized losses of 

$145,792 after two mortgages defaulted. 

ppp

Maria Franks, a former Michigan State Housing Development Authority Section 8 tenant, was charged 

in the 61st District Court, Grand Rapids, MI, with allegedly committing identity theft and larceny by false 

18

Chapter 1 - Single-Family Housing Programs
pretenses. Franks allegedly used the identity of another to obtain and later default on an FHA-insured 

mortgage. HUD losses have not yet been determined. 

ppp

Pablo Lopez-Mazariegos was sentenced in U.S. District Court, Grand Rapids, MI, to 10 months 

incarceration and 24 months supervised release and ordered to pay the Michigan Unemployment Insurance 

Agency $19,194 in restitution for his earlier guilty plea to committing a false representation of an SSN. LopezMazariegos used an SSN belonging to another to gain employment and obtain an FHA-insured mortgage. 

HUD losses have not yet been determined. 

Civil and Administrative Actions

Linda Carnagie, a former loan officer for Highland Mortgage Financial Group who was previously 

convicted in U.S. District Court, Denver, CO, of making false statements and committing a conspiracy, wire 

fraud, and money laundering, was debarred from procurement and nonprocurement transactions with HUD 

and throughout the Executive Branch of the Federal Government for 5 years. Carnagie and others submitted 

or caused the submission of fraudulent documents used by unqualified borrowers to obtain FHA-insured 

mortgages. HUD realized losses of about $1.25 million after 25 mortgages defaulted.

ppp

Ideal Mortgage Bankers, doing business as Lend America, was assessed $512,400 in civil penalties and 

issued a preliminary order of injunction (preliminary injunction) by the U.S. District Court, Central Islip, 

NY, for allegedly committing violations of HUD and FHA lender regulations. The preliminary injunction 

enjoins Lend America and its agents and employees from using the mails or wire transmissions or causing 

the use of the mails or wire transmissions to fraudulently obtain mortgage insurance from FHA; originating, 

underwriting, or endorsing any mortgage for FHA insurance or submitting to HUD any loans for FHA 

insurance coverage (with exceptions); submitting claims for FHA insurance coverage on loans in default; 

destroying, moving, altering, disposing of, or failing to maintain business, financial, accounting, real estate, 

and legal records; or advertising, marketing, or soliciting business to originate or make federally related or 

federally insured home mortgage loans, including loans defined in the Real Estate Settlement Procedures Act. 

In addition, former Lend America employee Michael Ashley was issued a civil injunction that requires him 

to sever his relationship with Ideal Mortgage Bankers and prevents him from underwriting or submitting 

FHA-insured loans, participating in any Federal mortgage loan program, or submitting FHA-insurance 

claims for mortgage loans in default. Ideal Mortgage is also prohibited from issuing Ginnie Mae securities. 

ppp

Mortgage loan officer Kenneth DiPrenda and real estate closing attorney Linda Serrano, both previously 

debarred after their earlier guilty pleas in U.S. District Court, Newark, NJ, to committing a conspiracy to 

submit false statements to FHA, entered into Program Fraud Civil Remedies Act settlements and agreed 

to collectively pay HUD $41,484. DiPrenda, Serrano, and others provided fraudulent documents used by 

unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses in excess of $349,000 after 

12 mortgages defaulted. 

ppp

Maria Gallucci, a licensed loan originator and a realtor for Herman Group Real Estate who previously 

pled guilty to committing forgery, was ordered to pay HUD $81,701 in a civil judgment filed in Adams County 

District Court, Brighton, CO. Gallucci forged the signature of her former spouse on documents associated 

with her jointly owned FHA-insured mortgage. HUD realized a loss of $81,701 after her mortgage defaulted. 

19

Chapter 1 - Single-Family Housing Programs
Other Single-Family Fraud

Gordon Miller, a registered agent for Canyon View Escrow who was previously charged in U.S. District 

Court, Salt Lake City, UT, with allegedly committing equity skimming and mail and wire fraud, was arrested 

on an outstanding warrant for allegedly violating his pretrial release. From July 2002 to January 2005, Miller 

and others allegedly identified properties surrendered to bankruptcy courts in a number of States, posed 

as bankruptcy court or financial institution representatives and secured quit claim deeds from the property 

owners, and rented about 300 properties and collected rents but failed to remit mortgage loan payments 

and used the rents collected for personal expenditures. HUD realized losses of about $1.6 million after 45 

mortgages defaulted. 

ppp

Andre Johnson, doing business at Hat General Contractors, Inc., a HUD Rehabilitation Loan program 

contractor, and former HUD Rehabilitation Loan program inspector Brian Lillie were collectively sentenced 

in U.S. District Court, Chicago, IL, to 12 months incarceration, 24 months supervised release, and 3 years 

probation and ordered to perform 500 hours of community service and pay Wells Fargo Bank $91,891 in 

restitution for their earlier guilty pleas to making false statements to HUD or committing mail fraud. Johnson 

and Lillie submitted fraudulent work completion documents and obtained $91,891 in rehabilitation loan 

escrow funds for repairs not completed. 

ppp

Ramon Reyes, Jr., a HUD Good Neighbor Next Door 

program participant and City of Irving police officer, pled guilty 

in U.S. District Court, Dallas, TX, to making a false statement 

to HUD. Reyes obtained a HUD-owned property and received 

an approximate $57,000 discount but failed to reside in the 

property as required. 

ppp

Marian Riley, a HUD Good Neighbor Next Door program 

participant and former U.S. Department of Homeland Security 

employee, was sentenced in U.S. District Court, Houston, 

TX, and ordered to pay HUD $30,676 in restitution for her 

earlier guilty plea to submitting false statements to HUD. 

Riley obtained a HUD-owned property and received a $30,500 

discount but failed to reside in the property as required. 

ppp

Jason Martinez, a real estate agent and mortgage broker for Merit Mortgage Financial, LLC, pled guilty 

in U.S. District Court, Tampa, FL, to committing theft of government funds and a conspiracy to commit 

mail and wire fraud. From February 2005 to May 2007, Martinez assisted straw buyers with the fraudulent 

purchase of five HUD real estate-owned properties, including a property purchased by his spouse through 

the HUD Officer/Teacher Next Door program. HUD losses are estimated at $15,500. 

ppp

20

Chapter 1 - Single-Family Housing Programs

Copyright 2010. Fort Worth Star Telegram. 

Fort Worth, TX. Reprinted with permission.
Richard and Angela Swoveland were each indicted in Marion County Court, Indianapolis, IN, for 

allegedly committing theft and forgery. From December 2009 to February 2010, Richard and Angela 

Swoveland allegedly entered five HUD real estate-owned properties without authorization, falsely claimed 

ownership of the properties, and fraudulently collected about $6,250 in security deposits and monthly rents. 

ppp

Victor Cedeno and Richard Nanan, former loss 

mitigation negotiators for Taylor Bean & Whitaker, 

and former Bank of America employee Genesis Valdez 

were each indicted in U.S. District Court, Orlando, 

FL, for allegedly committing a conspiracy, forgery, 

wire fraud, and money laundering. From January 

2008 to September 2009, Cedeno and Nanan allegedly 

negotiated and approved “short sales” for FHA-insured 

and conventional mortgages at 90 percent of the unpaid 

principal balance, fraudulently reported that the “short 

sales” were completed at 80 percent of the unpaid 

principal balance, and conspired with Valdez to steal 

the remaining 10 percent through bogus bank accounts 

created at Sun Trust Bank and the Navy Federal Credit 

Union. HUD losses have not yet been determined. 

ppp

FHA-insured borrower Taeana Stokes was convicted 

in U.S. District Court, Springfield, IL, of committing 

bankruptcy fraud. Stokes failed to report her four 

prior bankruptcies on her current bankruptcy petition 

and submitted forged documents in an effort to obtain 

additional credit and delay FHA foreclosure proceedings. 

HUD losses have not yet been determined.

ppp

Lawrence Luckett, the chief executive officer for Home Mortgage, Inc., a HUD-approved lender, pled 

guilty in U.S. District Court, Chicago, IL, to committing bank fraud. Luckett obtained $317,500 from GMAC 

Bank to fund a fictitious mortgage loan on a property with a current FHA-insured mortgage.

ppp

John Hemphill, doing business as United States Mortgage Release Corporation, was arrested and charged 

in U.S. District Court, Chicago, IL, with allegedly committing mail fraud and impersonating an officer, agent, 

or employee acting under the authority of the United States. Hemphill allegedly filed fictitious deeds and 

transferred the ownership of properties belonging to others, including a HUD real estate-owned property, 

and posed as a Federal receiver to prospective buyers. 

ppp

21

Chapter 1 - Single-Family Housing Programs

Copyright 2009. The Orlando Sentinel. Orlando, FL. 

Reprinted with permission.
Charles Murphy was indicted in U.S. District Court, Chicago, IL, for allegedly committing mail and wire 

fraud. From 2002 to 2004, Murphy and others allegedly assisted with the fraudulent resale of 19 HUD real 

estate-owned properties which were acquired at discounted prices by a nonprofit organization approved 

for the HUD Direct Sales program. 

ppp

Former HUD OIG auditor Kevin Gray pled guilty in Franklin County Court of Common Pleas, Columbus, 

OH, to receiving stolen property. Gray purchased and flipped a HUD real estate-owned property at an 

inflated value and shared the proceeds with others. 

ppp

22

Chapter 1 - Single-Family Housing Programs

Copyright 2009. The Chicago Sun Times. Chicago, IL. Reprinted with permission.
23

Chapter 1 - Single-Family Housing Programs

Inspections and Evaluations

Evaluation of Debt Servicing and Collections, Financial Operations 

Center, Albany, NY

HUD OIG evaluated the efforts of HUD’s Financial Operations Center (FOC) in managing FHA debts 

due HUD as a result of single-family indemnification agreements and civil money penalties (CMP). The 

objectives of the evaluation were to (1) determine whether FOC debt servicing and collections complied 

with applicable Federal laws and regulations and (2) to provide an update on the status and assess the 

collectability of the September 30, 2008, indemnification debt balance of more than $45.9 million. 

FOC staff complied with the Federal statutory and regulatory guidelines covering the collection of 

indemnification and CMP debt. The FOC serviced debt in a timely manner, and debt management decisions 

were reasonable and prudent. FOC collection rates compared favorably with rates of the U.S. Department 

of Veterans Affairs and private collection agencies. Regarding the indemnification debt balance of $45.9 

million, much of it is seriously delinquent and old, and the likelihood of collection is doubtful. As of 

September 30, 2009, the debt balance stood at almost $40.9 million. 

OIG made no recommendations. However, one other matter concerning the tracking of indemnification 

debt cases by the originating HUD office was observed. OIG plans to conduct a separate evaluation to 

determine whether the debt history of lenders is considered when deliberating on future administrative 

actions. (I&E Report: IED-09-007)

ppp

Chapter 2

Public and Indian

Housing Programs
The U.S. Department of Housing and Urban Development (HUD) provides grants and subsidies to 4,100 

public housing agencies (PHA) nationwide. Many PHAs administer both public housing and Section 8 

programs. HUD also provides assistance directly to PHAs’ resident organizations to encourage increased 

resident management entities and resident skills programs. Programs administered by PHAs are designed 

to enable low-income families, the elderly, and persons with disabilities to obtain and reside in housing 

that is safe, decent, sanitary, and in good repair. In addition to the audits and investigations described in 

this chapter, the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD 

OIG), has conducted numerous outreach efforts (see chapter 8, page 116).

Audit

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

Chart 2.1: Percentage of OIG public and Indian housing audit reports

during this reporting period

Region 1 - 14%

Region 2 - 9%

Region 3 - 9% 

Region 4 - 5%

Region 5 - 10%

Region 6 - 19%

Regions 7/8/9 - 10%

Region 10 - 19%

Region 11 - 5%

*The total public and Indian housing audits, questioned costs, and funds put to better use amounts include any American 

Recovery and Reinvestment Act of 2009 (nine audits) audits conducted in the public and Indian housing area. The writeups 

for these audits are shown separately in chapter 5 of this semiannual report.

Key program results Questioned costs Funds put to better use

$15.3 million $35.7 million

Page 27

Page 29

Page 30

Page 30

Audit 21 audits*

Our

focus

• Section 8 Housing Choice Voucher and leased housing 

program activities at public housing agencies

• Public housing program activities

• Controls over deceased tenants and invalid Social Security 

numbers 

• Indian block grants

26

Chapter 2 - Public and Indian Housing Programs
During this reporting period, the Office of Inspector General (OIG) reviewed HUD’s controls over the 

Section 8 Housing Choice Voucher and leased housing programs, public housing activities, deceased tenants’ 

Social Security numbers, and HUD’s administration of the Indian Block Grant program.

Section 8 Housing Choice Voucher and Leased Housing Program 

Activities at Public Housing Agencies

Audits of the Section 8 Housing Choice Voucher program were a priority during this semiannual 

reporting period. PHAs were selected for audit based on risk analysis and/or hotline complaints. While 

OIG’s objectives varied by auditee, the majority of reviews were to determine whether the units met housing 

quality standards, the PHA managed the program according to HUD requirements, and the eligibility of 

the tenants was correctly determined. The following section illustrates the audits conducted in the Section 

8 Housing Choice Voucher program area. 

ppp

HUD OIG audited the State of Connecticut Department of Social Services’ administration of its housing 

quality standards program for its Section 8 Housing Choice Voucher program and found that the agency 

did not adequately ensure that its Section 8 housing units met HUD’s housing quality standards. Of the 67 

program units inspected, 53 failed inspection, and 34 were materially noncompliant with housing quality 

standards. In addition, the agency did not always (1) perform its inspections in a timely manner, (2) properly 

abate the housing assistance payments when repairs were not made as required, or (3) notify the owners of 

inspection results in a timely manner. The agency also did not have an adequate housing quality standards 

quality control process. 

OIG recommended that HUD require the agency to (1) strengthen controls to ensure that it follows 

HUD’s procedures for conducting inspections and performing Section 8 quality control inspections to ensure 

that units meet HUD’s standards to prevent $22 million in program funds from being spent annually on 

units that materially fail to meet HUD’s housing quality standards and (2) reimburse its program from nonFederal funds more than $62,000 for units that remained in noncompliance with housing quality standards 

and were not properly abated. (Audit Report: 2010-BO-1001)

ppp

HUD OIG audited the Grand Rapids, MI, Housing Commission’s Section 8 Project-Based Voucher 

program and found that the Commission lacked documentation to support its selection and approval of 

program projects and provided housing assistance for units without appropriate housing assistance payments 

contracts. As a result, it (1) could not support that its eight projects were eligible for more than $2.8 million 

in program assistance and program administrative fees totaling more than $210,000 were appropriate and 

(2) overpaid more than $84,000 in program funds. 

The Commission provided improper housing assistance. It failed to ensure that six of its program 

participants met program eligibility requirements. As a result, it overpaid nearly $30,000 in program funds 

and received more than $3,000 in administrative fees contrary to HUD’s and its requirements.

The Commission made improper adjustments to housing assistance payments for 78 households. 

Duplicate adjustments were made for 61 households, adjustments were incorrectly calculated for 19 

households, and 2 of the households’ adjustments lacked supporting documents. As a result, the Commission 

overpaid nearly $10,000 and underpaid more than $10,000 in housing assistance.

27

Chapter 2 - Public and Indian Housing Programs
The Commission provided improper housing assistance for vacant units. It failed to follow its 

administrative plan in providing vacancy payments for 24 households, resulting in more than $5,500 in 

overpayments and more than $1,300 in underpayments.

OIG recommended that HUD require the Commission to (1) reimburse its program from non-Federal 

funds for the improper use of more than $102,000 in program funds, (2) provide documentation or reimburse 

its program more than $3 million from non-Federal funds for the unsupported payments cited, and (3) 

implement adequate procedures and controls to address the findings cited to prevent more than $140,000 

in program funds and administrative fees from being used improperly over the next year. (Audit Report: 

2010-CH-1003)

ppp

HUD OIG audited the administration of the Philadelphia Housing Authority in Philadelphia, PA, 

regarding its housing assistance payments for leased housing under its Moving to Work Demonstration 

program and found that the Authority generally maintained adequate documentation to support its housing 

assistance and utility allowance payments but did not always accurately calculate them. OIG found housing 

assistance and utility allowance calculation errors in 30 of 41 files reviewed, resulting in overpayments and 

underpayments. 

OIG recommended that HUD require the Authority to (1) correct the errors in the tenant files identified, 

(2) reimburse its leased housing program for the remaining ineligible overpayments, (3) reimburse 

applicable tenants for the remaining underpayments of housing assistance and utility allowances, (4) 

provide documentation or reimburse the program from non-Federal funds for unsupported payments, and 

(5) implement improved procedures and controls to prevent it from overpaying an estimated $2.3 million 

in program funds over the next year. (Audit Report: 2010-PH-1002)

ppp

HUD OIG audited the Section 8 Housing Choice Voucher program of the Lake Metropolitan Housing 

Authority in Painesville, OH, in response to a congressional request. 

The Authority’s program administration regarding housing unit conditions was inadequate. Of the 53 

housing units inspected that did not receive a quality control inspection by the Authority, 51 did not meet 

HUD’s housing quality standards, and 38 had exigent health and safety violations that existed at the time of 

the Authority’s previous inspections. As a result, more than $42,000 in program funds was spent on units 

that were not decent, safe, and sanitary. The Authority also received nearly $5,000 in inappropriate program 

administrative fees. Of the 27 housing units that received a quality control inspection by the Authority, 

26 did not meet HUD’s housing quality standards, and 15 had exigent health and safety violations that 

existed at the time of the Authority’s previous inspections. As a result, more than $39,000 in program funds 

was spent on units that were not decent, safe, and sanitary. The Authority also received nearly $4,000 in 

inappropriate program administrative fees.

OIG recommended that HUD require the Authority to reimburse its program from non-Federal funds for 

the improper use of more than $81,000 in program funds and implement adequate procedures and controls 

to address the finding cited to ensure that more than $903,000 in program funds is spent on housing units 

that meet HUD’s requirements. (Audit Report: 2010-CH-1001)

ppp

28

Chapter 2 - Public and Indian Housing Programs
Public Housing Program Activities

HUD OIG audited the Scranton Housing Authority in Scranton, PA, to determine whether the Authority 

followed applicable procurement regulations and used HUD funds properly. 

The Authority did not purchase goods, services, and property in accordance with applicable HUD 

requirements, the terms of its annual consolidated contributions contract, and its own procurement 

policy. It awarded contracts without competition, paid for services without having a contract, and lacked 

documentation to support expenditures totaling $923,000. In addition, it could not support the source and 

use of $480,000 in funds invested with a broker and $801,000 transferred into and out of its non-Federal 

cash and investment accounts. 

OIG recommended that HUD require the Authority to (1) provide supporting documentation or reimburse 

HUD or the applicable program from non-Federal sources for any amounts that it cannot support; (2) 

develop and implement controls to ensure that it complies with applicable procurement, cash management, 

and investment regulations and the terms of its annual consolidated contributions contract; and (3) train 

applicable staff. OIG also recommended that the Authority create and maintain a detailed investment 

register and periodically reconcile its investments to it. (Audit Report: 2010-PH-1801)

ppp

HUD OIG audited HUD’s efforts to recover the City of New London Housing Authority in New London, 

CT, to evaluate HUD’s effectiveness in identifying and helping to correct deficiencies at the Authority.

HUD had detected significant deficiencies but had not been effective in recovering the Authority from 

its longstanding troubled status. Although HUD provided extensive technical and monetary assistance 

and entered into a number of binding memorandums of agreement requiring improvement, the Authority’s 

condition continued to decline, it could not meet its debt obligations, and it remained troubled. 

HUD failed to take action in a timely manner when the Authority failed to make substantial progress 

in correcting its deficiencies. As a result, the Authority’s financial condition declined, creditors were not 

paid, liens were placed on its housing projects, and its rent receipts may be placed in receivership unless 

more than $1.7 million in unpaid utility bills is paid. In addition, the Authority improperly used more than 

$524,000 in Federal funds for State programs, $105,000 for unsupported payments in lieu of taxes, $99,000 in 

Federal capital funds for State security patrols, and $97,000 for unsupported and unreasonable renovations 

and painting.

OIG recommended that HUD ensure that the Authority (1) establishes and implements a financial/

business plan to pay its creditors, avoid having a local receivership lien placed against its rents, and remove 

liens; (2) enters into an agreement to repay more than $900,000 in water and sewer bills; (3) properly accounts 

for its revolving account, stops using Federal funds for State programs, and repays its Federal programs; (4) 

repays or supports unreasonable and unsupported contract maintenance costs; and (5) repays or supports 

Federal funds paid for State security patrols.

OIG further recommended that HUD (1) implement a formal process for reporting troubled housing 

agencies for a determination of the corrective actions required by HUD regulations and Federal statutes 

and (2) pursue all administrative and/or civil monetary penalties for the regulatory agreement violations 

cited. (Audit Report: 2010-BO-0001)

29

Chapter 2 - Public and Indian Housing Programs
Controls Over Deceased Tenants and Invalid Social Security 

Numbers

HUD OIG audited HUD’s controls over Housing Choice Voucher program payments for deceased 

tenants and invalid Social Security numbers to determine whether (1) HUD monitored agencies’ actions 

in response to its memorandum informing them that they had paid rental assistance for deceased tenants 

and the extent, accuracy, and impact of payments on behalf of deceased tenants and (2) agencies paid rental 

assistance for tenants with invalid Social Security numbers.

HUD did not monitor the agencies’ actions in response to its memorandum, to include whether the 

agencies received reimbursement for ineligible rental assistance payments made for deceased tenants and 

corrected information submitted to HUD. HUD did not retain documentation supporting its memorandum 

and, therefore, could not monitor agencies’ responses to the memorandum. Further, because the deceased 

tenants report did not record the date of death for all deceased tenants, reconciling information and 

documenting improvement were difficult. OIG estimated that agencies paid approximately $7 million in 

questionable payments on behalf of deceased tenants in single-member households. Also, agencies did not 

update family composition in a timely manner, which resulted in incorrect information being maintained 

in HUD’s system. However, they did check for invalid Social Security numbers before making housing 

assistance payments, and OIG did not find any reportable conditions.

OIG recommended that HUD (1) improve its monitoring so that it can measure corrections to agencyreported data maintained in HUD’s system and agency progress in limiting payments made on behalf of 

deceased tenants and (2) require agencies to support or repay its programs for questionable payments made 

on behalf of deceased tenants. (Audit Report: 2010-FW-0001)

Indian Block Grants

HUD OIG audited the Housing Authority of the Sac and Fox Nation of Oklahoma in Shawnee, OK, to 

determine whether the Authority expended its Indian Housing Block Grant program funds in accordance 

with HUD rules and regulations. 

The Authority did not perform the required environmental reviews or independent cost estimates or 

acquire appropriate bonding documents for procurement contracts. It also did not (1) maintain its low-rent 

housing inventory in a decent, safe, and sanitary manner or enforce its unit condition policies and procedures 

for mutual help housing; (2) follow up on previously failed inspections; or (3) expend grant funds within 

the year requested. In addition, the Authority did not receive all of its funding back from the Sac and Fox 

Nation of Oklahoma after the Nation reestablished the Authority. 

OIG recommended that HUD require the Authority to (1) support or reimburse nearly $810,000 and put 

to better use nearly $270,000 for the contracts without appropriate environmental reviews and an ineligible 

hotel expenditure; (2) correct both the deficiencies identified during the inspections and the inaccurate record 

keeping of funding requested for specific grant years; (3) implement policies and procedures to ensure that 

it maintains units, follows up on inspections, and turns around units within established timeframes; and 

(4) continue to work with its accounting firm to determine the correct amount of funding the Nation needs 

to return to the Authority. (Audit Report: 2010-FW-1002) 

ppp

30

Chapter 2 - Public and Indian Housing Programs
HUD OIG audited the Fort Belknap Indian Community in Harlem, MT, to determine whether it 

administered its Federal funds in a manner consistent with program guidance; regulations; and the terms 

and conditions of the Federal award for its (1) HUD-accepted Indian housing plan, (2) Indian Housing Block 

Grant (block grant) program, (3) submission of audited financial statements, (4) tenant accounts receivable, 

and (5) monthly equity payment accounts. 

Fort Belknap did not administer its Federal funds in a manner consistent with program guidance, 

regulations, and the terms and conditions of the Federal award. It did not ensure that it (1) only completed 

renovation work in its HUD-accepted Indian housing plan, (2) only used block grant funds for allowable 

costs, (3) submitted its audited financial statements when required, (4) pursued collection of its past-due 

tenant accounts receivable, and (5) properly established and maintained its monthly equity payment accounts.

OIG recommended that HUD provide training to Fort Belknap on the proper administration of block 

grant funds and ensure that it (1) recovers nearly $183,000 in funds expended for nonaccepted renovation 

work from the homeowners receiving that assistance or from other non-Federal sources, (2) repays nearly 

$32,000 in unallowable costs from non-Federal sources, (3) receives training regarding HUD’s financial 

reporting requirements, (4) recovers more than $1 million in tenant accounts receivable, and (5) maintains 

a separate monthly equity payment account for every mutual help program home buyer and identifies 

and returns $300,000 in misspent payments to the correct home buyers. OIG also recommended that HUD 

refer Fort Belknap to its Departmental Enforcement Center for appropriate administrative sanctions and 

civil actions and enforce the remedies in 24 CFR (Code of Federal Regulations) 1000.532 and 1000.538 for 

substantial noncompliance. These remedies range from adjusting the amount of block grant funds Fort 

Belknap will receive to providing a replacement tribally designated housing entity as the recipient. (Audit 

Report: 2010-DE-1002)

ppp

HUD OIG reviewed HUD’s evaluation of the Kaibab Band of Paiute Indians of Pipe Spring, AZ’s 

application for an Indian Community Development Block Grant (Indian block grant) under HUD’s 2008 

notice of funding availability to evaluate the merits of Kaibab’s allegation that HUD treated Kaibab’s 

application prejudicially without providing for a fair review.

OIG found no evidence that HUD treated Kaibab’s 2008 Indian block grant economic development 

grant application with prejudice or failed to provide a fair review. However, the review processes were 

not standardized in a way that easily precluded any perception of unfairness. Specifically, HUD assigned 

applications to grants management specialists without ensuring impartial treatment in appearance and in fact. 

Application reviewers did not receive training or guidance regarding the evaluation of such proposals and 

were not required to clearly and thoroughly document the reasons for their determination that an application 

failed to meet HUD requirements. In addition, the Indian block grant project-specific threshold criteria 

and related guidance were nonspecific regarding key requirements for economic development proposals, 

and Indian block grant projects were generally perceived to entail greater risk of failure to succeed in the 

long run. As a result, all economic development proposals faced similar barriers to approval and funding. 

OIG recommended that HUD (1) establish a consistent process for assignment of grant applications to 

reviewers, (2) develop standards to ensure that written review comments are clear and complete, and (3) 

develop a consistent evaluation approach for certain nonspecific project eligibility criteria. (Audit Report: 

2010-LA-0803)

ppp

31

Chapter 2 - Public and Indian Housing Programs
32

Chapter 2 - Public and Indian Housing Programs

Investigations

Some investigations discussed in this report were generated from leads provided by HUD public 

and Indian housing program staff and conducted jointly with Federal, State, and local law enforcement 

agencies. The results of various significant investigations are described below.

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

Key program 

results

$ 

recovered

Convictions/pleas/ 

pretrials

$6,831,610 297

Page 33

Page 38

Page 41

Page 42

Page 43

Page 44

Investigations 528

Our

focus

• Public Housing Authority theft/embezzlement

• Rental assistance fraud

• FedRent Initiative

• Fugitive Felon Initiative

• Civil and administrative actions

• Other fraud/crimes

Cases 

closed

Admin/civil 

actions

194

Chart 2.2: Percentage of OIG public and Indian housing closed

 investigation cases during this reporting period

Region 1 - 6%

Region 2 - 5%

Region 3 - 8%

Region 13 - 9% 

Region 4 - 9%

Region 14 - 6%

Region 5 - 7%

Region 15 - 7%

Region 6 - 8%

Regions 7/8 - 14%

Region 9 - 4%

Region 10 - 14%

Region 11 - 3%
33

Chapter 2 - Public and Indian Housing Programs

Public Housing Authority Theft/Embezzlement

Terri Lucero, the assistant executive director for the Alamosa Housing Authority (Alamosa), was indicted 

in U.S. District Court, Denver, CO, for allegedly filing false Federal income tax returns; Alamosa executive 

director Doris Abeyta and Jeffrey Guntle each pled guilty to committing embezzlement, theft from a program 

receiving Federal funds, or money laundering; and the former Alamosa executive director Patricia Martinez 

and maintenance employee Presiliano Romero were collectively sentenced to 93 months incarceration and 

6 years supervised release and ordered to pay HUD more than $1.2 million in restitution for their earlier 

guilty pleas to committing theft from a program receiving Federal funds or money laundering. Lucero 

allegedly failed to report income on her 2003 and 2004 Federal income tax returns, and from April 1998 to 

November 2007, the remaining defendants and others embezzled more than $1.8 million in Alamosa funds 

when they generated or negotiated unauthorized housing authority checks. 

ppp

Copyright 2009. The Valley Courier. Alamosa, CO. Reprinted with permission.
Juanita Montalvo-Cruz, a former Deland Housing Authority (Deland) Section 

8 case manager, was sentenced in U.S. District Court, Orlando, FL, to 36 months 

incarceration and 24 months probation, ordered to perform 50 hours of community 

service and pay HUD $320,244 in restitution, and fined $30,000 for her earlier 

guilty plea to committing embezzlement and aggravated identity theft. From 

November 2003 to September 2008, Cruz created a fictitious landlord and used 

former tenant identities to fraudulently obtain $292,446 in housing assistance 

payments. In addition, from May 2002 to November 2004, Cruz diverted and 

personally used $27,798 in Deland housing assistance funds. 

ppp

Charlesetta Jackson, a former Kansas City Housing Authority (Kansas City) 

program specialist, and former Kansas City Section 8 tenant Danielle Collins were 

each indicted or charged in U.S. District Court, Kansas City, KS, with allegedly 

committing bribery, a conspiracy to commit bribery, mail and wire fraud, or 

aiding and abetting. Jackson allegedly accepted bribes from Collins and assisted 

unqualified housing applicants who obtained $236,480 in housing assistance they 

were not entitled to receive. 

ppp

Rita Gestring, the former executive director for the Steele Housing Authority 

(Steele), was sentenced in U.S. District Court, Cape Girardeau, MO, to 1 year 

and 1 day incarceration and 3 years supervised release and ordered to pay Steele 

$119,184 in restitution for her earlier guilty plea to committing embezzlement 

and forgery. Gestring stole about $224,000 in cash and forged checks from the 

housing authority. 

ppp

LaDarana Mees, a finance officer for the Standing Rock Housing Authority, was arrested after her 

indictment in U.S. District Court, Rapid City, SD, for allegedly committing theft from a program receiving 

Federal funds and money laundering. Mees allegedly issued $188,217 in fraudulent housing authority 

payments to the owner of a defunct hardware store who then rerouted $175,297 to a business operated by 

Mees. 

ppp

Margarita Villegas, the former executive director for the South Bronx Community Management 

Corporation (South Bronx Community), pled guilty in U.S. District Court, Manhattan, NY, to committing 

embezzlement. From May 2005 to March 2009, Villegas and others used the South Bronx Community credit 

card without authorization and obtained about $180,000 in personal use items. 

ppp

Anthony Bandoh, a Syracuse Housing Authority (Syracuse) bookkeeper, was arrested and charged 

in Onondaga County Court, Syracuse, NY, with allegedly committing grand larceny. From 1986 to 2002, 

Bandoh allegedly diverted and personally used $176,000 in Syracuse funds. 

ppp

34

Chapter 2 - Public and Indian Housing Programs

Copyright 2009. The Daytona 

Beach News Journal. Daytona 

Beach, FL. Reprinted with 

permission.
35

Chapter 2 - Public and Indian Housing Programs

Laura Morales, the former Bexar County Housing Authority 

(Bexar County) executive director, pled guilty in U.S. District Court, 

San Antonio, TX, to committing theft from a program receiving 

Federal funds. Morales fraudulently inflated her annual leave hours 

and stole more than $131,000 in Bexar County funds. 

ppp

Donna Little Dog, the former Blackfeet Housing Authority 

(Blackfeet) payroll coordinator, and former Blackfeet employee Cletus 

Running Wolf, Jr., each pled guilty in U.S. District Court, Great Falls, 

MT, to committing theft from a program receiving Federal funds or 

aiding and abetting theft from an Indian tribal organization. From 

2005 to 2009, Little Dog issued $104,343 in unauthorized payroll 

checks to Running Wolf. 

ppp

Ronnie Faison, the former deputy director for the Englewood 

Housing Authority (Englewood), and former Englewood bookkeeper 

Sergio Gonzalez were collectively sentenced in U.S. District Court, 

Newark, NJ, to 4 months home confinement and 60 months probation, 

ordered to pay HUD $103,177 in restitution, and fined $15,200 for their 

earlier guilty pleas to committing theft of government funds. From 

February 2004 to August 2007, Faison and Gonzalez used $103,177 in 

Englewood funds for their personal gain. Faison and Gonzalez were 

also suspended from procurement and nonprocurement transactions 

with HUD and throughout the Executive Branch of the Federal 

Government. 

ppp

Marianne Henry was sentenced in U.S. District Court, New Orleans, LA, to 3 years probation and 

ordered to pay HUD $42,645 in restitution for her earlier guilty plea to committing a conspiracy to steal 

government funds. From December 2006 to March 2008, Henry and previously convicted Norman Taylor, a 

former security manager for the Housing Authority of New Orleans (New Orleans), conspired and prepared, 

endorsed, and negotiated $85,000 in fabricated New Orleans payroll checks. 

ppp

Rhonda Smith, the former Beaufort Housing Authority (Beaufort) executive director, was arrested and 

charged in Carteret County District Court, Beaufort, NC, with allegedly committing embezzlement and 

corporate malfeasance. In 2008 and 2009, Smith allegedly embezzled about $80,000 in Beaufort funds when 

she used Beaufort bank accounts and credit cards for personal expenses. 

ppp

Dwayne Muhammad, the former chief operating officer for the Housing Authority of New Orleans (New 

Orleans) Housing Choice Voucher program, was sentenced in U.S. District Court, New Orleans, LA, to 8 

months incarceration, 8 months home confinement, and 3 years probation and ordered to pay New Orleans 

$45,318 in restitution for his earlier guilty plea to committing theft of government funds. From January 2007 

Copyright 2009. San Antonio Express 

News. San Antonio, TX. Reprinted with 

permission.
to August 2009, Muhammad fraudulently used information belonging to another and personally obtained 

$45,318 in housing assistance he was not entitled to receive. 

ppp

Angelene Gaskins, a former Pinellas County Housing Authority (Pinellas County) housing manager, was 

sentenced in U.S. District Court, Tampa, FL, to 6 months home detention and 5 years probation and ordered 

to pay HUD $44,791 in restitution for her earlier guilty plea to committing theft from a program receiving 

Federal funds. From August 2004 to February 2006, Gaskins embezzled $44,791 in Pinellas County funds 

when she altered, forged, and deposited tenant payments into her personal bank account. 

ppp

Katisha Simmons, a former St. Louis County Housing Authority (St. Louis County) Section 8 caseworker, 

was indicted in U.S. District Court, St. Louis, MO, for allegedly committing misapplication of government 

funds. Simmons allegedly manipulated the St. Louis County accounting system and caused the issuance 

of $30,864 in unauthorized housing assistance payments to another person. 

ppp

Elizabeth Graves, a former property manager for Tibbs and Christamore Court Apartments, housing 

developments subsidized by both the Indianapolis Housing and Indiana Housing and Community 

Development Authorities, pled guilty in Marion County Superior Court, Indianapolis, IN, to committing 

theft and a corrupt business influence. From 2006 to 2010, Graves obtained and personally used $22,000 

in tenant rents. 

ppp

Jerome Wallace, a former community services specialist for the HUD-funded Honolulu Department 

of Community Services Family Self-Sufficiency program and a Hawaii Public Housing Authority housing 

recipient, was charged in the 1st Circuit Court, Honolulu, HI, with allegedly committing theft. From 1999 

to 2007, Wallace allegedly failed to report his employment or income on housing certifications and obtained 

$20,000 in housing assistance he was not entitled to receive. 

ppp

Lesvia Barrera, the former executive director for the Eagle Pass Housing Authority, and Juan Sifuentes 

were each convicted in U.S. District Court, Eagle Pass, TX, of committing a conspiracy to defraud the 

government. During October 2001 and August 2003, Barrera, with assistance from Sifuentes, submitted 

$17,800 in false claims to HUD. 

ppp

David Ford, the former executive director of the Ripley Housing Authority, was arrested and charged in 

Tennessee General Sessions Court, Ripley, TN, with allegedly committing forgery. On March 1, 2010, Ford 

allegedly deposited a $12,000 housing authority check into his personal bank account without authorization. 

ppp

36

Chapter 2 - Public and Indian Housing Programs
37

Chapter 2 - Public and Indian Housing Programs

Barbara Hollowell, the former executive director of the Benton Harbor Housing Commission (Benton 

Harbor), pled guilty in U.S. District Court, Grand Rapids, MI, to committing theft of government funds and 

Social Security Administration (SSA) fraud. Hollowell used a Benton Harbor credit card to obtain about 

$12,000 in personal use items and failed to report employment income on SSA retirement certifications. 

ppp

Rosa Reyes and Catherine Diaz, former Nassau County Office of Housing and Intergovernmental 

Affairs employees, were each arrested and charged in Nassau County Criminal Court, Mineola, NY, with 

allegedly committing grand larceny and official misconduct, receiving bribes, offering false instruments for 

recording, and falsifying business records. Between June 2003 and February 2008, Reyes and Diaz allegedly 

solicited and accepted bribes from Section 8 applicants in return for preferential placement on the housing 

waiting list. In addition, from May 2004 to September 2007, Diaz, the treasurer for the Association of Long 

Island Housing Agencies (Long Island Housing), allegedly used $11,035 in Long Island Housing funds for 

personal expenses.

ppp

Jane Martin, a former Turtle Mountain Housing Authority (Turtle Mountain) development specialist, 

was indicted in U.S. District Court, Fargo, ND, for allegedly committing theft of government funds. Martin 

and others allegedly created a fictitious construction project and fraudulently obtained $7,500 in Turtle 

Mountain funds.

ppp

Copyright 2009. The Herald Palladium. St. Joseph, MI. Reprinted with permission.
Debra Waterman, the former executive director for the Superior Housing 

Authority (Superior), was sentenced in Douglas County Circuit Court, Superior, 

WI, to 90 days incarceration and 1 year probation and ordered to pay Superior 

$10,000 in restitution for her earlier guilty plea to committing theft. Waterman 

used the Superior credit card to obtain $10,000 in personal use items. 

ppp

Hector Claveria, a former commissioner for the Hoboken Housing Authority, 

was indicted in Hudson County Superior Court, Newark, NJ, for allegedly 

committing official misconduct and bribery and accepting receipt of an unlawful 

benefit. Claveria allegedly accepted cash payments from a housing applicant in 

return for his efforts to circumvent the housing waiting list. HUD losses have not 

yet been determined. 

