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95–046 PDF 2015

EXPLORING ALLEGED ETHICAL AND 

LEGAL VIOLATIONS AT THE 

U.S. DEPARTMENT OF HOUSING 

AND URBAN DEVELOPMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 4, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–2 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

ROBERT DOLD, Illinois 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

SEAN P. DUFFY, Wisconsin, Chairman 

MICHAEL G. FITZPATRICK, Pennsylvania, 

Vice Chairman 

PETER T. KING, New York 

PATRICK T. MCHENRY, North Carolina 

ROBERT HURT, Virginia 

STEPHEN LEE FINCHER, Tennessee 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

ANN WAGNER, Missouri 

SCOTT TIPTON, Colorado 

BRUCE POLIQUIN, Maine 

FRENCH HILL, Arkansas 

AL GREEN, Texas, Ranking Member 

MICHAEL E. CAPUANO, Massachusetts 

EMANUEL CLEAVER, Missouri 

KEITH ELLISON, Minnesota 

JOHN K. DELANEY, Maryland 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

February 4, 2015 .............................................................................................. 1 

Appendix: 

February 4, 2015 .............................................................................................. 35 

WITNESSES 

WEDNESDAY, FEBRUARY 4, 2015 

Montoya, Hon. David A., Inspector General, Office of Inspector General, U.S. 

Department of Housing and Urban Development ............................................. 5 

Perez, Edda Emmanuelli, Managing Associate General Counsel, Office of 

General Counsel, U.S. Government Accountability Office ................................ 7 

APPENDIX 

Prepared statements: 

Montoya, Hon. David A. ................................................................................... 36 

Perez, Edda Emmanuelli ................................................................................. 48 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Ellison, Hon. Keith: 

Insert from the Federal Register dated January 6, 2015, on Proposed 

Rules .............................................................................................................. 63 

Responses to questions for the record submitted to Hon. David A. Montoya ................................................................................................................. 77 

(1) 

EXPLORING ALLEGED ETHICAL AND 

LEGAL VIOLATIONS AT THE 

U.S. DEPARTMENT OF HOUSING 

AND URBAN DEVELOPMENT 

Wednesday, February 4, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:06 a.m., in room 

2167, Rayburn House Office Building, Hon. Sean Duffy [chairman 

of the subcommittee] presiding. 

Members present: Representatives Duffy, Fitzpatrick, McHenry, 

Hurt, Fincher, Mulvaney, Hultgren, Tipton, Poliquin, Hill; Green, 

Cleaver, Delaney, Sinema, Beatty, Vargas, Ellison, Heck, and 

Capuano. 

Chairman DUFFY. The Subcommittee on Oversight and Investigations will come to order. The title of today’s subcommittee hearing is, ‘‘Exploring Alleged Ethical and Legal Violations at the U.S. 

Department of Housing and Urban Development.’’ 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

The Chair now recognizes himself for 3 minutes for an opening 

statement. I first want to thank everyone for being here today, including our witnesses. 

Our witnesses are here to discuss two reports. The first is the Inspector General’s report on allegations of improper lobbying and obstruction at the Department of Housing and Urban Development. 

For those returning members to the committee, you will remember that we first discussed this report almost a year ago, in February, when Mr. Montoya was here. At that time, Mr. Montoya and 

I talked about the whitewash mentality at HUD. At the time, I 

found those revelations troubling, but I hoped that we could chalk 

it up to just a few bad apples at HUD. 

But we are back here again today to discuss what happened with 

those bad apples because of other completely unrelated allegations 

that have surfaced. In fact, I think we are going to hear many stories of the waste, fraud, and abuse that is now taking place at 

HUD. 

The second report our witnesses have been asked to discuss concerns the questionable hiring practices at the Department that 

might have created a glaring conflict of interest. And that is within 

2 

the Office of Public and Indian Housing. I want to make clear to 

committee members that these are very different allegations 

against different employees in different departments and divisions 

responsible for very different tasks. 

But they seem to display the same cavalier attitude that shows 

these employees do not believe in following the rules. And they do 

not care about getting caught, and when they are caught they don’t 

care about obstructing an investigation or Congress. Their purpose 

is to protect themselves and each other. And sadly, what we find 

is that they get away with it. And sometimes, they even get rewarded during periods of bad behavior. It is an attitude that I 

think Americans are learning is prevalent throughout this Administration and it is an attitude of which we are all quickly getting 

very tired. 

I want to make clear that we are not here to debate the importance of HUD, the importance of its mission, or the work that they 

do. Millions of Americans who have fallen on hard times—veterans, 

single mothers, their children—all rely on HUD’s programs, and we 

should all recognize and applaud their efforts. 

In fact, it is because of the hard work of many HUD employees 

that we are here today. It is because they are the ones who have 

come forward and reported these allegations. They already work 

with limited resources that should not be diverted to illegal lobbying efforts or overpaying a lobbyist. 

So I look forward to hearing from our witnesses today to learn 

what sort of reprimands HUD has taken against these employees 

and what steps they continue to take to ensure that this attitude 

of disregard for accountability does not entrench itself within the 

Department permanently. And I hope my friends on the other side 

of the aisle will work with me in this committee to get to the bottom of these allegations and ensure that these bad acts stop now. 

And with that, I yield to my good friend, the ranking member of 

our Oversight and Investigations Subcommittee, Representative 

Green from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. Let me acknowledge that 

this is your first hearing as the official Chair. While you have occupied the seat before, this is your first time as Chair, and I commend you and want to thank you for the conversations that you 

and I have had prior to this hearing. While they were personal to 

us, I will indicate that they have been positive and productive. 

Again, I thank you. 

I would also like to thank our staffs for the outstanding jobs that 

they have done in preparing us for today’s hearing. I sincerely believe that without the staffs’ aid and assistance, we would not be 

nearly as effective as we are. So again, thank you staff. 

Mr. Chairman, I am pleased that we are taking an interest in 

how to improve the Federal agency principally responsible for providing housing to low-income Americans. Today’s hearing will cover 

HUD Inspector General (IG) investigations into alleged wrongdoing 

at the U.S. Department of Housing and Urban Development. 

The first report concerns lobbying actions taken by HUD that 

this subcommittee held a hearing on nearly a year ago. The IG’s 

report for this incident concluded that HUD had not violated the 

Anti-Lobbying Act. However, individuals at HUD had violated 

3 

HUD’s internal policies related to lobbying Congress on pending 

legislation. 

HUD has since taken action to clarify lobbying rules for its employees and acted to respond to the concerns raised during last 

year’s hearing. More recently, the U.S. Government Accountability 

Office (GAO) determined that the actions taken by individuals at 

HUD violated the Antideficiency Act related to the proper use of 

appropriated funds. As such, I fully expect HUD to comply appropriately and to take the necessary actions to address this. 

The other topic of today’s hearing is related to an IG investigation into alleged improper activities of an individual at HUD 

brought on through an agreement permitted under the Intergovernmental Personnel Act. 

While these agreements are designed to provide Federal agencies 

the ability to employ subject matter experts on a temporary basis, 

I believe it is our responsibility to ensure that it is being done 

properly. The HUD IG investigation raises a number of concerns 

about the actions taken by individuals at HUD and whether there 

was proper consideration given to potential conflicts of interest. I 

want to be clear, perspicuously so, Mr. Chairman. I believe, as do 

you, that it is our subcommittee’s responsibility to fully investigate 

what has occurred at HUD. And if wrongdoing is uncovered, it 

should be dealt with appropriately. 

However, like you, Mr. Chairman, I contend that this subcommittee’s ultimate goal must be improving HUD. HUD’s mission is critical to the success of this Nation. By and large, HUD continues to 

provide support for affordable housing for millions of Americans, 

including over 14,000 veterans. And 56 percent of HUD’s tenants 

supported by HUD are elderly or disabled. 

HUD currently employs over 9,000 people around the United 

States. While it would appear that the IG’s findings suggest that 

former HUD employees may have acted improperly, we should not 

conclude that their actions suggest a larger, more systemic problem 

at HUD. 

I will reiterate that HUD should act appropriately, and it appears that HUD is addressing concerns raised by the IG. One of 

the things that I will introduce into evidence at some point, Mr. 

Chairman, is a joint communique signed by the Secretary of HUD 

and the IG indicating a willingness to work together to bring resolution to the concerns that have been raised. We should not allow 

this debate to metamorphose into anything more than trying to improve HUD. 

Mr. Chairman, I agree with you. And, in fact, it is my hope that 

once the agency has addressed our concerns, this subcommittee will 

turn its attention to more pressing national matters, including the 

struggles of our country’s smallest banks and the state of our public housing in America. 

Mr. Chairman, nearly every member of this committee has heard 

from small banks about the struggles that they are facing in balancing their consumer protections with the regulatory burdens 

with which they struggle. Over 6,000 of our Nation’s banks, which 

is more than 90 percent of all banks in this country, are under $1 

billion in assets. And I believe that we must do more to help them 

4 

lest we wish to stand idly by as the industry continues to consolidate. 

While I look forward to this hearing and hearing from our witnesses, Mr. Chairman, I do want to work to improve HUD, and I 

am eager to tackle the many other issues that demand our attention. 

I yield back. 

Chairman DUFFY. The Chair now recognizes the vice chairman 

of our Oversight and Investigations Subcommittee, Mr. Fitzpatrick 

from Pennsylvania, for 2 minutes. 

Mr. FITZPATRICK. I thank the chairman for holding this important hearing. 

Today, this subcommittee is going to hear testimony from yet another Federal agency about an investigation into improper behavior. This week, it is the United States Department of Housing and 

Urban Development, whose own Inspector General found evidence 

that senior employees may have circumvented the hiring process to 

appoint politically connected lobbyists to high-level positions. 

Furthermore, this subcommittee will be following up on the Government Accountability Office and HUD OIG reports that officials 

violated Federal law by asking employees to contact United States 

Senators to ask for their support on pending legislation. 

Last Congress, it was the IRS, the Department of Justice, and 

most tragically, the Veterans Administration. In every case, the 

American people saw high-ranking officials within these agencies 

destroy evidence, skirt the law for their own benefit, and adhere to 

a personal agenda. Over the course of the testimony, I hope this 

committee is able to determine if this type of behavior is an isolated incident of just a few bad actors, or if it stretches across the 

entire senior leadership. But what concerns me more is that my 

constituents have come to expect this type of behavior from the Administration. 

Finally, this is not a hearing about the good work HUD does for 

struggling families across the United States, including in my district back home in Pennsylvania. And for the great number of HUD 

employees who work hard and who serve, I thank them for that. 

In fact, this is a hearing about behavior that has occurred at previously-mentioned Federal agencies which tarnishes the good work 

that many Federal employees, including those at HUD, are doing 

for the taxpayers. So, Mr. Chairman, I look forward to the important work of this subcommittee in the 114th Congress to hold accountable Federal agencies and Federal employees. 

And I yield back. 

Chairman DUFFY. The vice chairman yields back. 

The subcommittee now welcomes our witnesses. Thank you both 

for being here today. 

First, we welcome the Honorable David Montoya. He is the Inspector General of the United States Department of Housing and 

Urban Development. Before Mr. Montoya was sworn in as HUD’s 

Inspector General in December 2011, he served in senior-level positions for the Office of the Inspector General at the U.S. Postal 

Service and the U.S. Department of the Interior, and as the Deputy 

Director of the EPA’s Criminal Investigation Division. Mr. Montoya 

5 

is a native of El Paso, Texas, and a graduate of the University of 

Texas at El Paso. 