Rental Assistance Fraud

Five former Miami-Dade Housing Agency (Miami-Dade) housing recipients 

were arrested on probable cause or charged in the Florida Circuit Court, Miami, FL, 

with allegedly committing grand theft. In addition, former Miami-Dade housing 

recipients Robinson and Phillip Dukes, Carolyn Nesmith, and Melinda Hughes 

were collectively sentenced to 20 years probation and 15 years supervised release 

and ordered to pay HUD $123,614 in restitution for their earlier guilty pleas to 

committing grand theft. Between 1993 and 2007, the above defendants allegedly 

and Robinson and Phillip Dukes, Nesmith, and Hughes admittedly failed to 

report income or accurate household composition on housing certifications and 

collectively obtained $253,984 in housing assistance they were not entitled to 

receive. 

ppp

Six former Indianapolis Housing Agency Section 8 tenants were each charged in Marion County Court, 

Indianapolis, IN, with allegedly committing theft and welfare fraud. From 2005 to 2009, the above defendants 

allegedly failed to report income, unauthorized residents, duplicate housing assistance, or their criminal 

histories on housing certifications and collectively obtained more than $200,000 in housing assistance they 

were not entitled to receive. 

ppp

Gwendolyn Fisk, Yousha Wheeler, Ernestina Martinez, and Mary Murillo, former Hawthorne Housing 

Authority (Hawthorne) Section 8 tenants and a landlord, were each charged in Los Angeles County Superior 

Court, Los Angeles, CA, with allegedly committing grand theft and perjury and offering or attempting to 

offer a false instrument for recording. In addition, former Hawthorne Section 8 tenant Cathy McClain was 

sentenced to 270 days incarceration and 3 years probation and ordered to perform 30 days of community 

service and pay Hawthorne $15,358 in restitution for her earlier guilty plea to committing grand theft. 

Between August 2003 and January 2010, the above defendants allegedly and McClain admittedly failed to 

report income, accurate household composition, or their familial relationship with their Section 8 landlord 

on housing or other certifications and together obtained $129,019 in housing and $16,514 in other assistance 

they were not entitled to receive. 

ppp

38

Chapter 2 - Public and Indian Housing Programs

Copyright 2009. Superior 

Telegram. Superior, WI. 

Reprinted with permission.
39

Chapter 2 - Public and Indian Housing Programs

Patricia Stroud and Herman Angel, former New York City Housing Preservation and Development 

(Housing Preservation) housing recipients, were collectively sentenced in U.S. District Court, Manhattan, 

NY, to 3 years supervised probation and 12 months supervised release, fined $7,500, and ordered to pay 

HUD or Housing Preservation $122,064 in restitution for their earlier guilty pleas to making false statements 

to HUD or committing theft of government funds. From October 2004 to May 2009, Stroud and Angel failed 

to report income on housing certifications and together obtained $122,064 in housing assistance they were 

not entitled to receive 

ppp

Taikei Turner, Angela Carpenter, Rosland Stewart, and Louise Williams, current or former Las Vegas 

Housing Authority Section 8 tenants and a landlord, were each charged in Las Vegas or Clark County Justice 

Courts, Las Vegas, NV, with allegedly committing theft or theft by misrepresentation and a conspiracy. 

From November 2003 to July 2009, Turner and Carpenter allegedly failed to report income or an accurate 

household composition, and Stewart and Williams allegedly conspired and failed to report an unauthorized 

resident. Collectively, the above defendants obtained $113,392 in housing assistance they were not entitled 

to receive. 

ppp

Six New York City Housing Authority (New York City) housing recipients or applicants were each 

charged in U.S. District, New York Supreme, or the Bronx Criminal Courts, Manhattan or the Bronx, NY, 

with allegedly making false statements; committing theft of government funds, grand larceny, or forgery; 

possession of a forged instrument; offering a false instrument for filing; or filing false business records. In 

addition, New York City housing recipients Sandra Jimenez and Luzveminga Leon and unauthorized housing 

recipient Willmer Santiago were collectively sentenced to 3 years probation and 72 months supervised 

release and ordered to perform 100 hours of community service and pay HUD or New York City $55,971 in 

restitution for their earlier guilty pleas to committing theft of government funds. Jimenez, Leon, and Santiago 

admittedly and the remaining defendants allegedly failed to report income, assets, unauthorized residents, 

or their nonresidency and the subleasing of their subsidized units on housing certifications. Collectively, 

the above defendants obtained more than $112,456 in housing assistance they were not entitled to receive. 

ppp

Aesha Johnson, a Cuyahoga Metropolitan Housing Authority (Cuyahoga Metropolitan) Section 8 

landlord and tenant, was charged in Cuyahoga County Court of Common Pleas, Cleveland, OH, with 

allegedly committing theft and tampering with records. In addition, former Cuyahoga Metropolitan housing 

recipients or landlords Preston Sales, Rhonda Johnson, and Kevin Landrum were collectively sentenced 

to 66 months incarceration and 10 years community control and ordered to pay Cuyahoga Metropolitan 

$43,691 in restitution for their earlier guilty pleas to attempting to tamper with records; possessing criminal 

tools and weapons under disability; or committing theft, bribery, or trafficking offenses. From July 2003 

to September 2009, Aesha Johnson allegedly and Sales and Rhonda Johnson admittedly failed to report 

income, assets, or accurate household composition on housing certifications, and Landrum paid bribes to 

pass inspections or increase his housing assistance payments. Collectively, the above defendants obtained 

more than $107,598 in housing and utility assistance they were not entitled to receive. 

ppp

Sonny Vo and Denise Nguyen, a former Norwood Housing Authority Section 8 landlord and tenant, each 

pled guilty in U.S. District Court, Boston, MA, to committing mail fraud. From August 2001 to September 
2008, Vo and Nguyen failed to report their joint residency on housing certifications and together obtained 

$104,496 in housing assistance they were not entitled to receive. 

ppp

Rochonda Brown and Melissa McClelland, current or former Mississippi Regional Housing Authority 

V (Mississippi Regional) Section 8 tenants, were each charged in U.S. District Court, Jackson, MS, with 

allegedly making false statements or claims and committing theft of government funds or mail fraud. In 

addition, former Mississippi Regional Section 8 tenants Brenda Tillman, Deborah McNair, and Mary Bell each 

pled guilty to committing theft of government funds, and former Mississippi Regional Section 8 tenant Eva 

Reynolds was sentenced to 3 years supervised probation and ordered to pay Mississippi Regional $26,120 

in restitution for her earlier guilty plea to committing theft of government funds. Brown and McClelland 

allegedly and the remaining defendants admittedly failed to report income on housing certifications and 

collectively obtained $101,873 in housing assistance they were not entitled to receive. 

ppp

Zina Worley, a former Boston Housing Authority (Boston) Section 8 tenant, pled guilty in Boston 

Municipal Court, Boston, MA, to making a false claim and committing larceny over $250 by false pretense. 

In addition, former Boston Section 8 tenant Gladys Hill was sentenced to 2 years probation and ordered to 

pay Boston $25,000 in restitution for her earlier guilty plea to making a false claim and committing larceny 

over $250. From March 1998 to January 2007, Worley and Hill failed to report income on housing certifications 

and together obtained $95,381 in housing assistance they were not entitled to receive. 

ppp

Benjamin and Zisi Ruttner, Village of Kaser Section 8 tenants, were each arrested and charged in New 

York State Justice Court, Haverstraw, NY, with allegedly committing grand larceny and welfare fraud. 

Benjamin and Zisi Ruttner allegedly failed to report income on housing and other certifications and together 

obtained $89,430 in housing and $67,649 in other assistance they were not entitled to receive. 

ppp

Sonja Taylor and Coletta Washington, current or former Sacramento Housing and Redevelopment Agency 

(Sacramento) Section 8 tenants, were each charged in Sacramento County Superior Court, Sacramento, CA, 

with allegedly committing grand theft, welfare fraud, and perjury. In addition, former Sacramento Section 

8 tenant Frances Gallegos was sentenced to 90 days incarceration and 3 years probation and ordered to pay 

an undetermined amount of restitution for his earlier nolo contendere plea to committing grand theft. The 

above defendants allegedly failed to report income, their criminal histories, or an unauthorized resident on 

housing certifications and collectively obtained $85,992 in housing assistance they were not entitled to receive. 

ppp

Sheri Hirsh, a former Douglas County Housing Authority (Douglas County) Housing Choice Voucher 

program participant, was indicted in U.S. District Court, Omaha, NE, for allegedly making false statements; 

former Douglas County Section 8 tenant Shena Holmes entered into a pretrial diversion, admitted to making 

false statements, and agreed to pay Douglas County $12,584 in restitution; and former Douglas County 

housing recipients Cynthia Ellis, Bernita Anderson, and Deonna Wright-Reese were collectively sentenced 

to 12 years probation and ordered to pay Douglas County $31,163 in restitution for their earlier guilty pleas 

40

Chapter 2 - Public and Indian Housing Programs
to making false statements to HUD. From 2003 to 2008, Hirsh allegedly and the remaining defendants 

admittedly failed to report income on housing certifications and collectively obtained $78,623 in housing 

assistance they were not entitled to receive.

FedRent Initiative

HUD’s latest study estimated the combined gross improper rental housing assistance payments to be 

$1.022 billion in Fiscal Year 2008. In an effort to combat administrative overpayments and tenant fraud, HUD 

and HUD OIG commenced “Operation FedRent,” a joint effort to address rental assistance fraud involving 

Federal employees. Operation FedRent compares HUD tenant data to current and retired Federal employee 

information maintained by the U.S. Office of Personnel Management. After the data comparison, an income 

eligibility determination is made, and the Social Security numbers for family members 6 years of age and 

older are verified. If a discrepancy exists, an investigation is opened, and appropriate administrative or 

legal actions are initiated to collect any overpaid housing assistance. Results of Operation FedRent during 

this semiannual reporting period are described below.

ppp

Denise Davis, a former Newark Housing Authority Section 8 tenant and legal assistant for the New 

Jersey U.S. Attorney’s Office, was indicted in U.S. District Court, Newark, NJ, for allegedly making false 

statements to HUD and committing theft of HUD funds. From April 1985 to May 2006, Davis allegedly 

failed to report income on housing certifications and obtained about $105,000 in housing assistance she was 

not entitled to receive. 

ppp

Natosha Houston, a former Arlington Housing Authority Section 8 tenant and U.S. Department of 

Homeland Security employee, was charged in U.S. District Court, Fort Worth, TX, with allegedly making false 

statements to HUD. From 1999 to 2005, Houston allegedly failed to report income on housing certifications 

and obtained $53,804 in housing assistance she was not entitled to receive. 

ppp

Shawnda Burnett, a former Housing Authority of the City of Los Angeles Section 8 tenant and current 

Equal Employment Opportunity Commission employee, pled guilty in U.S. District Court, Los Angeles, CA, 

to making a false statement. From 1998 to May 2008, Burnett failed to report income on housing certifications 

and obtained about $37,374 in housing assistance she was not entitled to receive. 

ppp

Candace Morrow, a former Pilgrim Village Housing Authority Housing Choice Voucher program 

participant and Internal Revenue Service (IRS) employee, pled guilty in U.S. District Court, Buffalo, NY, 

to committing theft of government funds. From 2005 to 2010, Morrow failed to report income on housing 

certifications and obtained $32,358 in housing assistance she was not entitled to receive. 

ppp

Nellie Howard, a former Cook County Housing Authority Section 8 tenant and U.S. Postal Service 

(USPS) employee, paid HUD $27,000 and was sentenced in U.S. District Court, Chicago, IL, to 2 years 

41

Chapter 2 - Public and Indian Housing Programs
probation and ordered to perform 200 hours of community service for her earlier guilty plea to committing 

theft of government funds. From 2004 to 2007, Howard failed to report income on housing certifications 

and obtained $27,000 in housing assistance she was not entitled to receive. 

ppp

Adrienne Harper-Green, also known as Adrienne Harper, a former Dupage Housing Authority Section 8 

tenant and current USPS employee, was indicted in U.S. District Court, Chicago, IL, for allegedly committing 

theft and mail fraud. From 2003 to 2005, Harper-Green allegedly failed to report income on housing 

certifications and obtained about $13,000 in housing assistance she was not entitled to receive. 

ppp

Cherie Nelson, a former Fresno City and County Housing Authorities Section 8 tenant and U.S. 

Department of Veterans Affairs employee, was sentenced in U.S. District Court, Fresno, CA, to 12 months 

probation and ordered to pay HUD $7,621 in restitution for her earlier guilty plea to making false statements 

to HUD. From June 2002 to August 2006, Nelson failed to report income on housing certifications and 

obtained $7,621 in housing assistance she was not entitled to receive. 

ppp

Adriane Smith, a former Prince Georges County Housing Authority Section 8 tenant and current U.S. 

Department of Agriculture employee, was charged in Prince Georges County District Court, Upper Marlboro, 

MD, with allegedly committing theft over $500. From September 2006 to March 2009, Smith allegedly failed 

to report income on housing certifications and obtained more than $5,327 in housing assistance she was not 

entitled to receive. 

ppp

Penny Justice, a former Ogden Housing Authority (Ogden) public housing tenant and IRS employee, 

was sentenced in Utah State Court, Ogden, UT, to 30 days incarceration and 18 months supervised probation 

and ordered to pay Ogden $2,912 and attend theft reform training for her earlier guilty plea to obtaining 

housing benefits through fraud. From July 2008 to February 2009, Justice failed to report income on housing 

certifications and obtained $2,912 in housing assistance she was not entitled to receive.

Fugitive Felon Initiative

OIG supports a Fugitive Felon Initiative (FFI) by matching HUD housing assistance information with 

crime data from the National Crime Information Center, U.S. Marshals Service (Marshals), and other 

participating law enforcement data banks. In addition, OIG special agents actively participate in the 

Marshals’ “Operation FALCON,” a joint Federal, State, city, and county law enforcement effort to locate 

and apprehend fugitive felons wanted for violent crimes. Conducted in most major cities throughout the 

United States and its territories, Operation FALCON places a strong emphasis on apprehending fugitive 

felons involved in gangs, homicides, sexual assaults, or crimes against the elderly and children. Since the 

inception of OIG’s FFI, hundreds of cases have been opened and closed, resulting in more than 8,718 in 

arrests. OIG strongly supports Operation FALCON in an effort to make HUD public and assisted housing 

safe for families. Below is an example of that effort.

ppp

42

Chapter 2 - Public and Indian Housing Programs
Henry Kent, a Seattle Housing Authority Section 

8 tenant since 2004, was arrested in Seattle, WA, 

on an outstanding Canadian warrant for allegedly 

absconding or escaping from postprison supervision 

for noncapital murder. 

Civil and Administrative Actions

Helen Lowe, a former San Francisco Housing 

Authority (San Francisco) Section 8 landlord previously 

convicted in U.S. District Court, San Francisco, CA, 

of making false statements, entered into a Program 

Fraud Civil Remedies Act (PFCRA) settlement and 

agreed to pay HUD $20,000. In addition, previously 

convicted San Francisco Section 8 tenant Lauton Joshua 

was ordered to pay HUD $226,498 in civil penalties 

and assessments as a result of a PFCRA action. From 

August 1998 to December 2006, Lowe and Joshua failed 

to report income, assets, or their familial relationship on 

housing certifications and together obtained $126,934 

in housing assistance they were not entitled to receive. 

ppp

Tracey White-Jenkins, the former Irvington Housing Authority (Irvington) Section 8 director who 

previously pled guilty in U.S. District Court, Newark, NJ, to committing theft of government funds and 

submitting a false Federal income tax return, was suspended from procurement and nonprocurement 

transactions with HUD and throughout the Executive Branch of the Federal Government. White-Jenkins 

fraudulently obtained, deposited, and personally used $98,878 in Irvington housing assistance payments. 

ppp

LaRaye O’Brien, a former Boise City/Ada County (Boise/Ada) Housing Authority Section 8 landlord, 

was charged in a civil complaint filed in Idaho District Court, Boise, ID, with allegedly providing false 

housing certifications. In addition, former Boise/Ada Section 8 tenants Jeremiah and Jennifer O’Brien entered 

into civil settlements and agreed to repay Boise/Ada $48,980. From August 2003 to April 2009, the above 

defendants allegedly failed to report their familial relationship on housing certifications and collectively 

obtained $48,980 in housing assistance they were not entitled to receive. 

ppp

Ralph Payne, Jr., a former Orange County Housing and Community Development Section 8 landlord 

who previously pled guilty in U.S. District Court, Orlando, FL, to committing a conspiracy to defraud 

HUD, entered into a PFCRA settlement and agreed to pay HUD $10,000. From 2001 to 2005, Payne failed 

to report his joint residency with his Section 8 tenant and obtained $37,477 in housing assistance payments 

he was not entitled to receive.

ppp

43

Chapter 2 - Public and Indian Housing Programs

Copyright 2010. The Winnipeg Sun. Winnipeg, Canada. 

Reprinted with permission.
Lorelei Kristoff, a former Fort Walton Beach Housing Authority (Fort Walton) Section 8 landlord who 

previously pled guilty in U.S. District Court, Pensacola, FL, to making a false statement and committing 

theft of government property, entered into a PFCRA settlement and agreed to pay HUD $5,000. From July 

2002 to April 2004, Kristoff overcharged Fort Walton Section 8 tenants and falsified housing contracts. 

ppp

Christian and Natalie Maute, former New Jersey Department of Community Affairs (Community Affairs) 

Section 8 landlords in Newark, NJ, were each debarred from procurement and nonprocurement transactions 

with HUD and throughout the Executive Branch of the Federal Government for 3 years. Christian and 

Natalie Maute entered into lease contracts with Section 8 tenants and allegedly required the tenants to pay 

a monthly rental amount that exceeded the monthly rental amount set by Community Affairs. 

ppp

Victor Ortiz, a former City of Paterson housing inspector previously sentenced in U.S. District Court, 

Newark, NJ, for his earlier guilty plea to receiving corrupt payments, interfering with commerce by threats 

or violence, and aiding and abetting, was debarred from procurement and nonprocurement transactions 

with HUD and throughout the Executive Branch of the Federal Government for 20 months. Ortiz and others 

solicited and accepted bribes in exchange for steering Section 8 tenants to specific properties. HUD losses 

have not yet been determined. 

ppp

Scott Epstein, a former West Palm Beach Housing Authority (West Palm Beach) Section 8 landlord, entered 

into a deferred prosecution filed in the 15th Judicial Circuit Court, Wellington, FL, and agreed to refrain 

from participating in Section 8 housing programs for 12 months. Epstein allegedly allowed the residency 

of unauthorized tenants in his West Palm Beach subsidized housing units. 

Other Fraud/Crimes

Niasha King, a St. John the Baptist Parish Housing Authority public housing tenant, and Orlando 

Brown and Lester Gardner, Jr., were each charged in U.S. District Court, New Orleans, LA, with allegedly 

committing arson, wire fraud, a conspiracy to commit wire fraud, wire fraud through the use of fire, and 

aiding and abetting. The above defendants allegedly conspired and set fire to King’s and other subsidized 

housing units. HUD losses are estimated at $573,480. 

ppp

Alex Trujillo-Ojeda, an unauthorized Puerto Rico Public Housing Administration (Puerto Rico) tenant, 

was arrested after his indictment in U.S. District Court, San Juan, PR, for allegedly committing a conspiracy 

to interfere with commerce by threats or violence; a conspiracy to possess firearms in furtherance of drug 

trafficking crimes; a conspiracy to distribute narcotic controlled substances; aiding and abetting in the 

interference of commerce by threats or violence; and aiding and abetting in the distribution of heroin, cocaine, 

cocaine base, and marijuana. In addition, Puerto Rico housing recipient Jean Casanova-Garcia pled guilty 

to committing a conspiracy to interfere with commerce by threats or violence. From July 2006 to January 

2009, Trujillo-Ojeda and others allegedly and Casanova-Garcia admittedly extorted about $118,000 from 

North Constructors Group, Inc., a Puerto Rico rehabilitation contractor. In addition, Trujillo-Ojeda and 

others allegedly distributed narcotic controlled substances within public housing units. 

ppp

44

Chapter 2 - Public and Indian Housing Programs
Roosevelt Nicholson was sentenced in U.S. District Court, St. Louis, MO, to 21 months incarceration and 

ordered to pay the St. Louis and St. Clair County Housing Authorities and others $52,840 in restitution for 

his earlier guilty plea to committing a conspiracy to manufacture counterfeit securities. Nicholson conspired 

with others and produced $35,608 in counterfeit checks drawn on the St. Louis and St. Clair County Housing 

Authorities and counterfeit checks that involved other businesses. 

ppp

Adrian Hawkins, a former Lexington-Fayette Urban County Housing Authority (Lexington-Fayette) 

Section 8 tenant, and Josh Burgess were each arrested and charged in Fayette County District Court, 

Lexington, KY, with allegedly possessing forged instruments. From December 2009 to January 2010, Burgess 

and Hawkins allegedly created or forged and negotiated about $6,500 in fraudulent Lexington-Fayette checks. 

ppp

Jeffrey Font-Ruiz, a former San Juan Department of Housing and Community Development (Housing 

and Community Development) landlord, was sentenced in U.S. District Court, San Juan, PR, to 41 months 

incarceration for his earlier conviction of committing a conspiracy to solicit monies concerning a program 

receiving Federal funds. From 2004 to 2006, Font-Ruiz and others solicited and received payments from 

Housing and Community Development applicants in return for housing vouchers or improved placement 

on the housing waiting list. HUD losses have not yet been determined. 

ppp

Charlie Hampton, a former Housing Authority of New Orleans (New Orleans) contractor, was sentenced 

in Louisiana State Court, New Orleans, LA, to 6 months incarceration (suspended) and 1 year inactive 

probation and fined $2,000 for his earlier guilty plea to violating the Louisiana Pollutant Discharge Elimination 

System. Hampton falsified documents and fraudulently certified that asbestos had been properly removed 

from demolished New Orleans buildings. 

ppp

Thirty-nine New York City Housing Authority (New York City) authorized and unauthorized housing 

recipients were arrested and indicted in U.S. District Court, Bronx, NY, for allegedly possessing controlled 

substances with the intent to distribute. The above defendants allegedly sold illegal drugs from New York 

City subsidized housing units. 

ppp

Christopher Summers pled guilty in U.S. District Court, Kansas City, KS, to committing wire fraud, 

producing and possessing counterfeit securities, and defrauding the government. From May 2007 to May 

2009, Summers and others conducted a counterfeit check scheme from a public housing unit that involved 

the Kansas City and Independence Housing Authorities and a number of businesses. 

ppp

Charles Jones, a former Vicksburg Housing Authority maintenance supervisor, pled guilty in Mississippi 

State Court, Jackson, MS, to possession of a controlled substance. Jones accepted delivery of one kilo of 

cocaine at the Vicksburg Housing Authority. 

ppp

45

Chapter 2 - Public and Indian Housing Programs
Manuel Rodriguez, a former Fresno Housing Authority (Fresno) Section 8 landlord, was sentenced in 

Fresno County Superior Court, Fresno, CA, to 72 months incarceration for his earlier nolo contendere plea 

to committing grand theft, forgery, and perjury. In July 2007, Rodriguez allegedly set fire to his Fresnosubsidized housing unit in an attempt to commit insurance fraud. 

ppp

Luz Rodriguez, Yolanda Ramos, Wesley Peña, and Angel Rodriguez, unauthorized Puerto Rico Public 

Housing Administration (Puerto Rico) tenants, were each arrested and charged in Puerto Rico State Court, 

San Juan, PR, with allegedly occupying public housing units illegally. The above defendants allegedly 

entered and occupied Puerto Rico public housing units without authorization. 

ppp

Gary Pearson, a Chicago Housing Authority Section 8 landlord, was indicted in U.S. District Court, 

Chicago, IL, for allegedly concealing information on bankruptcy petitions. Pearson allegedly failed to report 

housing assistance payments or his prior bankruptcy filings on his 2005 and 2008 bankruptcy petitions. 

ppp

Frederick Freeman, a former Ogden Housing Authority public housing tenant, was sentenced in U.S. 

District Court, Ogden, UT, to 30 months incarceration and 36 months supervised probation and ordered to 

forfeit 302 rounds of ammunition for his earlier guilty plea to possessing ammunition after conviction of a 

felony. When questioned by Federal agents, Freeman disclosed that he was a convicted felon and provided 

302 rounds of ammunition from his public housing unit. 

ppp

James Bailey was sentenced in Dorchester District Court, Boston, MA, to 2 years probation and ordered 

to perform 100 hours of community service and pay a number of victims $8,300 in restitution for his earlier 

guilty plea to committing larceny over $250. From July to October 2007, Bailey sold nonexistent Boston 

Housing Authority Section 8 vouchers to a number of victims. 

ppp

46

Chapter 2 - Public and Indian Housing Programs
Chapter 3

Multifamily

Housing Programs
In addition to multifamily housing developments with U.S. Department of Housing and Urban 

Development (HUD)-held or HUD-insured mortgages, the Department owns multifamily projects acquired 

through defaulted mortgages, subsidizes rents for low-income households, finances the construction or 

rehabilitation of rental housing, and provides support services for the elderly and handicapped.

Audit

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

Chart 3.1: Percentage of OIG multifamily housing audit reports

during this reporting period

* This does not include disaster relief audits. See chapter 6 for these reviews.

Key program results Questioned costs Funds put to better use

$1.1 million $10.9 million

Page 49

Page 49

Audit 8 audits

Our

focus

• Review of HUD’s monitoring of performance-based 

contract administrators

• Owner and management agent operations

Region 1 - 0%

Region 2 - 25%

Region 3 - 25% 

Region 4 - 0%

Region 5 - 0%

Region 6 - 0%

Regions 7/8/9 - 12%

Region 10 - 38%

Region 11 - 0%*

48

Chapter 3 - Multifamily Housing Programs
Review of HUD’s Monitoring of Performance-Based Contract 

Administrators

HUD OIG audited HUD’s annual contributions contracts for performance-based Section 8 contract 

administration to determine whether the contracts were cost effective.

HUD did not always ensure accountability for results and include appropriate, cost-effective controls 

over its contracts. Consequently, it did not obtain the best value for the $291 million spent in 2008 on contract 

administration services. In particular, HUD spent $107 million of this amount on incentive fees. While OIG 

could not quantify how much of this amount was excessive, HUD continued to pay incentives for tasks that 

were included in the contract administrators’ basic fees. In addition, at least $7.6 million may be wasted 

each year because HUD continues to extend contracts beyond the original contract term of 5 years.

OIG recommended that HUD perform a detailed analysis to determine the most cost-effective method 

of performing the contract administration tasks. After selecting the best method, HUD should ensure 

accountability for results and include appropriate, cost-effective controls in its contracts. (Audit Report: 

2010-LA-0001)

Owner and Management Agent Operations

HUD OIG audited Kier Property Management and Real Estate, LLC, in Denver, CO, to determine 

whether Kier properly accounted for property and management agent costs and properly accomplished 

its occupancy functions. 

Kier recorded more than $2 million in notes payable in the properties’ books for notes that did not 

properly restrict repayment of the principal to surplus cash. It also used property funds for nearly $65,000 

in ineligible setup fees and did not always correctly compute subsidies or determine tenant eligibility.

OIG recommended that HUD require Kier to work with the owner to ensure that the notes restrict 

principal payments to surplus cash and repay nearly $65,000 in setup fees from non-Federal funds. OIG also 

recommended that HUD require Kier to (1) work with HUD to recover identified overpayments of Section 

8 housing assistance subsidies, (2) correct the rent miscalculations identified, and (3) develop procedures 

to consistently communicate changes to the policies and procedures to ensure accurate and consistent rent 

calculations and related occupancy procedures. (Audit Report: 2010-DE-1001)

ppp

HUD OIG audited the trust fund account of the Lutheran Gardens Corporation in Compton, CA, to 

determine whether the Corporation withdrew and expended trust funds in accordance with its agreement 

with HUD. 

The Corporation expended the trust funds according to the eligible uses described in the agreement. 

However, it did not comply with the agreement when depositing and withdrawing trust funds. With more 

than $918,000 in trust funds still subject to the agreement as of June 17, 2009, HUD and the Corporation 

were at risk of not complying with the regulatory requirements to ensure that the trust funds were used to 

promote the expansion of the supply of low- and moderate-income housing.

OIG recommended that HUD ensure that the Corporation (1) establishes the required trust account with 

HUD named as the trustee and provides signature cards for a HUD representative to sign; (2) deposits the 

49

Chapter 3 - Multifamily Housing Programs
balance of the trust funds subject to the agreement held in a Wells Fargo Bank account, along with more than 

$87,000 in replacement reserves due the trust; and (3) submits trust fund authorization forms to HUD for 

signature and approval before withdrawing trust funds from the trust account. (Audit Report: 2010-LA-1802)

ppp

HUD OIG audited HUD’s regulatory agreement with the Yorkville Cooperative in Yorkville, VA, to 

determine whether HUD entered into the appropriate regulatory agreement with the Cooperative for its 

Section 221(d)(3) program.

HUD and the Cooperative did not enter into an appropriate regulatory agreement for participants 

of the Section 221(d)(3) program. The regulatory agreement executed in 1979 was intended for entities 

participating in the multifamily insurance program, but it did not include specific regulatory requirements 

needed for entities participating in the program as cooperatives. The agreement failed to include necessary 

requirements pertaining to the general operating reserve account. 

OIG recommended that HUD enter into an amended regulatory agreement with the Cooperative that 

includes a rider pertaining to the general operating reserve to ensure that the nearly $990,000 in reserve 

funds will only be used for eligible expenses. (Audit Report: 2010-PH-0801)

ppp

HUD OIG audited the Yorkville Cooperative in Fairfax, VA, to determine whether the Cooperative 

administered its Section 221(d)(3) property and housing assistance contract according to its regulatory 

agreement and HUD requirements.

The Cooperative did not administer its Section 221(d)(3) property and housing assistance contract in 

accordance with its regulatory agreement and HUD requirements. Specifically, it used operating funds 

to pay for ineligible expenses (legal fees and resident promotions) and made erroneous calculations and 

unsupported housing assistance payments on behalf of its board members. It also billed HUD for housing 

assistance payments it may not have been eligible to receive. 

OIG recommended that HUD require the Cooperative to (1) reimburse its operating account from nonFederal funds nearly $244,000 for ineligible expenses; (2) develop and implement adequate procedures and 

controls to ensure that disbursements made from its operating account are for expenses that are reasonable, 

necessary, and in accordance with program requirements; (3) reimburse HUD from non-Federal funds 

more than $14,000 for the overpayment of housing assistance and provide support or reimburse HUD 

nearly $67,000 from non-Federal funds for unsupported housing assistance payments; and (4) develop and 

implement procedures to ensure that housing assistance payments are correctly calculated and supported 

with the required documentation. (Audit Report: 2010-PH-1003)

ppp

HUD OIG audited the SFDS Development Corporation in New York, NY, management agent for HUDsubsidized Section 202 elderly housing direct loan properties, to assess the merits of a hotline complaint 

and the agent’s compliance with HUD financial, procurement, and administrative regulations applicable 

to the Section 202 elderly housing program. 

The agent did not comply with HUD regulations. Specifically, the agent (1) charged ineligible and 

unsupported expenses to the projects, (2) failed to make required deposits to or seek HUD approval for 

withdrawals from the replacement for reserve account, (3) did not always conduct unit inspections or procure 

50

Chapter 3 - Multifamily Housing Programs
services in a prudent manner, and (4) failed to file financial statements in a timely manner. As a result, the 

projects were deprived of more than $177,000, and HUD lacked assurance that nearly $499,000 was disbursed 

for eligible expenses, units were properly maintained, and services were obtained at the most economical 

price. In addition, HUD was not made aware of the financial condition of the projects in a timely manner. 

OIG recommended that HUD instruct the owner/agent to (1) repay ineligible costs charged to the 

projects; (2) provide documentation for unsupported costs and if support cannot be provided, repay the 

amount with non-Federal funds; and (3) strengthen controls over financial, procurement, and administrative 

functions. (Audit Report: 2010-NY-1006)

ppp

HUD OIG audited the San Diego Square project in San Diego, CA, in response to a hotline complaint 

regarding a sublease transaction with San Diego Kind Corporation. The objective was to determine whether 

the complaint was valid. 

The sublease transaction occurred more than 20 years ago, and many of the project records could not 

be located or were no longer available. Therefore, OIG could not make a final determination as to whether 

the hotline complaint was valid. As a result, it is incumbent upon HUD to resolve this matter by making a 

final determination on whether the subleased area was built and insured under the Section 202 loan. 

OIG recommended that HUD make a final determination and provide official written notification to the 

San Diego Kind Corporation as to whether the subleased area of the San Diego Square project is considered 

part of the Section 202-insured project and rental revenue it received in the past and will receive in the 

future for use of space in the project must be recognized as project income. (Audit Report: 2010-LA-0801) 

ppp

HUD OIG audited the management agent operations of the South Bronx Community Management 

Co., Inc., in Bronx, NY, regarding the administration of a HUD Section 202 direct loan for the elderly and 

handicapped housing project Maria Isabel to determine whether the agent complied with HUD requirements. 

The agent generally complied with HUD financial and unit maintenance requirements in its administration 

of the project. However, various issues were identified, which warrant HUD’s attention to provide greater 

assurance that the project is managed in the most economical and efficient manner. Specifically, (1) tenant 

accounts receivable and vendor accounts payable were not properly reported, (2) prudent procurement 

practices were not always followed, (3) advances were made by and partially repaid to the agent without 

HUD approval, and (4) action to mitigate cash-flow problems was not addressed in a timely manner but 

has since been taken. As a result, HUD was not made aware of the financial condition of the project, and 

the project experienced serious cash-flow problems. 

OIG recommended that HUD instruct the agent and property owners to (1) determine the collectability 

of delinquent tenant accounts receivable and request HUD approval to write off those accounts determined 

to be uncollectible, (2) strengthen procedures to ensure accurate reporting of accounts payable, (3) establish 

procedures to request approval for receiving and paying agent advances, (4) strengthen procedures to 

provide greater compliance with HUD’s and its own procurement procedures, and (5) strengthen controls 

to ensure that late fees are minimized and actions to mitigate cash-flow problems are addressed in a timely 

manner. (Audit Report: 2010-NY-1003)

ppp

51

Chapter 3 - Multifamily Housing Programs
Investigations

Some investigations discussed in this report were generated from leads provided by HUD multifamily 

housing program staff and conducted jointly with Federal, State, and local law enforcement agencies. The 

results of various significant investigations are described below.

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

Chart 3.2: Percentage of OIG multifamily housing closed investigation cases

during this reporting period

Key program 

results

$ 

recovered

Convictions/pleas/ 

pretrials

$2,090,908 36

Page 53

Page 54

Page 57

Investigations 105

Our

focus

• Theft/embezzlement

• Rental assistance fraud

• Other fraud/crimes

Cases 

closed

Admin/civil 

actions

35

Region 1 - 12%

Region 2 - 8%

Region 3 - 12%

Region 13 - 18% 

Region 4 - 7%

Region 14 - 4%

Region 5 - 4%

Region 15 - 2%

Region 6 - 3%

Regions 7/8 - 22%

Region 9 - 1%

Region 10 - 6%

Region 11 - 1%

52

Chapter 3 - Multifamily Housing Programs
Theft/Embezzlement

Brenda Phillips, the former manager for Quail Ridge Apartments, a HUD-subsidized multifamily 

housing development, pled guilty in U.S. District Court, Wichita, KS, to making a false statement. Phillips 

provided false tenant information on HUD certifications and fraudulently obtained $160,234 in housing 

assistance payments. 

ppp

Meredith Sullivan, a former manager for Sycamore Grove Apartments, a HUD-subsidized multifamily 

housing development, pled guilty in U.S. District Court, Kansas City, MO, to making false statements. 

Sullivan provided false tenant information on HUD certifications and provided housing applicants with 

preferential placement on the housing waiting list in exchange for actual or anticipated sexual relations. 

HUD losses are estimated at $138,611. 

ppp

Khristi Anderson, the former executive director for Pin Oak Acres Apartments, a HUD-subsidized 

multifamily housing development, pled guilty in U.S. District Court, Kansas City, KS, to making false 

statements. From October 2003 to September 2006, Anderson embezzled about $114,312 in security deposits 

and tenant rents. Anderson was also suspended from procurement and nonprocurement transactions with 

HUD and throughout the Executive Branch of the Federal Government. 

ppp

Nina Donehue, a former board member for the Northridge Cooperative Homes (Northridge), a HUDsubsidized multifamily housing development, was sentenced in U.S. District Court, San Francisco, CA, to 

1 year home confinement and 5 years probation and ordered to pay Northridge $34,983 in restitution and 

vacate her subsidized housing unit for her earlier conviction of committing embezzlement from a program 

receiving Federal funds. From January to February 2006, Donehue embezzled and personally used $34,983 

in Northridge funds. 

ppp

Susan Green, the former assistant manager for Lexington Green and Clayton Court Apartments, 

HUD-subsidized multifamily housing developments, pled guilty in U.S. District Court, Wilmington, DE, 

to committing embezzlement. From July 2007 to September 2009, Green embezzled and personally used 

$14,343 in tenant rents and other housing funds. 

ppp

Becky Dziubak, a former property manager for Prairie Meadows Apartments (Prairie Meadows), a HUDsubsidized multifamily housing development, was sentenced in Hennepin County Court, Minneapolis, MN, 

to 20 days incarceration and 36 months probation and ordered to pay Prairie Meadows $6,276 in restitution 

for her earlier guilty plea to committing theft. From July 2004 to January 2007, Dziubak embezzled and 

personally used $6,200 in tenant rents. 

ppp 

53

Chapter 3 - Multifamily Housing Programs
Betty Jefferson, the former president of the St. Stephen Manor, Inc. (St. 

Stephen), a HUD-subsidized multifamily housing development, and former St. 

Stephen manager Angela Coleman each pled guilty in U.S. District Court, New 

Orleans, LA, to committing a conspiracy to commit mail fraud, aggravated 

identity theft, money laundering, and Federal income tax evasion. From 1999 to 

2006, Jefferson, Coleman, and others embezzled and personally used $931,224 in 

Federal and State funds, including $9,230 in HUD housing assistance payments. 

ppp

Wynee Joyner, the vice president of National Housing Group, Inc., a HUD 

contractor that oversaw the management and maintenance of HUD-owned 

multifamily housing developments, was sentenced in U.S. District Court, 

Manhattan, NY, to 2 months home detention and 24 months supervised release 

and ordered to pay an amount of restitution not yet determined for her earlier 

guilty plea to committing a conspiracy to commit mail fraud. Joyner falsified 

vendor payments and submitted false claims to HUD in an effort to circumvent 

contract terms and obtain HUD reimbursements before paying third-party 

vendors. 

ppp

Nina Parker-Davis, an occupancy specialist for Pilgrim Baptist Village, a 

HUD-subsidized multifamily housing development, was sentenced in U.S. 

District Court, Newark, NJ, to 24 months probation for her earlier guilty plea 

to accepting bribes. From June to November 2003, Parker-Davis accepted cash 

payments from prospective tenants in exchange for immediate placement into 

subsidized housing units. HUD losses have not yet been determined. 

Rental Assistance Fraud

Five current or former Section 8 tenants at AK Houses, Jamie’s Place III, 

Hamilton Heights, or Harlem Gateway Houses, HUD-subsidized multifamily 

housing developments, were each arrested, charged, or indicted in U.S. District 

or Manhattan Criminal Courts, Manhattan, NY, for allegedly committing 

theft of government funds, grand larceny, or filing false business records. In 

addition, housing recipients Kelly Roberson and Nanette Rivers each pled guilty 

to making false statements to HUD or committing theft of government funds, 

and housing recipients Rafael and Carmen Goris remitted $31,313 to HUD and 

were collectively sentenced to 36 months supervised release, ordered to perform 

350 hours of community service, and fined $30,000 for their earlier guilty pleas 

to committing theft of government funds. Roberson, Rivers, and Rafael and 

Carmen Goris admittedly and the remaining defendants allegedly failed to report 

income, assets, or accurate household composition on housing certifications and 

collectively obtained more than $258,388 in housing assistance they were not 

entitled to receive. 

ppp

(2010) The Times-Picayune 

Publishing Co. All rights 

reserved. Used with 

permission of the 

Times-Picayune.

54

Chapter 3 - Multifamily Housing Programs
Lisa Ramos, Gilberto Torres, and Francina N’Diaye, Section 8 tenants at Maria Estella Apartments (Maria 

Estella) or Academy Gardens, HUD-subsidized multifamily housing developments, were each arrested 

and charged in U.S. District Court, Bronx, NY, with allegedly making false statements or committing 

embezzlement or theft of government funds. In addition, former Maria Estella Section 8 tenant Didna 

Telemaco was sentenced to 2 years supervised probation and ordered to pay HUD $26,274 in restitution 

for her earlier guilty plea to making false statements to HUD. Ramos, Torres, and N’Diaye allegedly and 

Telemaco admittedly failed to report income on housing certifications and collectively obtained $141,774 

in housing assistance they were not entitled to receive. 

ppp

Bamidele Awopetu, Natasha Edmonds, Benedict Snyder, and Eric Melton, Section 8 tenants at Park 

Hill or Concord Apartments, HUD-subsidized multifamily housing developments, were each arrested and 

charged in U.S. District or Staten Island Criminal Courts, Staten Island, NY, with allegedly making false 

statements, committing embezzlement of public money or grand larceny, or falsifying business records. 

The above defendants allegedly failed to report income on housing certifications and collectively obtained 

$138,744 in housing assistance they were not entitled to receive. 

ppp

Bethel Wooten, a former Section 8 tenant at Academy Square Apartments, a HUD-subsidized multifamily 

housing development, was indicted in Cook County Circuit Court, Chicago, IL, for allegedly committing 

forgery and theft by deception. From 2000 to November 2009, Wooten allegedly failed to report income on 

housing certifications and obtained more than $100,000 in housing assistance she was not entitled to receive. 

ppp

Sylvester Okonoboh, a former Section 8 tenant at Norway Housing, a HUD-subsidized multifamily 

housing development, was arrested after his indictment in U.S. District Court, Boston, MA, for allegedly 

committing theft of public funds. In addition, Mandela Homes Section 8 tenant Rotimi Abu was sentenced 

to 2 years probation and ordered to perform 100 hours of community service and pay HUD $7,369 in restitution for his earlier guilty plea to making false statements and committing theft of public money. Between 

January 2001 and April 2009, Okonoboh allegedly and Abu admittedly failed to report income or assets on 

housing certifications and together obtained $87,223 in housing assistance they were not entitled to receive.

ppp

Sharon Gist and Adriane Drye, Section 8 tenants at Fulton Park, a HUD-subsidized multifamily housing development, were each arrested and charged in Kings County Court, Brooklyn, NY, with allegedly 

committing grand larceny, offering a false instrument for filing, and possession of a forged instrument. In 

addition, former Marcus Garvey Village Section 8 tenant Nicole Baker, also known as Nicole Stanley, was 

sentenced in U.S. District Court to 1 year supervised probation and ordered to pay HUD $45,202 in restitution for her earlier guilty plea to making false statements to HUD. Gist and Drye allegedly and Baker 

admittedly failed to report income on housing certifications and collectively obtained $78,124 in housing 

assistance they were not entitled to receive.

ppp

55

Chapter 3 - Multifamily Housing Programs
Tanya and Sonia Johnson and Crystal Bailey, former Section 8 tenants at Central Gardens I Apartments 

(Central Gardens), a HUD-subsidized multifamily housing development, were each charged in Prince 

Georges County District Court, Upper Marlboro, MD, with allegedly committing theft and housing 

assistance fraud. In addition, former Central Gardens Section 8 tenant Donna Landers-Coleman pled guilty 

to committing theft. Tanya and Sonia Johnson and Bailey allegedly and Landers-Coleman admittedly failed 

to report income, accurate household composition, or an unauthorized resident and his criminal history on 

housing certifications and collectively obtained $75,264 in housing assistance they were not entitled to receive.

ppp

Joseph Nader, a former Cuyahoga Metropolitan Housing Authority landlord and Section 8 tenant at 

Lakeshore Towers, a HUD-subsidized multifamily housing development, was charged in Cuyahoga County 

Court of Common Pleas, Cleveland, OH, with allegedly committing theft and tampering with records. From 

October 1999 to September 2009, Nader allegedly failed to report income or assets on housing certifications 

and obtained $68,353 in housing assistance he was not entitled to receive.

ppp

Benita Holmes and Felicia Jenkins, a property manager and former Section 8 tenant at Rowan Towers, 

a HUD-subsidized multifamily housing development, and registered sex offender Darryl Andrews were 

each charged in Trenton Municipal Court, Trenton, NJ, with allegedly committing theft by deception and 

liability for the conduct of another. From April 2002 to August 2008, Jenkins allegedly failed to report her 

incarceration or the unauthorized residency of Andrews in her subsidized unit, and Holmes allegedly allowed 

Andrews to reside in Jenkins’ subsidized unit during her incarceration. HUD losses are estimated at $60,562. 

ppp

Catalina Ortiz and Lisa Hayes, former Section 8 tenants at Windham Heights or Park West Apartments, 

HUD-subsidized multifamily housing developments, were each arrested and charged in U.S. District or 

Rockville Superior Courts, Willimantic or Rockville, CT, with allegedly making false statements and 

committing theft of government funds, larceny, or forgery. Between September 2003 and August 2009, Ortiz 

and Hayes allegedly failed to report income on housing certifications and together obtained about $60,500 

in housing assistance they were not entitled to receive.

ppp

Five former housing recipients at Woodlake Apartments, a HUD-subsidized multifamily housing 

development, were each charged in Woodbury Municipal Court, Woodbury, NJ, with allegedly making false 

statements or committing theft by deception. The above defendants allegedly failed to report income or 

the subleasing of their subsidized housing units on housing certifications and collectively obtained $59,208 

in housing assistance they were not entitled to receive.

Other Fraud/Crimes

Robert Corp, a former loan officer, originator, and underwriter and vice president of Continental 

Securities, LLC, entered into a civil settlement filed in U.S. District Court, Buffalo, NY, and agreed to pay 

the U.S. Government $693,547. Corp allegedly made a number of misrepresentations on loan documents 

he submitted to HUD when he originated and underwrote a $7 million HUD-insured mortgage for Brylin 

Hospital. Brylin Hospital defaulted on the HUD-insured mortgage, and HUD paid an adjusted claim of 

more than $6.1 million to the lender. 

ppp

56

Chapter 3 - Multifamily Housing Programs
Sandra Sattler, a supervisor for Carabetta Management Company, a management agent for Parkside and 

Oakland Gardens Apartments, HUD-subsidized multifamily housing developments, was sentenced in U.S. 

District Court, New Haven, CT, to 6 months probation, ordered to perform 15 hours of community service, 

and fined $2,500 for her earlier guilty plea to failing to provide lead-based paint disclosures. In 2003, Sattler 

and others forged tenant signatures and provided fraudulent lead-based paint disclosure forms to HUD. 

ppp

57

Chapter 3 - Multifamily Housing Programs
Inspections & Evaluations

Inspection of the Assignment and Assumption of Mark-to-Market 

Loans, Lakeshore Village Apartments, Cleveland, OH

HUD OIG completed an inspection of post-Mark-to-Market restructuring of mortgage debt for 

Lakeshore Village Apartments to determine the validity of an informal complaint received from HUD’s 

Multifamily Office of Asset Management (OAM). OAM staff was concerned that, in approving the 

assignment and assumption of the restructured debt instruments, HUD’s Office of Affordable Housing 

Preservation (OAHP) did not sufficiently verify information provided from purchasers and sellers and (1) 

allowed the nonprofit purchaser to retain approximately $400,000 that should have been remitted to HUD, 

(2) failed to provide timely information to OAM during the decision-making process, and (3) ignored 

questions raised by OAM staff about the amount of proceeds due to HUD at loan closing.

The inspection did not substantiate any of the allegations in the informal complaint, but better 

communication between the two offices is needed to adequately resolve questions that arise during the 

loan approval process. Other matters were noted that warrant attention by the Office of Housing involving 

(1) certified source and use of funds statements, (2) voting rights on the Assumption/Subordination Loan 

Committee, and (3) safe harboring certifications. 

OIG recommended that the Office of Housing ensure that (1) OAM and OAHP continue their preloan 

committee meetings and provide a comprehensive record of the concerns raised and the decisions arrived 

at during the assignment and assumption approval process, (2) the assignment and assumption approval 

process not be completed until a certified source and use of funds statement is received by OAHP, (3) 

existing HUD guidelines are amended as soon as possible to clarify OAHP’s and OAM’s responsibilities 

during the assignment and assumption approval process, and (4) nonprofit purchasers who intend to 

qualify for safe harboring status include a certification of their independence from any for-profit entity by 

declaring, “the information contained in these documents is true and correct under the penalty of perjury.” 

(I&E Report: IED-09-005)

ppp

58

Chapter 3 - Multifamily Housing Programs
Chapter 4

Community Planning

and Development 

Programs
The Office of Community Planning and Development (CPD) seeks to develop viable communities by 

promoting integrated approaches that provide decent housing, suitable living environments, and expanded 

economic opportunities for low- and moderate-income persons. The primary means toward this end is 

the development of partnerships among all levels of government and the private sector. In addition to the 

audits and investigations described in this chapter, the U.S. Department of Housing and Urban Development, 

Office of Inspector General (HUD OIG), has conducted numerous outreach efforts (see chapter 8, page 119).

Audit

Strategic Initiative 3: Contribute to the strengthening of communities

Chart 4.1: Percentage of OIG community planning and development 

audit reports during this reporting period

*The total CPD audits, questioned costs, and funds put to better use amounts include any American Recovery and 

Reinvestment Act of 2009 (20 audits) and disaster recovery (5 audits) type audits conducted in the CPD area. The 

writeups for these audits are shown separately in chapters 5 and 6 of this semiannual report.

Key program results Questioned costs Funds put to better use

$20.1 million $9.7 million

Page 61

Page 62

Page 64

Audit 35 audits*

Our

focus

• Community Development Block Grant programs

• HOME Investment Partnerships Program

• Neighborhood Stabilization Program 

60

Chapter 4 - Community Planning and Development Programs

Region 1 - 17%

Region 2 - 11%

Region 3 - 6% 

Region 4 - 11%

Region 5 - 17%

Region 6 - 9%

Regions 7/8/9 - 6%

Region 10 - 17%

Region 11 - 6%
The Office of Inspector General (OIG) audited the Community Development Block Grant (CDBG) 

program, the HOME Investment Partnerships Program (HOME), and the Neighborhood Stabilization 

Program (NSP). While OIG’s objectives varied by auditee, the majority of the reviews were to determine 

whether the grant funds were administered for eligible activities and that the auditee met program objectives. 

The following section illustrates the audits conducted in the CPD area.

Community Development Block Grant Programs

HUD OIG audited a CDBG program administered by the City of Paterson, NJ, and found that the City 

did not always disburse CDBG funds efficiently and effectively in accordance with its submission to HUD 

and with applicable rules and regulations. Specifically, procurement requirements were not followed, and 

funds were disbursed for unsupported and ineligible activities and planning and administration expenses. 

In addition, the City’s financial management system did not have adequate controls to properly safeguard 

funds and report program income. 

OIG recommended that HUD instruct the City to (1) provide documentation to support more than 

$3.7 million in costs related to the procurement of demolition, housing rehabilitation, public facility, and 

planning and administrative activities; (2) repay more than $641,000 in ineligible disbursements; and (3) 

develop adequate procurement, management, and financial controls and procedures to ensure that planned 

demolition, housing rehabilitation, and public facility activities comply with regulations and that program 

income, demolition liens, and interest income are properly recorded to ensure that more than $2 million in 

budgeted funds is put to better use. (Audit Report: 2010-NY-1005)

ppp

HUD OIG audited the City of Altoona, PA’s CDBG program and found that the City paid a subrecipient 

for CDBG activities that it could not demonstrate were eligible. It could not demonstrate that it paid a 

subrecipient for eligible activities that met a national objective under its Blighted Property Maintenance 

Program. 

OIG recommended that HUD require the City to provide documentation to demonstrate that more 

than $914,000 was used for eligible activities that met a national objective or repay HUD from non-Federal 

funds and establish and implement written policies and procedures requiring it to maintain records that (1) 

provide a full description of each activity undertaken; (2) demonstrate that each activity undertaken meets a 

national objective of the CDBG program; (3) determine the eligibility of the activities; and (4) document the 

acquisition, improvement, use, or disposition of real property acquired or improved with CDBG assistance. 

Further, the City should evaluate its subrecipients in terms of compliance risk, performance, and funding 

levels at least annually. (Audit Report: 2010-PH-1001) 

ppp

HUD OIG audited the City of East St. Louis, IL’s CDBG program and found that the City did not 

properly allocate salary and building expenses to the CDBG program. It also did not properly document the 

cost estimate and selection process used to procure a contract for developing its 5-year consolidated plan. 

OIG recommended that HUD require the City to (1) provide supporting documentation or reimburse 

its CDBG program from non-Federal funds for more than $1 million paid for salary expenses, building rent, 

and the administration contract and (2) implement acceptable policies and procedures and provide technical 

assistance to ensure future compliance. (Audit Report: 2010-KC-1003)

ppp

61

Chapter 4 - Community Planning and Development Programs
HUD OIG audited the City of Los Angeles, CA’s Community Development Department and found 

that the City initially failed to demonstrate that any of the five CDBG-assisted projects reviewed, totaling 

more than $4.8 million, administered by its subrecipient complied with the national objectives. The City 

later located and provided additional records to adequately support that the national objectives were met 

for four of these projects. Therefore, only one of the five projects, totaling $935,000, remained inadequately 

supported. In addition, the City did not always effectively monitor CDBG-assisted projects administered 

by its subrecipient. 

OIG recommended that HUD require the City to (1) provide supporting documentation showing that 

the Capitol Records Surface Parking CDBG project met a national objective or repay its program from nonFederal funds, (2) implement adequate monitoring controls over its subrecipient and CDBG-assisted projects, 

and (3) suspend all CDBG funding to the subrecipient until acceptable policies and procedures are in place 

to ensure compliance with CDBG program requirements. (Audit Report: 2010-LA-1003) 

ppp

HUD OIG audited the City of Saginaw, MI’s CDBG-funded demolition activities and found that the City 

did not effectively administer its CDBG-funded demolition activities. It (1) lacked sufficient information 

to support nearly $138,000 in CDBG funds used for costs, (2) did not request reimbursement from property 

owners and/or place liens on properties for more than $80,000 in CDBG funds used, and (3) did not provide 

sufficient documentation to support that it was not required to request reimbursement from property owners 

and/or place liens on properties for nearly $51,000 in CDBG funds used.

OIG recommended that HUD require the City to (1) provide sufficient supporting documentation or 

reimburse its CDBG program from non-Federal funds for the nearly $138,000 in funds used for unsupported 

expenses, (2) reimburse its CDBG program more than $80,000 from non-Federal funds for the activities 

for which the City did not request the property owners to reimburse it or place liens on the properties, (3) 

provide sufficient supporting documentation or reimburse its CDBG program from non-Federal funds for 

the nearly $51,000 used for which the City did not provide sufficient documentation to support that it was 

not required to request reimbursement from property owners and/or place liens on properties, and (4) 

implement adequate procedures and controls to address the finding cited. (Audit Report: 2010-CH-1002)

HOME Investment Partnerships Program

HUD OIG audited the HOME- and CDBG-funded housing programs administered by the City of 

Holyoke, MA, and found that the City did not always award its HOME Development program contracts in 

accordance with Federal requirements. Specifically, it did not obtain or prepare adequate cost estimates or 

conduct required cost analyses before it awarded $2.6 million in funds for three noncompetitive construction 

contracts. Expenditures claimed by the developer for the construction of duplex units were an average of 

14 percent higher than the construction cost estimates, totaling $288,000 for seven duplexes. Additionally, 

all HUD assistance was not properly considered during the City’s evaluations of project total development 

costs for duplexes developed as part of the HOME Development program. Lastly, the HOME investments 

subject to recapture were incorrectly calculated so that more than $344,000 would not be recaptured if the 

homeowners did not reside in the HUD-funded duplexes for the entire 15-year affordability period.

Of the loans processed under the Rental Neighborhood Improvement program, 67 percent went to 

properties that were owned by either the subrecipient or a second, related nonprofit. The subrecipient also 

did not treat related and nonrelated loans consistently regarding use of contracts, enforcement of timetables 

for completion, accrual of interest on advances, or project record keeping. In addition, (1) related-party 

rehabilitation was not completed in a timely manner, (2) appropriate reviews and approvals of the projects 

62

Chapter 4 - Community Planning and Development Programs
were not made for all loans before the funds were committed, (3) the subrecipient did not secure all program 

investments to related-party loans, and (4) not all project records were maintained in accordance with 

record-keeping requirements. Further, the City allowed the subrecipient to use program funds totaling 

more than $332,000 in the form of “grants,” which were used for demolition activities that did not meet the 

Rental Neighborhood Improvement program’s objectives and were not carried out in compliance with the 

CDBG program.

OIG recommended that HUD require the City to (1) establish appropriate internal controls over the HOME 

procurement process, including the segregation of duties, so that the process is not entirely controlled by 

one person and (2) repay $288,000 in unreasonable construction costs paid under the HOME Development 

program. Additionally, OIG recommended that HUD and the City conduct an independent cost analysis 

for the 2008 procurements to ensure that HOME and CDBG program expenditures of more than $1 million 

were reasonable and supported. For the unreasonable amounts, the City should reimburse the program(s) 

from non-Federal funds.

OIG also recommended that HUD review the revised subrecipient contract for the Rental Neighborhood 

Improvement program to ensure that it contains appropriate controls, particularly when related parties 

are involved. These increased controls will ensure that HUD funds used for future related-party activities 

will be properly spent with appropriate performance measures in place, resulting in more than $1.7 million 

in funds put to better use for activities properly approved and overseen by independent parties. (Audit 

Report: 2010-BO-1002)

ppp

HUD OIG audited the City of Los Angeles, CA’s Housing Department and found that the City improperly 

allocated HOME funds for the NoHo Commons housing development without adequate controls in place to 

ensure compliance with HOME program requirements. Specifically, the City’s subrecipient did not ensure 

that the development’s management agent (1) implemented a waiting list as established by its lottery and 

subsequent applications, (2) correctly determined tenants’ income to establish eligibility, (3) maintained 

adequate documentation supporting the use of HOME funds, and (4) implemented adequate monitoring 

policies and procedures for the development.

OIG recommended that HUD require the City to (1) suspend all HOME funding to the subrecipient until 

acceptable monitoring policies and procedures have been implemented to ensure compliance with all HOME 

program requirements, (2) reconstruct and establish a complete waiting list, and (3) determine which eligible 

applicants were improperly bypassed and ensure that they are given first priority for housing as vacancies 

arise. OIG also recommended that both the City and the subrecipient establish and implement effective 

policies and procedures to ensure compliance with HOME regulations. (Audit Report: 2010-LA-1001)

ppp

HUD OIG audited the District of Columbia’s administration of HOME funds that it provided to CEMIParkside Associates, LLP, a limited partnership managed by developer H.R. Crawford, for the rehabilitation/

construction of a high rise property known as Parkside Terrace Apartments. OIG found that the grantee 

properly accounted for ineligible HOME funds it provided for the rehabilitation/construction of Parkside 

Terrace. However, it needs to formalize its procedures for monitoring HOME-funded project activities to 

ensure that HOME funds are used in accordance with all program requirements.

OIG recommended that HUD require the grantee to formalize and implement adequate procedures to 

ensure that its HOME funds are used in accordance with program requirements. (Audit Report: 2010-PH1802)

63

Chapter 4 - Community Planning and Development Programs
Neighborhood Stabilization Program

HUD OIG audited the State of Indiana’s NSP to determine whether the State awarded program funds 

to eligible projects. The State’s administrator awarded NSP funds for an inappropriate project.

OIG recommended that HUD require the State to implement (1) its action plan by amending its grant 

agreement with the City of Mishawaka to remove $4.5 million in NSP funds for the redevelopment of the 

Mishawaka Furniture building and award the funds for an eligible project(s) and (2) adequate procedures 

and controls to ensure that it awards NSP funds for eligible projects and that its recipients use NSP funds 

for the redevelopment of commercial buildings in accordance with HUD’s requirements. (Audit Report: 

2010-CH-1803)

ppp

HUD OIG conducted a capacity review of the City of Meriden, CT’s operations to determine whether 

the City had the necessary capacity to effectively administer the State of Connecticut’s NSP funds provided 

through the Housing and Economic Recovery Act of 2008.

Despite the City’s capacity to administer its NSP funds, it will not be able to meet its planned goal of 

completing the acquisition and rehabilitation of 15 single-family properties. However, the City still plans 

to spend all funding due to higher than forecast per-unit costs. Because the contract agreement between the 

City and the State’s Department of Economic and Community Development contains recapture provisions 

for not meeting all planned goals, OIG recommended that HUD require the City to obtain an approved 

amendment to its NSP local action plan from the Department to reduce the number properties acquired, 

rehabilitated, and resold to avoid the potential recapture of funds. (Audit Report: 2010-BO-1804)

ppp

64

Chapter 4 - Community Planning and Development Programs
65

Chapter 4 - Community Planning and Development Programs

Investigations

Some investigations discussed in this report were generated from leads provided by HUD CPD program 

staff or conducted jointly with Federal, State, and local law enforcement agencies. The results of various 

significant investigations are described below.

Strategic Initiative 3: Contribute to the strengthening 

of communities

Key program 

results

$ 

recovered

Convictions/pleas/ 

pretrials

$12,629,681 40

Page 66

Page 68

Investigations 136

Our

focus

• Theft/embezzlement

• Other fraud/crimes

Cases 

closed

Admin/civil 

actions

16

Chart 4.2: Percentage of OIG community planning and development 

closed investigation cases during this reporting period

Region 1 - 12%

Region 2 - 5%

Region 3 - 6%

Region 13 - 3% 

Region 4 - 5%

Region 14 - 4%

Region 5 - 2%

Region 15 - 4%

Region 6 - 4%

Regions 7/8 - 4%

Region 9 - 1%

Region 10 - 5%

Region 11 - 45%
66

Chapter 4 - Community Planning and Development Programs

Theft/Embezzlement

Linda Bevins, the former payroll supervisor for the Crotched Mountain Foundation (Crotched Mountain), 

an organization that receives HUD CDBG and Supportive Housing program funds, was sentenced in U.S. 

District Court, Concord, NH, to 24 months incarceration and 36 months supervised probation and ordered 

to pay Crotched Mountain more than $1.6 million in restitution for her earlier guilty plea to committing theft 

from a program receiving Federal funds. From June 2004 to August 2007, Bevins diverted and personally 

used or provided to others more than $1.6 million in Crotched Mountain funds without authorization. 

ppp

Joseph Giacalone and Daniel Robin, doing business as OK Industries, an organization that received HUD 

CDBG funds, were collectively sentenced in the 7th Circuit Court, Flint, MI, to 60 months probation and 

ordered to pay the City of Flint more than $1.3 million in restitution for their earlier nolo contendere pleas 

to committing larceny by conversion greater than $20,000. Giacalone and Robin applied for and received 

about $870,000 in CDBG funds to relocate their manufacturing business to an economically deprived area 

and expand their operations, but they allegedly failed to comply with HUD stipulations and defaulted on 

their CDBG loan. HUD recovered the funds by offsetting future City of Flint CDBG funding.

ppp

Raymond Vella, the owner of Pavel Construction, a contractor for the Linden Neighborhood Preservation 

Program (Linden Neighborhood), an organization that receives HUD CDBG and HOME program funds, was 

sentenced in U.S. District Court, Newark, NJ, to 39 months incarceration and 3 years probation and ordered 

to pay HUD $82,705 in restitution for his earlier guilty plea to committing mail fraud, obtaining property 

through fraud, and offering and giving a corrupt thing of value. From January 1998 to December 2006, 

Vella paid bribes to an unnamed conspirator in exchange for more than $652,448 in Linden Neighborhood 

contracts. 

ppp

Patti Buffington, the former executive director for Genesis House (Genesis), an organization that receives 

HUD Emergency Shelter grants and other Federal funds, was sentenced in Cook County Circuit Court, 

Chicago, IL, to 1 year incarceration and 1 year parole and ordered to pay the City of Chicago $100,000 in 

restitution for her earlier guilty plea to committing theft of government funds. From 2004 to 2006, Buffington 

and others embezzled and used more than $500,000 in Genesis funds to pay for personal expenses and 

previously assessed Federal income taxes. 

ppp

Samantha Cornelius, a case manager for the House of Ruth, a homeless and domestic violence shelter 

that receives HUD Supportive Housing program funds, pled guilty in U.S. District Court, New Orleans, 

LA, to committing a conspiracy and theft of government funds. From May 2007 to July 2008, Cornelius and 

others conspired and embezzled $109,702 in House of Ruth program funds. 

ppp

Thomas Manuel, a former commissioner for St. Johns County, a government entity that receives HUD 

CDBG, HOME, and other HUD funding, remitted $3,400 to the U.S. Department of Justice and was sentenced 

in U.S. District Court, Jacksonville, FL, to 21 months incarceration, 16 months home detention, and 36 months 
67

Chapter 4 - Community Planning and Development Programs

probation for his earlier guilty plea to corruptly soliciting and accepting a bribe intended to influence a 

government business transaction. Between July 2007 and July 2008, Manuel accepted $60,000 in bribes from 

contractors in return for his influence or rewards involving St. Johns County contracts.

ppp

Jeanetta Tinsley, the former grant monitoring and administration director for the City of San Antonio, a 

municipality that receives HUD CDBG and other funding, was indicted in Bexar County District Court, San 

Antonio, TX, for allegedly committing misapplication of fiduciary property of a financial institution. From 

January to March 2009, Tinsley allegedly used $16,336 in HUD funds for the former director’s retirement 

events. 

ppp

Kelly Girard, the former executive director for Community Action in Self Help, Inc. (Community Action), a 

senior housing development that receives HUD HOME funds, and former Community Action office manager 

and bookkeeper Carrie Girard and Kortni Calabrese were each indicted in Wayne County Court, Lyons, 

NY, for allegedly committing grand larceny and a scheme to defraud. From September 2004 to December 

2005, the above defendants allegedly conspired and stole more than $15,000 in Community Action funds. 

ppp

Rick Cherry, a housing manager for the Housing First Homeless Coalition, an organization that receives 

HUD Supportive Housing funds, was sentenced in U.S. District Court, Mobile, AL, to 6 months home 

confinement and 5 years probation and ordered to pay HUD $14,179 in restitution for his earlier guilty 

plea to committing theft from an organization receiving Federal funds. From August 2006 to August 2008, 

Cherry embezzled $14,179 in tenant rents.

ppp

Shiryl Chambers, a former maintenance manager for the Cleveland Housing Network (Housing Network), 

an organization that receives HUD HOPE VI funds, was sentenced in U.S. District Court, Cleveland, OH, 

to 3 years probation, ordered to pay Housing Network $6,000 in restitution, and fined $1,000 for her earlier 

guilty plea to making false statements. In 2004, Chambers awarded Housing Network rental rehabilitation 

contracts to contractors who performed services at her residence free of charge. 

ppp

Anthony Saccomanno, the director for the Cherry Hill Department of Code Enforcement and Inspections 

(Cherry Hill), an organization that receives HUD CDBG funds, was sentenced in U.S. District Court, Newark, 

NJ, to 22 months incarceration and 36 months supervised release and fined $20,100 for his earlier guilty plea 

to committing mail fraud. In November 2007, Saccomanno caused a letter to be mailed after he accepted 

money from Building Inspections Underwriters, Inc., a Cherry Hill contractor. HUD losses have not yet 

been determined. 

ppp

Leona Beldini, the former deputy mayor for Jersey City, a government entity that received more than 

$6.7 million in HUD CDBG entitlement funds in 2007, was convicted in U.S. District Court, Newark, 

NJ, of accepting something of value to influence and reward. Beldini accepted $20,000 in illicit political 
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Chapter 4 - Community Planning and Development Programs

contributions from a government informant posing as a developer in exchange for his assistance, action, or 

influence relating to real estate approvals. HUD losses have not yet been determined. 

ppp

Dennis Stackhouse, a developer under contract with Tremont Capital Realty (Tremont) and the 

Miami-Dade Empowerment Trust (Empowerment Trust), an organization that receives HUD CDBG and 

Empowerment Zone funds, was arrested and charged in the 11th Judicial Circuit Court, Miami, FL, with 

allegedly committing grand theft and an organized scheme to defraud. From December 2005 to May 2007, 

Stackhouse allegedly submitted false invoices and fraudulently obtained $990,000 in Empowerment Trust 

and Tremont funds. HUD losses have not yet been determined. 

Other Fraud/Crimes

Unity Care Group, Inc. (Unity Care), an organization that receives HUD Supportive Housing program 

funds, entered into a civil settlement filed in U.S. District Court, San Jose, CA, and agreed to repay HUD 

$679,919. From 2000 to 2006, Unity Care allegedly provided uncorroborated requests and certifications and 

obtained $679,919 in Supportive Housing program disbursements.

ppp

A & F Commercial Builders (Commercial Builders) president James Fendt, Commercial Builders 

cofounder Eric Anderson, and Commercial Builders, a contractor that received HUD HOME funds, entered 

into a settlement agreement with the U.S. Attorney’s Office, Manhattan, NY, and agreed to refrain from 

procurement and nonprocurement transactions with HUD and throughout the Executive Branch of the 

Federal Government and the City of New York for 2 years. The above defendants also waived any claims, 

rights, or interest in $291,877 held in escrow by the New York City Department of Housing Preservation 

and Development (Department of Housing Preservation). Commercial Builders, while under a $6.4 million 

contract with the Department of Housing Preservation, allegedly failed to abide by the prevailing DavisBacon Act wage requirements. 

ppp

Robert Jacumin, also known as Roy or Kris King, a HUD Housing Opportunities for Persons with 

AIDS (HOPWA) program participant, pled guilty in U.S. District Court, Fort Lauderdale, FL, to making 

false statements and committing theft of government funds. Jacumin failed to report income or assets on 

housing and other certifications and obtained $59,300 in housing and $21,695 in Social Security benefits he 

was not entitled to receive. 

ppp

Michelle Reynolds, a HUD HOPWA program participant, was arrested and charged in the 15th Judicial 

Circuit Court, Wellington, FL, with allegedly committing public assistance fraud. From September 2007 to 

July 2009, Reynolds allegedly failed to report unauthorized residents or their criminal histories on housing 

certifications and obtained $20,707 in housing assistance she was not entitled to receive. 

ppp

Roger Corbin, a former legislator for Nassau County, a government entity that receives HUD HOME 

funds, pled guilty in U.S. District Court, Central Islip, NY, to making false statements, filing false Federal 

income tax returns, and committing Federal income tax evasion. From April 2006 to December 2008, Corbin 
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Chapter 4 - Community Planning and Development Programs

received $229,000 from a developer involved with a HUD-funded housing renewal project but failed to 

report these payments on his 2005, 2006, and 2007 Federal income tax returns and provided false statements 

when questioned by Federal agents. 

ppp

Michael Cenzi, Ronald Caceci, and Herbert Babcock, employees for Sinisgalli, Inc., a demolition contractor 

for the City of Rochester, a municipality that receives HUD CDBG funds, were each indicted or charged 

in Monroe County District Court, Rochester, NY, with allegedly endangering public health and illegally 

dumping hazardous waste. Cenzi, Caceci, and Babcock allegedly disposed of asbestos and other illegal 

hazardous waste products in an unauthorized area. 

ppp

Chapter 5

American Recovery 

and Reinvestment Act 

of 2009
The U.S. Department of Housing and Urban Development (HUD) has received $13.61 billion in funding 

under the American Recovery and Reinvestment Act of 2009 (ARRA) in several housing program areas. 

Table 1 shows the HUD program areas receiving funding and the amounts appropriated to each program. 

Table 1: HUD programs receiving ARRA funding

Program Area

• Public Housing Capital Fund

• Native American Housing Block 

Grant

• Community Development Block 

Grant

• Neighborhood Stabilization Program

• HOME Investment Partnerships 

Program-Tax Credit Assistance 

Program

• Homelessness Prevention Fund

• Assisted Housing Stability Grant

• Green Retrofit Grant 

• Lead Hazard Reduction 

Demonstration Program

Office of Public and Indian 

Housing

Office of Community 

Planning and Development

Office of Multifamily Housing

Office of Healthy Homes and 

Lead Hazard Control

$4,000,000,000

$510,000,000

$1,000,000,000

$2,000,000,000

$2,250,000,000

$1,500,000,000

$2,000,000,000

$250,000,000

$100,000,000

Funding amount

Total $ 13,610,000,000

This funding will remain available until September 2013. The purpose of the funding is for “oversight 

and audit of programs, grants, and activities funded by this Act and administered by the Department of 

Housing and Urban Development.”

Through its audit and investigative programs, HUD OIG will constantly tailor and adjust its short- and 

long-term activities for timely and effective oversight of the ARRA funds expended by HUD programs. 

Additionally, OIG received $15 million in ARRA funds. OIG’s plan will be adjusted as the HUD programs 

develop plans and distribute their ARRA funds. OIG will step up outreach and training efforts for the 

prevention of fraud, waste, and abuse to the Department and recipients of ARRA funds. 

ppp

Introduction and Background

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Chapter 5 - American Recovery and Reinvestment Act of 2009
Audits

The Office of Audit has initiated a three-phased approach to conducting related audit work. The actions 

it has taken and plans to take will help position it to meet the increased workload under ARRA and protect 

the Federal investment over the long term. 

The Office of Audit’s overall oversight objectives for HUD funding under ARRA are to determine 

whether 

• Funds are awarded and distributed in a prompt, fair, and reasonable manner;

• The recipients and uses of all funds are transparent to the public, and the public benefits of these 

funds are reported clearly, accurately, and in a timely manner; 

• Funds are used for authorized purposes, and instances of fraud, waste, error, and abuse are 

mitigated; 

• Projects funded under ARRA avoid unnecessary delays and cost overruns; and 

• Program goals are achieved, including specific program outcomes and improved results on broader 

economic indicators. 

In prior reporting periods, HUD OIG reviewed HUD’s front-end risk assessments (FERA), audited 

HUD’s formula allocation dictated in ARRA programs, and assessed the administrative capacity for 

selected grantees to effectively administer ARRA funds. During this reporting period, OIG continued to 

perform capacity assessments but expects to shift its focus to audits of the grantee expenditures. OIG has 

also focused on HUD’s oversight activities. 

The following section demonstrates the audit work that has been completed during this reporting 

period.

Strategic Initiative 3: Contribute to the strengthening of communities

*The total ARRA-related audits consist of community planning and development, public and Indian housing, and other 

activity audits. The questioned costs and funds put to better use amounts relate only to ARRA-related costs. 

Key program results Questioned costs Funds put to better use

$662,000 $8.8 million

Page 74

Page 74

Page 77

Page 78

Page 80

Page 84

Audit 33 audits*

Our

focus

• Department-wide audits

• Public Housing Capital Fund audits and reviews

• Native American Housing Block Grant audits and reviews 

• Community Development Block Grant audits and reviews

• Neighborhood Stabilization Program audits and reviews

• Office of Healthy Homes – Lead Hazard Control audit and 

review

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Chapter 5 - American Recovery and Reinvestment Act of 2009
In addition to the audits described in this chapter, HUD OIG, has conducted numerous outreach efforts 

(see chapter 8, page 121).

Department-Wide Audits

HUD OIG audited HUD’s process for monitoring recipient reporting for ARRA to determine whether 

HUD had developed a process for performing limited data quality reviews of recipient reporting of recovery 

funds. The Recovery Accountability and Transparency Board (Board), created by ARRA, required the 

inspector general community to evaluate Federal agencies’ processes for monitoring recipient reporting 

of ARRA funds for the quarter ending September 30, 2009. The audit reports were to be issued to their 

agencies no later than October 30, 2009. The reports were also to be submitted to the Board, which will 

compile the results and issue a consolidated report with recommendations for improvement across the 

Federal Government. 

HUD has made progress in the quality assurance process. It has established a Recovery Implementation 

Team that has developed Department-wide policies and procedures and provided guidance to HUD program 

offices. The Recovery Implementation Team has developed a process for performing limited data quality 

reviews of recipient reporting of ARRA funds. The team has also developed procedures to identify and 

notify the recipients of the need to make appropriate and timely changes to data submissions. HUD has 

begun reviewing data reported to FederalReporting.gov by recipients and identified possible data errors 

that require follow-up.

However, there are areas that HUD needs to address; specifically, (1) not all prime recipients have filed 

all of the required quarterly reports, (2) HUD has not ensured that the prime recipients review the data 

submitted by subrecipients, and (3) HUD has not developed a process for identifying subrecipients that 

demonstrate systemic or chronic reporting problems and/or otherwise fail to correct such problems as 

identified by the primary recipients. (Audit Report: 2010-DP-0801)

Office of Public and Indian Housing Audits and Reviews

Public Housing Capital Fund Audits and Reviews

HUD OIG performed a capacity review to assess the Syracuse, NY, Housing Authority’s administration 

of its Public Housing Capital Fund (Capital Fund) program to evaluate the Authority’s capacity in the 

area of internal controls, eligibility, financial controls, procurement, and outputs/outcomes to effectively 

administer its ARRA funds. The Authority was awarded $4.5 million in capital funds under ARRA. 