We also welcome Ms. Edda Perez. She is the Managing Associate 

General Counsel in the Office of General Counsel at the United 

States Government Accountability Office. Ms. Perez serves as Associate General Counsel for appropriations law, budget issues and financial management, and assurance teams within GAO’s Office of 

General Counsel, and she has been with the GAO in several different capacities since 1987. Ms. Perez received her law degree 

from Georgetown University and her undergraduate degree from 

InterAmerican University of Puerto Rico. 

The witnesses will be recognized for 5 minutes to give an oral 

presentation of their testimony. Without objection, the witnesses’ 

written testimony will be made a part of the record. Once the witnesses have finished presenting their testimony, each member of 

the subcommittee will have 5 minutes in which to ask questions of 

the witnesses. 

I want to remind the witnesses verbally that while you may not 

be placed under oath today, your testimony is subject to 18 U.S.C. 

Section 1001, which makes it a crime to knowingly give false statements in proceedings such as this one. You are specifically advised 

that knowingly providing false statements to this subcommittee or 

knowingly concealing material information from this subcommittee 

is a crime. 

On your table, you will see that you have three lights: green 

means go; yellow means you are running out of time; and red 

means stop. The microphones are oftentimes very sensitive, so 

make sure you are speaking directly into it. 

And with that, Mr. Montoya, you are recognized for 5 minutes. 

STATEMENT OF THE HONORABLE DAVID A. MONTOYA, INSPECTOR GENERAL, OFFICE OF INSPECTOR GENERAL, U.S. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. MONTOYA. Thank you, Chairman Duffy, Ranking Member 

Green, and members of the subcommittee. I am David Montoya, 

the Inspector General of the Department of Housing and Urban 

Development. I want to thank you for the opportunity to testify 

today regarding our investigative and audit work of legal and ethical issues at the Department, including lobbying activities, its improper use of agreements under the Intergovernmental Personnel 

Act, and other investigations of HUD employees’ misconduct. My 

written testimony outlines a number of our concerns. 

While we are encouraged by the positive involvement of Secretary Castro and Deputy Secretary Coloretti, our work does continue. On February 26th of last year, I testified before this subcommittee regarding our investigation of HUD lobbying activities. 

I recounted the series of events and lapses in judgment that resulted in HUD engaging in grassroots lobbying activities. 

While our investigation did not result in criminal prosecution, it 

demonstrated an institutional failure to follow HUD’s own existing 

internal policies. This led to placing the Department and its second 

highest-ranking official, the former Deputy Secretary, into a comprising situation, one that leaves an impression of lapses in judgment and unethical decision-making by high-ranking officials. 

6 

In that matter, officials attempted to impede our investigation by 

withholding information and threatening my investigating agents. 

In response to our report of investigation, HUD took no formal disciplinary action. 

I am here today to state that unfortunately, we have encountered 

another example of senior officials bending the rules and engaging 

in what I consider misconduct. Over the last 5 months, we have 

issued two reports concerning HUD’s appointment of the Deputy 

Director of the Council of Large Public Housing Authorities, known 

as CLPHA, to HUD’s Office of Public and Indian Housing’s (PIH’s) 

policymaking division that was responsible for developing the regulations applicable to the entities CLPHA represents. 

In essence, HUD appointed someone who represented the regulated to be in charge of developing the regulations. We believe the 

former Assistant Secretary and former Deputy General Assistant 

Secretary for PIH may have committed prohibitive personnel practices and created an inherent conflict of interest in doing so. More 

troubling is that once inside HUD, CLPHA’s Deputy Director attempted to deregulate public housing agency reporting requirements and loosen oversight of public—or PIH programs to align 

with the agenda set forth by CLPHA and other similar industry 

groups. 

These two events alone illustrate what can happen when senior 

officials veer from the course of ethical decision-making, skirt the 

edges, and act in a manner that is not in the government’s best interest. 

The inappropriate and sometimes illegal actions by a small group 

of HUD employees detract from what my experience has shown me 

to be the norm, which is that the vast majority of HUD employees 

are hard-working, dedicated civil servants. In fact, many of these 

cases have come to us by conscientious employees who are frustrated that their managers have not addressed these issues and allegations. 

In some of these cases, we see a failure to adhere to existing policies and procedures, or we see a breakdown in responsibility. Particularly troubling to me is when information is withheld from my 

office or employees demonstrate a lack of candor with, or even 

threaten, OIG agents and yet HUD takes no action. 

It is a fact that poor actions and behavior are human in nature 

and will occur throughout any industry or entity, private or government. HUD is not alone. But what I believe is important is what 

an organization does after such behavior is detected to discipline, 

and create an ethical culture in the workplace. It is my opinion 

that HUD has failed in both. 

One cannot ignore the fact that for the past several years HUD 

has consistently ranked near the bottom in annual surveys of the 

most desirable Federal agency to work for. Misconduct and unethical behavior, particularly by high-ranking officials, does not, in my 

view, serve to enhance this unfavorable image. Employee morale 

also suffers when employees observe that misconduct is not dealt 

with and the offending employees are allowed to remain in their 

positions virtually unpunished. 

It is in HUD’s best interest that they address misconduct. Because according to a 2013 national business ethics survey conVerDate Nov 24 2008 13:23 Jul 31, 2015 Jkt 095053 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\95046.TXT TERRI
7 

ducted by the Ethics Resource Center, when employees observe 

misconduct on the job, their engagement drops by nearly 30 percent. 

I do want to express my appreciation for Secretary Castro’s effort 

to encourage HUD employees to cooperate with my office. Indeed, 

he issued a jointly-signed letter with me to all HUD employees outlining his expectations. I look forward to working with the Department and the Congress to ensure that HUD programs and personnel operate in a legal and ethical manner. 

Thank you for the opportunity to speak today, and I am happy 

to answer your questions. 

[The prepared statement of Inspector General Montoya can be 

found on page 36 of the appendix.] 