Significant control weaknesses diminished the Authority’s capacity to effectively administer its Capital 

Fund program in the areas of internal controls, eligibility, financial controls, procurement, and output/

outcomes. Specifically, the Authority failed to (1) complete its 2002 Capital Fund Financing Program in a 

timely manner, and additional Capital Fund grants remain open; (2) follow HUD-required contracting and 

procurement regulations, thus limiting competition and potentially causing excessive and/or ineligible 

costs; and (3) implement a proper control environment, which contributed to management and financial 

control deficiencies.

OIG recommended that HUD (1) closely monitor the operations of the Authority to ensure compliance 

with all Capital Fund Financing Program, Capital Fund program, and ARRA deadlines and objectives 

and (2) certify that the Authority’s procurement practices meet Federal procurement requirements. OIG 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
recommended that HUD instruct the Authority to (1) immediately complete its 2002 Capital Fund Financing 

Program bond program activities and use the remaining $1.3 million for eligible improvements, (2) submit a 

viable plan to obligate capital funds and supplemental ARRA funds, (3) establish and implement operational 

procedures to ensure compliance with applicable regulations for all future procurement activities, and (4) 

institute effective management and financial controls to ensure successful administration and completion 

of the ARRA program and objectives. (Audit Report: 2010-NY-1802)

ppp

HUD OIG audited the ARRA Public Housing Capital Fund formula grant to the Dallas Housing 

Authority in Dallas, TX, to evaluate the Authority’s capacity in the areas of internal controls, eligibility, 

financial controls, procurement, and output/outcomes in administering its grant. 

Overall, the Authority demonstrated capacity to administer its grant in accordance with requirements. 

However, it should address issues identified to help ensure that it fully expends its grant funds on eligible 

activities within ARRA deadlines. 

OIG recommended that HUD work with the Authority to resolve documentation requirements 

for administration and management improvements expense categories and require the Authority to 

revise its budget and reallocate $280,000 in budgeted funds to other eligible activities. (Audit Report: 

2010-FW-1001)

ppp

HUD OIG performed a capacity review of the Housing Authority of New Orleans, LA, to evaluate the 

Authority’s capacity and risks in the areas of basic internal controls, financial operations, procurement, and 

outputs/outcomes. The Authority received $34.5 million in ARRA funding. 

The Authority had capacity deficiencies related to internal controls, financial operations, procurement, 

and inventory. Specifically, it lacked (1) internal control capacity related to staffing levels and segregation of 

duties; (2) financial capacity related to its accounts payable procedures, financial policies, and independent 

public accountant reviews; and (3) procurement capacity, as it did not always comply with the procurement 

policy and the policy was not always clear. The Authority generally ensured that its outputs and outcomes 

related to rehabilitation contracts were adequate. However, it did not maintain an adequate inventory 

listing of items removed from some of the rehabilitated projects. Due to capacity limitations, the Authority 

will encounter difficulty in both obligating and expending the $34.5 million in ARRA funds within the 

statutory time limits. While the Authority had taken measures to develop policies and procedures for 

obligating and expending the ARRA funds, its prior performance continued to raise serious concerns about 

its ability to comply with the statutory requirements and safeguard resources. Therefore, HUD, as the 

Authority’s administrative receiver, must make a realistic determination regarding its ongoing capacity 

limitations.

OIG recommended that HUD require the Authority to (1) support or repay unsupported disbursements 

totaling more than $321,000; (2) maintain adequate staffing levels in its Finance and Contracting and 

Compliance Departments and obtain qualified staff to perform the accounts receivable function; (3) amend 

its finance policies; (4) consider cross-training employees in the Finance Department and rotate respective 

roles periodically to prevent collusion; (5) amend its procurement policy to comply with 24 CFR (Code 

of Federal Regulations) 85.36; (6) consider labeling all asset inventory items obtained for rehabilitation 

before placing items into the inventory; (7) obtain a contractor to oversee contracting activities; and (8) 

contract with an accounting firm to maintain a separate accounting and biweekly reporting of ARRA funds 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
expended. OIG also recommended that HUD immediately deobligate all or some of the Authority’s ARRA 

funds and reallocate the funds to housing authorities that can use the funds if the lack of capacity continues 

and indicates the Authority’s inability to obligate the funds or complete the planned work by the statutory 

deadline. (Audit Report: 2010-AO-0801)

ppp

HUD OIG conducted a capacity review of the Chattanooga, TN, Housing Authority’s operations 

to determine whether the Authority had the capacity to adequately administer its capital fund ARRA 

funding according to applicable requirements. The Authority had the capacity to properly administer 

its capital fund ARRA grants. There were no reportable conditions or recommendations. (Audit Report: 

2010-AT-1804)

ppp

HUD OIG reviewed HUD’s guidance on using ARRA capital funding for physical needs assessments 

to determine whether HUD’s guidance to grantees on using ARRA capital funds for physical needs 

assessments was sufficient to ensure that grantees had the information needed to avoid missing the grant 

obligation deadline of March 17, 2010. HUD took actions in a timely manner to address concerns raised 

during the review. OIG made no recommendations. (Audit Report: 2010-FW-0801)

ppp

HUD OIG conducted a review of the Guam Housing and Urban Renewal Authority in Sinajana, GU, 

to determine whether the Authority (1) had effective and efficient operations in place to manage its grantfunded projects and (2) had administered its grant funds in accordance with HUD rules and regulations. 

The Authority received more than $1.9 million in Capital Fund Recovery Act grant funding as part of 

ARRA.

The Authority generally had effective and efficient operations in place to manage its grant-funded 

projects and generally administered its grant funds in accordance with HUD rules and regulations. 

Therefore, OIG made no recommendations. (Audit Report: 2010-LA-1002)

ppp

HUD OIG reviewed the New York City, NY, Housing Authority’s capacity to administer the 

approximately $423 million in capital funds awarded to it under ARRA to determine whether the 

Authority’s general, financial, and procurement controls were adequate to provide assurance that it had 

the capacity to effectively manage the ARRA funds.

The Authority’s general, financial, and procurement controls were generally adequate to provide 

assurance that it had the capacity to effectively manage its ARRA funds. Authority officials had plans for 

using the funds in a timely manner and had addressed previously reported weaknesses in its Capital Fund 

program administration. 

OIG recommended that HUD closely monitor the Authority to ensure that it achieves planned 

accomplishments within the prescribed timeframes and take action necessary to ensure compliance with 

ARRA requirements. (Audit Report: 2010-NY-1803)

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Chapter 5 - American Recovery and Reinvestment Act of 2009
Native American Housing Block Grant Audits and Reviews 

HUD OIG reviewed HUD’s FERA for ARRA funding for Native American Block Grant housing 

programs to determine whether the FERA complied with the Office of Management and Budget’s (OMB) 

guidance for implementation of ARRA; ARRA’s streamlined FERA process; and HUD Handbook 1840.1, 

Departmental Management Control Program.

The FERA was generally prepared in accordance with OMB requirements, and the ARRA programs 

are similar to the existing Native American Housing Assistance and Self-Determination Act of 1996 

(NAHASDA) program. In addition, the overall risks will be similar to those under NAHASDA, except 

for those associated with the additional workloads. The FERA stated that HUD planned to fill 34 existing 

vacancies and hire an additional 12 temporary employees to meet the increased reporting requirements 

and other responsibilities under ARRA. However, if HUD hires a significant number of new staff, it will 

need to ensure that the new staff members receive sufficient and timely training to be effective in the 

administration and oversight of ARRA funds. (Audit Report: 2010-LA-0802)

ppp

HUD OIG completed a capacity review of the Department of Hawaiian Home Lands in Oahu, HI, 

regarding its ARRA funding to determine whether the Department had sufficient capacity to manage and 

administer its funding. Specifically, OIG reviewed and assessed the Department’s capacity in the following 

areas: internal controls, financial operations, and procurement. 

The Department generally had sufficient capacity to manage its ARRA funding. However, it could 

improve its controls by (1) developing a more comprehensive set of written policies and procedures to 

describe its drawdown and disbursement process, (2) ensuring that its contractors have not been debarred 

or suspended before awarding federally funded contracts, (3) obtaining tax clearance certificates from 

its subcontractors, and (4) performing adequate reviews of weekly certified payrolls to ensure that its 

contractors and subcontractors pay their employees proper wages and fringe benefits in accordance with 

the Davis-Bacon Act and Hawaii Revised Statutes. 

OIG recommended that HUD require the Department to ensure that it (1) develops detailed written 

policies and procedures regarding its drawdown and disbursement process, (2) performs a search on the 

General Services Administration’s Excluded Parties List System and the State of Hawaii’s List of Debarred 

and Suspended Persons before it awards its federally funded contracts, (3) obtains tax clearance forms to 

show that all delinquent taxes against the contractor’s subcontractor have been paid, and (4) performs 

adequate reviews of the weekly certified payrolls in compliance with the Davis-Bacon Act and Hawaii 

Revised Statutes. (Audit Report: 2010-LA-1005)

ppp

HUD OIG conducted a capacity review of the operations of the Navajo Housing Authority in Ft. 

Defiance, AZ, to evaluate the Authority’s capacity to administer its ARRA funds and identify related 

potential internal control weaknesses that could impact its ability to properly administer the funds. 

Although OIG did not find evidence indicating that the Authority lacked the basic capacity to administer 

its ARRA funding, it did identify some concerns that could impact the Authority’s ability to meet the 

ARRA obligation and expenditure timeframes and ensure that its funds are expended in accordance with 

program requirements.

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Chapter 5 - American Recovery and Reinvestment Act of 2009
OIG recommended that HUD (1) provide additional monitoring and technical assistance related to the 

Authority’s implementation of the ARRA project, as needed, to ensure that the Authority has the appropriate 

capacity to properly administer its ARRA funds and (2) require the Authority to review its written policies 

and procedures and adapt them to address construction contractor procurement and monitoring. (Audit 

Report: 2010-LA-1801)

Community Development Block Grant Audits and Reviews 

HUD OIG reviewed the City of Saginaw, MI’s Community Development Block Grant (CDBG) program 

under ARRA to determine whether the City had the capacity to effectively and efficiently administer its 

CDBG program under ARRA. 

The City’s capacity to effectively and efficiently administer its CDBG program under ARRA had 

weaknesses. Specifically, the City (1) did not have documentation, such as a use survey, to support that 

work associated its program principally benefited Saginaw’s low- to moderate-income residents; (2) 

lacked a work completion schedule in its program contract; (3) did not follow HUD’s regulations and its 

own requirements for monitoring the program project; and (4) had not established sufficient policies and 

procedures for its CDBG program under ARRA.

OIG recommended that HUD require the City to provide documentation, such as a use survey, to 

support that the nearly $336,000 in CDBG funds under ARRA principally benefitted the City’s low- to 

moderate-income residents. If the City cannot provide supporting documentation, it should amend its 

substantial amendment to remove the program project and include an eligible activity or activities that meet 

one of HUD’s three national objectives. OIG also recommended that HUD require the City to implement 

adequate policies, procedures, and controls to ensure that CDBG funds under ARRA are used effectively 

and efficiently and in accordance with applicable requirements. (Audit Report: 2010-CH-1804)

ppp

HUD OIG audited the City of Jersey City, NJ’s capacity to administer CDBG funding provided 

under ARRA to evaluate the City’s capacity in the areas of internal controls, eligibility, financial controls, 

procurement, and output/outcomes in administering CDBG funds.

The City generally had adequate financial controls and staff capacity to administer its CDBG funds; 

however, it needs to strengthen its controls to ensure that it will be able to effectively administer CDBG 

funds provided under ARRA and comply with applicable requirements. Specifically, the City did not (1) 

ensure that costs charged to CDBG planning and administration by its subgrantee were reasonable and 

necessary and (2) have adequate procedures to ensure compliance with procurement requirements. 

OIG recommended that HUD instruct the City to strengthen its controls and (1) repay nearly $62,000 in 

ineligible costs charged to CDBG planning and administration, (2) support the allocability of nearly $118,000 

in planning and administration costs charged to the CDBG program, and (3) ensure that procurements are 

conducted in accordance with all Federal requirements. (Audit Report: 2010-NY-1007)

ppp

HUD OIG performed a review of the City of Grand Prairie, TX’s operations to evaluate its capacity to 

administer the $3.2 million received under the Housing and Economic Recovery Act of 2008 and ARRA. 

Specifically, OIG’s objective was to review and assess the City’s capacity and risks in the following areas: 

basic internal controls, financial operations, and procurement. Generally the City maintained capacity to 

administer its ARRA funding. 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
OIG recommended changes regarding potential favoritism and conflicts of interest and the inclusion of 

ineligible expenses in ARRA programs. Also, the City needs to improve its HOME Investment Partnerships 

Program (HOME), contracting and payment processes, and policies and procedures. (Audit Report: 

2010-FW-1803)

ppp

HUD OIG conducted a capacity review of the City of East Cleveland, OH’s operations to determine 

whether there was evidence to indicate that the City lacked the capacity to adequately administer its ARRA 

funding. 

The City had sufficient capacity to effectively and efficiently administer its ARRA CDBG program. 

This determination does not reflect a finding of sufficient capacity to administer its regular CDBG, 

HOME, or Neighborhood Stabilization (NSP) programs. OIG made no recommendations. (Audit Report: 

2010-CH-1802)

ppp

HUD OIG reviewed the State of Arkansas’s controls and operations to determine whether the State 

had the capacity to account for ARRA funding and the controls to ensure that its recipients expend those 

funds for eligible program activities. The State is scheduled to receive more than $15.67 million under 

ARRA. The State had the capacity and management controls to account for ARRA funding and ensure that 

its recipients spend the funds for eligible program activities within the allotted time. Therefore, OIG made 

no recommendations. (Audit Report: 2010-FW-1801)

ppp

HUD OIG conducted a capacity review of the operations of the City of San Antonio, TX, to determine 

whether the City had the capacity to account for ARRA funds and the controls to ensure that it expends 

those funds only for eligible program activities. The City appeared to have the capacity to adequately 

administer its ARRA funding. It had written policies and procedures, a staffing plan including adequate 

segregation of duties, and a plan for using ARRA funding. OIG recommended that HUD closely monitor 

the City’s spending of ARRA funds based on HUD’s risk assessment of the City’s other HUD programs. 

(Audit Report: 2010-FW-1802)

ppp

HUD OIG reviewed HUD’s Office of Community Planning and Development’s (CPD) risk assessment 

process to determine whether CPD had established and properly implemented a risk assessment process 

that used appropriate measures to determine risk and identify grantees for monitoring.

CPD had established and implemented a risk assessment process that used relevant assessment factors 

to determine risk and identify grantees for monitoring. Additionally, the risk analyses prepared annually 

were used to select grantees for later monitoring. OIG made no recommendations since no reportable 

deficiencies were identified. (Audit Report: 2010-BO-0002)

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Chapter 5 - American Recovery and Reinvestment Act of 2009
Neighborhood Stabilization Program Audits and Reviews 

HUD OIG reviewed Hillsborough County, FL, to determine whether the County had the capacity to 

effectively and efficiently administer its NSP and whether it accurately reported HOME commitments in 

HUD’s Integrated Disbursement and Information System (IDIS).

The County had the capacity to administer its NSP. It had made substantial and effective revisions to 

its organization and staffing to correct many of the past performance problems identified by HUD and its 

own internal assessments. It had (1) established and implemented adequate NSP procedures, (2) followed 

proper procedures in the procurement of contract services, (3) hired or was in the process of hiring an 

adequate number of qualified staff, and (4) arranged for other County departments to assist with NSP 

workload and was progressing in carrying out its NSP.

As of October 1, 2009, the County had not entered any obligations or expenditures into HUD’s Disaster 

Recovery Grant Reporting (DRGR) system. In addition, its staff had not obtained training on the use of the 

system, and its policy did not address timeliness for entering and reporting obligations and expenditures 

in the system. In addition, the County’s DRGR policy did not define what constituted an NSP obligation 

and the documentation required to properly support an obligation.

The County had a past problem with making inaccurate commitment entries into IDIS. OIG identified 

more than $748,000 in incorrect commitment entries made to IDIS before the County improved its controls. 

Due to the inaccurate entries, more than $61,000 is subject to recapture by HUD.

OIG recommended that HUD require the County to (1) mandate that all staff with DRGR responsibilities 

complete in-house and/or HUD-assisted training on use of the system to ensure timely and proper entry 

of NSP obligations, expenditures, and performance reporting; (2) amend its draft DRGR policy to include 

timeliness for entering and reporting NSP obligations and expenditures, defining what constitutes an NSP 

obligation, and the type of documentation to be kept to support NSP obligations; and (3) recapture more 

than $61,000 in HOME funds that the County did not commit by the 24-month statutory deadline. (Audit 

Report: 2010-AT-1803)

ppp

HUD OIG conducted a capacity review of the City of Waterbury, CT’s Waterbury Development 

Corporation’s operations to determine whether the Corporation (subrecipient) had sufficient capacity to 

adequately administer the the City’s NSP funds. The City is a subgrantee of the State of Connecticut, 

Department of Economic and Community Development (grantee). 

The subrecipient needs to improve its capacity to effectively administer NSP funds provided through 

the Housing and Economic Recovery Action of 2008 (HERA). The subrecipient (1) had inadequate 

staffing, (2) had an inadequate selection process for approving NSP applicants, (3) may have delays in 

completing projects, (4) had inadequate support for the scope of work developed for two projects, (5) had 

an inadequate procurement process, (6) will not meet performance goals for its rehabilitation activities, 

and (7) did not properly charge NSP expenses to the program. As a result, the subrecipient may not meet 

program requirements and its goals for NSP.

OIG recommended that HUD require the grantee to ensure that the subgrantee/subrecipient (1) 

implements adequate policies, procedures, and controls to ensure that NSP funds are used effectively, 

efficiently, and in accordance with applicable requirements; (2) hires additional staff, as needed, to assist 

in administrating NSP to ensure that the subrecipient has sufficient capacity to effectively and efficiently 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
administer program funds; (3) strengthens its procurement controls to ensure that it follows the subgrantee’s 

and Federal policies when procuring services; (4) submits an amendment to its NSP local action plan 

reducing the number of units to be completed for its acquisition and rehabilitation activities; and (5) 

requests comments from the Connecticut State Historical Preservation Office for properties approved for 

NSP rehabilitation funding that are not in accordance with the Secretary of the Interior’s Rehabilitation 

Standards and Guidelines. 

OIG also recommended that HUD (1) perform additional monitoring and provide technical assistance 

to the subrecipient, as needed, to ensure that the subrecipient properly administers the NSP funding in 

accordance with Federal requirements and (2) review salaries charged by staff to determine whether costs 

were properly charged to HUD programs and require the subrecipient to make adjustments to its direct 

and indirect expenses as necessary. (Audit Report: 2010-BO-1004)

ppp

HUD OIG evaluated the capacity of Miami-Dade County, FL, to administer $62.2 million in NSP funds 

awarded to it under HERA. 

The following issues were identified: (1) the County did not execute agreements between County 

departments, (2) existing policies and procedures did not address NSP requirements, (3) adequate supporting 

documentation for an NSP activity was not maintained, and (4) NSP expenditures were improperly classified. 

These weaknesses could adversely affect the County’s capacity to administer its NSP funds. 

OIG recommended that HUD require corrective action on the deficiencies. (Audit Report: 2010-AT-1801)

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HUD OIG conducted a capacity review of the City of Atlanta, GA, to determine whether the City had 

the capacity to effectively and efficiently administer its NSP. The City received a $12.3 million NSP grant 

from HUD that was authorized under Title III of HERA and had applied for an additional $57.9 million in 

NSP funds under ARRA.

The City had developed the organizational structure needed to administer its NSP and hired a 

sufficient number of qualified staff to implement the program. However, it needs to expedite actions to 

meet the program’s 18-month obligation deadline due to delays in executing implementation contracts and 

obligating funds, past performance problems, procurement inconsistencies, and a lack of procedures for 

some components of its NSP. 

OIG recommended that HUD require the City to (1) expedite the implementation of the remaining 

$10.9 million approved for NSP activities; (2) expedite execution of implementation contracts with 

developers or subrecipients; (3) review and verify the accuracy of evaluator scores for leveraged funds 

and fund commitments for all contractors and determine whether further action is needed; (4) amend 

executed contracts to include leveraged funds if the contractor(s) competed for funding based on the City’s 

leveraging requirement and proposed to provide leveraged funds and the City evaluated the contractor(s) 

proposal against other contractors, giving consideration to proposed leveraging; (5) develop and implement 

procedures for land banking; and (6) implement procedures for (a) entering and monitoring obligations 

in HUD’s reporting system, (b) demolition, and (c) tracking program income in HUD’s reporting system. 

(Audit Report: 2010-AT-1802)

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Chapter 5 - American Recovery and Reinvestment Act of 2009
In accordance with OIG’s goal to review and ensure the proper administration of NSP funds provided 

under HERA and/or ARRA, OIG conducted a capacity review of the operations of the State of Vermont’s 

Agency of Commerce and Community Development, which has responsibility for administering the State’s 

NSP. OIG’s objective was to determine whether the Agency had the necessary capacity to effectively and 

efficiently administer the NSP funds provided through HERA. OIG made no recommendations. (Audit 

Report: 2010-BO-1801)

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HUD OIG conducted a capacity review of the operations of the State of Maine’s Office of Community 

Development, which is responsible for administering the State’s NSP, to determine whether the Office 

had the capacity to adequately administer the State’s NSP funds provided through HERA. There were no 

findings. Therefore, OIG made no recommendations. (Audit Report: 2010-BO-1802)

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HUD OIG reviewed Wayne County, MI’s NSP to determine whether the County had the capacity to 

effectively and efficiently administer its NSP. Congress amended NSP and increased its funding as part 

of ARRA. As part of a consortium, the Wayne County Land Bank Corporation, which is controlled by the 

County, submitted an application to HUD, dated July 13, 2009, that totaled $290 million in additional NSP 

funds under ARRA. The application is under review by HUD.

The County needs to improve its capacity to effectively and efficiently administer its NSP. Specifically, 

the County (1) did not ensure that the Corporation fully complied with HUD’s regulations for full and 

open competition regarding the procurement of project management services for its NSP, (2) had not 

established sufficient policies and procedures for its program as of December 16, 2009, and (3) provided a 

detailed fiscal years (FY) 2010 through 2013 budget for planning and administrative costs that exceeded 10 

percent of its total NSP grant and its revised NSP budget for planning and administrative costs by more 

than $18,000. Lastly, HUD did not include sufficient special conditions in its NSP grant agreement with 

the County. 

OIG recommended that HUD require the County to perform a formal cost analysis to determine 

whether the $1.2 million was reasonable for the project management services to be provided. The County 

should also submit the analysis to HUD for review and approval. If the County does not perform a formal 

cost or prices analysis, it should not use HUD funds to pay for the management services. If the County 

performs a formal analysis and determines that a reasonable cost for the management services was less 

than $1.2 million, it should amend its written agreement with Community Improvement Group for the 

amount determined to be reasonable. If Community Improvement Group will not agree to amend the 

agreement, the County should void the agreement and reprocure the management services in accordance 

with HUD’s regulations. (Audit Report: 2010-CH-1801)

 ppp

HUD OIG conducted a capacity review of the County of Riverside, CA’s NSP to determine whether 

the County had the capacity and necessary controls to manage and administer the program. The County 

was awarded $48.6 million in NSP funds.

The County generally had sufficient capacity to administer its allocation of NSP funds. It had applied 

for additional funding under ARRA to continue its program activities, and its procedures and controls 

should be adequate to administer the continuation of the program. However, the County could improve 

internal controls for NSP activities by developing separate, specific, and well-documented policies and 

procedures for acquisition, rehabilitation, and resale/rental activities. 

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OIG recommended that HUD require the County to create and maintain policies and procedures 

specific to NSP acquisition activities. (Audit Report: 2010-LA-1004)

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HUD OIG completed a capacity review of the City of Fresno, CA’s NSP to determine whether the City 

had sufficient capacity and the necessary controls to manage and administer the program. 

The City had sufficient management controls to ensure that grant funds were used for eligible purposes 

and disbursements were fully supported. However, it may not be capable of obligating program funds 

for eligible activities within 18 months as required. It took the City more than 7 months from receipt of 

the grant and 4 months from selection of subcontractors/developers to execute contracts with the four 

entities selected to carry out program activities. Further, the program requires grantees to set aside 25 

percent of grant funds to benefit individuals and families that earn no more than 50 percent of area median 

income. As of the end of November 2009, the City had not developed an action plan, nor had it selected a 

subgrantee for this activity. 

OIG recommended that HUD provide the City with technical assistance and oversight to ensure that 

program funds are obligated within 18 months. (Audit Report: 2010-LA-1006)

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HUD OIG completed a capacity review of the County of San Bernardino, CA’s NSP to determine 

whether the County had sufficient capacity and the necessary controls to manage and administer the 

program. 

The County generally had questionable capacity to administer its allocation of NSP funds. It had 

difficulty committing and spending the funds in a timely manner and had not been on track to meet 

the required 18-month obligation deadline, having obligated zero dollars toward its NSP activities. In 

addition, it could improve internal controls for its two rental property acquisition and rehabilitation NSP 

activities and program monitoring by developing separate, specific, and well-documented policies and 

procedures for those activities. 

OIG recommended that HUD require the County to (1) reevaluate its current strategies and consider 

modifications, including pursuing other, more attainable NSP activities, and/or immediately return any 

NSP funds to HUD that are not anticipated to be obligated by the 18-month deadline; (2) obtain technical 

assistance from HUD; (3) create and maintain policies and procedures specific to the NSP acquisition and 

rehabilitation of rental property activities; and (4) create and maintain policies and procedures specific to 

NSP-monitoring activities. (Audit Report: 2010-LA-1007)

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HUD OIG audited HUD’s controls over special conditions in NSP grant agreements under Title III of 

HERA, as amended, to determine whether HUD ensured that its CPD field offices were consistent in their 

consideration and inclusion of special conditions in NSP grant agreements with high-risk grantees.

HUD’s field offices used different procedures for including special conditions in NSP grant agreements 

under HERA. HUD did not ensure that the field offices were consistent in their consideration and inclusion 

of special conditions in NSP grant agreements with high-risk grantees.

OIG recommended that HUD determine whether NSP grantees under HERA are high risk by 

considering grantees’ past performance or other serious actions in their HOME, Emergency Shelter Grant, 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
and Supportive Housing programs. If the NSP grantees are high risk, they should be required to develop 

and implement management plans for their NSP that will include but not be limited to describing how 

unresolved HOME, Emergency Shelter Grant, and/or Supportive Housing program performance issues 

were resolved or are being resolved and explain whether the issues will impact the administration of their 

NSP. (Audit Report: 2010-CH-0001)

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HUD OIG reviewed the capacity of the City of Los Angeles, CA’s Housing Department to determine 

whether the City had sufficient capacity and the necessary controls to manage and administer NSP funds 

under HERA and ARRA. The City generally had sufficient capacity to adequately administer its NSP 

funding. OIG made no recommendations, and no further action is necessary. (Audit Report: 2010-LA1008)

ppp

HUD OIG audited Broward County, FL, to determine whether the County had the necessary controls to 

administer its NSP in accordance with HERA. Specifically, OIG evaluated whether the County had adequate 

(1) management controls to ensure that activities met NSP objectives and (2) financial controls to ensure that 

obligations were timely and valid and expenditures were allowable and properly reported. 

The County had (1) adequate management controls to ensure that activities met NSP objectives and 

(2) adequate financial controls to ensure that obligations were timely and valid and expenditures were 

allowable. However, it did not accurately report NSP financial information to HUD and incorrectly 

posted NSP expenditures to the wrong fiscal year in its financial management system. As a result, HUD 

had no assurance of the County’s actual financial progress, and the County overstated its obligations and 

expenditures in its financial management system. In addition, it did not post first and second quarter NSP 

performance reports to its Web site in a timely manner. 

OIG recommended that HUD require the County to (1) establish controls to reconcile NSP obligations and 

expenditures between HUD’s DRGR and the County’s financial management system, (2) strengthen controls 

to ensure that all NSP activities are properly reported in DRGR and the County’s financial management 

system on a timely basis, and (3) post its NSP quarterly performance reports on its Web site in a timely 

manner. (Audit Report: 2010-AT-1002)

Office of Healthy Homes – Lead Hazard Control Audit and Review

HUD OIG audited HUD’s selection procedures used to award lead hazard grants to determine whether 

HUD awarded (1) ARRA funds in accordance with the selection criteria specified in the FY 2008 notices of 

funding availability and ARRA and (2) FY 2008 funds in accordance with the selection criteria.

HUD did not have adequate controls to ensure that only qualified applicants were selected to receive 

grant funds. As a result, it improperly awarded $1.9 million in ARRA funds to the City of Greenville, NC, 

and nearly $875,000 to Healthy Homes Resources. In addition, HUD improperly awarded $3 million in FY 

2008 funds to the City of Cincinnati, OH.

OIG recommended that HUD (1) rescind the $2.8 million in ARRA funds that was improperly awarded 

to Greenville and Healthy Homes Resources, ensure that the selection procedures are followed, and take 

appropriate actions against employees and (2) rescind the $3 million in FY 2008 funding that was awarded 

to Cincinnati, ensure that the application review panels follow threshold review requirements when 

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Chapter 5 - American Recovery and Reinvestment Act of 2009
determining eligibility, and take appropriate action against employees who circumvented the regulations. 

(Audit Report: 2010-HA-0001)

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HUD OIG conducted a capacity review of the City of Utica, NY’s administration of its lead-based paint 

hazard control program to evaluate the City’s capacity in the areas of internal controls, eligibility, financial 

controls, procurement, and outputs/outcomes to effectively administer its lead hazard control program 

funds provided under ARRA in accordance with applicable requirements. The City was awarded $2.04 

million under ARRA to carry out lead-based paint hazard control activities in privately owned homes. 

The City had the capacity to effectively administer its lead hazard grant funds provided under ARRA. 

Therefore, OIG made no recommendations. (Audit Report: 2010-NY-1801)

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Chapter 5 - American Recovery and Reinvestment Act of 2009
Investigations

The investigation below was conducted jointly with other Federal and local law enforcement agencies. 

Theft/Embezzlement

Debora Kessah, a former HUD Homelessness Prevention and Rapid Re-Housing Program case worker 

for the Society of St. Vincent DePaul, an organization that receives HUD Emergency Shelter Grants, was 

indicted in Hamilton County Court of Common Pleas, Cincinnati, OH, for allegedly committing theft. 

From August to September 2009, Kessah allegedly created false documents and fraudulently obtained 

about $1,900 in rental assistance payments. 

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Chapter 5 - American Recovery and Reinvestment Act of 2009

Inspections & Evaluations

Recovery Accountability and Transparency Board Survey of 

Contracts and Grants Workforce Staffing and Qualifications – 

Evaluation of Reported Staffing Levels

HUD OIG conducted an evaluation of HUD’s September 2009 response to questions posed by the 

Recovery Accountability and Transparency Board’s (Board) survey of staff resources dedicated to 

ARRA. The evaluation objective was to determine whether the reported number of HUD contract and 

grant personnel responsible for ARRA funding and oversight could be validated and relied on for public 

disclosure.

The full-time-equivalent (FTE) staffing levels submitted in response to the Board survey could not 

be validated. The reported FTE staffing levels reflected “informed estimates” by headquarters program 

management of ARRA activities. Documentation was not available to support the estimates because HUD 

does not directly track workforce time and activity for each pay period. A comparison of FTE estimates 

from the survey for the third quarter of FY 2009 to ARRA activity reported in HUD’s Total Estimation and 

Allocation Mechanism for the same period disclosed material and unexplained differences in the staffing 

data reported by CPD and the Office of Public and Indian Housing (PIH). CPD and PIH are responsible for 

awarding and monitoring $11.26 billion (83 percent) of HUD’s $13.62 billion in ARRA funding. 

OIG recommended that HUD’s ARRA Implementation Team (1) working with the respective HUD 

offices/program areas, implement a verifiable process to account for ARRA staff time and (2) ensure that 

future responses to ARRA requests are supported by information that can be validated. (I&E Report No. 

IED-09-006) 

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Chapter 6

Disaster Relief

Oversight
In response to disasters, Congress has appropriated additional funding for the Community Development 

Block Grant (CDBG) programs as Disaster Recovery Assistance grants to rebuild the affected areas 

and provide crucial seed money to start the recovery process. Since fiscal year (FY) 2005, Congress has 

appropriated $32.4 billion in CDBG Disaster Recovery Assistance funding. This block grant assistance may 

fund a broad range of recovery activities. The U.S. Department of Housing and Urban Development (HUD) 

can help communities and neighborhoods that otherwise might not recover due to limited resources. Because 

CDBG programs include a broad list of eligible activities and allow for flexibility, communities and States 

affected by disasters have been able to undertake short-term disaster relief efforts, implement mitigation 

strategies, and finance long-term recovery activities. Further, Disaster Recovery Assistance grants often 

supplement disaster programs of the Federal Emergency Management Agency (FEMA), the Small Business 

Administration (SBA), and the U.S. Army Corps of Engineers. In addition to the audits, inspections, and 

investigations described in this chapter, the Office of Inspector General (OIG) has conducted a number of 

outreach efforts (see chapter 8, page 120). 

Audit

*The total disaster audits, questioned costs, and funds put to better use amounts include five audits conducted in the 

community planning and development area. 

Key program results Questioned costs Funds put to better use

Audit 5 audits* $10.7 million ---

HUD OIG audited the State of Iowa’s CDBG Disaster Recovery Assistance funds to determine whether 

the State ensured that the City of Cedar Rapids provided the funds only to eligible businesses and that these 

businesses did not receive duplicate Federal benefits.

The State misspent more than $10.5 million of its CDBG Disaster Recovery Assistance funding and 

failed to check for duplicate benefits before awarding the funds. It provided Disaster Recovery Assistance 

funds to 305 of 406 businesses without supporting their eligibility for funding. It also failed to verify that 

the 406 recipients did not receive duplicate benefits through any other program, insurance, or source before 

awarding the funds.

OIG recommended that HUD require the State to (1) provide documentation to support that $10.5 million 

in Disaster Recovery Assistance funds was paid to businesses in accordance with Iowa State law or reimburse 

the CDBG program from non-Federal sources for amounts that it cannot support and (2) perform oversight 

and monitoring of the disaster recovery activities in a timely manner. OIG also recommended that HUD 

require the State to perform a duplication of benefits check on all 406 businesses to ensure compliance with 

the Robert T. Stafford Disaster Relief and Emergency Assistance Act and repay any amounts that are found 

to have been duplicated. (Audit Report: 2010-KC-1001)

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HUD OIG audited the State of Louisiana, Office of Community Development, Recovery Workforce 

Training Program, administered by the State’s subrecipient, Louisiana Workforce Commission (LWC), Baton 

Rouge, LA, to determine whether the LWC, as the State’s subrecipient, (1) ensured that its subrecipients under 

agreement expended Program funds for eligible expenses and (2) adequately monitored its subrecipients 

under agreement.

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Chapter 6 - Disaster Relief Oversight
The LWC did not always ensure that its subrecipients under agreement expended Program funds 

for eligible and supported expenses. In addition, it did not maintain adequate internal controls over the 

Program’s financial management. Specifically, the LWC did not (1) ensure that reimbursements were 

consistent with approved budgets before disbursing funds, (2) review its subrecipients’ reimbursements 

for compliance with agreement requirements or Federal regulations, or (3) maintain adequate records to 

support the eligibility of reimbursed costs. As a result, the State misspent nearly $148,000 for ineligible and 

unsupported costs. Further, although the State generally provided technical assistance, the LWC did not 

always adequately monitor its subrecipients under agreement or submit quarterly reports to the State that 

included all required performance data. Without this monitoring and compliance assurance, the State could 

not effectively monitor the Program’s progress and ensure that Program goals were met and deliverables 

were provided as required.

OIG recommended that HUD require the State to repay ineligible costs totaling more than $2,000 and 

support or repay unsupported costs totaling more than $145,000. In addition, the State must ensure that 

the LWC (1) completes its subrecipient agreement amendments in a timely manner; (2) ensures that its 

subrecipients comply with the approved budgets; (3) receives periodic reviews to ensure that it maintains 

documentation that accurately and adequately identifies and accounts for all Program funds disbursed; (4) 

implements adequate internal controls to ensure that sufficient reimbursement reviews are conducted; and 

(5) implements procedures to ensure that its subrecipients comply with laws, regulations, and agreement 

terms. Further, the State must (1) ensure that the LWC conducts and maintains documentation of onsite 

monitoring for all subrecipients, (2) ensure that the LWC maintains adequate staffing levels to ensure that 

sufficient onsite monitoring visits are conducted, (3) clearly convey and document its expectations to the 

LWC pertaining to onsite monitoring, and (4) ensure that the LWC submits quarterly report data required by 

the interagency agreement or formally amends the reporting requirements. (Audit Report: 2010-AO-1002)

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HUD OIG audited the Lower Manhattan Development Corporation’s (auditee) administration of the 

$2.783 billion in CDBG Disaster Recovery Assistance funds provided to the State of New York in the aftermath 

of the September 11, 2001, terrorist attacks on the World Trade Center in New York City, NY. The auditee 

disbursed approximately $50.3 million of these funds during the audit period, October 1, 2008, through 

March 31, 2009. The objectives of the audit were to determine whether the auditee (1) disbursed Disaster 

Recovery Assistance funds in accordance with the guidelines established under HUD-approved partial 

action plans, (2) expended Disaster Recovery Assistance funds for eligible administration and planning 

expenses in accordance with applicable laws and regulations, and (3) had a financial management system 

in place that adequately safeguarded funds and prevented misuse. 

The auditee generally administered the grant funds reviewed in accordance with HUD regulations, 

expended funds for eligible planning and administrative expenses, and continued to maintain a 

financial management system that adequately safeguarded funds and prevented misuse. There were no 

recommendations. (Audit Report: 2010-NY-1001)

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HUD OIG completed the fourteenth audit in its ongoing review of the Lower Manhattan Development 

Corporation in New York, NY, regarding its administration of the $2.783 billion in CDBG Disaster Recovery 

Assistance funds provided to the State of New York in the aftermath of the September 11, 2001, terrorist 

attacks on the World Trade Center in New York City. During the audit period, April 1 through September 

30, 2009, the auditee disbursed $38.8 million of the $2.783 billion being administered. The objectives of this 

audit were to determine whether the auditee (1) disbursed Disaster Recovery Assistance funds in accordance 

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Chapter 6 - Disaster Relief Oversight
with the guidelines established under HUD-approved partial action plans, (2) expended Disaster Recovery 

Assistance funds for eligible administration and planning expenses in accordance with applicable laws and 

regulations, and (3) had a financial management system in place that adequately safeguarded funds and 

prevented misuse. 

The auditee generally (1) disbursed CDBG Disaster Recovery Assistance funds in accordance with the 

guidelines established under HUD-approved partial action plans and applicable laws and regulations, (2) 

expended CDBG Disaster Recovery Assistance funds for eligible planning and administrative expenses in 

accordance with applicable laws and regulations, and (3) had a financial management system in place that 

adequately safeguarded funds and prevented misuse. Therefore, for the disbursements reviewed during the 

audit, HUD had assurance that the CDBG Disaster Recovery Assistance funds were properly administered. 

OIG had no recommendations, and no further action is needed. (Audit Report: 2010-NY-1008)

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HUD OIG conducted a review of the State of Mississippi, a $5.5 billion CDBG disaster recovery grantee, 

to determine whether the State ensured that (1) public housing authorities provided quarterly progress 

reports in compliance with their subrecipient agreements and (2) the agreements for its authorities complied 

with HUD minimum requirements. 

Although the State generally ensured that the agreements complied with HUD’s minimum requirements, 

it did not always ensure that authorities complied with their agreements. Of 22 reports reviewed, none 

complied with the agreement. In addition, the State did not always ensure that the reports were complete 

and submitted by the established due dates. 

OIG recommended that HUD require the State to (1) develop and implement written policies and 

procedures for the review and verification of information in the reports, (2) ensure that subrecipients fully 

comply with their agreements by including all information required in the reports, and (3) implement a 

system or process for tracking the submission of the reports to ensure compliance with the agreements. 

(Audit Report: 2010-AO-1001)

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Chapter 6 - Disaster Relief Oversight
The HUD OIG Office of Investigation continues to pursue HUD disaster assistance crimes with other 

law enforcement agencies, including the Federal Bureau of Investigation and other Federal, State, and local 

partners. While the majority of prosecutions during this reporting period involved fraudulent disaster 

assistance provided to individuals, OIG is vigorously pursuing public corruption, infrastructure, and 

procurement crimes. Working with the Louisiana Recovery and Mississippi Development Authorities, 

OIG is taking a proactive role to prevent fraudulent disaster-related claim payments and to assist with the 

recovery of deceptive or fraudulent grants. In addition, HUD OIG continues to be a dedicated partner in 

the National Center for Disaster Fraud Task Force (previously known as the Hurricane Katrina Fraud Task 

Force). HUD OIG provides personnel to support the joint command center in Baton Rouge, LA, continues to 

support disaster-related investigative efforts throughout the country, and actively participates in the sharing 

of information and the receipt and referral of complaints with other law enforcement agencies.

Homeowner Grant Fraud

Jerome and Catherine Foreman were collectively sentenced in U.S. District 

Court, Gulfport, MS, to 39 months incarceration and 4 years supervised release 

and ordered to perform 200 hours of community service and jointly pay the 

Mississippi Development Authority (MDA) $150,000 and FEMA $6,706 in 

restitution for their earlier convictions of making false statements and claims 

and committing theft of government funds. Jerome and Catherine Foreman 

applied for and received $150,000 in CDBG Disaster Recovery Assistance funds 

through the MDA and $6,706 in FEMA disaster assistance for hurricane-damaged 

residential property, but the damaged property was not their primary residence 

during Hurricane Katrina. 

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Denise Gibbons-Stobaugh and Kenneth Stobaugh each pled guilty in U.S. 

District Court, New Orleans, LA, to committing theft of government funds or 

misprision of a felony. Gibbons-Stobaugh applied for and received $150,000 in 

CDBG Disaster Recovery Assistance funds through the Louisiana Road Home 

(Road Home) program and $38,800 in SBA disaster assistance after she claimed 

extensive property damage from Hurricane Katrina, but the property sustained 

only minimal storm damage. Stobaugh helped Gibbons-Stobaugh conceal the 

extent of the property storm damage. 

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Investigation

(2009) The Times-Picayune 

Publishing Co. All rights 

reserved. Used with 

permission of the 

Times-Picayune.

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Chapter 6 - Disaster Relief Oversight
Lionel Perkins was charged in a superseding indictment filed in U.S. District Court, New Orleans, 

LA, with allegedly committing theft of government funds; aggravated identity theft; and Social Security 

Administration, Medicaid, and wire and health care fraud. Perkins applied for and received $150,000 in 

CDBG Disaster Recovery Assistance funds through the Road Home program and caused the Road Home 

administrator to remit $58,500 in CDBG funds to repay his SBA disaster assistance loan, but allegedly the 

damaged property was not his primary residence during Hurricane Katrina. In addition, Perkins allegedly 

applied for and fraudulently obtained Social Security, Medicaid, food stamps, and other benefits. 

ppp

Robert Lombardino was sentenced in U.S. District Court, New Orleans, LA, to 3 years probation and 6 

months home confinement and ordered to pay the Louisiana Office of Community Development $113,865 

in restitution for his earlier guilty plea to committing theft of government funds. Lombardino applied for 

and received $134,000 in CDBG Disaster Recovery Assistance funds through the Road Home program for 

hurricane-damaged residential property, but the damaged property was not his primary residence during 

Hurricane Katrina. 

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Barbara Dowl was sentenced in U.S. District Court, New Orleans, LA, to 69 months incarceration and 3 

years supervised release and ordered to pay the Louisiana Office of Community Development $154,761 in 

restitution for her earlier conviction of making false statements and committing theft of government funds 

and wire fraud. Dowl applied for and received $132,000 in CDBG Disaster Recovery Assistance funds 

through the Road Home program for hurricane-damaged residential property, but Dowl did not own the 

damaged property during Hurricane Katrina. 

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Louis Stiglet was sentenced in U.S. District Court, Gulfport, MS, to 6 months home confinement and 

3 years probation, ordered to pay the MDA $131,021 in restitution, and fined $20,000 for his earlier guilty 

plea to making false statements and claims. Stiglet applied for and received $131,021 in CDBG Disaster 

Recovery Assistance funds through the MDA for hurricane-damaged residential property, but the damaged 

property was not his primary residence during Hurricane Katrina. 

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(2009) The Times-Picayune Publishing Co. All rights reserved. Used with permission of the Times-Picayune.

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Chapter 6 - Disaster Relief Oversight
Frederick Rabito pled guilty in U.S. District Court, New Orleans, LA, to making false statements. 

Rabito applied for and received $122,397 in CDBG Disaster Recovery Assistance funds through the Road 

Home program for hurricane-damaged residential property, but the damaged property was not his primary 

residence during Hurricane Katrina. 

ppp

Thomas Steele pled guilty in U.S. District Court, New Orleans, LA, to making false statements. Steele 

applied for and received $119,935 in CDBG Disaster Recovery Assistance funds through the Road Home 

program for hurricane-damaged residential property, but the damaged property was not his primary 

residence during Hurricane Katrina. 

 

ppp

Ryant Price pled guilty in U.S. District Court, New Orleans, LA, to committing theft of government 

funds. Price applied for and received $105,000 in CDBG Disaster Recovery Assistance funds through the 

Road Home program for hurricane-damaged residential property, but the damaged property was not his 

primary residence during Hurricane Katrina. 

 

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Copyright 2009. The Advocate. Baton Rouge, LA. Reprinted with permission.

(2010) The Times-Picayune Publishing Co. All rights reserved. Used with permission of the Times-Picayune.

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Chapter 6 - Disaster Relief Oversight
Garrett Goodbee was charged in U.S. District Court, New Orleans, LA, with allegedly committing theft 

of government funds. Goodbee applied for and received $104,900 in CDBG Disaster Recovery Assistance 

funds through the Road Home program for hurricane-damaged residential property, but allegedly the 

damaged property was not his primary residence during Hurricane Katrina. 

ppp

William Turnage was charged in U.S. District Court, New Orleans, LA, with allegedly making a false 

statement to HUD. Turnage applied for and received $89,355 in CDBG Disaster Recovery Assistance 

funds through the Road Home program and $12,500 in FEMA disaster assistance for hurricane-damaged 

residential property, but allegedly the damaged property was not his primary residence during Hurricane 

Katrina. 

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Joseph Recasner was sentenced in U.S. District Court, New Orleans, LA, to 5 months incarceration, 6 

months home confinement, and 3 years probation and ordered to pay the Louisiana Office of Community 

Development $87,424 in restitution for his earlier guilty plea to making a false statement to HUD. Recasner 

applied for and received $87,424 in CDBG Disaster Recovery Assistance funds through the Road Home 

program for hurricane-damaged residential property, but the damaged property was not his primary 

residence during Hurricane Katrina. 

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Todd Northrop was sentenced in U.S. District Court, Gulfport, MS, to 10 months incarceration and 2 

years probation, ordered to perform 70 hours of community service and pay FEMA $21,756 in restitution, 

and fined $3,000 for his earlier guilty plea to committing mail fraud. Northrop applied for and received 

$21,756 in FEMA disaster assistance and attempted to obtain $81,133 in CDBG Disaster Recovery Assistance 

funds through the MDA for hurricane-damaged residential property, but the damaged property was not 

his primary residence during Hurricane Katrina. 

ppp

Charles Thonn was sentenced in U.S. District Court, New Orleans, LA, to 4 years probation, ordered to 

pay the Louisiana Office of Community Development $80,368 in restitution, and fined $3,000 for his earlier 

guilty plea to committing theft of government funds. Thonn applied for and received $80,368 in CDBG 

Disaster Recovery Assistance funds through the Road Home program for hurricane-damaged residential 

property, but the damaged property was not his primary residence during Hurricane Katrina. 

ppp

Gordon and Mary Guidry were each charged in U.S. District Court, Jackson, MS, with allegedly 

making false statements and committing theft of government funds. Gordon and Mary Guidry applied for 

and received $69,742 in CDBG Disaster Recovery Assistance funds through the MDA and $6,706 in FEMA 

disaster assistance for hurricane-damaged residential property, but allegedly the damaged property was 

not their primary residence during Hurricane Katrina. 

ppp

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Chapter 6 - Disaster Relief Oversight
Wayne Manning pled guilty in U.S. District Court, New Orleans, LA, to making false statements. 

Manning applied for and received $64,877 in CDBG Disaster Recovery Assistance funds through the Road 

Home program for hurricane-damaged residential property, but the damaged property was not his primary 

residence during Hurricane Katrina. 

ppp

Sylvia Fleming was charged in U.S. District Court, Gulfport, MS, with allegedly committing theft of 

government funds and making false statements and claims. Fleming applied for and received $60,074 

in CDBG Disaster Recovery Assistance funds through the MDA and $26,200 in FEMA disaster assistance 

for hurricane-damaged residential property, but allegedly the damaged property was not her primary 

residence during Hurricane Katrina. 

ppp

Albert McCarty, Sr., pled guilty in U.S. District Court, New Orleans, LA, to committing theft of 

government funds. McCarty applied for and received $56,000 in CDBG Disaster Recovery Assistance 

funds through the Road Home program and $50,800 in SBA disaster assistance for hurricane-damaged 

residential property, but the damaged property was not his primary residence during Hurricane Katrina. 

ppp

Anita Belaire was sentenced in U.S. District Court, Lake Charles, LA, to 1 day incarceration and 3 

years probation and ordered to perform 100 hours of community service and pay the Louisiana Office of 

Community Development $55,600 in restitution for her earlier guilty plea to committing theft of government 

funds. Belaire applied for and received $55,600 in CDBG Disaster Recovery Assistance funds through the 

Road Home program for property that does not exist. 

ppp

Elizabeth Holiday pled guilty in U.S. District Court, New Orleans, LA, to 

committing theft of government funds. Holiday applied for and received $54,566 

in CDBG Disaster Recovery Assistance funds through the Road Home program 

for hurricane-damaged residential property, but the damaged property was not 

her primary residence during Hurricane Katrina. 

ppp

Robert Kirkland was charged in U.S. District Court, Jackson, MS, with 

allegedly making false statements and committing theft of government funds. 

Kirkland applied for and received $55,515 in CDBG Disaster Recovery Assistance 

funds through the MDA and $9,923 in FEMA disaster assistance for hurricanedamaged residential property, but allegedly the damaged property was not his 

primary residence during Hurricane Katrina. 

ppp

(2010) The Times-Picayune 

Publishing Co. All rights 

reserved. Used with 

permission of the 

Times-Picayune.

97

Chapter 6 - Disaster Relief Oversight
Tinika Ealy was sentenced in U.S. District Court, Baton Rouge, LA, to 3 years probation and fined 

$1,500 for her earlier guilty plea to committing wire fraud and accessory to commit wire fraud. Ealy 

applied for and received $50,000 in CDBG Disaster Recovery Assistance funds through the Road Home 

program, $94,000 in SBA disaster loan funds, and $4,469 in FEMA disaster assistance for hurricane-damaged 

business property she fraudulently claimed as her primary residence. 

ppp

Peter Weir was charged in U.S. District Court, Jackson, MS, with allegedly making false statements 

and committing theft of government funds. Weir applied for and received $41,797 in CDBG Disaster 

Recovery Assistance funds through the MDA and $26,200 in FEMA disaster assistance for hurricanedamaged residential property, but allegedly the damaged property was not his primary residence during 

Hurricane Katrina. 

ppp

Sharon Baker was charged in U.S. District Court, New Orleans, LA, with allegedly committing theft of 

government funds. Baker applied for and received $33,500 in CDBG Disaster Recovery Assistance funds 

through the Road Home program for hurricane-damaged residential property, but allegedly the damaged 

property was not her primary residence during Hurricane Katrina. 

ppp

Edward Toliver entered into a pretrial diversion filed in U.S. District Court, New Orleans, LA, and 

agreed to undergo 12 months supervised probation and perform 50 hours of community service. Toliver 

admittedly applied for and received $30,909 in CDBG Disaster Recovery Assistance funds through the 

Road Home program for hurricane-damaged residential property, but the damaged property was not his 

primary residence during Hurricane Katrina. 

ppp

Angelica and Carrie Williams were collectively sentenced in U.S. District Court, Baton Rouge, LA, to 6 

months home confinement and 10 years probation for their earlier guilty pleas to making false statements 

and claims or aiding and abetting. Angelica Williams applied for and received $28,966 in CDBG Disaster 

Recovery Assistance funds through the Road Home program for hurricane-damaged residential property, 

but Angelica Williams did not own the damaged property during Hurricane Katrina. Carrie Williams 

assisted Angelica Williams when she fraudulently claimed ownership of the hurricane-damaged property. 

ppp

Donelle Humphrey remitted $22,320 to the Louisiana Office of Community Development and was 

sentenced in U.S. District Court, New Orleans, LA, to 2 years probation and 6 months home confinement 

for her earlier guilty plea to making a false statement to HUD. Humphrey applied for and received $22,320 

in CDBG Disaster Recovery Assistance funds through the Road Home program for hurricane-damaged 

residential property, but the damaged property was not her primary residence during Hurricane Katrina.

HUD and FEMA Disaster Housing Assistance Fraud 

George Kinsler III, the former housing and residential director for NOAH Development Corporation 

(NOAH), an organization that receives HUD housing assistance funds, and Sheneiris Harris, a former 

West Palm Beach Housing Authority Hurricane Wilma Disaster Housing Assistance program participant, 

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Chapter 6 - Disaster Relief Oversight
were collectively sentenced in U.S. District Court, Pahokee, FL, to 31 months incarceration and 4 years 

supervised release and ordered to pay HUD, FEMA, and NOAH $75,500 in restitution for their earlier 

guilty pleas to making false statements and committing a conspiracy and theft from an organization 

receiving Federal funds. Kinsler used his position and fraudulently provided NOAH housing assistance 

to family members and friends, and Harris failed to report Kinsler’s residency in her subsidized housing 

unit. Together, Kinsler and Harris obtained $22,882 in housing and $24,961 in FEMA and other assistance 

they were not entitled to receive. 

ppp

Adrienne Breaux and Tamera King, Harris County Housing Authority (Harris County) Hurricane 

Katrina Disaster Housing Assistance program participants, were each indicted in the U.S. or 338th District 

Courts, Houston, TX, for allegedly making false statements and committing wire fraud, a conspiracy to 

submit false claims, or theft. In addition, former Harris County Disaster Housing Assistance program 

participant Odell Chambers was sentenced to 10 months incarceration and 3 years supervised release and 

ordered to pay FEMA $30,766 in restitution for his earlier guilty plea to committing a conspiracy to make 

false statements and claims and wire fraud. Breaux and King allegedly and Chambers admittedly used 

the identities or Social Security numbers belonging to others and fraudulently applied for and collectively 

obtained about $19,514 in housing and $92,890 in other disaster assistance. 

ppp

George Magee, a Housing Authority of New Orleans Section 8 tenant and Hurricane Katrina Disaster 

Housing Assistance program participant, pled guilty in U.S. District Court, New Orleans, LA, to committing 

theft of government funds and mail fraud. Magee submitted false documents and obtained $15,474 in 

disaster housing assistance he was not entitled to receive.

ppp

Urban Developers, LLC (Urban Developers), a New Britain Housing Authority (New Britain) landlord, 

pled guilty in U.S. District Court, Hartford, CT, to committing theft and conversion of public money. From 

December 2005 to November 2006, an agent for Urban Developers executed documents that enabled a New 

Britain Section 8 tenant to fraudulently obtain $13,749 in Hurricane Katrina disaster housing assistance at 

the same time she received New Britain Section 8 housing assistance. 

ppp

Christine Tate, a former New Britain Housing Authority Section 8 tenant, pled guilty in U.S. District 

Court, Hartford, CT, to making false statements. From September 2005 to November 2006, Tate applied for 

and received $3,742 in FEMA disaster assistance after she claimed Hurricane Katrina evacuee status, but 

Tate resided in Connecticut or Alabama during the storm.

FEMA and Other Fraud by HUD Tenants

Piquela Stelly, a former housing recipient at Wurzbach Manor Apartments (Wurzbach Manor), a HUDsubsidized multifamily housing development, was indicted in U.S. District Court, San Antonio, TX, for 

allegedly making false claims and committing theft of government funds. Stelly applied for and received 

$71,525 in FEMA disaster assistance after she claimed Hurricane Rita evacuee status, but Stelly allegedly 

maintained a subsidized housing lease at Wurzbach Manor during the storm. 

ppp

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Chapter 6 - Disaster Relief Oversight
Florence Randle, a Housing Authority of New Orleans Section 8 tenant, pled guilty in U.S. District 

Court, New Orleans, LA, to committing mail fraud. Randle fraudulently applied for and received $12,285 

in Red Cross disaster assistance funds. 

ppp

Stacie Ellerson, an East Baton Rouge Housing Authority (East Baton Rouge) public housing tenant, was 

sentenced in U.S. District Court, Baton Rouge, LA, to 5 years probation and ordered to pay FEMA $2,373 for 

her earlier guilty plea to making false statements and claims and committing wire fraud. Ellerson applied 

for and received $2,373 in FEMA disaster assistance, after she claimed property damage, and Hurricane 

Katrina evacuee status, but East Baton Rouge suffered no storm damage, nor were tenants evacuated. 

Other Fraud

Willie Smith, Derrick Beaulieu, and Shawnzell Venson were collectively sentenced in U.S. District Court, 

New Orleans, LA, to 48 months incarceration, 6 years supervised release, and 3 years probation; ordered 

to perform 100 hours of community service; and fined $5,000 for their earlier guilty pleas to committing 

a conspiracy to steal government funds or misprision of a felony. Smith, Beaulieu, Venson, and others 

attempted to divert $646,947 in Road Home CDBG Disaster Recovery Assistance funds into their personal 

bank accounts. 

ppp

(2010) The Times-Picayune Publishing Co. All rights reserved. Used with permission of the Times-Picayune.

100

Chapter 6 - Disaster Relief Oversight
Robert Chiarappa, a former purchasing agent for the John Galt Corporation and Safeway Environmental, 

organizations under contract with the Lower Manhattan Development Corporation (Lower Manhattan), 

an organization that received HUD CDBG Disaster Recovery Assistance funds after the September 11, 2001, 

terrorists attacks, was sentenced in New York County District Court, Manhattan, NY, to incarceration not 

to exceed 7.5 years and was ordered to pay Lower Manhattan $511,000 in restitution for his earlier guilty 

plea to committing grand larceny. From September 2006 to November 2007, Chiarappa instructed Lower 

Manhattan vendors to submit fraudulent invoices for goods not delivered to the Deutsche Bank building 

deconstruction site; approved and submitted the false invoices to Lower Manhattan; and obtained cash, 

jewelry, and other personal use items in return. 

ppp

Darlene Poole, a Hurricane Katrina evacuee and housing assistance recipient through the Houston 

Housing and Community Development, an organization that receives HUD HOME Investment Partnerships 

funds, and Lashona Victor were collectively sentenced in U.S. District Court, Houston, TX, to 9 months 

and 1 day incarceration and ordered to jointly pay FEMA $14,215 in restitution for their earlier guilty 

pleas to committing a conspiracy to commit mail and wire fraud. Poole applied for and received $13,000 

in HUD funds to purchase a residential property, but after acquiring the property, Poole fraudulently 

obtained FEMA disaster housing assistance after she and Victor created and submitted false documents 

that declared Victor as the property owner. 

ppp

Bernard McCann, also known as Bernard Mitchell, Bernard Marshall, or Johnny Jordan, was sentenced 

in Cook County Circuit Court, Chicago, IL, to 18 months probation and ordered to pay several victims 

$11,700 in restitution for his earlier guilty plea to committing theft. McCann posed as a Chicago Housing 

Authority employee and police officer from the Cook County Sheriff’s Office, fraudulently sold fake 

Hurricane Katrina Section 8 vouchers, and collected $11,700 from a number of victims. 

ppp

Andre Milton was sentenced in U.S. District Court, Phoenix, AZ, to 3 years probation and ordered 

to collectively pay FEMA, the American Red Cross, and the Arizona Department of Housing $4,616 in 

restitution for his earlier guilty plea to committing theft of government funds. Milton applied for and 

received $4,616 in disaster assistance after he claimed to be a Hurricane Katrina evacuee, but Milton resided 

in Arizona during the storm. 

ppp

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Chapter 6 - Disaster Relief Oversight
Inspections and Evaluations

Inspection of the State of Louisiana’s Road Home Elevation 

Incentive Program Homeowner Compliance

HUD OIG completed an inspection of the State of Louisiana’s (State) 

Road Home Elevation Incentive (elevation grant) program funded by 

HUD CDBG Disaster Recovery Assistance funds to determine whether 

homeowners used the funds to elevate their homes as set forth in their 

grant agreements. The inspection covered 199 (about 10 percent) of the 

1,906 property owners who received more than $44.4 million in elevation 

grants during the first round of State funding in 2006 and 2007. 

Inspection results strongly suggest that the elevation grant program is 

at risk and could fail to achieve its intended goal of reducing homeowner 

flood risks from future hurricanes. Most homeowners had not elevated 

their homes, although they received grants of up to $30,000 in 2006 and 

2007 to pay toward the construction costs. Seventy-nine percent of 

the homes inspected (158 of 199 properties) were not elevated. These 

noncompliant homeowners received grant funds exceeding $3.8 million. 

More than 29,000 homeowners have now received taxpayer-funded checks 

totaling $845 million to leverage the cost of elevating their properties. 

OIG recommended that HUD require the State to (1) coordinate efforts 

with HUD to address and reduce the incidence of noncompliance in the 

Road Home Elevation Incentive program, (2) ensure that monitoring of 

the elevation grants provides adequate coverage to specifically identify 

compliant and noncompliant recipients, (3) identify and advise all 

elevation grant recipients who have yet to meet the terms of their grant 

agreements of their obligation to either elevate the subject property or 

return the elevation grant funds to the State, and (4) enforce the program 

remedies for noncompliance as set out in the elevation grant agreements 

starting with recovery, where warranted, of the $3.8 million in grant funds 

from the 158 noncompliant homeowners in our sample. OIG plans to 

revisit the elevation grant program at a future date to review the level 

of the State’s success in reducing noncompliance, achieving intended 

program goals, and enforcing funds recovery. (I&E Report: IED09 002)

ppp (2010) The Times-Picayune Publishing 

Co. All rights reserved. Used with 

permission of the Times-Picayune.

102

Chapter 6 - Disaster Relief Oversight
Chapter 7

Other Significant Audits

and Investigations/

OIG Hotline
In addition to the audits and investigations described in this chapter, the U.S. Department of Housing 

and Urban Development (HUD), Office of Inspector General (OIG), has conducted numerous outreach 

efforts (see chapter 8, page 124).

Audit

Strategic Initiative 4: Contribute to improving HUD’s execution 

and accountability of fiscal responsibilities as a relevant 

and problem-solving advisor to the Department’s execution

* The total “other” audits include American Recovery and Reinvestment Act of 2009 (four audits) type audits conducted in 

other areas. The writeups for these audits are shown separately in chapter 5 of this semiannual report.

Audit of HUD’s Financial Statements

HUD OIG provided additional details to supplement the report on HUD’s fiscal years 2009 and 2008 

financial statements, which is included in HUD’s Fiscal Year 2009 Performance and Accountability Report.

Based on the audit and the reports of other auditors, the financial statements were presented fairly, in 

all material respects, in conformity with accounting principles generally accepted in the United States of 

America. The report identified 11 significant weaknesses and 4 instances of noncompliance with applicable 

laws and regulations. It discussed each of these conditions in detail, provided an assessment of actions 

taken by HUD to mitigate the deficiencies noted, and made recommendations for corrective actions. (Audit 

Report: 2010-FO-0003) 

FHA Financial Statements

Urbach Kahn and Werlin LLP, audited the fiscal years 2009 and 2008 financial statements of the Federal 

Housing Administration (FHA). 

The report included an unqualified opinion on FHA’s financial statements. It contained four significant 

deficiencies in FHA’s internal controls and one reportable instance of noncompliance with laws and 

regulations. The report contained 15 new recommendations. It discussed the issues/conditions in detail, 

provided an assessment of management’s responses to the report, and made recommendations for corrective 

actions. (Audit Report: 2010-FO-0002)

Key program results Questioned costs Funds put to better use

--- $522 million

Page 104

Page 104

Page 105

Page 105

Page 105

Audit 9 audits*

Our

focus

• Audit of HUD’s financial statements

• FHA financial statements

• Audit of the Government National Mortgage Association’s 

financial statements 

• Evaluation of HUD’s implementation of the Federal 

Information Security Management Act of 2002

•	 Evaluation of Ginne Mae’s controls over information

technology

104

Chapter 7 - Significant Audits and Investigations/OIG Hotline
Audit of the Government National Mortgage Association’s 

Financial Statements

Carmichael, Brasher, Tuvell, and Company (CBTC) audited the Government National Mortgage 

Association’s (Ginnie Mae) financial statements for the fiscal years ending September 30, 2009 and 2008. 

In CBTC’s opinion, the financial statements presented fairly, in all material respects, Ginnie Mae’s 

financial position as of September 30, 2009, and September 30, 2008, and the results of its operations and 

its cash flows for the years then ended in conformity with accounting principles generally accepted in the 

United States of America. 

The report identified one significant deficiency on internal control, which was a repeat finding from 

last fiscal year and one reportable instance of noncompliance with laws, regulations, and government-wide 

policies. It discussed the issues/conditions in detail, provided an assessment of management’s responses 

to the report, and made recommendations for corrective actions. (Audit Report: 2010-FO-0001)

Evaluation of HUD’s Implementation of the Federal Information 

Security Management Act of 2002 

(Report Not Available to the Public)

HUD OIG audited HUD’s information security program and practices in accordance with requirements 

of the Federal Information Security Management Act of 2002. OIG has determined that the results of this 

audit would not be appropriate for public disclosure and has, therefore, limited distribution to selected 

officials. (Audit Report: 2010-DP-0802)

Evaluation of Ginne Mae’s Controls Over Information Technology 

(Redacted Report Available to the Public)

HUD OIG audited Ginnie Mae’s controls over its information technology (IT) resources. OIG assessed 

whether Ginnie Mae’s management of its information systems complied with HUD IT policies and Federal 

information system security requirements. The audit was performed in support of OIG’s annual financial 

statement audit of Ginnie Mae and its annual evaluation of HUD’s information system security program 

within the context of the Federal Information Security Management Act. 

OIG has determined that the full contents of this report would not be appropriate for public disclosure 

and released a redacted version to the public. (Audit Report: 2010-DP-0001)

ppp

105

Chapter 7 - Significant Audits and Investigations/OIG Hotline
Investigations

HUD field office director Michael Colon was arrested after his indictment in U.S. District Court, San 

Juan, PR, for allegedly committing theft of government funds and wire fraud and submitting false time 

and attendance records. From December 2008 to February 2010, Colon allegedly failed to work the hours 

he claimed on his time and attendance reports. HUD losses are estimated at $65,979.

ppp

Herman Ransom, a former director for the HUD Office of Multifamily 

Housing, was convicted in U.S. District Court, Kansas City, KS, of committing 

theft of government funds and wire fraud. From September 2001 to June 

2007, Ransom played tennis or gambled at local casinos during work hours. 

HUD realized losses of $46,926. 

ppp

Strategic Initiative 4: Contribute to improving HUD’s execution 

and accountability of fiscal responsibilities as a relevant 

and problem-solving advisor to the Department’s execution

Key program 

results

$ 

recovered

Convictions/pleas/ 

pretrials

Investigations 32 $38,642 9

Cases 

closed

Admin/civil 

actions

9

Copyright 2010. The Kansas City 

Star. Kansas City, MO. Reprinted 

with permission.

106

Chapter 7 - Significant Audits and Investigations/OIG Hotline
OIG Hotline

The HUD OIG hotline is operational 5 days a week, Monday through Friday, from 10:00 a.m. to 4:30 

p.m. The hotline is staffed by nine full-time OIG employees, who take allegations of waste, fraud, abuse, 

or serious mismanagement in HUD or HUD-funded programs from HUD employees, contractors, and the 

public. The hotline also coordinates reviews with internal audit and investigative units or HUD program 

offices.

During this reporting period, the hotline received and processed 9,324 complaints -- 75 percent (6,962) 

received by telephone, 10 percent (976) by mail, and 15 percent (1,385) by e-mail. Every allegation received 

by the hotline is logged into a database and tracked.

Of the complaints received, 534 were related to the mission of OIG and addressed as hotline cases. 

Hotline cases are referred to OIG’s Offices of Audit and Investigation or to HUD program offices for action 

and response. The following illustration shows the distribution of hotline case referrals by percentage.

Chart 7.1: Hotline cases opened by program area

Public and Indian housing, 41%

Multifamily housing, 11%

Community planning and 

development, 4%

OIG audit and investigation, 30%

Single-family housing, 4%

Other, 10%

The hotline closed 291 cases this reporting period. The closed hotline cases included 40 substantiated 

allegations. The substantiated allegations resulted in three administrative sanctions, including action taken 

against a tenant for failing to report all income and allowing unauthorized live-ins to reside in her HUDsubsidized residence. The Department also took 28 corrective actions that resulted in $75,082 in recoveries 

of losses and $363,780 in HUD funding that could be put to better use. The recoveries included repayments 

of overpaid rental subsidies. Some of the funds that could be put to better use were the result of cases 

in which tenants were terminated from public housing or multifamily housing programs for improperly 

reporting their income or family composition to qualify for rental assistance. 

107

Chapter 7 - Significant Audits and Investigations/OIG Hotline
Chart 7.2: Hotline dollar impact from program offices

$300,000

$240,000

$180,000

$120,000

$60,000

$0

Public and Indian housing Multifamily housing

$261,864

$53,496 $101,916 $21,586

Funds put to better use Recoveries

ppp

108

Chapter 7 - Significant Audits and Investigations/OIG Hotline
Chapter 8

Outreach

Efforts
To foster cooperative, informative, and mutually beneficial relationships with agencies and organizations 

assisting the U.S. Department of Housing and Urban Development (HUD) in accomplishing its mission, 

the Office of Inspector General (OIG) participates in special outreach efforts. The outreach efforts described 

below complement routine coordination with Federal, State, and local law enforcement agencies, various 

congressional committees or subcommittees, and other OIGs. During outreach efforts, OIG personnel 

present information about HUD OIG’s role and function, provide audit and investigative results, and discuss 

desired goals and objectives. 

Single-Family Housing Programs

Inspector General Kenneth Donohue, 

Deputy Inspector General Michael Stevens, and 

Assistant Inspector General for Investigation 

John McCarty participated in mortgage fraud 

summits held in Miami, FL, and Phoenix, 

AZ. These regional mortgage fraud summits, 

sponsored by the U.S. Department of Justice 

Financial Fraud Enforcement Task Force, were 

held to highlight the nature of mortgage fraud 

and raise the profile of the Financial Fraud 

Enforcement Task Force, to assess mortgage 

fraud and emerging trends in different areas 

of the country, and to coordinate and motivate 

law enforcement efforts. Each summit included 

morning sessions open to the general public 

and afternoon sessions for law enforcement 

personnel. Attorney General Eric Holder spoke 

at a press conference following the Phoenix, AZ, 

general public session.

ppp

Deputy Assistant Inspector General for Investigation Ruth Ritzema provided an overview of nationwide 

fraud preventative measures as a panelist during a New York Foreclosure Summit in Manhattan, NY. 

Approximately 200 individuals representing financial institutions and State and local government agencies 

attended the Summit, which was sponsored by HUD and the U.S. Department of the Treasury. 

ppp

Special Agent in Charge (SAC) Barry McLaughlin and Federal Housing Administration (FHA), Office of 

Business Development, Account Liaison Kitty Watkins provided an overview of recent changes in the FHA 

regulations and requirements for Illinois Mortgage Fraud Working Group members meeting in Chicago, 

IL. Approximately 45 mortgage industry personnel and State and local officials attended. 

ppp

SAC Wayne North and Assistant Special Agent in Charge (ASAC) James Siwek provided an overview 

of HUD OIG’s mission and function and described investigative priorities relating to mortgage fraud, 

FHA, and public housing programs at a meeting at the office of U.S. Senator Patty Murray in Seattle, WA. 