Chairman DUFFY. Thank you, Mr. Montoya. 

The Chair now recognizes Ms. Perez for 5 minutes. 

STATEMENT OF EDDA EMMANUELLI PEREZ, MANAGING ASSOCIATE GENERAL COUNSEL, OFFICE OF GENERAL COUNSEL, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. PEREZ. Good morning, Chairman Duffy, Vice Chairman 

Fitzpatrick, Ranking Member Green, and members of the subcommittee. Thank you for the opportunity to discuss our legal opinion concerning the Department of Housing and Urban Development’s use of appropriations to prepare and transmit an email to 

the public. 

GAO concluded that HUD violated the anti-lobbying provision of 

its Appropriations Act and the Antideficiency Act. The legal opinion 

was requested by this subcommittee’s previous chairman. Representative McHenry asked GAO whether HUD violated anti-lobbying provisions when the Deputy Secretary prepared and transmitted an email on July 31, 2013. 

That email encouraged recipients to contact specific Senators regarding pending legislation. We relied upon facts determined from 

the investigation done by HUD’s Office of Inspector General and information that HUD provided to the subcommittee. We also asked 

HUD to provide us with additional facts and its legal views. HUD 

did not provide any additional facts or legal views to GAO. 

The provision applicable in this case is Section 716 of HUD’s 

2012 Appropriations Act, which was carried forward by the 2013 

Appropriations Act. Section 716 is commonly referred to as an antilobbying provision. It prohibits the use of appropriated funds for indirect or grassroots lobbying in support of or in opposition to pending legislation. 

Grassroots lobbying occurs when an agency makes clear appeals 

to the public to contact Members of Congress regarding pending 

legislation. The email transmitted by the Deputy Secretary requested that recipients contact 17 named Senators in support of 

the Senate’s version of HUD’s 2014 appropriations bill, which was 

pending in the Senate at that time. The email emphatically urged 

recipients to encourage the Senators to take various actions: to vote 

in favor of procedural motions to advance consideration of the bill; 

to oppose specific amendments HUD considered harmful to the bill; 

and to vote in support of the bill itself. 

8 

Among the over 1,000 recipients of the Deputy Secretary’s email 

were members of the public. GAO concluded that HUD violated 

Section 716 by preparing and transmitting the email. The provision 

is violated when there is evidence of a clear appeal by an agency 

to the public to contact Members of Congress in support of or in 

opposition to pending legislation. 

Here, the Deputy Secretary’s email, on its face, made several 

clear appeals to the public to contact Members of Congress regarding HUD’s pending appropriations bill. HUD did not deny that it 

engaged in grassroots lobbying. Rather, HUD emphasized that the 

email was sent by its Deputy Secretary, who is a Presidentially-appointed and Senate-confirmed official. 

HUD noted that the Department of Justice has opined that a 

similar anti-lobbying provision which is enforced by Justice does 

not restrict the activities of certain Executive Branch officials such 

as Presidential appointees. Notably, however, in interpreting that 

provision in Section 1913 of Title 18, Justice does caution against 

such officials engaging in the sort of lobbying activity that section 

was intended to prevent. 

GAO’s opinion did not analyze whether HUD violated Section 

1913, a provision enforced by the Department of Justice, not GAO. 

GAO analyzed HUD’s compliance with the appropriations provision 

found in Section 716. 

GAO does not agree with HUD’s view that the Deputy Secretary 

is exempt from the appropriations provision. Section 716 would not 

prevent the Deputy Secretary from engaging in normal executive 

legislative relationships. It does however establish a brightline rule 

prohibiting a clear agency appeal to the public to contact Members 

of Congress in support of or in opposition to pending legislation. 

And in this case, there is evidence of such an appeal to the public, 

and GAO concluded that HUD violated the anti-lobbying restriction 

of Section 716. By using its appropriated funds in violation of this 

prohibition, HUD also violated the Antideficiency Act. 

The Antideficiency Act is a cornerstone of fiscal laws by which 

Congress enforces its constitutional power of the purse. It is also 

a funds-control statute that is designed to implement agency fiscal 

discipline. 

Under the Act, officials of the government may not make or authorize an obligation or expenditure exceeding the amounts of 

available appropriation. In other words, agencies may not spend 

more than Congress provides. The legal effect of Section 716 is to 

make no funds—that is, zero—available to HUD for indirect or 

grassroots lobbying. By using funds to prepare and transmit the 

email in question, HUD spent funds in excess of the amount available. And because no funds were available for grassroots lobbying, 

HUD violated the Antideficiency Act. 

Consequently, HUD must report an Antideficiency Act violation 

to the President and Congress, and transmit copies of the report 

to GAO in accordance with the law. As of this date, GAO has not 

received a report from HUD for this Antideficiency Act violation. 

Thank you, Chairman Duffy, Vice Chairman Fitzpatrick, and 

Ranking Member Green. 

This concludes my statement, and I would be pleased to answer 

any questions you may have. 

9 

[The prepared statement of Ms. Perez can be found on page 48 

of the appendix.] 

Chairman DUFFY. Thank you, Ms. Perez. 

The Chair now recognizes himself for 5 minutes. Mr. Montoya, 

maybe just a brief recap. After last year’s hearing, after the information came to light with regard to the lobbying effort within 

HUD, what happened to Mr. Jones, Mr. Mincberg, and Mr. Constantine in regard to disciplinary action, and where are they today? 

Mr. MONTOYA. Thank you for that question, Mr. Chairman. Mr. 

Mincberg has left the organization. Nothing—no personnel action, 

if you will, took place against him prior to his leaving, but he has 

left the organization. 

Chairman DUFFY. So he wasn’t removed for his actions? He left 

on his own volition? 

Mr. MONTOYA. Left on his own. He resigned, yes, sir. With regards to the Deputy Secretary, he left and took another position 

with the State. Nothing happened with him, although our investigation did not suggest that he had any real direct involvement in 

the email, and may have been unknown with regards to the email 

contact list. 