Approximately eight congressional staff members attended.

ppp

110

Chapter 8 - Outreach Efforts

IG Donohue speaks at the Financial Fraud Enforcement Task Force 

Mortgage Fraud Summit held in Miami, FL
SAC Barry McLaughlin, Regional Inspector General for Audit (RIGA) Heath Wolfe, and Federal Bureau 

of Investigation (FBI) Supervisory Special Agent Paul Holdeman provided an overview of the roles and 

responsibilities of the HUD OIG Offices of Investigation and Audit and described “red flag” fraud indicators 

and civil enforcement initiatives at an Illinois Mortgage Bankers Association fraud conference in Rolling 

Meadows, IL. Approximately 50 individuals attended. 

ppp

SAC Rene Febles and Special Agent (SA) Martin Sullivan provided an overview of HUD OIG initiatives 

and described mortgage fraud detection methods for individuals attending a HUD-sponsored Real Estate 

Settlement Procedures Act training seminar in Manhattan, NY. Approximately 100 mortgage industry 

personnel attended. 

ppp

SAC Ken Taylor, Jr., provided an overview of HUD OIG’s mission and function and described investigative 

priorities relating to FHA-insured mortgages and grants as a panelist during a winter symposium for Property 

Records Industry Association members meeting in Washington, DC. At the conclusion, a question and 

answer forum was held for approximately 50 members in attendance.

ppp

SAC Barry McLaughlin and RIGA Heath Wolfe provided an overview of the Home Equity Conversion 

Mortgage (HECM) and FHA insurance programs and described fraud schemes, audit expectations, and 

OIG’s affirmative civil enforcement actions for Northeast Indiana Mortgage Bankers Association members 

meeting in Fort Wayne, IN. Approximately 60 individuals attended. 

ppp

SAC Michael Powell, ASAC Cortez Richardson, and SA Jerome Winkle provided an overview of HUD 

OIG’s role and responsibilities relating to mortgage fraud investigations for members of a mortgage fraud 

working group meeting in Augusta, GA. More than 20 mortgage industry professionals and Federal and 

State banking, real estate, and law enforcement personnel attended.

ppp

SAC Barry McLaughlin and RIGA Heath Wolfe provided an overview of the HUD HECM and FHA 

insurance programs and described American Recovery and Reinvestment Act of 2009 (ARRA) reporting 

requirements and fraud schemes, OIG’s affirmative civil enforcement actions, and OIG audit expectations 

at a luncheon for members of the Three Rivers Association of Realtors in Joliet, IL. Approximately 75 real 

estate professionals and others attended. 

ppp

RIGA Joan Hobbs and Supervisory Forensic Auditor (SFA) Tony Putzulu spoke to about 40 assistant 

U.S. attorneys (AUSA) attending mortgage fraud civil remedies training in Los Angeles, CA. RIGA Hobbs 

provided an overview of OIG, and SFA Putzulu gave a presentation on FHA mortgage fraud. Also attending 

were the HUD OIG forensic audit staff in Los Angeles and two special agents. At the conclusion of the 

training, OIG staff met with civil AUSAs from four districts in California and the Nevada district. 

ppp

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Chapter 8 - Outreach Efforts
A S A C Wa l l a c e M e r r i m a n , 

NeighborWorks® America Chief 

Operating Officer Eileen Fitzgerald, 

FBI Assistant Director Kevin Perkins, 

Assistant State Attorney April Richardson, 

and U.S. Senator Barbara Mikulski were 

guest speakers at a “Loan Modification 

Scam Alert” campaign at the Seat Pleasant 

Activities Center in Seat Pleasant, 

MD. This public education event was 

designed to help homeowners protect 

themselves against loan modification 

scams, find trusted help, and report illegal 

activities. Approximately 80 State, local, 

and national governmental agencies, 

nonprofit organizations, and financial 

institution representatives attended. 

ppp

ASACs Michael Catinella and Eric Bizjak and Assistant Regional Inspector General for Audit (ARIGA) 

Ronald Farrell provided an overview of HUD OIG’s mission, goals, and priorities; explained the functions 

of the Offices of Audit and Investigation; and described current mortgage fraud trends at a meeting for 

members of the Ohio Land Title Association in Columbus, OH. Approximately 40 individuals attended. 

ppp

ASACs Ray Espinosa and Brad Geary provided an overview of deed forgery and the effects on financial 

institutions and illustrated a recent investigation for Financial Institution Group members meeting in 

Chicago, IL. Approximately 20 financial institution security and loss prevention and Federal and local law 

enforcement personnel attended. 

ppp

ASAC Lisa Gore and HUD Attorney Thomas Derryberry provided an overview of HUD and HUD OIG’s 

mission and goals and described the Real Estate Settlement Procedures Act final rule implementation, fraud 

schemes, and criminal issues and complaints at the Tennessee Land Title Association regional conference 

in Nashville, TN. Approximately 50 industry professionals attended. 

ppp

ASAC Wallace Merriman provided an overview of HUD OIG’s mission and described predatory lending, 

property flipping, equity skimming, and appraisal and HECM program fraud as a panelist during a “Law 

Enforcement Best Practices and New Scams” forum in Baltimore, MD. Approximately 80 State, local, and 

nonprofit representatives attended the forum, which was sponsored by the Federal Reserve Bank. 

ppp

ASAC Suzanne Steigerwald and SA John Raney provided an overview of HUD OIG’s mission and role 

and described reverse mortgage fraud schemes and “red flag” indicators during a training session, entitled 

112

Chapter 8 - Outreach Efforts

ASAC Wallace Merriman addresses community leaders.
“Consumer University,” in Denver, CO. Approximately 50 individuals attended the training session, which 

was sponsored by AARP, the Colorado Better Business Bureau, and the Colorado Attorney Generals’ Office.

ppp

ASAC Brad Geary and Assistant U.S. Trustee Sandra Rasnak provided an overview of mortgage fraud 

trends involving property flipping and deed theft schemes, explained common Federal statutes involving 

mortgage fraud and the role of bankruptcy courts, and described current enforcement efforts at an annual 

meeting of Wisconsin Chapter 7 Bankruptcy Trustees in Milwaukee, WI. Approximately 25 trustees attended. 

ppp

ASAC Kevin Chan, SA Michael Granatstein, and HUD FHA employee Migdalia Murati provided 

an overview of the FHA program, described OIG’s authority and process for selecting and conducting 

investigations, and explained the benefits of forming partnerships to address mortgage fraud at a convention 

of Exit Association of Mortgage Brokers members in New Hyde Park, NY. Approximately 100 mortgage 

brokers and other financial institution representatives attended. 

ppp

ASAC Michael Wixted, ARIGA Kevin Smullen, SA Brian Gosselin, and AUSA Michael Drescher provided 

an overview of HUD OIG’s mission and described the FHA and HECM programs and fraud vulnerabilities 

at a meeting of members of the Vermont Mortgage Bankers Association in Burlington, VT. Approximately 

86 members attended. 

ppp

ASAC James Luu provided an overview of HUD OIG’s mission and role in mortgage fraud at a “Faith in 

Action” town hall meeting held in Bakersfield, CA, to address foreclosure rescue scams and loan modification 

fraud. Approximately 230 community members, housing counselors, and Federal and local officials attended. 

ppp

ASAC Cortez Richardson and SAs Shelly Mack, Gustaveous Madden, and Tyrone Hardy provided an 

overview of HUD OIG’s mission and involvement with ARRA and described fraud vulnerabilities in the 

HECM program at a Georgia Real Estate Fraud Prevention and Awareness Coalition meeting in Atlanta, 

GA. At the conclusion, a question and answer forum was held for 50 mortgage industry professionals in 

attendance.

ppp

ASAC Kris Kanakares provided an overview of HUD OIG’s mission and funding provided by 

ARRA; described a number of mortgage fraud schemes; and illustrated fraud prevention, detection, and 

enforcement methods used to successfully prosecute mortgage fraud investigations at the 2009 Mid-America 

Intergovernmental Audit Forum in Kansas City, MO. At the conclusion, a question and answer forum was 

held for approximately 50 individuals in attendance. 

ppp

ASAC Edwin Bonano and SAs José Laureano and Hector Mercado provided a presentation, entitled 

“FHA and HECM Mortgage Fraud: The Jurisdiction and Investigative Role of HUD OIG,” and described 

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HUD OIG’s mission and priorities, common mortgage fraud schemes and indicators, and Federal criminal 

statutes at a training seminar for Banco Santander employees in San Juan, PR. Approximately 50 mortgage 

and compliance division employees and executives attended. 

ppp

ASAC Lisa Gore, SAs Jeffrey Monnin and Keith Benderoth, and HUD Attorney Robert Kuhnle provided 

an overview of HUD and HUD OIG’s mission and goals and described the Real Estate Settlement Procedures 

Act final rule implementation, criminal issues, and common fraud schemes for Kentucky Department of 

Financial Institutions employees meeting in Louisville, KY. Approximately 20 staff members attended.

ppp

ASAC Wallace Merriman provided an overview of HUD OIG’s mission and described predatory lending, 

property flipping, equity skimming, appraisal fraud, and potential HECM program fraud as a panelist 

during a “Law Enforcement Best Practices and New Scams” seminar sponsored by the Maryland Housing 

Counselors Network in Prince Georges County, MD. Approximately 40 individuals representing State and 

local governments and nonprofit agencies attended. 

ppp

ASACs Ray Espinosa and Brad Geary provided an overview of the emerging trends at HUD and 

described FHA and HECM loans, the Neighborhood Stabilization Program (NSP), and OIG initiatives to 

ensure the integrity of these programs at a meeting of Lifelong Learning Institute members at Northern 

Illinois University in Dekalb, IL. Approximately 15 individuals attended. 

ppp

ASAC Lisa Gore provided an overview of HUD OIG’s mission and goals, described the functions of the 

Offices of Investigation and Audit, discussed potential criminal issues and common fraud schemes associated 

with HUD programs, and participated in a panel discussion at a Property Records Industry Association 

conference in Nashville, TN. Approximately 60 mortgage industry professionals attended.

ppp

ASAC Nadine Gurley provided an overview of HUD OIG and mortgage fraud investigations for 

members of the Alabama Association of Certified Fraud Examiners meeting in Birmingham, AL. More 

than 40 financial, insurance, and other industry professionals attended. 

ppp

SA Timothy Lishner provided an overview of HUD OIG’s mission and role and described single-family 

housing fraud schemes at a “Housing Summit” sponsored by Congresswoman Betsy Markey in Fort Collins, 

CO. Approximately 50 home buyers and mortgage industry professionals attended.

ppp

SA José Laureano provided an overview of HUD OIG’s mission, jurisdiction, and role in FHA mortgage 

fraud investigations during a consumer financial education fair sponsored by the Puerto Rico Office of the 

Commissioner for Financial Institutions in San Juan, PR. About 25 individuals attended. 

ppp

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SA James Carrieres provided an overview of HUD OIG’s mission and described successful Arizona 

mortgage fraud investigations at a meeting of Keller Williams Realty staff in Tempe, AZ. Approximately 

50 real estate agents attended. 

ppp

SA DeChantel Bahr provided an overview of HUD programs and described mortgage rescue fraud 

schemes and the availability of foreclosure assistance for residents attending an “open house” sponsored 

by the DC Metropolitan Police Department in Washington, DC. More than 250 local residents, community 

leaders and organizations, Federal law enforcement representatives, and others attended. 

ppp

SA José Laureano provided a presentation, entitled “Jurisdiction and the Investigative Role of HUD 

OIG in Mortgage Fraud Cases”; described HUD OIG’s mission and priorities; and illustrated common FHA 

mortgage fraud indicators and schemes at a training session for First Bank employees in San Juan, PR. 

Approximately 60 loan originators, compliance and collection officers, fraud investigators, and executive 

staff attended. 

ppp

SA Samuel Ortiz-Diaz provided an overview of HUD OIG’s mission and priorities and described 

OIG’s role in mortgage fraud investigations at a Bank Secrecy Act conference in Springfield, MA. At the 

conclusion, a question and answer forum was held for approximately 35 financial institution and legal and 

law enforcement personnel in attendance. 

ppp

SAs Patrick Fox and Matthew Nutt and U.S. Secret Service SA Marisella Shaw provided an overview of 

current mortgage fraud schemes for State Farm Insurance personnel meeting in Livonia, MI. Approximately 

50 insurance investigators and claim representatives attended. 

ppp

SA Michael Weinstein provided an overview of HUD OIG’s mission and programs and described the 

value of FHA mortgage activity reports for individuals attending a Maryland Association for Bank Security 

meeting in Baltimore, MD. Approximately 30 financial institution and Federal, State, and local government 

representatives attended.

ppp

SA José Laureano provided an overview of HUD OIG’s mission and role in FHA mortgage fraud and 

described mortgage fraud detection and prevention strategies for members of the Puerto Rico Mortgage 

Loan Officers Association meeting in San Juan, PR. More than 60 members attended. 

ppp

SA Timothy Lishner provided an overview of HUD OIG’s mission and role in FHA mortgage fraud 

and described mortgage fraud detection and prevention strategies for members of the Northern Colorado 

Association of Real Estate Appraisers meeting in Northglenn, CO. More than 60 members attended.

ppp

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RIGA Heath Wolfe provided a presentation to the Mid-America Intergovernmental Audit Forum’s 

winter meeting in Kansas City, MO, entitled “Auditors Pursuing Civil Fraud Through Affirmative Civil 

Enforcement Actions.” The presentation included an overview of OIG’s mission and the Office of Audit’s 

affirmative civil enforcement initiative. Approximately 60 individuals attended

ppp

RIGA Joan Hobbs and Assistant Inspector General for Audit (AIGA) James Heist spoke to about 40 

Pacific Island auditors at the Western Intergovernmental Audit Forum Conference in Honolulu, HI. RIGA 

Hobbs spoke on the topic of mortgage fraud, and AIGA Heist spoke on ARRA, how HUD has implemented 

it, and how HUD OIG is auditing the funds.

ppp

RIGA Joan Hobbs and AIGA James Heist spoke to about 350 attendees at the joint conference of the 

Association of Government Accountants/Association of Military Comptrollers in Honolulu, HI. The topic 

of their presentation was the mortgage fraud crisis and what HUD and FHA are doing to help the public.

Public Housing and Rental Assistance Programs

SAC Phyllis Robinson and ASAC Gene Westerlind provided an overview of HUD OIG’s mission and 

authority and described OIG’s relation to HUD programs at a “HUD Strategic Planning and Regional 

Feedback” session in St. Louis, MO. At the conclusion, a question and answer forum was held for 60 

housing professionals and HUD staff in attendance. 

ppp

SAC Herschell Harvell, ASAC Michael Wilson, and SA Gary Haley provided an overview of HUD 

OIG’s mission and structure; described and illustrated tenant, landlord, and multifamily Section 8 fraud; 

explained FHA-insured mortgages; and offered information relating to NSP and ARRA at an Arkansas 

National Association of Housing and Redevelopment Officials (NAHRO) meeting in Little Rock, AR. 

Approximately 100 housing officials attended. 

ppp

SAC Kenneth Taylor, Jr., ASAC Kevin McBride, and SA Kylan Dunn provided an overview of HUD 

OIG’s mission and goals and described housing assistance program fraud and avenues available to report 

fraudulent activities during a meeting of Prince Georges County Housing Authority landlords in Largo, 

MD. Approximately 30 landlords attended. 

ppp

SAC George Dobrovic provided an overview of HUD OIG’s mission, goals, and priorities and discussed 

HUD OIG initiatives and the support available to help provide safe environments for subsidized housing 

residents at a meeting of Cuyahoga, Summit, Youngstown, and Lorain police departments and housing 

authority personnel in Cleveland, OH. Approximately 30 housing authority and law enforcement 

representatives attended. 

ppp

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Michael Beard, Director, Technical Oversight and Planning Division, gave a presentation, entitled “How 

to Prepare for an OIG Audit,” at the 33rd Annual Housing Choice Voucher Conference in Washington, DC. 

Quadel Consulting sponsored the training event. More than 60 individuals from State and local housing 

agencies attended. 

ppp

Frank Rokosz, Assistant Director, Technical Oversight and Planning Division, participated in a panel 

presentation at the National Leased Housing Association’s fall seminar on Asset Management, Occupancy, 

and Preservation of Section 8 Projects in Washington, DC. The panel discussed the topic, “How to Survey 

an OIG Audit or a Referral to the DEC [Departmental Enforcement Center].” The panel included Henry 

Czauski, Deputy Director of the Departmental Enforcement Center; Lisa Tunick, an attorney with Hessel, 

Aluise, and Neun; and George Wiedenfeller, an attorney with Goulston and Storrs. More than 120 owners, 

managers, and consultants attended. 

ppp

RIGA Heath Wolfe and ASAC Michael Catinella provided an overview of HUD OIG’s mission, goals, 

and priorities; explained the functions of the Offices of Audit and Investigation; and described common 

audit findings in nonprofit activities, the Office of Audit’s affirmative civil enforcement initiative, the 

accountability and reporting requirements for capital funding through ARRA, and the Section 8 and housing 

voucher programs for Michigan Housing Director’s Association members meeting on Mackinac Island, 

MI. Approximately 70 individuals attended. 

ppp

ASAC Edwin Bonano provided an overview of HUD OIG’s mission and described various housing 

fraud schemes at a HUD-sponsored workshop for Miami-Dade County Commissioners in Miami, FL. At 

the conclusion, a question and answer forum was held for approximately 30 commissioners and MiamiDade County residents in attendance.

ppp

ASAC Lou Mancini provided an overview of HUD OIG’s mission and structure; described tenant, 

landlord, and multifamily Section 8 fraud indicators and presented fraud scenarios; and explained FHAinsured mortgages and community planning and development programs, including NSP and homeless and 

Emergency Shelter Grant programs at the New York State Division of Housing and Community Renewal 

Section 8 conference in Syracuse, NY. Approximately 120 individuals attended.

ppp

ASAC Gene Westerlind and SA Greg Moyer provided an overview of HUD OIG’s mission and described 

various housing fraud schemes, NSP, and ARRA for Section 8 landlords meeting at the Wichita Housing 

Authority in Wichita, KS. At the conclusion, a question and answer forum was held for approximately 80 

landlords and housing officials in attendance. 

ppp

ARIGA Kim Randall and SAs Karen Gleich and Paul Pace provided an overview of HUD OIG’s mission 

and the funding provided by ARRA; described the functions of OIG’s Offices of Audit and Investigation; and 

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illustrated fraud prevention, detection, and enforcement methods used to successfully prosecute housing 

investigations at the Kansas NAHRO conference in Lawrence, KS. Approximately 60 housing officials 

attended. 

ppp

SA Victoria Marquez and Austin Housing Authority senior rental integrity coordinator Chress Rocha 

conducted a panel discussion, entitled “Combating Tenant Fraud From a Housing Authority and HUD 

OIG’s Prospective,” at the 2009 Texas NAHRO conference in San Marcos, TX. Approximately 450 housing 

officials attended. 

ppp

SA Scott Savedow, Palm Beach County Sheriff detective Michael Leatherman, and Palm Beach County 

Housing Authority General Counsel Jennifer Cuhna moderated a discussion forum, entitled “Convictions 

for Tenant Fraud,” at the Housing and Development Law Institute general counsel forum in Tampa, FL. 

Approximately 25 general counsel representatives attended. 

ppp

SA Jeffery Monnin provided an overview of HUD OIG’s mission and goals and described public housing 

fraud schemes and the criminal referral process at the Kentucky Housing Executives Association conference 

in Lexington, KY. Approximately 40 executive directors attended.

ppp

SA Ronnyne Bannister provided an overview of HUD OIG’s mission, priorities, and subsidized housing 

programs during a panel discussion for residents of Gateway Village Apartments, a HUD-subsidized elderly 

housing development in Capitol Heights, MD. At the conclusion, a question and answer forum was held 

for about 45 tenants in attendance. 

ppp

SA Angela Stewart provided an overview of HUD OIG’s mission and described criminal and civil fraud 

schemes and prosecutorial results involving HUD housing assistance programs at a meeting of Fort Walton 

Beach Housing Authority landlords in Fort Walton Beach, FL. Approximately 18 landlords attended.

ppp

SA Gregory Williams provided an overview of HUD OIG’s mission, role, and priorities and described the 

process for detecting, preventing, and reporting fraud at a meeting in Gardner, MA, for staff members from 

RCAP Solutions, a nonprofit organization that administers a number of HUD-funded housing programs. 

Approximately 23 staff members attended. 

ppp

SA Stephen Tufts provided an overview of HUD OIG’s mission and role in detecting and investigating 

waste, fraud, and abuse in HUD programs for Maine Department of Health and Human Services employees 

meeting in Augusta, ME. At the conclusion, a question and answer forum was held for about 20 individuals 

in attendance. 

ppp

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SA Ronnyne Bannister provided an overview of HUD OIG’s mission and priorities and described 

HUD-subsidized housing and the real estate-owned program during a community meeting for residents 

of Hillside and Capitol Heights, MD. At the conclusion, a question and answer forum was held for about 

25 residents in attendance. 

ppp

RIGA John Buck and SAC Joseph Clarke were guest speakers at the Pennsylvania Association of Housing 

and Redevelopment Agencies (PAHRA) annual conference in Harrisburg, PA. PAHRA is an affiliation of 

Pennsylvania’s housing authorities, redevelopment authorities, community development agencies, and 

nonprofit corporations. RIGA Buck and SAC Clarke presented an overview of HUD OIG’s mission and goals 

and the functions of the Offices of Audit and Investigation. RIGA Buck presented information on recent 

audits and future plans for auditing ARRA funds, concerns about the risk in ARRA programs, and information 

about the region’s overall audit plans. SAC Clarke presented information on the Fraud Enforcement and 

Recovery Act and potential criminal activities associated with ARRA programs and provided examples of 

HUD OIG criminal cases involving government funds. Approximately 60 members attended the presentation. 

Community Planning and Development

SAC Rene Febles provided a briefing on HUD stimulus funds awarded to New York agencies and OIG’s 

efforts to protect these funds at a New York State Stimulus Board meeting in Manhattan, NY. Approximately 

eight board members representing the New York State Commission on Human Rights, the New York State 

OIG, and the Metropolitan Transit Administration OIG attended. 

ppp

SAC Barry McLaughlin, RIGA Heath Wolfe, and ASACs Brad Geary and Ray Espinosa provided an 

overview of the HUD OIG Offices of Investigation and Audit and described “red flag” fraud indicators, the 

audit process, the HOME Investment Partnerships (HOME) and Supportive Housing programs, the False 

Claims and Program Fraud Civil Remedies Acts, and ARRA accountability and reporting requirements for 

Cook County Department of Planning and Development employees in Chicago, IL. Approximately 50 

county employees attended. 

ppp

ASACs Ray Espinosa and Brad Geary provided an overview of Illinois mortgage fraud and described 

NSP areas susceptible to fraud at a meeting in Chicago, IL, for Illinois NSP grantees. More than 100 

individuals attended the meeting, which was hosted by the Illinois Housing Development Authority and 

the Department of Human Services. 

ppp

ASAC Kris Kanakares and SA Chris Conn provided an overview of HUD OIG’s mission; described 

the functions of OIG’s Offices of Audit and Investigation; and illustrated fraud prevention, detection, 

and enforcement methods used to successfully prosecute community planning and development-related 

investigations for Missouri’s Department of Economic Development and Business and Community Services 

personnel meeting in Jefferson City, MO. Approximately 10 supervisory employees attended. 

ppp

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ASAC Lisa Gore and SAs Jeffrey Monnin and Keith Benderoth provided an overview of HUD OIG’s 

mission and goals; described the functions of the Offices of Investigation and Audit; discussed potential 

criminal issues and common fraud schemes associated with Community Development Block Grant (CDBG) 

funding; and explained HUD OIG’s oversight and responsibilities relating to grants awarded through ARRA 

at a HUD-sponsored meeting of Kentucky community planning and development grantees in Louisville, 

KY. Approximately 60 grantees attended. 

ppp

ASAC Robert Jones provided an overview of the HUD Disaster Recovery Assistance program and NSP; 

described ARRA and the Housing and Economic Recovery Act of 2008 (HERA); and illustrated OIG’s role in 

addressing fraud, waste, and abuse in HUD-funded programs at a community planning and development 

“Directors Round-Up” hosted by the HUD Office of Community Planning and Development (CPD) in 

Houston, TX. Approximately 20 individuals representing local CPD-funded entities attended. 

ppp

SA Alexander Rosania provided an overview of the HUD Homelessness Prevention and Rapid ReHousing Program and described fraud vulnerabilities at a meeting with the Rhode Island Office of Housing 

and Community Development staff and other city employees in Providence, RI. At the conclusion, a question 

and answer forum was held for approximately 30 State and local employees in attendance. 

ppp

RIGA Heath Wolfe and ASAC Brad Geary made two presentations at the Cook County, IL, Community 

Development Block Grant Agreement Workshop in Chicago, IL. The presentations consisted of an overview 

of HUD OIG’s mission and goals and the functions of the Offices of Investigation and Audit. RIGA Wolfe 

and ASAC Geary also presented information on OIG’s planned oversight and priorities to address HUD’s 

funding for HERA and ARRA. There were more than 65 individuals in attendance for each presentation. 

Disaster Relief

SAC Robert Anderson and ARIGA Tracey Carney provided an overview of HUD disaster relief grants 

during a panel discussion at the National Disaster Recovery Stakeholder Forum at the University of New 

Orleans International Conference Center in New Orleans, LA. Approximately 200 nonprofit grant recipients 

and Federal, State, and local government representatives attended.

ppp

Acting RIGA Tracey Carney provided an overview of HUD OIG’s background, mission, goals, and audit 

process during HUD’s CDBG Disaster Recovery Training in Houston, TX. The training was sponsored 

by HUD’s Office of Block Grant Assistance, Disaster Recovery and Special Issues Division. The training 

purpose was to bring together HUD grantees and presenters to review and discuss compliance issues in 

a number of areas such as performance management, compliance systems, and fraud prevention. More 

than 110 individuals representing Federal, State, and local governments responsible for the oversight and 

administration of CDBG disaster funding attended. 

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American Recovery and Reinvestment Act

SAC Barry McLaughlin and RIGA Heath Wolfe provided an overview of HUD OIG, NSP, and future 

projects funded by ARRA and described HUD program regulations, reporting requirements, “red flag” 

indicators, and subgrantee responsibilities at a meeting of Cook County subgrantees in Chicago, IL. More 

than 50 business executives attended. 

ppp

RIGA Heath Wolfe and ASAC Brad Geary provided an overview of HUD OIG’s mission and goals, 

described the functions of the Offices of Audit and Investigation, and illustrated OIG’s planned oversight 

of HUD funding relating to HERA and ARRA at a Cook County CDBG Agreement workshop in Chicago, 

IL. More than 120 community planning and development grantees attended.

ppp

RIGA John Dvorak, ASAC Michael Wixted, and ARIGA Kevin Smullen met in Boston, MA, with Neil 

Cohen, the Deputy Inspector General from the Massachusetts OIG, and several of his staff to make a 

presentation on HUD OIG’s oversight efforts regarding ARRA. Participants were briefed on OIG’s mission, 

role, and responsibilities with regard to auditing ARRA funds and detecting and investigating ARRA 

fraud. The types of funds HUD would provide and the associated risks of administering these funds were 

discussed, as well as OIG outreach efforts in the State. Mr. Cohen noted that his office would evaluate the 

State’s use of ARRA funds. There was an exchange of ideas on how the two offices could jointly ensure that 

the areas which may be at risk could be evaluated/audited to prevent duplication of effort, followed by a 

commitment to continue the exchange of information on HUD programs and ARRA funding. A question 

and answer session followed the presentation.

ppp

ASAC James Luu and SA Eric Huhtala provided an overview of HUD OIG’s mission and described 

ARRA and OIG’s role in addressing program fraud at a fraud awareness training session for Western Region 

Inspector General Council members meeting in Sacramento, CA. Approximately 250 State, county, and 

local government officials attended. 

ppp

ASAC Nadine Gurley provided an overview of HUD OIG’s mission and described OIG’s involvement 

with ARRA funding at a meeting of Alabama housing authority executive directors in Birmingham, AL. 

At the conclusion, a question and answer forum was held for 50 executive directors in attendance. 

ppp

SA Jessica Thompson and HUD CPD Program Manager Robert Shumeyko provided an overview of 

HUD funding through ARRA and described potential risks and fraud involving the programs or grantees 

at a meeting in Boston, MA, of employees from the Massachusetts OIG. At the conclusion, a question and 

answer forum was held for approximately 15 investigators, analysts, and senior staff members in attendance. 

ppp

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SA Shelly Mack provided an overview of HUD OIG and its role in investigative initiatives and described 

HERA and ARRA at a meeting of Exit Realty Company employees in Calhoun, GA. Approximately 25 

employees attended.

ppp

SAC Joseph Clarke, ASAC Cary Rubenstein, and ARIGA Osiko Tekpetey made a presentation at the 

Council of State Community Development Agencies’ annual conference in Harrisonburg, PA. They provided 

an overview of HUD OIG’s mission and goals and the functions of the Offices of Audit and Investigation. 

Their presentation focused primarily on anticipated and ongoing HUD OIG oversight of funding received 

from ARRA. The conference was attended by representatives from various State agencies nationwide. 

Approximately 60 participants attended the presentation. 

ppp

RIGA Heath Wolfe and SAC Barry McLaughlin gave a presentation to HUD’s HOME Fund Accounting 

training in Pewaukee, WI. The presentation consisted of an overview of HUD OIG’s mission and goals 

and the functions of the Offices of Investigation and Audit. RIGA Wolfe presented information on the 

HOME program, common HOME audit findings, and OIG’s affirmative civil enforcement initiatives. SAC 

McLaughlin presented information on community development grant fraud, potential criminal issues/

activities associated with the HOME program, and OIG’s focus on ARRA funding and provided examples 

of OIG criminal cases involving government funds. There were more than 50 individuals in attendance.

ppp

SAC Diane DeChellis and ARIGA Kevin Smullen attended the STOP Fraud Task Force meeting at the 

offices of the Massachusetts Attorney General in Boston MA. The Task Force, established in 2009 in response 

to the enactment of ARRA, includes representatives from Massachusetts State and U.S. Federal investigative, 

audit, and inspector general agencies. The discussion topics centered on the issue of what areas the Task 

Force should address going forward from the release of ARRA funding to various Massachusetts entities. 

The discussion noted outreach efforts taken by HUD OIG in New England in advance of NSP/HERA and 

ARRA and the capacity audit of the City of Brockton, MA, NSP-I program. During the capacity audit, OIG’s 

Office of Audit determined that the City of Brockton’s grantee for NSP funds, Building a Better Brockton 

(BBB), had capacity issues and that there appeared to be conflict-of-interest issues relative to many board 

members on the BBB with entities that would benefit from the NSP funds. From conditions cited in the audit 

report (2009-BO-1803), HUD cancelled the NSP-II ARRA funding, totaling more than $20 million, for the 

City. This report was recognized as an example of lessons to be learned by other HERA/ARRA grantees, 

and several Task Force members were provided copies of the published audit report. Approximately 25 

Task Force members were in attendance.

ppp

RIGA Edgar Moore and ARIGA Jack Harrison met in New York, NY, with Ms. Rose Gill Hearn, 

Commissioner, New York City Department of Investigation; her deputy commissioner for investigations; 

and two inspectors general from her staff (Department of Housing Preservation and Development and 

New York City Housing Authority) that oversee housing-related issues to discuss the roles of each and 

opportunities to coordinate activity in light of the ARRA funds distributed by HUD.

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Law Enforcement Outreach

SAC Rene Febles provided an overview of FHA and HECM fraud schemes as a panelist during a mortgage 

fraud panel in Brooklyn, NY, hosted by New York defense attorneys and moderated by U.S District Judge 

Joanne Seybert. Additional panelists included AUSA Jon Green, U.S. Probation Chief Mark Gelaj, and 

defense attorney Tom Rice. Approximately 70 New York defense attorneys attended. 

ppp

SAC Robert Anderson and SA Aimee Peralta provided an overview of HUD OIG’s mission and authority, 

described the working relationships between HUD OIG and Federal prosecutors, and discussed public 

corruption investigations relating to HUD programs at a meeting of members of the Indonesian AntiCorruption Task Force sponsored by the New Orleans, LA, U.S. Attorney’s Office. At the conclusion, a 

question and answer forum was held for 15 Indonesian prosecutors in attendance. 

ppp

SA Heather Yannello provided an overview of HUD OIG’s investigative mission and described HUD 

programs at a New York State Division of Criminal Justice training seminar in Buffalo, NY. Approximately 

120 government officials attended. 

ppp

SAs Bozena Schrank and John Keaney provided an overview of HUD OIG’s mission involving FHA 

mortgage fraud and described a number of fraud vulnerabilities, including loan originations, appraisals, 

identity theft, straw borrowers, and foreclosure rescue schemes, for individuals attending a “Fraud 

Investigations” training seminar at the Connecticut Police Academy in Meriden, CT. Approximately 45 

State and local police department personnel attended. 

ppp

SAs José Laureano and Hector Mercado provided an overview of HUD OIG’s mission and described 

avenues available to support each agency’s respective mission and goals during presentations for the 

director of the Puerto Rico Treasury Department Tax Evasion Division and the Puerto Rico Comptroller in 

San Juan, PR. 

ppp

SA Charee’ Carey and Rockland County District Attorney’s Office detective Brendan Donohue provided 

a presentation, entitled “Thinking Outside of the Box,” and described white-collar crimes and HUD Section 

8 fraud for Rockland County Police Academy students in Pamona, NY. Approximately 35 New York and 

Connecticut law enforcement personnel attended. 

ppp

SA Michael Weinstein provided an overview of HUD OIG’s mission and programs and described available 

OIG resources for individuals attending a Central Maryland Financial Crimes and Identity Theft seminar 

in Baltimore, MD. Approximately 25 Federal, State, and local government representatives attended the 

seminar, which was sponsored by the U.S. Postal Inspection Service. 

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Other Outreach

ASAC Wallace Merriman provided an overview of HUD OIG’s mission and described the HUD OIG 

tools used to detect grant fraud in HUD programs at a Grant Fraud Investigations Training seminar hosted 

by the National Science Foundation OIG in Arlington, VA. Approximately 250 attorneys, auditors, and 

law enforcement personnel attended. 

ppp

ARIGA Frederick Smith gave a presentation to the Beta Alpha Psi association at the campus of Metro State 

in Denver, CO. In attendance were 16 students from Metro State and the University of Colorado Denver. 

ARIGA Smith discussed the duties and responsibilities of Federal auditors and investigators, specifically as 

they pertain to HUD programs and ARRA. He provided a synopsis of each HUD program and examples 

of typical audits conducted by OIG within these program areas and discussed the advantages of a career 

in the Federal Government and the benefits of working for HUD OIG. 

ppp

Forensic Auditor (FA) Seda Mangassarian and an FBI agent were guest speakers at a graduate class in 

forensic accounting at the University of Southern California’s Marshall School of Business in Los Angeles, 

CA. They spoke to about 30 students on the impact of forensic accounting and auditing on criminal 

investigations. FA Mangassarian discussed her varied assignments during a public corruption case that 

resulted in a trial and her testimony in court, as well as her work on mortgage fraud cases. 

ppp

Counsel to the Inspector General Bryan Howell, SAC James Todak, and RIGA Heath Wolfe made 

presentations at the Association of Certified Fraud Specialists’ 10th Annual Fraud Conference in San Diego, 

CA. RIGA Wolfe presented information on the functions of the Office of Audit and the FHA insurance 

program. SAC Todak presented an overview of OIG’s Office of Investigation’s roles and responsibilities, 

and Counsel Howell discussed OIG’s civil enforcement initiative. There were 45 individuals in attendance.

ppp

ASAC Jeanne Daumen and ARIGA Joseph Vizer participated in the Joint Investigations and Global 

Resolutions - Parallel Proceeding Conference and the Government Fraud Task Force Meeting at the United 

States Attorneys Office in Newark, NJ. They presented information relating to HUD OIG’s mission, 

initiatives, and opportunities to participate in criminal and civil parallel proceedings.

ppp

ASAC Jeanne Daumen and ARIGA Joseph Vizer participated in the Interagency Bankruptcy Fraud Task 

Force Meeting at the United States Attorneys Office in Newark, NJ. They presented information relating 

to HUD OIG’s Mortgage Fraud Initiative investigations and civil parallel proceedings.

ppp

Senior Auditors Joanna Varenhorst and Larry McMillion gave a presentation to doctoral students at 

Our Lady of the Lake University in San Antonio, TX. The presentation included a brief background about 

HUD and HUD OIG and included examples of OIG activities from recent audits and media reports. The 

presentation included a short question and answer session.

ppp

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The HUD OIG office in Seattle, WA, invited members of the University of Washington’s chapter of the 

Beta Alpha Psi accounting fraternity for a presentation and office tour. During the presentation, ARIGAs 

Ed Schmidt and Tracey Vargas, Auditor Kela Mikkelsen, and SAC Wayne North described the mission and 

work of the HUD OIG Offices of Audit and Investigation. The attendees were also briefed on the advantages 

of seeking a career with HUD OIG. 

ppp

RIGA John Buck, SAC Joseph Clarke, ASAC Cary Rubenstein, and Auditor Stephen Cholewiak attended 

the Pennsylvania Attorney General’s Consumer Fair in Philadelphia, PA, along with program staff from 

HUD’s Philadelphia field office, as part of National Consumer Protection Week. They discussed issues such 

as HUD OIG’s priority to combat mortgage fraud; its efforts to ensure that housing authorities have the 

capacity to spend ARRA funding; and how taxpayers can report fraud, waste, and abuse in public housing.

ppp

Senior Auditor Michael Zaccaria participated in Essex County’s Point in Time Survey of the Homeless 

outreach in Newark, NJ, along with Newark HUD program staff. HUD staff interviewed and obtained 

information from homeless individuals and made them aware of resources that were available to assist them.

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RIGA Gerald Kirkland; ARIGA Jacob Williams; and Senior Auditors Joanna Varenhorst, Lorenzo Garcia, 

Larry McMillion, and Enrique Espinoza gave presentations to three accounting classes at the St. Mary’s 

University Bill Greehey School of Business in San Antonio, TX. The event was a part of the University’s 

annual Business Week, which honors outstanding students and professors. The presentation included a 

brief background about HUD and OIG and examples of OIG activities from recent audits and media reports. 

There was a short question and answer session during which audit staff discussed challenges faced by OIG 

and employment opportunities. 

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Chapter 8 - Outreach Efforts

Chapter 9

Reviews of

Policy Directives
Reviewing and making recommendations on legislation, regulations, and policy issues is a critical part 

of the Office of Inspector General’s (OIG) responsibilities under the Inspector General Act. During this 

6-month reporting period, OIG has committed approximately 540 hours to reviewing 106 issuances. The 

draft directives consisted of 4 notices of funding availability, 20 new or revised regulations, 62 mortgagee 

letters or notices, and 20 other directives. OIG provided comments on 51 percent of these directives. This 

chapter highlights some of OIG’s comments for this reporting period.

Enacted Legislation

Due to the collapse of the subprime mortgage market and resulting increase in foreclosures, Congress and the 

President approved the Housing and Economic Recovery Act of 2008 (HERA) and the American Recovery and 

Reinvestment Act of 2009 (ARRA). This legislation contained significant new funding and programs for the 

U.S. Department of Housing and Urban Development (HUD). Specifically, the Neighborhood Stabilization 

Program (NSP) was created under HERA and provided an initial $3.92 billion in funding to State and local 

governments for the redevelopment of abandoned and foreclosed-upon homes and residential properties. 

ARRA provided an additional $13.61 billion to existing programs, including an additional $2 billion for NSP.

OIG, at the request of Congress, is performing audits of recipients of HERA and ARRA funding. Based on 

risks identified in HUD’s front-end risk assessments, OIG targeted program areas and will propose regulatory 

changes, as necessary, to control risks in these new program areas. 

OIG also participated in a number of meetings with HUD officials regarding these additional funds and 

the programmatic risks of the activities. OIG continues to express concerns about the capacity of many of 

the grantees. OIG has expressed its concerns in our review comments to clearance items and directly to 

HUD officials.

The Federal Housing Commissioner continued to propose a number of risk management initiatives related to 

HUD’s single-family programs and has started the process of updating its multifamily program requirements. 

As part of the issuances reviewed, OIG provided comments on the preliminary rules. Many of the proposed 

changes required rule making. Therefore, OIG is awaiting publication of the proposed rules in the Federal 

Register and subsequent submission of the final rules in the clearance process. OIG will continue to monitor 

and review proposed changes related to the Federal Housing Administration.

Notices and Policy Issuances

OIG objected to two HUD-proposed notices and one policy issuance. Working cooperatively with the 

Department, OIG continues efforts to resolve its objections.

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Chapter 9 - Reviews of Policy Directives
Chapter 10

Audit

Resolution
In the audit resolution process, Office of Inspector General (OIG) and U.S. Department of Housing and 

Urban Development (HUD) management agree upon the needed actions and timeframes for resolving audit 

recommendations. Through this process, OIG hopes to achieve measurable improvements in HUD programs 

and operations. The overall responsibility for ensuring that the agreed-upon changes are implemented 

rests with HUD managers. This chapter describes significant revised management decisions and significant 

management decisions with which OIG disagrees. It also contains a status report on HUD’s implementation 

of the Federal Financial Management Improvement Act of 1996 (FFMIA). In addition to this chapter on audit 

resolution, see appendix 2, table B, “Significant Audit Reports Described in Previous Semiannual Reports 

in Which Final Action Had Not Been Completed as of March 31, 2010.”

Audit Reports Issued Before Start of Period With No 

Management Decision as of March 31, 2010

Registered Sex Offenders’ Occupancy of HUD-Subsidized Housing 

Issued August 14, 2009. The Inspector General referred this issue to the Assistant Secretaries for Housing 

and Public Housing on December 28, 2009, because agreement could not be reached with the Deputy 

Assistant Secretaries on 13 of the 22 recommendations. The recommendations relate to OIG’s audit of HUD’s 

requirement prohibiting lifetime registered sex offenders from admission to HUD-subsidized housing. Based 

upon a statistical sample, OIG determined that HUD subsidized an estimated 2,094 to 3,046 households that 

included lifetime registered sex offenders. As a result, it did not accomplish the objective of the statute to 

prevent admission of dangerous sex offenders, and the same offenders who were deemed too dangerous 

for admission were allowed to continue living in subsidized housing. OIG recommended that HUD seek 

legislative and program rule changes to require denial of continued occupancy and termination of tenancy 

or continued subsidy, as appropriate, for all lifetime registered sex offenders residing in subsidized housing. 

OIG also recommended that if legislative changes are passed, HUD develop and implement a plan to 

detect lifetime registered sex offenders occupying subsidized housing. Additionally, OIG recommended 

that HUD require projects and housing authorities to revise their admission, screening, and recertification 

procedures and urge them to aggressively pursue termination of assistance for lifetime sex offenders to the 

extent allowed by law. 

Both Assistant Secretaries submitted new proposed management decisions on March 31, 2010. OIG agreed 

with the Assistant Secretaries on all but two recommendations, which related to the need for legislative 

changes to require denial of continued occupancy and termination of tenancy for all lifetime registered sex 

offenders residing in subsidized housing. Specifically, OIG’s audit identified tenants who were eligible 

at the time of admission but later became lifetime registered sex offenders. While Congress has banned 

lifetime registered sex offenders from being admitted to federally assisted housing, current statutes do not 

effectively empower HUD to purge all lifetime registrants who already reside there. This issue is troubling 

because HUD possesses sufficient legal authority to terminate other groups. To compensate for this gap in 

its statutory authority, HUD’s only present option is to employ a mix of regulations, policies, and procedures, 

the statutory basis and ultimate efficacy of which are disputable. A statutory fix authorizing and requiring 

termination of lifetime registrants from federally assisted housing is the surest means to enable HUD to 

protect residents from known sexual offenders. After the end of this semiannual reporting period, OIG 

referred this matter to the Deputy Secretary for a final decision. (Audit Report: 2009-KC-0001)

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The City of Boston’s Department of Neighborhood Development in 

Boston

Issued August 19, 2009. The OIG Office of Audit initially referred this issue to the Deputy Assistant 

Secretary for Grant Programs, Office of Community Planning and Development (CPD), on December 18, 

2009, because agreement could not be reached on recommendations for finding 2 in the audit report with 

the CPD Director of Region 1 (Boston). The five recommendations relate to the City of Boston’s failure 

to ensure that project developers that received HOME Investment Partnerships Program (HOME) funds 

(from the City) followed Federal procurement regulations when they hired contractors for construction and 

development work. The City’s procurement transactions were not conducted in a manner to provide open 

and free competition. The City’s own written policy on bidding states that projects must be competitively 

bid to achieve the lowest reasonable construction costs and to provide increased fair access to the economic 

opportunities created through the project. The City’s policy further states that developers must solicit 

and receive at least three bids, at least two of which are from general contractors that have not previously 

contracted with the developer. Both the Federal regulations and the auditee’s written policies should serve 

as valid criteria. 

In its response, the Region 1 CPD Director appeared to be in agreement that projects should be 

competitively bid to achieve the lowest possible construction costs and to provide increased fair access to 

economic opportunities created through the project. OIG did not agree, however, with CPD’s statement 

that the City provided the necessary documentation indicating that the City followed proper bidding 

policies on all projects identified in the OIG report.

In the audit report, OIG recommended that the Boston CPD Director require the City to (1) conduct 

an independent cost analysis for each of the procurements noted to ensure that nearly $5.2 million was 

reasonable and properly supported and to reimburse the program any amounts not determined to be 

reasonable and supported; (2) monitor the developer’s procurement process to ensure that construction 

bids are formally (publicly) advertised, bids are solicited from an adequate number of contractors, and 

awards are made to the lowest responsive bidder; (3) provide technical assistance to the developers as 

needed; (4) review and maintain supporting documentation for each procurement including a history of 

the procurement; and (5) revise its written procurement regulations to ensure compliance with Federal 

regulations.

By late March 2010, 3 months after OIG submitted the referral to the Deputy Assistant Secretary, it had 

not received a response from the Deputy Assistant Secretary’s office. The management decisions for these 

recommendations were pending as of March 31, 2010. (Report No. 2009-BO-1011)

HUD Lacked Adequate Controls To Ensure The Timely Commitment 

and Expenditure of HOME Funds

Issued September 28, 2009. HUD OIG audited HUD’s HOME program. OIG recommended that HUD 

CPD establish and implement controls to ensure that field offices require participating jurisdictions to 

close out future HOME activities within a timeframe that will permit reallocation and use of the funds for 

eligible activities in time to avoid losing them to recapture by the United States Treasury under provisions 

of Public Law 101-510. OIG also recommended that CPD obtain a formal legal opinion from HUD’s Office 

of General Counsel regarding whether

• HUD’s cumulative technique for assessing compliance with commitment deadlines is consistent 

with and an allowable alternative to the 24-month commitment required by 42 U.S.C. (United 

States Code) 12748 and

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• HUD’s first-in, first-out (FIFO) method for assessing compliance with HOME expenditure 

requirements is consistent with and an allowable alternative to the 8-year recapture deadline 

pursuant to Public Law 101-510, codified at 31 U.S.C. 1552.

CPD obtained a legal opinion from the Assistant General Counsel for Community Development on 

March 5, 2010. The legal opinion supports the Department’s use of the cumulative approach and FIFO 

accounting method. Based on this legal opinion, CPD does not plan to implement OIG’s recommendation 

to discontinue use of the FIFO method to account for the commitment and expenditure of HOME funds or 

the cumulative technique for assessing deadline compliance.

OIG disagrees with the conclusions of the CPD legal opinion. OIG continues to disagree that CPD’s use 

of the FIFO method for recognizing commitments and expenditures that participating jurisdictions make 

against their HOME appropriations or CPD’s cumulative accounting are consistent with the legislation, 42 

U.S.C. 12748, requiring recapture of funds not committed by statutory deadline dates. These methods of 

accounting also potentially violate the closure of accounts under 31 U.S.C. 1552. 

The issues related to the commitment and expenditure of funds should be reviewed by the Office of 

the Chief Financial Officer. OIG is also considering referring the matter to the Government Accountability 

Office for its review and determination. 

Another issue raised by CPD’s accounting methods is whether HUD’s FIFO accounting method 

complies with Federal accounting requirements for maintaining the U.S. Standard General Ledger and 

general appropriations law. The accounting issues require review for compliance with Federal accounting 

standards and appropriation law. (Audit Report: 2009-AT-0001)

Significantly Revised Management Decisions

Section 5(a)(11) of the Inspector General Act, as amended, requires that OIG report information 

concerning the reasons for any significant revised management decisions made during the reporting 

period. During the current reporting period, there were significant revised management decisions on four 

audits.

Mays Property Management, Inc., Multifamily Management Agent - 

Little Rock, AR

Issue Date: September 17, 2004. As part of HUD OIG’s initiative to combat equity skimming, OIG audited 

nine multifamily projects managed by Mays Property Management, Inc. (Mays). HUD either insured or 

held the mortgages on the properties. OIG’s objective was to determine whether Mays complied with 

project regulatory agreements and HUD regulations when spending project funds.

HUD OIG found that Mays officials disbursed project operating funds for items that violated 

project regulatory agreements with HUD. They charged management agent expenses to projects, paid 

for unsupported expenditures, diverted project funds to Mays and a property owner, and overcharged 

expenses to projects. In addition, Mays split its management fee with a project owner and transferred 

project funds to other projects having cash-flow problems. As a result, Mays’ officials misspent more 

than $979,000 in project-operating funds and made unauthorized advances of more than $20,000 from five 

projects to other projects. This action had a negative financial impact on the projects.

OIG made six recommendations to HUD. The recommendations included (1A) require Mays to 

pay back the projects nearly $492,000 for the ineligible expenditures from project operating funds, (1C) 

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Chapter 10 - Audit Resolution
require Mays to either furnish required documentation or pay back the projects more than $437,000 for the 

unsupported outlays, and (1E) with HUD review and approval, require projects to pay their debt to other 

projects. 

In February 2005, HUD and OIG reached agreed-upon management decisions. HUD sent a letter 

to Mays requiring Mays to either provide supporting documentation or reimburse the projects. HUD 

followed up on this request with a June 3, 2005, demand letter for immediate repayment of the debt owed 

projects. HUD officials have been unsuccessful in collecting the misspent funds. Moreover, on March 

16, 2007, Pulaski County Circuit Court, located in Arkansas, awarded a $1.39 million creditor judgment 

against Mays and its owner. The judgment awarded liens to the creditor that were superior to any liens 

held by HUD. As a result, HUD deems the debt as uncollectable. On March 18, 2010, HUD and OIG 

agreed that HUD should submit a revised management decision indicating that HUD would write off the 

nearly $929,000 debt as uncollectable because Mays would not be able to repay. HUD would also revise 

the management decision by not requiring projects to pay their debt to other projects. Once agreed upon 

by OIG, those actions would close recommendations 1A, 1C, and 1E. (Audit Report: 2004-FW-1009)

Capmark Finance, Inc., Underwriter for Asbury Square Apartments’ 

Mortgage Loan - Tulsa, OK

Issue Date: July 2, 2007. At the request of HUD, OIG audited Capmark Finance, Inc.’s (Capmark) 

underwriting and processing of the mortgage loan for Asbury Square Apartments (Asbury), located in 

Tulsa, OK. OIG had previously audited Asbury’s owner/management agent. OIG’s objective was to 

determine whether Capmark followed HUD requirements when underwriting and processing the Asbury 

loan.

OIG found that Capmark misrepresented Asbury’s financial and physical situation to HUD in its 

underwriting narrative. Further, it did not exercise the required amount of due diligence to support its 

recommendation for HUD endorsement. The Asbury mortgage loan, as recommended by Capmark, 

did not provide enough funds to restore the project to a financially viable condition. While Capmark 

complied with most multifamily accelerated processing (MAP) requirements when underwriting the loan, 

its underwriting narrative lacked material financial information and analysis. In addition, Capmark did 

not perform its property site inspection within MAP requirements. As a result, Asbury defaulted on the 

loan before final closing, causing HUD a possible loss of more than $5.9 million. 

OIG recommended that the Assistant Secretary for Housing refer Capmark to the Mortgagee Review 

Board for appropriate action. Further, OIG recommended that the acting Deputy Assistant Secretary for 

Multifamily Housing establish a MAP Lender Review Board to address and resolve violations by Capmark.

On March 31, 2010, HUD and OIG reached a revised management decision. HUD’s Office of General 

Counsel provided an opinion that collection is not likely due to pending litigation and Capmark’s 

bankruptcy in December of 2009. As a result, HUD will follow appropriate procedures to write off the 

more than $5.2 million loss. (Audit Report: 2007-FW-1011)

Heartland Funding Corporation - Springfield, MO

Issue Date: September 8, 2008. HUD OIG conducted an audit of Heartland Funding Corporation, 

which disclosed that Heartland Funding violated the Real Estate Settlement Procedures Act and HUD’s 

requirements when processing Federal Housing Administration (FHA) loans that involved downpayment 

assistance. In addition, Heartland Funding did not follow HUD requirements when it underwrote 27 FHA 

loans.

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Chapter 10 - Audit Resolution
OIG recommended that HUD require Heartland Funding to (1) make principal reductions totaling 

nearly $84,000 on the 25 loans that used the improper downpayment assistance program, (2) indemnify 

HUD for 17 actively insured loans with unpaid principal balances totaling more than $1.4 million, (3) 

indemnify HUD for future losses on nine loans with unpaid principal balances totaling nearly $930,000 for 

which HUD has not yet sold the property, and (4) reimburse HUD for one loan for which HUD has sold the 

property and incurred a loss of more than $54,000.

HUD agreed with the recommendations; however, an initial attempt by HUD to deliver the findings 

letter and indemnification agreements to Heartland Funding’s home office in Springfield, MO, on February 

12, 2009, was unsuccessful. Heartland Funding failed to notify HUD that it was no longer operating at that 

address. A second attempt to deliver the findings letter and indemnification agreements to the residential 

address of Heartland Funding’s chief executive officer was successful on March 25, 2009. On August 

18, 2009, Heartland provided a written response to HUD, in which it indicated that the planned actions 

outlined in response to our audit recommendations were inappropriate and stated that the company was 

in the process of dissolving. HUD determined that Heartland Funding was a viable company with active 

FHA approval and referred the lender to the Mortgagee Review Board for review and appropriate action.

On March 22, 2010, HUD submitted a revised management decision proposing to write off (1) the 

nearly $84,000 in principal reductions for the 25 loans that used the improper downpayment assistance 

program, (2) the projected loss of nearly $534,000 for the 17 actively insured loans with unpaid principal 

balances totaling more than $1.4 million, (3) the projected loss of more than $351,000 for the nine loans with 

unpaid principal balances totaling nearly $930,000 for which HUD has not yet sold the property, and (4) 

the more than $54,000 for the one loan for which HUD sold the property and incurred a loss. On March 25, 

2010, OIG agreed with the revised management decision. (Audit Report No. 2008-KC-1006)

Homes for Life Foundation, Los Angeles, CA

Issue Date: December 18, 2007. OIG audited Homes for Life Foundation (Foundation) to determine 

whether the Foundation applied and tracked is HUD Supportive Housing Program cash match in 

accordance with applicable laws, regulations, and requirements. The audit showed that the Foundation 

did not administer its Supportive Housing Program grants in compliance with HUD requirements. 

Specifically, it could not adequately support that it met the statutory 25 percent cash match requirement 

of more than $389,000 for all 12 grants reviewed. Further, it inappropriately charged more than $5,000 in 

duplicate operational costs to both HUD and the Los Angeles County Department of Mental Health and 

more than $107,000 in unsupported duplicate salaries. OIG attributed the deficiencies to the Foundation’s 

inadequate understanding of the cash match record-keeping rules and regulations, its inadequate financial 

management system, its failure to implement a cost allocation plan that met HUD requirements to distribute 

shared costs among its multifunded projects, and the Authority’s failure to monitor the Foundation’s cash 

match operations. 

OIG recommended that HUD require the Foundation and/or the Authority to (1) provide adequate 

supporting documentation to substantiate that the cash match of more than $389,000 was met or repay 

more than $2 million from non-Federal funds for the grant funds expended, (2) implement a financial 

management system that adequately identifies the source and application of all cash match funds for 

federally sponsored activities, (3) support or repay the duplicate costs, and (4) establish and implement a 

cost allocation plan that meets HUD requirements by allocating program expenditures for its multifunded 

projects equitably. On February 26, 2008, HUD and OIG reached management decisions to implement the 

recommendations by February 22, 2009. Later, the Foundation implemented a new financial management 

system that would adequately identify the source and application of funds spent in the future and 

implemented a cost allocation plan. However, HUD and OIG were unable to reach an agreement on 

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Chapter 10 - Audit Resolution
whether the documentation provided by the Foundation adequately supported the questioned costs 

associated with the recommendations. 

The Assistant Secretary for Community Planning and Development agreed with OIG’s audit opinion 

that the Foundation’s financial management system was deficient and agreed that the findings were valid. 

She further agreed that the Foundation did not satisfactorily track the use of its cash-matching funds 

through its accounting records down to the level of the individual projects as required by 24 CFR (Code 

of Federal Regulations) 85.20(a)(2), and HUD was unable to obtain documentation to prove whether the 

double billings had occurred. Despite all of this, HUD’s position was that since the Foundation has since 

implemented a new financial management system, there was no evidence of fraudulent activity on the 

Foundation’s part so no repayment of grant funds should be required. Instead, HUD agreed to monitor the 

Foundation over the next 3 years to ensure that the new financial management system is adequate. HUD 

chose not to implement the original agreed-upon management decisions to require repayment of the grant 

funds. A revised management decision to monitor the Foundation over the next 3 years will not remedy 

the past deficiencies. Although, the Foundation was unable to demonstrate that the grant funds were 

used in accordance with the pertinent requirements or that the effectiveness of the Supportive Housing 

Program’s intent was met, OIG accepted the revised management decisions and the final action target date 

of April 1, 2013. (Report No. 2008-LA-1003)

Significant Management Decision With Which OIG Disagrees

There were no reports in which OIG disagrees with the Department’s final management decision.

Federal Financial Management Improvement Act of 1996

In fiscal year 2009, HUD did not substantially comply with FFMIA. In this regard, HUD’s financial 

management systems did not substantially comply with Federal financial management system requirements.

During fiscal year 2009, HUD made limited progress in bringing the financial management systems 

into compliance with FFMIA. HUD’s financial management systems continued to not meet current 

requirements. HUD’s systems were not operated in an integrated fashion and linked electronically to 

efficiently and effectively provide agency-wide financial system support necessary to carry out the agency’s 

mission and support the agency’s financial management needs.

HUD’s financial systems, many of which were developed and implemented before the issue date of 

current standards, were not designed to provide the range of financial and performance data currently 

required. HUD is in the process of modernizing its financial management systems by developing an 

integrated financial management system. The modernization development, HUD’s Integrated Financial 

Improvement Project (HIFMIP), was launched in fiscal year 2003 but has been plagued by delays. Originally 

planned for implementation in 2006, HIFMIP is now slated to be fully integrated in fiscal year 2015. 

FFMIA requires OIG to report in its Semiannual Reports to the Congress instances and reasons when 

an agency has not met the intermediate target dates established in its mediation plan required by FFMIA. 

At the end of 2009, the Department reported that 2 of its 40 financial management systems were not in 

substantial compliance with FFMIA. These two systems are the HUD Procurement System and Small 

Purchase System. The Department plans to acquire a new application, which will bring these systems into 

compliance with FFMIA. The acquisition of the new application is anticipated to be complete by June 30, 

2010. However, full funding to complete the project has not been obtained; therefore, it is unclear when the 

new application will be fully implemented. Although 38 individual systems had been certified as compliant 

with Federal financial management systems requirements, HUD had not performed independent reviews 

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Chapter 10 - Audit Resolution
on all of its financial management systems within the 3-year period required by Office of Management and 

Budget (OMB) Circular A-127. Collectively and in the aggregate, deficiencies continued to exist. 

In addition, OIG audit reports have disclosed that security of financial information was not provided 

in accordance with OMB Circular A-130, Management of Federal Information Resources, appendix III, and 

the Federal Information Security Management Act. 

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Chapter 10 - Audit Resolution
Appendix 1

Audit Reports

Issued
Internal Reports

19 Audit Reports

Chief Financial Officer (1 Report)

2010-FO-0003 Additional Details to Supplement Our Report on HUD’s Fiscal Years 2009 and 2008 

Financial Statements, 11/16/2009. Better use: $516,100,000.

Community Planning and Development (2 Reports)

2010-BO-0002 HUD’s CPD Had Established and Implemented an Appropriate Risk Assessment 

Process, 03/18/2010.

2010-CH-0001 The Office of Block Grant Assistance Lacked Adequate Controls Over the Inclusion 

of Special Conditions in NSP Grant Agreements, 03/29/2010.

Government National Mortgage Association (2 Reports)

2010-DP-0001 Review of Ginnie Mae’s Controls over Its Information Technology Resources, 

12/11/2009.

2010-FO-0001 Audit of Ginnie Mae’s Financial Statements for Fiscal Years 2009 and 2008, 

11/06/2009.

Housing (3 Reports)

2010-FO-0002 Audit of the FHA’s Financial Statements for Fiscal Years 2009 and 2008, 

11/13/2009.

2010-LA-0001 HUD’s Performance-Based Contract Administration Contract Was Not Cost 

Effective, 11/12/2009. Better use: $7,600,755.

2010-PH-0001 HUD’s Philadelphia, PA, Homeownership Center Did Not Always Ensure That 

Required Background Investigations Were Completed for Its Contracted 

Employees, 02/26/2010. Questioned: $5,438,372; Unsupported: $5,438,372; Better 

use: $2,175,348.

Lead Hazard Control (1 Report)

2010-HA-0001 HUD’s OHHLHC Awarded Grants to Ineligible Applicants, 01/11/2010. Better 

use: $5,774,821.

Public and Indian Housing (2 Reports)

2010-BO-0001 HUD Was Not Effective in Recovering the New London Housing Authority 

From Troubled Status and Did Not Take the Required Regulatory or Statutory 

Action, 02/18/2010. Questioned: $812,618; Unsupported: $162,525; Better 

use: $14,306.

2010-FW-0001 HUD Did Not Maintain Documentation to Determine if Public Housing Agencies 

Took Corrective Action on its January 7, 2008 Memorandum and Public Housing 

Agencies Paid an Estimated $7 Million for Deceased Tenants, 11/10/2009. 

Questioned: $7,061,404; Unsupported: $7,056,917; Better use: $6,423,628.

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Appendix 1 - Audit Reports Issued
Audit-Related Memorandums1

Chief Financial Officer (1 Report)

2010-LA-0802 Evaluation of the Final Front-End Risk Assessment for the Native American 

Housing Block Grant Program, 10/26/2009.

Chief Information Officer (1 Report)

2010-DP-0802 OIG Response to Questions From the OMB Under the Federal Information Security 

Management Act of 2002, 11/18/2009.

Housing (2 Reports)

2010-LA-0801 HUD Needs to Make a Final Determination on Whether San Diego Square 

Subleased Property is HUD Insured Under Section 202 of the Housing Act of 1959, 

San Diego, CA, 10/01/2009. Better use: $73,621.

2010-PH-0801 HUD’s Regulatory Agreement with the Yorkville Cooperative Does Not Protect 

HUD’s Interest, 01/12/2010. Better use: $989,521.

Office of the Secretary (1 Report)

2010-DP-0801 Review of HUD’s Process for Monitoring Recipient Reporting for the ARRA, 

10/30/2009.

Public and Indian Housing (3 Reports)

2010-AO-0801 HUD Needs to Ensure That the Housing Authority of New Orleans Strengthens Its 

Capacity to Adequately Administer Recovery Funding, 12/15/2009. Questioned: 

$321,462; Unsupported: $321,462.

2010-FW-0801 HUD Guidance on American Recovery and Reinvestment Act Capital Fund 

Physical Needs Assessment, 01/15/2010.

2010-LA-0803 Review Results for Hotline Case Number HL-09-0756 Kaibab Band of Paiute 

Indians, Pipe Spring, AZ, 01/25/2010.

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1

 The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted 

government auditing standards, to close out assignments with no findings and recommendations, to respond to requests for 

information, to report on the results of a survey, or to report the results of civil actions or settlements.

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Appendix 1 - Audit Reports Issued
External Reports

63 Audit Reports

Community Planning and Development (19 Reports)

2010-AO-1001 Mississippi Development Authority Did Not Always Ensure Compliance under Its 

Public Housing Program, Jackson, MS, 12/15/2009.

2010-AO-1002 State of Louisiana Did Not Always Ensure Compliance Under Its Recovery 

Workforce Training Program, Baton Rouge, LA, 01/04/2010. Questioned: $147,681; 

Unsupported: $145,392.

2010-AT-1002 Broward County Needs To Strengthen Controls Over Its NSP, Fort Lauderdale, FL, 

03/31/2010.

2010-BO-1002 The City of Holyoke, Office of Community Development, Needs to Improve Its 

Administration of HOME- and CDBG-Funded Housing Programs, Holyoke, MA, 

11/23/2009. Questioned: $1,595,491; Better use: $2,277,385.

2010-BO-1004 The City of Waterbury’s Subrecipient, Waterbury Development Corporation, 

Needs to Improve Its Capacity to Effectively Administer Its Neighborhood 

Stabilization Program, Waterbury, CT, 01/20/2010. Questioned: $8,900; Better use: 

$15,700.

2010-CH-1002 The City of Saginaw Lacked Adequate Controls over Its CDBG-Funded Demolition 

Activities, Saginaw, MI, 11/03/2009. Questioned: $268,369; Unsupported: $188,225.

2010-KC-1001 The State of Iowa Misspent CDBG Disaster Assistance Funds and Failed To Check 

for Duplicate Benefits, Des Moines, IA, 03/10/2010. Questioned: $10,532,871; 

Unsupported: $10,532,871.

2010-KC-1003 The City of East St. Louis Did Not Properly Allocate Salary and Building Expenses 

or Properly Document Its Process to Secure a Consulting Services Contract, East St. 

Louis, IL, 03/26/2010. Questioned: $1,025,798; Unsupported: $1,025,798.

2010-LA-1001 City of Los Angeles Housing Department Did Not Ensure That the NoHo 

Commons Housing Development Met HOME Program Requirements, Los 

Angeles, CA, 10/28/2009.

2010-LA-1003 City of Los Angeles’ Community Development Department Projects Did Not 

Comply with CDBG Program Requirements, Los Angeles, CA, 12/04/2009. 

Questioned: $935,000; Unsupported: $935,000.

2010-LA-1004 Although the County of Riverside Had Sufficient Overall Capacity, It Lacked 

Necessary Controls To Administer Its NSP, Riverside, CA, 12/29/2009.

2010-LA-1006 City of Fresno, NSP, Fresno, CA, 02/03/2010.

2010-LA-1007 The County of San Bernardino Had Questionable Capacity To Administer Its 

Allocation of NSP Funds, San Bernardino, CA, 02/11/2010.

2010-LA-1008 The City of Los Angeles Generally Had Sufficient Capacity and Adequate 

Internal Controls To Administer Its NSP Funds, Los Angeles, CA, 03/17/2010.

2010-NY-1001 Lower Manhattan Development Corporation Generally Administered CDBG 

Disaster Recovery Assistance Funds in Accordance with Regulations, New 

York, NY, 10/06/2009.

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Appendix 1 - Audit Reports Issued
2010-NY-1005 The City of Paterson Did Not Always Administer Its CDBG Program in 

Accordance with HUD Requirements, Paterson, NJ, 12/18/2009. Questioned: 

$4,347,948; Unsupported: $3,707,142; Better use: $2,093,480.

2010-NY-1007 The City of Jersey City Needs To Strengthen Its Controls To Ensure That It Will Be 

Able To Effectively Administer CDBG-R Funds, Jersey City, NJ, 02/02/2010. 

Questioned: $298,901; Unsupported: $237,183.

2010-NY-1008 The Lower Manhattan Development Corporation Generally Administered CDBG 

Disaster Recovery Assistance Funds in Compliance With Regulations, New York, 

NY, 03/22/2010.

2010-PH-1001 The City of Altoona Made Unsupported CDBG Payments, Altoona, PA, 

10/02/2009. Questioned: $914,335; Unsupported: $914,335; Better use: $458,700.

Housing (12 Reports)

2010-AT-1001 Mortgage Counseling Services, Inc., Did Not Follow HUD Requirements in 

Originating and Closing Loans and Implementing Its Quality Control Program, 

College Park, GA, 01/13/2010. Better use: $469,057.

2010-CH-1004 Leader Financial Services Did Not Perform an Adequate Due Diligence Review of 

Purchased Loan Components of FHA-Insured Loans, Parma, OH, 12/15/2009.

2010-DE-1001 Kier Paid or Recorded Ineligible Costs and Did Not Properly Compute Subsidies, 

Denver, CO, 12/18/2009. Questioned: $84,510; Better use: $2,050,000.

2010-LA-1009 DHI Mortgage Company, LTD’s Scottsdale, AZ, Branches Did Not Follow FHAInsured Loan Underwriting Requirements, 03/19/2010. Questioned: $265,420; 

Better use: $1,501,765.

2010-NY-1002 Jersey Mortgage Company Did Not Always Comply with HUD/FHA Loan 

Underwriting Requirements, Cranford, NJ, 10/09/2009. Questioned: $96,359; 

Better use: $1,281,314.

2010-NY-1003 The South Bronx Community Management Co., Inc., Had Weaknesses in Its 

Administration of the Project Maria Isabel, Bronx, NY, 11/04/2009. Better use: $2,005.

2010-NY-1004 Ark Mortgage, Incorporated, Did Not Always Comply with HUD/FHA Loan 

Origination Requirements, North Brunswick, NJ, 11/24/2009. Questioned: $79,860; 

Unsupported: $79,860; Better use: $672,158.

2010-NY-1006 SFDS Development Corporation Had Weaknesses in Its Financial, Procurement 

and Administrative Controls, New York, NY, 12/22/2009. Questioned: $676,049; 

Unsupported: $498,643; Better use: $20,386.

2010-NY-1009 Somerset Investors Corporation Did Not Always Comply With HUD/FHA Loan 

Underwriting Requirements, Melville, NY, 03/26/2010. Better use: $2,799,832.

2010-PH-1003 The Yorkville Cooperative Did Not Administer Its Section 221(d)(3) Property and 

Housing Assistance Contract According to Its Regulatory Agreement and HUD 

Requirements, Fairfax, VA, 11/25/2009. Questioned: $324,935; Unsupported: 

$66,850; Better use: $81,257.

2010-PH-1004 Residential Home Funding Corporation Did Not Always Comply With HUD 

Requirements in Originating FHA-Insured Single-Family Loans, Gaithersburg, 

MD, 01/21/2010. Better use: $997,291.

2010-PH-1005 Infinity Home Mortgage Company, Inc., Did Not Implement a Quality Control 

Plan in Accordance With HUD Requirements, Cherry Hill, NJ, 03/31/2010.

141

Appendix 1 - Audit Reports Issued
Public and Indian Housing (11 Reports)

2010-BO-1001 The State of Connecticut Department of Social Services’ Section 8 Housing Units 

Did Not Always Meet HUD’s Housing Quality Standards, Hartford, CT, 

11/02/2009. Questioned: $62,459; Better use: $22,002,284.

2010-BO-1003 The State of Massachusetts, Department of Housing and Community 

Development, Properly Administered Its Section 8 Project-Based Voucher Program, 

Boston, MA, 12/17/2009.

2010-CH-1001 The Lake Metropolitan Housing Authority Did Not Always Ensure That Section 

8 Units Met HUD’s Housing Quality Standards, Painesville, OH, 10/28/2009. 

Questioned: $89,713; Better use: $903,984.

2010-CH-1003 The Grand Rapids Housing Commission Needs to Improve Its Administration of 

Its Section 8 Project-Based Voucher Program, Grand Rapids, MI, 11/24/2009. 

Questioned: $3,152,357; Unsupported: $3,050,078; Better use: $140,766.

2010-DE-1002 Fort Belknap Indian Community Did Not Properly Administer Its Indian Housing 

Block Grant Funds, Harlem, MT, 03/07/2010. Questioned: $514,898; Better use: 

$1,043,553.

2010-FW-1001 Dallas Housing Authority Demonstrated Capacity to Administer Its Recovery 

Act Capital Fund Formula Grant, Dallas, TX, 12/18/2009. Questioned: $27,425; 

Unsupported: $27,425; Better use: $1,174,243.

2010-FW-1002 The Housing Authority of the Sac and Fox Nation of Oklahoma Improperly 

Spent More Than $800,000 in Contracts and Did Not Always Operate in 

Accordance with HUD Rules and Regulations or Its Own Policies, Shawnee, OK, 

01/20/2010. Questioned: $809,547; Unsupported: $803,272; Better use: $269,604.

2010-KC-1002 The Kansas City Housing Authority Did Not Violate HUD’s Waiting List Rules 

When It Issued Section 8 Vouchers to Delaware Highlands Assisted Living Tenants, 

Kansas City, KS, 03/12/2010.

2010-LA-1002 Guam Housing and Urban Renewal Authority, Capital Fund Recovery Act Grant, 

Sinajana, GU, 12/02/2009.

2010-LA-1005 The Department of Hawaiian Home Lands Generally Had Capacity To Manage; 

However, It Needs To Improve Controls Over Its Administration of Recovery Act 

Funds, Kapolei, HI, 01/19/2010.

2010-PH-1002 The Philadelphia Housing Authority Needs to Improve Its Controls over Housing 

Assistance Payments, Philadelphia, PA, 10/06/2009. Questioned: $204,838; 

Unsupported: $154,736; Better use: $2,336,377.

Audit-Related Memorandums1

Community Planning and Development (14 Reports)

2010-AT-1801 Miami-Dade County Needs to Strengthen Controls over Its NSP, Miami, FL, 

11/20/2009.

2010-AT-1802 The City of Atlanta Needs To Improve Certain Aspects of Its NSP To Meet the 

Program’s 18-Month Obligation Deadline, Atlanta, GA, 12/14/2009.

1

 The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted 

government auditing standards, to close out assignments with no findings and recommendations, to respond to requests for 

information, to report on the results of a survey, or to report the results of civil actions or settlements.

142

Appendix 1 - Audit Reports Issued
2010-AT-1803 Hillsborough County has the Capacity To Administer its NSP and To Accurately 

Enter Commitments for its HOME Investment Partnerships Program, Hillsborough 

County, FL, 12/18/2009. Better use: $61,256.

2010-BO-1801 The State of Vermont’s Agency of Commerce and Community Development Had 

Sufficient Capacity To Effectively Administer Its NSP, Montpelier, VT, 12/07/2009.

2010-BO-1802 The State of Maine’s Department of Economic and Community Development, 

Office of Community Development, Has Sufficient Capacity To Effectively 

Administer Its NSP, Augusta, ME, 12/16/2009.

2010-BO-1804 The City of Meriden Had Sufficient Capacity To Effectively Administer Its NSP, 

Meriden, CT, 01/27/2010.

2010-CH-1801 Wayne County Needs To Improve Its Capacity to Effectively and Efficiently 

Administer Its NSP, Wayne County, MI, 01/12/2010.

2010-CH-1802 The City of East Cleveland Had Sufficient Capacity To Effectively and Efficiently

 Administer Its Recovery Act Block Grant Program, East Cleveland, OH, 

01/12/2010.

2010-CH-1803 The State of Indiana’s Administrator Awarded NSP Funds for an Inappropriate 

Project, Indianapolis, IN, 02/25/2010. Better use: $4,500,000.

2010-CH-1804 The City of Saginaw Needs To Improve Its Capacity To Effectively and Efficiently 

Administer Its CDBG Program Under the ARRA, Saginaw, MI, 03/31/2010. Better 

use: $335,750.

2010-FW-1801 The State of Arkansas Has the Capacity to Manage Recovery Act Funding, Little 

Rock, AR, 12/15/2009.

2010-FW-1802 The City of San Antonio Demonstrated Capacity To Administer Its Recovery Act 

Grant, San Antonio, TX, 12/29/2009.

2010-FW-1803 The City of Grand Prairie Maintains Capacity To Adequately Administer Recovery 

Funding But Needs To Make Program Improvements, Grand Prairie, TX, 

01/06/2010. Questioned: $5,309.

2010-PH-1802 District of Columbia - HOME Funds Provided to Developer H.R. Crawford for 

Parkside Terrace Apartments, Washington, DC, 02/25/2010.

Housing (1 Report)

2010-LA-1802 Review of Lutheran Gardens Corporation Trust Fund Account, Compton, CA, 

12/18/2009. Better use: $87,076.

Lead Hazard Control (1 Report)

2010-NY-1801 The City of Utica Has the Capacity to Administer Lead-Based Paint Funds 

Provided Under the ARRA, Utica, NY, 12/22/2009.

Public and Indian Housing (5 Reports)

2010-AT-1804 The Chattanooga Housing Authority Demonstrated Capacity To Administer Its 

Recovery Act Funds, Chattanooga, TN, 01/26/2010.

2010-LA-1801 HUD Should Provide Additional Monitoring of the Navajo Housing Authority’s 

Implementation of Recovery Act-Funded Projects, Window Rock, AZ, 10/09/2009.

2010-NY-1802 Control Weaknesses at the Syracuse Housing Authority May Affect Its Capacity 

to Administer American Recovery and Reinvestment Act Funds, Syracuse, NY, 

01/14/2010. Better use: $1,390,588.

143

Appendix 1 - Audit Reports Issued
2010-NY-1803 The New York City Housing Authority Had the Capacity to Administer Capital 

Funds Provided Under the American Recovery and Reinvestment Act, New York, 

NY, 03/12/2010.

2010-PH-1801 Audit of the Scranton Housing Authority, Scranton, PA, 12/17/2009. Questioned: 

$2,204,000; Unsupported: $2,204,000.

ppp

144

Appendix 1 - Audit Reports Issued
Appendix 2

Tables
Table A

Audit reports issued before the start of the period

with no management decision at March 31, 2010

*Significant audit reports described in previous semiannual reports

Report number

and title

Reason for lack of

management decision

Issue date

* 2009-KC-0001 HUD Subsidized an 

Estimated 2,094 to 3,046 Households 

That Included Lifetime Registered Sex 

Offenders

* 2009-BO-1011 The City of Boston’s 

Department of Neighborhood 

Development in Boston, Massachusetts, 

Did Not Administer Its HOME Program 

in Compliance with HUD Requirements

* 2009-AT-0001 HUD Lacked Adequate 

Controls to Ensure the Timely 

Commitment and Expenditure of HOME 

funds

See chapter 10, page 130.

See chapter 10, page 131.

See chapter 10, page 131.