Chairman DUFFY. Is it fair to say Mr. Jones was, in your opinion, 

relying on the advice given to him by others? 

Mr. MONTOYA. Yes, sir. I think last time I testified, I classified 

it as ‘‘ill-advised.’’ He was ill-advised by his attorneys who should 

have kept him from this situation. 

Chairman DUFFY. Okay. 

Mr. MONTOYA. And with regards to Mr. Constantine, I believe he 

may have been issued a reprimand or an oral counseling, which we 

would not consider a personnel action—oral counseling. 

Chairman DUFFY. But he has been removed from HUD, yes? 

Mr. MONTOYA. No, no. 

Chairman DUFFY. No? 

Mr. MONTOYA. He is still the ethics official for HUD. 

Chairman DUFFY. He is the ethics official for HUD? 

Mr. MONTOYA. Yes, sir. 

Chairman DUFFY. Was Mr. Constantine misguided, do you think, 

like Mr. Jones? 

Mr. MONTOYA. The evidence suggested that Mr. Mincberg had 

several conversations within his hallway about this more aggressive lobbying. I did fault Mr. Constantine for not taking more of an 

aggressive approach himself in asking the question, what is it you 

are talking about? Especially because it dealt with the Secretary 

and the Deputy Secretary. 

Chairman DUFFY. Did Mr. Constantine cooperate with your investigation? 

Mr. MONTOYA. We had to interview him 3 times. So to the extent 

that he was willing to be interviewed— 

Chairman DUFFY. Is that standard practice that you would interview someone 3 times? Or usually, if someone is cooperative, does 

it take only one time? 

Mr. MONTOYA. It is not unheard of that we interview somebody 

several times if we need to go back for additional information. In 

his case we, quite frankly, didn’t feel that the story was straight. 

So that is why we interviewed him 3 times. 

10 

Chairman DUFFY. Do you think he was fully forthright with you 

in the first interviews that you did with him? 

Mr. MONTOYA. No. And quite frankly, although he didn’t say it, 

I believe he was a little fearful of retaliation of speaking up. 

Chairman DUFFY. But he has not been removed. He is in the 

Ethics Division. 

Mr. MONTOYA. That is correct, sir. 

Chairman DUFFY. Okay. Has there been any promotion or increase in pay? 

Mr. MONTOYA. I am not aware that there would be for him. 

Chairman DUFFY. Okay. I want to switch gears and go to the 

more recent investigation with regard to Ms. Gross being hired by 

HUD. Listen, it is not uncommon, and I think many Americans 

might not like this, but sometimes lobbyists will come to work for 

the government and sometimes government employees will leave 

and go work for lobby firms. It is referred to as the ‘‘revolving 

door.’’ That is not uncommon, or that is not illegal, is it? No. 

Mr. MONTOYA. No. It would depend on the circumstances. 

Chairman DUFFY. But with Ms. Gross, however, she was brought 

into HUD in her governmental personnel agreement. Did she resign her position from CLPHA? 

Mr. MONTOYA. No, she did not. She maintained her position as 

the Deputy Director and was, quite frankly, being paid by CLPHA 

with HUD reimbursing payments. So in essence, she was still a 

full-fledged paid employee of CLPHA while employed in Federal 

service. 

Chairman DUFFY. In these IPA agreements between agencies 

and outside organizations, is that uncommon that they would keep 

their position at the outside organization? 

Mr. MONTOYA. I don’t believe it is uncommon. I think what was 

uncommon here is, she was put in a very key, high-ranking role— 

she wasn’t there as an advisor, per se—to sort of inform HUD of 

what the industry was dealing with when it came to regulations. 

There is nothing wrong with that sort of advisory role, but she was 

in a key, policymaking position. 

Chairman DUFFY. And that is where the difference is, that she 

was not there in an advisory role, which is the traditional position 

of an IPA individual. Instead, she was in a policy-making position 

and still kept her position the CLPHA, which is a lobbying organization and has a certain view and perspective of what HUD should 

be doing with regard to reforms. Is that correct? 

Mr. MONTOYA. Yes, sir, that is correct. 

Chairman DUFFY. Do you have an opinion as to whether—was 

she loyal to HUD, was she loyal to CLPHA, was she loyal to herself? How did she navigate her role in HUD? 

Mr. MONTOYA. Quite frankly, everything suggests to me and to 

us that she was loyal to CLPHA and to the industry, not only with 

regards to the fact that she wanted to maintain the higher salary 

that CLPHA was giving her as opposed to the salary she would 

have made as a Federal employee, but quite frankly, in trying to 

deregulate some of the regulations that had established HUD in a 

better position, especially with regards to improper payments. 

Chairman DUFFY. Thank you. And my time has expired. 

11 

The Chair now recognizes the ranking member, Mr. Green from 

Texas, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. Thank you again to the 

witnesses. 

Let me start with you, Ms. Perez. And thank you for appearing 

today. With reference to the report that you are to receive from 

HUD and that Congress is to receive as well, you have indicated 

that you have not received it. But would you go on and indicate at 

this time that this is not unusual given the length of time that has 

lapsed? And that sometimes it can take months to get these reports 

to the appropriate parties? 

Ms. PEREZ. Yes, sir, it can take several months for us to get reports from agencies when we have indicated that they have violated the Antideficiency Act. Some agencies have done it in a matter of weeks, others have taken several months and even years. 

Mr. GREEN. And just for the record, to make it very clear, you 

are not contending that anything untoward has occurred by virtue 

of the report not having reached your office to date. 

Ms. PEREZ. No, sir. The main concern and purpose of that report 

would be for the agency to be able to identify what actions it has 

taken to correct these violations, as well as to take actions to prevent violations in the future. So we really view it as forward-looking because that is part of what the statute requires, to impose additional safeguards. 