08/14/2009

08/19/2009

09/28/2009

146

Appendix 2 - Tables
Report 

number

Report title Issue

date

Decision

date

Final

action

Table B

Significant audit reports on which final action had not been completed 

within 12 months after the date of the 

Inspector General’s report

2002-AT-1002

2002-KC-0002

2004-DP-0002

2004-PH-1008

2004-PH-1012

2004-FW-1009

2005-AT-1004

2005-CH-1002

2005-NY-1005

2005-AT-1013

2006-CH-0001

Housing Authority of the City of Tupelo, 

Housing Programs Operations, Tupelo, 

MS

Nationwide Survey of HUD’s Office 

of Housing Section 232 Nursing Home 

Program

Application Control Review of the Tenant 

Rental Assistance Certification System

Safe Haven Outreach Ministry, 

Incorporated, Washington, DC

Mortgage America Bankers, LLC, 

Nonsupervised Loan Correspondent, 

Kensington, MD

Mays Property Management,Inc., 

Multifamily Management Agent, Little 

Rock, AR

Housing Authority of the City of Durham, 

NC

Washington Mutual Bank, Underwriting 

of FHA-Insured Loans, Downers Grove, IL

The Housing Authority of the City 

of Newark Bond Financing Activities 

and Section 8 Housing Choice Voucher 

Administrative Fee Reserves, Newark, NJ

Corporacion Para el Fomento Economico 

de la Ciudad Capital Did Not Administer 

Its Independent Capital Fund in 

Accordance with HUD Requirements, San 

Juan, PR

Real Estate Assessment Center’s Physical 

Condition Assessment Was Compromised

07/03/2002 

07/31/2002 

02/25/2004 

06/03/2004

09/10/2004

09/17/2004

11/19/2004

11/29/2004

05/26/2005

09/15/2005

11/30/2005

10/31/2002

11/22/2002

07/14/2004

08/31/2004

01/06/2005

02/23/2005

03/15/2005

01/28/2005

09/23/2005

01/11/2006

01/10/2006

07/01/2015

Note 1

Note 1

Note 1

04/30/2010

12/31/2010

03/15/2015

Note 2

10/11/2011

Note 1

12/31/2011

147

Appendix 2 - Tables
Report 

number

Report title Issue

date

Decision

date

Final

action

2006-AT-1004

2006-NY-1003

2006-CH-1007

2006-NY-0001

2006-BO-1009

2006-BO-0001

2006-SE-0002

2006-KC-1013

2006-DP-0802

2007-LA-0001

The Housing Authority of the City of 

Prichard Did Not Ensure Section 8 Subsidy 

Payments Were for Eligible Units, Tenants, 

and Landlords, Prichard, AL

The Housing Authority of the City of 

Newark’s Controls Over Bond Financing 

Activities, Obtaining Supporting 

Documentation, and Legal Settlements 

Require Improvement, Newark, NJ

Huntington National Bank, Supervised 

Lender, Generally Complied with 

Requirements Regarding Submission 

of Late Requests for Endorsement and 

Underwriting of Loans, Columbus, OH

HUD’s Controls over the Reporting, 

Oversight, and Monitoring of the Housing 

Counseling Assistance Program Were Not 

Adequate

The Rhode Island Housing and Mortgage 

Finance Corporation Incorrectly Made 

More Than $1.8 Million in Section 8 

Subsidy Payments and Released More 

Than $900,000 from Restricted Residual 

Receipts Accounts, Providence, RI

HUD Incorrectly Approved $42 Million in 

Operating Subsidies for Phase-Down for 

Demolition Add-On Funding

The Office of Single Family Housing 

Expanded Late Endorsement Eligibility 

Without Studying Associated Risks

The Columbus Housing Authority 

Improperly Expended and Encumbered Its 

Public Housing Funds, Columbus, NE

Assessment of HUD’s Compliance with 

OMB Memorandum M-06-16, “Protection 

of Sensitive Agency Information”

Tax Credit Project Owners Are Allowed 

to Charge Higher Rents for Tenant-Based 

Section 8 Voucher Households than NonVoucher Households

01/13/2006 

02/14/2006 

03/15/2006 

06/08/2006

07/06/2006

07/11/2006

08/16/2006

08/30/2006

09/21/2006

11/08/2006

04/25/2006

08/17/2006

09/18/2006

01/08/2007

10/24/2006

10/13/2006

03/30/2007

10/17/2006

11/24/2006

07/05/2007

06/30/2010

09/13/2012

Note 2

Note 2

11/01/2010

10/01/2013

Note 1

11/30/2012

Note 2

10/01/2010

148

Appendix 2 - Tables
Report 

number

Report title Issue

date

Decision

date

Final

action

2007-DP-0003

2007-KC-0002

2007-AT-1007

2007-KC-0003

2007-BO-0002

2007-LA-1011

2007-SE-0001

2007-FW-1011

2007-BO-1006

2007-LA-1014

2007-AT-1010

Review of HUD’s Procurement Systems

HUD Can Improve Its Use of Residual 

Receipts to Reduce Housing Assistance 

Payments

The Municipality of Toa Baja Needs 

to Improve Its CDBG Program 

Administration, Toa Baja, PR

HUD Did Not Recapture Excess Funds 

from Assigned Bond-Financed Projects

HUD Did Not Process Multifamily 

Accelerated Processing Applications 

within Established Processing Goals and 

the Multifamily Accelerated Processing 

Guide Is Outdated

Suburban Mortgage Company Did Not 

Comply with HUD Requirements in the 

Origination of FHA-Insured Single-Family 

Mortgages, Phoenix, AZ

HUD’s Oversight of the Section 8 ProjectBased Contract

Capmark Finance, Inc. Misrepresented 

Asbury Square Apartments’ Financial and 

Physical Condition When Underwriting 

the $9.098 Million Loan, Tulsa, OK

Multifamily Project Deficiencies Resulted 

in More Than $730,000 in Cost Exceptions 

for Moosup Gardens Apartments, 

Moosup, CT

The Housing Authority of the County of 

San Mateo Did Not Use HUD Program 

Funds in Accordance with HUD 

Requirements, San Mateo, CA

The Cathedral Foundation of Jacksonville 

Used More Than $2.65 Million in Project 

Funds for Questioned Costs, Jacksonville, 

FL

01/25/2007 

01/29/2007 

04/11/2007 

04/30/2007

05/21/2007

05/29/2007

06/07/2007

07/02/2007

07/25/2007

07/27/2007

08/14/2007

05/25/2007

01/29/2007

07/16/2007

08/27/2007

09/07/2007

12/31/2007

10/05/2007

10/23/2007

11/20/2007

11/23/2007

12/03/2007

09/30/2010

01/31/2011

Note 2

Note 2

06/30/2010

Note 1

Note 1

11/30/2010

07/10/2010

11/24/2017

04/01/2010

149

Appendix 2 - Tables
150

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2007-PH-0002

2007-DP-0006

2007-AT-0001

2007-KC-0801

2007-AT-1011

2007-CH-1017

2007-CH-1018

2008-LA-0001

2008-AT-1002

2008-LA-1003

2008-NY-0001

2008-FW-1005

HUD’s Oversight of Contractors’ 

Marketing of Its Real Estate-Owned 

Properties

Review of HUD’s Personal Identity 

Verification and Privacy Program

HUD Needs to Improve Controls Over Its 

Contract Administration Processes

Lenders Submitted Title II Manufactured 

Housing Loans for Endorsement without 

the Required Foundation Certifications

The Wilmington Housing Authority 

Did Not Follow HUD Requirements for 

Its Nonprofit Development Activities, 

Wilmington, NC

The City of Cincinnati Lacked Adequate 

Controls over Its HOME Investment 

Partnerships Program, Cincinnati, OH

The City of Milwaukee Needs to Improve 

Existing Controls over Its HOME Program 

Regarding Housing Conditions and 

Contracting, Milwaukee, WI

The Los Angeles Multifamily Hub Did Not 

Properly Monitor Its Performance-Based 

Contract Administrator, Los Angeles 

LOMOD

The Municipality of Canovanas Needs 

to Improve Administration of Its CDBG 

Program, Canovanas, PR

Home for Life Foundation Did Not 

Properly Administer Its Supportive 

Housing Program Grants, Los Angeles, CA

HUD’s Monitoring Controls and 

Procedures Regarding the CDBG Program 

Were Not Adequate

The Housing Authority of the City of 

McKinney Inappropriately Advanced 

Funds and Transferred Real Estate to Its 

Not-for-Profit Affiliate, McKinney, TX

08/17/2007 

08/28/2007 

09/19/2007 

09/24/2007

09/26/2007

09/30/2007

09/30/2007

11/05/2007

11/15/2007

12/18/2007

12/31/2007

01/07/2008

12/12/2007

12/20/2007

09/19/2007

03/11/2008

01/24/2008

01/28/2008

03/20/2008

03/03/2008

03/07/2008

02/26/2008

03/27/2008

04/24/2008

Note 1

Note 2

Note 2

09/30/2010

01/01/2011

09/30/2011

Note 2

Note 1

Note 2

04/01/2013

Note 2

07/31/2010
151

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2008-AT-1004

2008-AT-1005

2008-KC-0001

2008-NY-1003

2008-AO-1002

2008-BO-1004

2008-KC-0002

2008-AO-0801

2008-CH-1006

2008-AT-0002

The City of West Palm Beach Did Not 

Properly Administer Its CDBG Program, 

West Palm Beach, FL

The City of Fort Lauderdale Did Not 

Properly Administer Its CDBG Program, 

Fort Lauderdale, FL

HUD’s Quality Assurance Division 

Did Not Always Resolve Materially 

Deficient or Potentially Fraudulent Loans 

Consistently

The City of New York’s Department of 

Housing Preservation and Development 

Had Administrative Weaknesses in Its 

HOME Program, New York, NY

State of Louisiana, Road Home Program, 

Funded 418 Grants Coded Ineligible or 

Lacking an Eligibility Determination, 

Baton Rouge, LA

Multifamily Project Deficiencies Resulted 

in More Than $1.1 Million in Cost 

Exceptions for Mohegan Commons, 

Norwich, CT

HUD Did Not Ensure That Housing 

Authorities Properly Administered the 

Community Service and Self-Sufficiency 

Requirement

Review of Duplication of Participants 

Benefits under HUD’s Katrina Disaster 

Housing Assistance Program and Disaster 

Voucher Program

The Indianapolis Housing Agency Did 

Not Effectively Operate Its Section 8 

Housing Choice Voucher Program, 

Indianapolis, IN

The Miami Dade Housing Agency Did 

Not Maintain Adequate Controls over Its 

Capital Fund Program

01/09/2008 

01/11/2008 

01/14/2008 

01/23/2008

01/30/2008

02/04/2008

03/24/2008

03/28/2008

04/15/2008

04/24/2008

05/05/2008

05/05/2008

06/05/2008

05/21/2008

05/12/2008

05/21/2008

07/22/2008

08/01/2008

08/12/2008

08/22/2008

05/01/2012

05/01/2012

Note 2

Note 2

Note 1

07/10/2010

10/01/2011

Note 2

04/01/2010

06/30/2010
152

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2008-SE-1004

2008-AT-0003

2008-BO-0002

2008-CH-1010

2008-DP-0004

2008-LA-1012

2008-FW-0001

2008-AO-1005

2008-LA-0003

2008-AT-0004

A Plus Mortgage, Inc., Overcharged 

Borrowers and Allowed Independent 

Contractors and Unapproved Branches to 

Originate Loans, Tukwila, WA

HUD Lacked Adequate Controls over the 

Physical Condition of Section 8 Voucher 

Program Housing Stock

Maintenance of Effort Requirements Are 

Needed to Ensure Intended Use of CDBG 

Program Funds

The City of Cincinnati Lacked Adequate 

Controls over Its System Reporting and 

Rental Rehabilitation Projects for Its 

HOME Investment Partnerships Program, 

Cincinnati, OH

Review of Selected FHA Major 

Applications’ Information Security 

Controls

The Housing Authority of the City of 

Calexico Did Not Comply with Public 

Housing Program Rules and Regulations, 

Calexico, CA

HUD’s CDBG Set-Aside for Colonias Was 

Not Used for Its Intended Purposes

State of Louisiana, Road Home Program, 

Did Not Ensure That All Additional 

Compensation Grant Applicants Were 

Eligible, Baton Rouge, LA

Implementation Weaknesses Existed in 

All Major Phases of the FHA Appraiser 

Review Process

The Miami-Dade Housing Agency Did 

Not Maintain Adequate Controls over 

Capital Fund Program Drawdowns, 

Miami, FL

05/07/2008

05/14/2008

05/21/2008

06/11/2008

06/12/2008

07/01/2008

07/29/2008

08/07/2008

09/04/2008 

09/17/2008

09/24/2008

09/10/2008

10/02/2008

10/09/2008

10/08/2008

10/14/2008

11/24/2008

01/13/2009

12/19/2008

09/17/2008

Note 2

10/01/2011

Note 1

07/13/2011

Note 2

12/31/2013

04/01/2010

Note 2

Note 2

06/30/2010
153

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2008-LA-1016

2008-DE-1003

2008-CH-1014

2009-NY-0001

2009-CH-1001

2009-BO-1002

2009-FO-0002

2009-KC-1001

2009-FO-0003

2009-DP-0001

2009-FW-1002

The City of Los Angeles Housing 

Department Did Not Comply with HOME 

Affordability Monitoring and Inspection 

Requirements for Its HOME-Assisted 

Rental Housing, Los Angeles, CA

The State of Colorado Did Not Comply 

with CDBG Program Requirements, 

Denver, CO

The City of Cincinnati Did Not 

Adequately Manage Its HOME Investment 

Partnerships Program, Cincinnati, OH

HUD Did Not Adequately Monitor 

Its Performance-Based Contract 

Administrator, New York State Housing 

Trust Fund Corporation

New Phoenix Assistance Center 

Substantially Failed to Manage Its 

Supportive Housing Program Grant, 

Chicago, IL

Orchard Court Multifamily Project Was 

Not Properly Managed in Accordance 

with HUD Regulations, Bath, ME

Audit of the FHA’s Financial Statements 

for Fiscal Years 2008 and 2007

CitiMortgage Did Not Follow HUD 

Requirements When Underwriting 20 

Loans and Performing Its Quality Control 

Program, St. Louis, MO

Additional Details to Supplement Our 

Report on HUD’s Fiscal Years 2008 and 

2007 Financial Statements

Review of Single-Family Partial Claims 

Collection Process

The Owner of Ebony Lake Healthcare 

Center Violated Its Regulatory Agreement 

with HUD, Brownsville, TX

09/18/2008 

09/23/2008

09/26/2008

10/16/2008

10/24/2008

11/06/2008

11/07/2008

11/13/2008

11/14/2008

11/20/2008 

11/25/2008 

12/02/2008

01/14/2009

01/22/2009

03/06/2009

02/20/2009

01/16/2009

03/13/2009

03/13/2009

03/19/2009

01/26/2009

03/25/2009

04/16/2010

09/30/2011

08/31/2010

Note 2

Note 2

02/25/2011

08/31/2010

Note 2

12/31/2011

Note 2

04/15/2010
154

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-NY-1002

2009-NY-1003

2009-KC-1003

2009-BO-1004

2009-DP-0003

2009-CH-1002

2009-NY-1006

2009-CH-1003

2009-AO-0002

2009-SE-0002

The New York City Housing Authority 

Had Administration Weaknesses in Its 

Capital Fund Program, New York, NY

Lower Manhattan Development 

Corporation CDBG Disaster Recovery 

Assistance Funds, New York, NY

CTX Mortgage Did Not Follow HUD’s 

Requirements When Underwriting 12 

FHA Loans and Developing Its Quality 

Control Plan, Overland Park, KS

The City of Hartford Did Not Always 

Comply with Its Annual Contributions 

Contracts and HUD Regulations in 

Administering Its Housing Choice 

Voucher Program, Hartford, CT

Review of the Centralized HUD Account 

Management Process

The Indianapolis Housing Agency Failed 

to Operate Its Housing Choice Voucher 

Program According to HUD’s and Its 

Requirements, Indianapolis, IN

The City of Rome Did Not Always 

Administer Its CDBG Program in 

Accordance with HUD Requirements, 

Rome, NY

The Portage Metropolitan Housing 

Authority Improperly Operated Its Section 

8 Housing Choice Voucher Program, 

Ravenna, OH

HUD’s Receivership Did Not Ensure That 

the Housing Authority of New Orleans 

Properly Accounted for Its Fungibility 

Funding, Monitored and Paid Two of 

Its Contractors, and Paid Its Accounts 

Payable Disbursements

NAHASDA Program Income from 1937 

Act Properties

11/25/2008 

12/04/2008

12/17/2008

01/05/2009

01/09/2009

01/23/2009

01/26/2009

01/28/2009

01/29/2009

02/06/2009 

04/09/2009

05/06/2009

04/16/2009

04/29/2009

04/30/2009

05/08/2009

05/27/2009

06/08/2009

08/21/2009

09/29/2009

04/09/2010

01/12/2011

Note 2

04/09/2010

04/29/2010

05/22/2010

05/31/2010

04/27/2010

08/21/2010

09/28/2010
155

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-FW-1005

2009-DE-1001

2009-NY-1008

2009-KC-1005

2009-FW-1007

2009-AT-1004

Allied Home Mortgage Capital 

Corporation Did Not Fully Follow HUD’s 

Branch Office Requirements, Houston, TX

The Adams County Office of Community 

and Development Did Not Comply with 

HOME Investment Partnerships Program 

Regulations, Denver, CO

The City of Newburgh Did Not Always 

Administer Its CDBG Program in 

Accordance with HUD Requirements, 

Newburgh, NY

The East St. Louis Housing Authority’s 

Section 8 Voucher Program Units Did Not 

Always Meet HUD’s Housing Quality 

Standards, East St. Louis, IL

The Owners of Stonebrook Apartments 

Phase I and Phase II Violated Their 

Regulatory Agreements with HUD, 

Baytown, TX

The City of Durham Did Not Adequately 

Administer Its CDBG Program, Durham, 

NC

02/10/2009 

02/11/2009 

02/24/2009

03/02/2009

03/25/2009

03/31/2009

06/10/2009

04/29/2009

06/11/2009

06/25/2009

06/12/2009

06/09/2009

10/18/2010

04/29/2010

06/11/2010

06/25/2010

06/09/2010

04/30/2010
156

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

Significant audit reports issued within the past 12 months 

that were described in previous semiannual reports

on which final action had not been completed

as of March 31, 2010

2009-AO-0003

2009-BO-1006

2009-SE-1002

2009-FO-0005

2009-AO-1001

2009-AO-1002

2009-CH-1008

2009-NY-1010

2009-CH-1009

HUD Could Not Demonstrate That Its 

Receivership Improved the Housing 

Authority of New Orleans’ Performance

Quincy Housing Authority Housing 

Choice Voucher Program Needs to 

Improve Controls over Its Interprogram 

Fund Transactions, Procurement, and 

Travel, Quincy, MA

The John C. Cannon Retirement and 

Assisted Living Residence Violated Its 

Regulatory Agreement, Seattle, WA

Mortgage-Backed Securities Program 

Document Review

State of Louisiana, Road Home Program, 

Did Not Ensure That Road Home 

Employees Were Eligible to Receive 

Additional Compensation Grants, Baton 

Rouge, LA

State of Louisiana, Road Home 

Program, Did Not Ensure That Multiple 

Disbursements to a Single Damaged 

Residence Address Were Eligible, Baton 

Rouge, LA

The City of East Cleveland Did Not 

Adequately Manage Its HOME Investment 

Partnerships and CDBG Programs, East 

Cleveland, OH

The Union County Consortium Had 

Administrative Weaknesses in Its CDBG 

Program, Elizabeth, NJ

The Chicago Housing Authority Needs 

to Improve Its Controls over Its Section 8 

Housing Assistance Payments, Chicago, IL

04/08/2009 

04/09/2009 

04/15/2009 

04/30/2009

05/05/2009

05/05/2009

05/11/2009

05/15/2009

05/19/2009

08/21/2009

07/30/2009

08/13/2009

10/05/2009

09/16/2009

09/16/2009

09/08/2009

08/24/2009

09/15/2009

11/30/2010

08/01/2010

08/13/2010

Note 2

04/30/2010

04/30/2010

09/08/2011

05/31/2010

05/15/2010
157

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-CH-1010

2009-NY-1012

2009-FW-0801

2009-DP-0004

2009-AT-1007

2009-DP-0005

2009-AT-1008

2009-PH-0801

2009-FW-0001

2009-FW-1010

The Cincinnati Metropolitan Housing 

Authority Needs to Improve Its Controls 

over Section 8 Housing Assistance 

Payments, Cincinnati, OH

The City of Rome Did Not Administer 

Its Economic Development Activity in 

Accordance with HUD Requirements, 

Rome, NY

Tenant Confirmation for Disaster Housing 

Assistance Program for March and April 

2009

FY 2008 Review of Information Systems 

Controls in Support of the Financial 

Statements Audit

The Chattanooga Housing Authority 

Mismanaged Its Finances, Chattanooga, 

TN

Review of Implementation of Security 

Controls over HUD’s Business Partners

Miami-Dade County Did Not Properly 

Administer Its CDBG Program, Miami, FL

Corrective Action Verification Review, 

Upfront Grant for Ridgecrest Heights 

Apartments, CEMI-Ridgecrest, Inc., 

Washington, DC, Audit Memorandum 98-

AO-219-1804

HUD’s Disaster Recovery Grant Reporting 

System Can Collect the Basic Information 

Needed to Monitor the Neighborhood 

Stabilization Program

Harry Mortgage Company Overstated the 

Financial Wherewithal of the Owner and 

General Contractor and Overestimated the 

Qualifications of the General Contractor 

When Underwriting the Cypress Ridge 

Apartments’ $5.87 Million Loan under 

the Multifamily Accelerated Processing 

Program, Oklahoma City, OK

05/19/2009 

05/20/2009 

05/28/2009 

05/29/2009

06/11/2009

06/11/2009

06/19/2009

06/19/2009

06/25/2009

06/26/2009

09/11/2009

09/23/2009

09/25/2009

09/25/2009

09/04/2009

11/17/2009

09/25/2009

07/09/2009

10/23/2009

10/19/2009

06/30/2010

09/30/2010

10/01/2011

10/31/2010

12/31/2020

12/31/2014

05/17/2010

07/09/2010

03/25/2011

10/16/2010
158

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-LA-1011

2009-FW-1012

2009-AT-1009

2009-KC-1008

2009-NY-0802

2009-CH-1801

2009-FW-1014

2009-PH-1011

2009-CH-1011

City of Los Angeles Housing Department 

Did Not Ensure That the Buckingham 

Place Project Met HOME Program 

Requirements, Los Angeles, CA

Financial Freedom Senior Funding 

Corporation Did Not Fully Follow HUD’s 

Reverse Mortgage Requirements for Loans 

in the San Antonio, Texas Area, Irvine, CA

The Housing Authority of the City of 

Newnan Inappropriately Encumbered 

Assets and Advanced Funds to Support Its 

Nonprofit Organization, Newnan, GA

Grace Hill Used Neighborhood Initiative 

Grant Funds to Pay Unsupported Payroll 

Expenses and Duplicated Computer 

Support Costs, St. Louis, MO

Significant Flaws Identified at the 

Lackawanna Municipal Housing 

Authority may affect its Capacity to 

Administer American Recovery and 

Reinvestment Act Funds

The City of Cincinnati Lacked Sufficient 

Capacity to Effectively and Efficiently 

Administer Its Neighborhood Stabilization 

Program, Cincinnati, OH

Cypress Ridge Apartments Owner’s 

Agent Received and Paid More Than 

$742,000 Contrary to HUD and Regulatory 

Requirements, Oklahoma City, OK

The Wilmington Housing Authority Did 

Not Ensure That Its Section 8 Housing 

Choice Voucher Program Units Met 

Housing Quality Standards, Wilmington, 

DE

The Housing Authority of the City of 

Terre Haute Failed to Follow Federal 

Requirements and Its Employment 

Contract Regarding Nonprofit 

Development Activities, Terre Haute, IN

07/01/2009 

07/14/2009 

07/20/2009 

07/24/2009

07/24/2009

07/29/2009

07/30/2009

07/30/2009

07/31/2009

10/21/2009

11/20/2009

11/16/2009

10/13/2009

09/29/2009

11/24/2009

10/30/2009

10/01/2009

11/24/2009

09/01/2011

07/14/2010

06/30/2011

09/01/2010

04/30/2010

04/30/2010

09/30/2010

04/30/2010

01/01/2030
159

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-NY-1014

2009-BO-1010

2009-CH-1012

2009-KC-0001

2009-FW-1015

2009-FW-1801

2009-AT-1011

2009-BO-1011

2009-CH-0002

2009-LA-1018

The Lackawanna Municipal Housing 

Authority Needs to Improve Controls 

and Operational Procedures regarding Its 

Capital Fund Program, Lackawanna, NY

The City of New London Housing 

Authority Lacks the Capacity to Properly 

Administer its Capital Fund Program and 

Recovery Act Funds, New London, CT

The Lake Metropolitan Housing Authority 

Needs to Improve Its Controls over 

Housing Assistance and Utility Allowance 

Payments, Painesville, OH

HUD Subsidized an Estimated 2,094 to 

3,046 Households That Included Lifetime 

Registered Sex Offenders

The Housing Authority of Travis County 

Could Not Adequately Account For or 

Support Its Use of Federal Program Funds, 

Austin, TX

Travis County Housing Authority 

Lacks Capacity to Administer American 

Recovery and Reinvestment Act of 2009 

Public Housing Capital Funds, Austin, TX

The City of Miami Did Not Properly 

Administer Its CDBG Program, Miami, FL

The City of Boston’s Department of 

Neighborhood Development in Boston, 

MA, Did Not Administer Its HOME 

Program in Compliance with HUD 

Requirements

The Office of Affordable Housing 

Programs’ Oversight of HOME Investment 

Partnerships Program Income Was 

Inadequate

DHI Mortgage Company, LTD’s Scottsdale 

and Tucson, AZ, Branches Did Not Always 

Follow FHA-Insured Loan Underwriting 

and Quality Control Requirements

07/31/2009 

08/07/2009 

08/14/2009 

08/14/2009

08/17/2009

08/17/2009

08/18/2009

08/19/2009

08/28/2009

09/10/2009

11/06/2009

12/04/2009

11/24/2009

12/12/2009

12/03/2009

10/27/2009

12/15/2009

01/20/2010

12/26/2009

01/08/2010

07/31/2010

12/01/2010

05/31/2010

Note 3

10/15/2010

10/15/2010

06/30/2010

Note 3

03/31/2011

09/10/2010
Report 

number

Report title Issue

date

Decision

date

Final

action

2009-LA-1019

2009-CH-1013

2009-CH-1802

2009-DE-1005

2009-SE-1803

2009-AO-1003

2009-BO-1802

2009-DE-1801

2009-LA-1020

2009-AT-1012

The Owner of Park Lee Apartments 

Violated Its Regulatory Agreement with 

HUD, Phoenix, AZ

The Housing Authority of the City of 

Milwaukee Did Not Adequately Maintain 

a Separate Identity for Commingled 

Funds, Milwaukee, WI

Cook County Needs to Improve Its 

Capacity to Effectively and Efficiently 

Administer Its Neighborhood Stabilization 

Program, Chicago, IL

Adams County Did Not Have Adequate 

Controls over Its Block Grant Funds, 

Westminster, CO

Capacity Review of the Warm Springs 

Housing Authority, Warm Springs, OR

Louisiana Land Trust, As the State of 

Louisiana’s Subrecipient, Did Not Always 

Ensure That Properties Were Properly 

Maintained, Baton Rouge, LA

The City of Boston’s Department of 

Neighborhood Development Can Develop 

the Capacity to Administer Its Housing 

and Economic Recovery Act and American 

Recovery and Reinvestment Act Programs, 

Boston, MA

Adams County, Colorado Had Weaknesses 

That Could Significantly Affect Its 

Capacity to Administer Its Recovery Act 

Funding, Commerce City, CO

The Housing Authority of the City of 

Richmond Did Not Follow Procurement 

Requirements and Had Internal Control 

Weaknesses, Richmond, CA

The Municipality of Río Grande Needs 

to Improve Administration of Its CDBG 

Program and Its Recovery Act Funds, Rio 

Grande, PR

09/15/2009 

09/17/2009 

09/17/2009 

09/17/2009

09/21/2009

09/23/2009

09/23/2009

09/24/2009

09/24/2009

09/25/2009

01/13/2010

01/14/2010

01/15/2010

01/15/2010

01/13/2010

01/26/2010

12/17/2009

01/14/2010

12/29/2009

01/22/2010

07/13/2011

01/07/2011

10/31/2010

01/07/2011

05/17/2010

04/30/2010

05/14/2010

01/11/2011

12/29/2010

01/27/2011

160

Appendix 2 - Tables
161

Appendix 2 - Tables

Report 

number

Report title Issue

date

Decision

date

Final

action

2009-CH-1015

2009-AT-0001

2009-AT-1013

2009-AT-1014

2009-CH-1017

2009-CH-1018

2009-DP-0006

2009-AT-1015

2009-CH-0003

2009-CH-1019

The Public Housing Agency of the City 

of Saint Paul Needs to Improve Its 

Administration of Its Section 8 ProjectBased Voucher Program, Saint Paul, MN

HUD Lacked Adequate Controls to Ensure 

the Timely Commitment and Expenditure 

of HOME funds

The City of Atlanta Entered Incorrect 

Commitments into HUD’s Integrated 

Disbursement and Information System for 

its HOME Program, Atlanta, GA

The Housing Authority of the City 

of Winston-Salem Needs to Improve 

Financial Controls, Winston-Salem, NC

The Housing Authority of the City of 

Terre Haute Failed to Follow Federal 

Requirements Regarding Its Turnkey III 

Homeownership Program Units’ Sales 

proceeds, Terre Haute, IN

The Chicago Housing Authority Needs to 

Improve Its Controls over the Enforcement 

of Housing Quality Standards, Chicago, IL

Review of HUD’s Web Application 

Systems

The Puerto Rico Public Housing 

Administration Mismanaged Its 

Capital Fund Financing Program and 

Inappropriately Obligated $32 Million in 

Recovery Act Funds, San Juan, PR

HUD’s Oversight of FHA Lenders 

Underwriting of Home Equity Conversion 

Mortgages Was Generally Adequate

The Michigan State Housing Development 

Authority Failed to Operate Its Section 8 

Project-Based Voucher Program According 

to HUD’s and Its Requirements, Lansing, 

MI

09/25/2009 

09/28/2009 

09/28/2009 

09/29/2009

09/29/2009

09/29/2009

09/29/2009

09/30/2009

09/30/2009

09/30/2009

02/24/2010

03/03/2010

11/05/2009

12/01/2009

01/22/2010

01/25/2010

12/17/2009

01/27/2010

03/02/2010

01/27/2010

10/01/2010

Note 3

03/25/2011

12/01/2010

12/30/2010

06/30/2010

09/30/2011

04/15/2011

09/30/2010

02/01/2012
Report 

number

Report title Issue

date

Decision

date

Final

action

2009-CH-1020

2009-DP-0007

2009-DP-0008

2009-FW-1016

2009-SE-0004

The City of Flint Lacked Adequate 

Controls over Its Commitment and 

Disbursement of HOME Investment 

Partnerships Program Funds, Flint, MI

Review of Selected Controls within the 

Disaster Recovery Grant Reporting System

Review of Recovery Act Management and 

Reporting System

The Texas Department of Housing and 

Community Affair’s Disaster Recovery 

Action Plan Needs Improvement, Austin, 

TX

Controls over FHA’s Single-Family Lender 

Approval Process Need Improvement

09/30/2009 

09/30/2009 

09/30/2009 

09/30/2009

09/30/2009

01/27/2010

03/26/2010

01/12/2010

01/26/2010

01/27/2010

10/01/2010

08/01/2010

08/31/2010

Note 2

09/30/2010

162

Appendix 2 - Tables

Audits Excluded:

77 audits under repayment plans

28 audits under debt claims collection

processing, formal judicial review,

investigation, or legislative solution

Notes:

1 Management did not meet the target date. 

Target date is over 1 year old.

2 Management did not meet the target date.

Target date is under 1 year old.

3 No management decision
Table C

Inspector General-issued reports with questioned and

unsupported costs at March 31, 2010

(thousands)

Audit reports Number of

audit reports

Unsupported

costs

For which no management decision had been 

made by the commencement of the reporting 

period

For which litigation, legislation, or investigation 

was pending at the commencement of the 

reporting period

For which additional costs were added to 

reports in beginning inventory

For which costs were added to noncost reports

Which were issued during the reporting period

Which were reopened during the reporting 

period

Subtotals (A+B)

78,177 

4,727 

129 

0 

37,550

0

120,583 

Questioned

costs

150,459 

7,520 

2,962 

0 

42,307 

0

203,248

41 

6 

- 

0 

29

0

76

A1

A2

A3

A4

B1

B2

For which a management decision was made 

during the reporting period

(1) Dollar value of disallowed costs: 

 - Due HUD

- Due program participants

(2) Dollar value of costs not disallowed

For which management decision had been 

made not to determine costs until completion of 

litigation, legislation, or investigation

For which no management decision had been 

made by the end of the reporting period

77,975 

2,313

69,003

6,659 

4,599 

38,009 

<23,604>4 

152,264

7,727

135,404

9,133 

7,247 

43,737 

<26,705>4

 

561

152

44

93

 

5

15 

<30>4

 

C

D 

E

1

 28 audit reports also contain recommendations with funds to be put to better use. 

2

 4 audit reports also contain recommendations with funds due program participants. 

3

 8 audit reports also contain recommendations with funds agreed to by management. 

4

 The figures in brackets represent data at the recommendation level as compared to the report level. 

See explanations of tables C and D.

163

Appendix 2 - Tables
Table D

Inspector General-issued reports with recommendations 

that funds be put to better use at March 31, 2010

(thousands)

Audit reports Number of

audit reports

For which no management decision had been made 

by the commencement of the reporting period

For which litigation, legislation, or investigation 

was pending at the commencement of the reporting 

period

For which additional costs were added to reports in 

beginning inventory

For which costs were added to noncost reports

Which were issued during the reporting period

Which were reopened during the reporting period

Subtotals (A+B)

Questioned

costs

302,776 

2,957 

10 

0 

588,118 

0

893,861 

26 

1 

- 

0 

34

0

61

A1

A2

A3

A4

B1

B2

For which a management decision was made during 

the reporting period

(1) Dollar value of disallowed costs: 

- Due HUD

- Due program participants

(2) Dollar value of costs not disallowed

For which management decision had been made 

not to determine costs until completion of litigation, 

legislation, or investigation

For which no management decision had been made 

by the end of the reporting period

272,270 

47,994

222,821

1,455 

2,957 

618,634 

<102,095>4 

431

82

35

23

 

1

17 

<23>4

 

C

D 

E

1

 28 audit reports also contain recommendations with questioned costs. 

2

 1 audit report also contains recommendations with funds due program participants. 

3

 1 audit report also contains recommendations with funds agreed to by management. 

4

 The figures in brackets represent data at the recommendation level as compared to the report level. 

See explanations of tables C and D.

164

Appendix 2 - Tables
Explanations of Tables C and D

The Inspector General Act Amendments of 1988 require Inspectors General and agency heads to report 

cost data on management decisions and final actions on audit reports. The current method of reporting at 

the “report” level rather than at the individual audit “recommendation” level results in misleading reporting 

of cost data. Under the Act, an audit “report” does not have a management decision or final action until all 

questioned cost items or other recommendations have a management decision or final action. Under these 

circumstances, the use of the “report” based rather than the “recommendation” based method of reporting 

distorts the actual agency efforts to resolve and complete action on audit recommendations. For example, 

certain cost items or recommendations could have a management decision and repayment (final action) in 

a short period of time. Other cost items or nonmonetary recommendation issues in the same audit report 

may be more complex, requiring a longer period of time for management’s decision or final action. Although 

management may have taken timely action on all but one of many recommendations in an audit report, the 

current “all or nothing” reporting format does not recognize of their efforts.

The closing inventory for items with no management decision in tables C and D (line E) reflects figures 

at the report level as well as the recommendation level.

ppp

165

Appendix 2 - Tables

Appendix 3

Index
State Page numbers

Alabama 67, 114, 121

Arizona 10, 31, 77, 101, 110, 115

Arkansas 79, 116, 132

California 14, 15, 38, 40, 41, 42, 43, 46, 49, 51, 53, 62, 63, 68, 82, 83, 84, 111, 113, 121, 

124, 134

Colorado 17, 18, 19, 33, 49, 113, 114, 115, 124

Connecticut 27, 29, 56, 57, 64, 80, 99, 123

Delaware 53

District of Columbia 63, 111, 115, 117

Florida 14, 15, 16, 17, 20, 21, 34, 36, 38, 43, 44, 66, 68, 80, 81, 84, 99, 110, 117, 118

Georgia 11, 17, 81, 111, 113, 122

Guam 76

Hawaii 36, 77

Idaho 43

Illinois 20, 21, 22, 41, 42, 46, 55, 61, 66, 101, 110, 111, 112, 114, 119, 120, 121

Indiana 21, 36, 38, 64, 111

Iowa 90

Kansas 34, 45, 53, 106, 117, 118

Kentucky 45, 114, 118, 120

Louisiana 16, 35, 44, 45, 54, 66, 75, 90, 93, 94, 95, 96, 97, 98, 99, 100, 120, 123

Maine 82, 118

Maryland 10, 42, 56, 112, 114, 115, 116, 118, 119, 123

Massachusetts 39, 40, 46, 55, 62, 115, 118, 121, 122

Michigan 18, 19, 27, 37, 62, 66, 78, 82, 115, 117

Minnesota 53

Mississippi 40, 46, 91, 93, 94, 96, 97, 98

Missouri 17, 34, 36, 45, 53, 113, 116, 119, 133

Montana 30, 35

Nebraska 40

Nevada 39

New Hampshire 66

168

Appendix 3 - Index


New Jersey 10, 11, 14, 16, 17, 19, 35, 38, 41, 43, 44, 54, 56, 61, 66, 67, 78

New York 9, 18, 19, 23, 34, 37, 39, 40, 41, 45, 50, 51, 54, 55, 56, 67, 68, 69, 74, 76, 85, 91, 

101, 110, 111, 113, 117, 119, 122, 123

North Carolina 35, 84

North Dakota 37

Ohio 12, 22, 28, 39, 56, 58, 67, 79, 84, 86, 112, 116

Oklahoma 29, 133

Pennsylvania 9, 28, 29, 61

Puerto Rico 44, 45, 46, 106, 114, 115, 123

Rhode Island 120

South Dakota 34

Tennessee 36, 76, 112, 114 

Texas 14, 15, 18, 20, 35, 36, 41, 67, 75, 78, 79, 99, 101, 118, 120, 124, 125

Utah 20, 42, 46

Vermont 82, 113

Virginia 18, 50, 124

Washington 43, 110, 125

Wisconsin 38, 113, 122

ppp

State Page numbers

169

Appendix 3 - Index

HUD OIG

Operations Telephone

Listing
Office of Audit

Headquarters Office of Audit, Washington, DC 202-708-0364

Region 1 Boston, MA 617-994-8380

Hartford, CT 860-240-4800

Region2 New York, NY 212-264-4174

Albany, NY 518-464-4200

Buffalo, NY 716-551-5755

Newark, NJ 973-622-7900

Region 3 Philadelphia, PA 215-656-0500

Baltimore, MD 410-962-2520

Pittsburgh, PA 412-644-6372

Richmond, VA 804-771-2100

Region 4 Atlanta, GA 404-331-3369

Miami, FL 305-536-5387

Greensboro, NC 336-547-4001

Jacksonville, FL 904-232-1226

Knoxville, TN 865-545-4369

San Juan, PR 787-766-5202

Region 5 Chicago, IL 312-353-7832

Columbus, OH 614-469-5745

Detroit, MI 313-226-6190

Region 6 Fort Worth, TX 817-978-9309

Houston, TX 713-718-3199

Oklahoma City, OK 405-609-8606

San Antonio, TX 210-475-6898

Regions 7/8/10 Kansas City, KS 913-551-5870

St. Louis, MO 314-539-6339

Denver, CO 303-672-5452 

Seattle, WA 206-220-5360

Regions 9 Los Angeles, CA 213-894-8016

Phoenix, AZ 602-379-7250

San Francisco, CA 415-489-6400

Region 11 New Orleans, LA 504-671-3715

Jackson, MS 601-965-4700

ppp

172

HUD OIG Operations Telephone Directory
Office of Investigation

Headquarters Office of Investigation, Washington, DC 202-708-0390 

Region 1 Boston, MA 617-994-8450

Hartford, CT 860-240-4800

Manchester, NH 603-666-7988

Region 2 New York, NY 212-264-8062

Buffalo, NY 716-551-5755

Region 3 Philadelphia, PA 215-656-0500

Newark, NJ 973-776-7347 

Pittsburgh, PA 412-644-6598

Region 4 Atlanta, GA 404-331-3359

Birmingham, AL 205-731-2630

Columbia, SC 803-451-4320

Knoxville, TN 865-545-4369

Louisville, KY 502-618-8127

Memphis, TN 901-229-6997

Nashville, TN 615-426-6171

Region 5 Chicago, IL 312-353-4196

Indianapolis, IN 317-226-5427

Minneapolis/St. Paul, MN 612-370-3000

Region 6 Arlington, TX 817-978-5440

Houston, TX 713-718-3196

Little Rock, AR 501-353-8115

Oklahoma City, OK 405-609-8601

San Antonio, TX 210-475-6819

Regions 7/8 Kansas City, KS 913-551-5866

Denver, CO 303-672-5350

Salt Lake City, UT 801-524-6090

St. Louis, MO 314-539-6559

Regions 9 Los Angeles, CA 213-894-0219

Las Vegas, NV 702-336-2144

Phoenix, AZ 602-379-7255

Region 10 Seattle, WA 206-220-5380

Billings, MT 406-247-4080

Sacramento, MT 916-930-5691

San Francisco, CA 415-489-6683

Region 11 New Orleans, LA 504-671-3701

Hattiesburg, MS 601-299-4279

Jackson, MS 601-965-5772

Region 13 Baltimore, MD 410-962-4502

Greensboro, NC 336-547-4000

Richmond, VA 804-771-2100

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HUD OIG Operations Telephone Directory
Region 14 Tampa, FL 813-228-2026

Jacksonville, FL 904-208-6126

Miami, FL 305-536-3087

San Juan, PR 787-766-5868

Region 15 Detroit, MI 313-226-6280

Cleveland, OH 216-522-4421

Columbus, OH 614-469-6677

ppp

174

HUD OIG Operations Telephone Directory
Report fraud, waste, and mismanagement in HUD 

programs and operations by

Calling the OIG hotline: 1-800-347-3735

Faxing the OIG hotline: 202-708-4829

Sending written information to:

Department of Housing and Urban Development

Inspector General Hotline (GFI)

451 7th Street, SW

Washington, DC 20410

E-mailing the OIG hotline: hotline@hudoig.gov

Internet:http://www.hud.gov/complaints/fraud_waste.cfm

All information is confidential,

and you may remain anonymous.
Semiannual Report to Congress

October 1, 2009, through March 31, 2010

www.hud.gov/offices/oig

No. 63 HUD-OIG-2010-001