Mr. GREEN. Thank you. And with reference to the anti-lobbying, 

you do concede that if the wording in that letter had been appropriate to indicate that the Administration opposes a certain piece 

of legislation, or this is the Administration’s position on a piece of 

legislation, that it would have been perfectly appropriate and 

would not have been a breach. Is that a fair statement? 

Ms. PEREZ. Yes, sir. What our case law recognizes is that it is 

fine for agencies and Administrations to make their views known 

to the public, including their views on pending legislation. But— 

Mr. GREEN. Thank you. I am going to have to intercede for just 

a moment and move to Mr. Montoya because there are a couple of 

things I have to get into with him. 

Ms. PEREZ. Sure. 

Mr. GREEN. Sir, thank you. It appears that two Texans have 

joined together to issue a joint communique, you and the Secretary. 

And I would like to ask a couple of questions about this. Is that 

something that is commonplace for a Secretary, to sign a communique with an IG? 

Mr. MONTOYA. No, sir. I have to say no, and I am not sure I 

know of any other situation like this. 

Mr. GREEN. And if you had to characterize it as either unique or 

commonplace, you would lean more toward unique than commonplace, would you not? 

Mr. MONTOYA. Yes, sir, I would agree with that. 

Mr. GREEN. And in this communique, you indicate that you are 

working together to eliminate waste and mismanagement. And you 

go on to indicate that you believe that you can prevent these inefficiencies and that we can work together to make HUD a more effective and efficient organization. Is that a fair statement? 

Mr. MONTOYA. Yes, sir. That, in fact, is the mission of the IG. 

12 

Mr. GREEN. And have you found the new Director, Director Castro, to be someone that you can work with to date? And do you find 

him moving in the right direction? 

Mr. MONTOYA. With my initial conversations, and the fact that 

he would sign this joint letter in response to many of the concerns 

that I have raised, or the subject of this testimony, yes, I am encouraged by that. And I look forward to him making those changes. 

Mr. GREEN. The organization itself, HUD, you have indicated 

that the infractions should not be perceived as pervasive, that 

these are things that occur in large organizations the size of 

HUD—9,000-plus employees—and you have been very clear on 

this. But I think for the record it is important to reiterate this. Is 

this true? 

Mr. MONTOYA. Yes, sir, that is correct. 

Mr. GREEN. And it is also true that what has been done is something that is correctable with a reasonable amount of effort and 

time. And you are eager to work with the new Secretary to make 

these corrections. 

Mr. MONTOYA. Yes, sir, and that is key, what an organization 

will do when it comes across misconduct. 

Mr. GREEN. Yes, sir. And you agree that the new Secretary, 

given his initial expression to you, should be given an opportunity 

to make the necessary corrections so that we can move forward 

with HUD. 

Mr. MONTOYA. Yes, sir, absolutely. 

Mr. GREEN. And finally this. The people who have been involved 

in these infractions, for the most part, are all no longer with HUD. 

I do understand that they left under circumstances that are sometimes questionable in the minds of some, but they are no longer 

there. Is that a fair statement? 

Mr. MONTOYA. It depends on which example of which we are 

speaking. There are a fair amount who are still there. 

Mr. GREEN. Yes, but the—Mr. Jones is no longer there. 

Mr. MONTOYA. No, sir, he is no longer there. 

Mr. GREEN. Ms. Gross is no longer there. 

Mr. MONTOYA. That is correct; she is no longer there. 

Mr. GREEN. So for the most part, we can say that HUD has 

been—whether they have left, and that is a good thing, their leaving. 

Mr. MONTOYA. I would say—well, I don’t know about Deputy Secretary Jones. I actually thought he was trying to do a lot to change 

the culture with regard to some of this conduct. With regards to 

Ms. Gross, yes, it is a good thing she has left. 

Mr. GREEN. Okay. And HUD is putting those behind them— 

Chairman DUFFY. The gentleman’s time has expired. 

Mr. GREEN. Thank you very much, Mr. Chairman. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the former chairman of this subcommittee. And we appreciate all the good work he has done on the 

subcommittee as chairman and the good work he has done on this 

issue. He is also the Majority Deputy Whip and the vice chairman 

of the full Financial Services Committee. The Chair now recognizes 

Mr. McHenry from North Carolina for 5 minutes. 

13 

Mr. MCHENRY. I thank my friend from Wisconsin. And I hope 

you will enjoy the same working relationship I had with the ranking member during my time. And congratulations on your new 

chairmanship, Sean. We are happy you have taken over, and I am 

sure the staff is much happier to work with you. 

So, Mr. Montoya, thank you for being here, and Ms. Perez, thank 

you for being here, as well. I appreciate the work that you all do 

on a daily basis for the taxpayers and for the American people. It 

is important work. 

Mr. Montoya, in your report you outline several other cases of 

employee misconduct in the Department of Housing and Urban Development. In your opinion, were the administrative remedies that 

the Department put in place sufficient? 

Mr. MONTOYA. No, sir, I don’t believe they are. And quite frankly, when they do issue some personnel action it seems to amount 

mostly to counseling sessions, verbal oral counseling. Which, quite 

frankly, don’t amount to penalties even under their own code of 

conduct. A minimum penalty would be a reprimand, and that is in 

written form that generally stays in an employee’s personnel file 

for 2 years. So when HUD tells us that they have handled it and 

they have issued corrective action, oral counseling to us does not— 

Mr. MCHENRY. So, why? Why does that matter? 

Mr. MONTOYA. I think, again, that is what I said earlier. I think 

in order to establish that ethical culture in a workplace your have 

to discipline as appropriate when the circumstances arise. And I 

think in many of the examples we give you, it would suggest that 

there should have been a stronger reprimand or at least a stronger 

way of addressing— 

Mr. MCHENRY. So you work with the Department of Justice on 

these investigations, and you turn over—you have criminal referrals, at times, you turn over to the Department of Justice. Have 

they prosecuted in these cases? 

Mr. MONTOYA. No. And often, they will defer to us and to the Department because they feel that the administrative actions available to the Department are sufficient enough to address the issue, 

some of these being, obviously, reprimand up to removal— 

Mr. MCHENRY. So HUD—most HUD employees are in the union. 

Is that correct? 

Mr. MONTOYA. That is correct, sir. 

Mr. MCHENRY. Okay. So how has the union involvement been in 

terms of taking action against people who have done wrong—broken the law, broken ethical standards? Have they helped? 

Mr. MONTOYA. No. Quite frankly, I think the union will come to 

the aid of the employee irrespective of what he has done. In one 

of the examples I gave, with a gentleman who was running a business for over 6 years in the Department—working 2 to 3 hours a 

day on that business, by his own testimony—I think the initial recommendation was to remove him. And it was the union who helped 

retain him for—retain him by only having to suffer through a 30- 

day-without-pay penalty. The problem with that, though, is he was 

awarded twice in that same year with a monetary award. 

And he was promoted, if you will, with regards to his performance rating. He went from an ‘‘exceeds,’’ which he had historically 

been, to an ‘‘outstanding’’ that year. 

14 

Mr. MCHENRY. Isn’t that a deeper issue when some guy is spending basically 40 percent of his time on a daily basis doing something else, and yet he is given high marks for exceeding his job? 

Perhaps maybe he should be doing more work or have more responsibility to maybe fill up his day if he can actually spend about 

half of his time working for the taxpayer but collecting full pay. 

Isn’t that a deeper cultural problem? 

Mr. MONTOYA. Yes, sir. In fact, I plan to look into it. As we were 

preparing for this testimony, it came to our attention that not only 

he, but another employee who was running a business was also 

given several monetary performance awards. It is my suspicion 

that they were given these awards in order to offset the loss in pay. 

And so I do plan to look into it and ask the question— 

Mr. MCHENRY. Sir, look, these are important programs. You 

have Public and Indian Housing, you had a loan officer who embezzled over $800,000 from the taxpayers—and he was hired despite 

the fact that—as you outline in your report—he had a 10-year 

criminal history. First of all, how did he slip through the cracks? 

And second of all, has he paid us back yet? Has he paid my constituents back and the American taxpayers back for the money he 

embezzled? 

Mr. MONTOYA. I don’t believe he has done that yet. 

Mr. MCHENRY. But how did he slip through the cracks with a 10- 

year criminal record? 

Mr. MONTOYA. Well, here is the irony. HUD, I believe, knew of 

that, of some of that. They also had a systemic concern with how 

they were really looking into employee backgrounds. We actually 

issued a report on what they did wrong in that particular case— 

actually, it was in a prior case—and what we thought they could 

do better. 

Mr. MCHENRY. And have they corrected this? 

Mr. MONTOYA. When we initially submitted that, what we call a 

‘‘systemic implication report,’’ it was 5 or 6 months before this gentleman was hired. So they obviously didn’t do it in that 5- or 6- 

month period because then they hired this one with the large 

criminal history. My staff is actually now going back to ask those 

questions: whatever happened to that; and did you implement that? 

I don’t have an answer for you now. 

Mr. MCHENRY. Thank you. 

Thank you, Mr. Chairman. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Ellison, for 5 minutes. 

Mr. ELLISON. Thank you, Mr. Chairman, and Mr. Ranking Member. 

Mr. Montoya, do you argue that when someone has worked for 

a membership association of a public housing agency and has that 

background, they should be prohibited from serving in leadership 

at HUD on public housing issues? 

Mr. MONTOYA. Well, it depends. Absolutely not if they come in 

as a full-fledged government employee. They are responding to a 

vacancy announcement, they are selected. They come in as a fullfledged government employee. I do have a concern when they come 

15 

in while still working for those associations. So, it is kind of a dual 

answer there. 

Mr. ELLISON. Yes. You are well aware that there are people who 

come, do government service, who have been in the private sector 

but then come work at the FDIC, the OCC, the Consumer Financial Protection Bureau, things like that. 

Mr. MONTOYA. Absolutely. 

Mr. ELLISON. It happens all the time. And then in the public 

housing space, would you say it is somehow unique from those 

other examples I gave? 

Mr. MONTOYA. No. And quite frankly, she could have come in as 

a GS–15 government employee having left CLPHA. But she absolutely could have done that. The irony there is that then she could 

have tried to deregulate in her government role which, obviously, 

still would have been a concern for us. 

Mr. ELLISON. Thank you. And let me also mention that I just 

think that it is important—and I wonder if you agree with this— 

that experts in affordable housing and development and management who work for nonprofits or government should be able to 

work in public policy positions. As a general principle, it sounds 

like you agree with that. 

Mr. MONTOYA. I do. And I actually don’t disagree with the fact 

that they can come into a Department under an IPA in an advisory 

role, right? But not in key positions doing what Ms. Gross did. 

Mr. ELLISON. Okay. How would you describe how HUD is providing appropriate oversight of the IPA process so that IPA experts 

are provided with the guidance to meet all the requirements at the 

beginning of their service rather than later on down the line? 

Mr. MONTOYA. Oh, I would say their oversight was poor to nonexistent when these started. It is my understanding now that the 

Office of General Counsel is actually reviewing every IPA for ethical considerations, these sorts of things. But I am looking at everyone they have—I think they have 16 IPAs so I have launched a review of all 16 to find out if we have any more circumstances like 

we did with Ms. Gross. 

Mr. ELLISON. Okay. Well, I just want to say that I am personally 

appalled by how poorly Congress has funded public housing. At 

this time—there has been a study that said that the maintenance 

budget for public housing—to get public housing back up to snuff 

at acceptable standards would be upwards of $26 billion. And yet 

in the last 10, 12 years we haven’t come anywhere close to that. 

I am concerned about that. 

You have people with inadequate lighting, elevators that aren’t 

working, mold, all at the same time when low-income people all 

over this country really need housing. So this is something that 

continues to be a concern of mine. And, we are going to continue 

to watch this issue closely. 

Mr. MONTOYA. Well, sir, you would be interested to know that 

one of the sections of the PIH requirements that Deb Gross tried 

to deregulate was the requirement for quality standard reviews 

every year. She wanted to push that out to every 2 or 3 years, 

which would have added more to the very maintenance problems 

you are talking about. To not require these public housing authorities to look at this every year so that these people have a clean, 

16 

safe home is a concern for us. And that is one of those things she 

tried to change. 

Mr. ELLISON. Thanks for your service. 

Mr. MONTOYA. Thank you, sir. 

Mr. ELLISON. And I will yield back. 

Mr. MONTOYA. Thank you, sir. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the vice chairman of the subcommittee, the gentleman from Pennsylvania, Mr. Fitzpatrick, for 

5 minutes. 

Mr. FITZPATRICK. I thank the chairman. And as I said in my 

opening statement, this hearing is not about the important work 

that HUD does, or the need to provide adequate resources to HUD. 

I think we can all agree that is important. This hearing is about 

waste, fraud, and abuse within the agency which, hopefully, we all 

agree we need to get after. And, Mr. Montoya, I want to thank you 

for what I would describe as your great work within the agency. 

Mr. MONTOYA. Thank you, sir. 

Mr. FITZPATRICK. The investigations you do—we have met in my 

office, we have met here in public forums and hearings, and I have 

always found you to be very direct and very prepared. I want to 

go back to the issue of the Council for Large Public Housing Agencies. Was this organization ever a registered lobbying organization 

with the Federal Government, the Council itself? 

Mr. MONTOYA. Yes, sir, it was. 

Mr. FITZPATRICK. What was the timeframe? 

Mr. MONTOYA. I believe they relinquished their registration as a 

lobbyist in 2009. There was a law change there so I think it was 

a 2009 timeframe. 

Mr. FITZPATRICK. So they were registered Federal lobbyists up 

until 2009, then they terminated that registration? 

Mr. MONTOYA. They did, but they didn’t end the practices that 

they had done as a lobbyist. They continued those. In fact, Ms. 

Gross and the male employee she hired from CLPHA, both in our 

interviews, attested to the fact that their roles and responsibilities 

didn’t change. They did the very same thing. 

Mr. FITZPATRICK. So you are saying that they either terminated 

their registration or they let it lapse and didn’t renew it. Nevertheless, the individuals within the Council for Large PHAs continued 

with the same course of conduct. Would that be communicating 

with HUD and attempting to influence their policy? 

Mr. MONTOYA. Yes, sir. 

Mr. FITZPATRICK. Would that be acting as a lobbyist without 

being a federally-registered lobbyist? 

Mr. MONTOYA. I am not an attorney, but that would be my impression and interpretation, yes, sir. 

Mr. FITZPATRICK. So effectively, you are saying that the Council 

is continuing to act as a lobbyist today. 

Mr. MONTOYA. That would be my opinion, yes, sir. 

Mr. FITZPATRICK. Was Ms. Gross herself ever a federally-registered lobbyist? 

Mr. MONTOYA. Yes, sir. She was, as well as the male employee 

that she hired from CLPHA to work directly for her at HUD. 

17 

Mr. FITZPATRICK. The President’s Executive Order 13490 bars individuals who have been federally-registered lobbyists within the 

past 2 years from working in Federal agencies in the specific areas 

in which they lobbied. Is that correct? Is that your understanding 

of that— 

Mr. MONTOYA. Yes, sir, that is correct. 

Mr. FITZPATRICK. —Executive Order? If appears as though Ms. 

Henriquez and Ms. Hernandez violated this Executive Order when 

they hired Ms. Gross then. Is that correct? 

Mr. MONTOYA. Yes, sir, that is my opinion. It is correct. 

Mr. FITZPATRICK. Now, Ms. Gross was—how would you describe 

that relationship? Like a contracted employee? Not a direct employee of HUD, correct? 

Mr. MONTOYA. Correct. It is sort of a quasi-contractual type employment. 

Mr. FITZPATRICK. Was she qualified to hold that position if she 

had applied as any American would apply to HUD for a position— 

as a job description, with requirements and qualifications? If she 

had applied directly, was she qualified to hold that position? 

Mr. MONTOYA. That is a great question, Mr. Fitzpatrick. What I 

would tell you is that there was a vacancy announcement for that 

position for which she applied. She originally was disqualified for 

not having the right criteria. Then she was placed on the list after 

some finagling, if you will, by the Assistant Secretary. And then 

ironically, the Assistant Secretary voided the announcement, saying that no one on the list, including Ms. Gross, was qualified. And 

out of a five-point scale she rated them all as two, right? And then 

goes and hires her under this IPA agreement at $40,000 more than 

she would have been making if she had simply become a Federal 

employee. 

Mr. FITZPATRICK. So it would appear to an inquiring independent 

investigator that something was up here. We would call that a clue. 

Mr. MONTOYA. Yes, sir, absolutely. 

Mr. FITZPATRICK. On the issue of compensation, as a contracted 

employee was she actually compensated more than the direct position would have paid? 

Mr. MONTOYA. Yes, sir, she was. And she also received salary increases and bonuses during a period of time that Federal Government employees did not. 

Mr. FITZPATRICK. As a contracted employee, was she required to 

file financial disclosures with the Federal Government? 

Mr. MONTOYA. Under the IPA agreement, we believe yes, that 

she was required to. 

Mr. FITZPATRICK. And did she do that? 

Mr. MONTOYA. She did not. HUD doesn’t feel that she should 

have. 

Mr. FITZPATRICK. So you are saying that HUD hired a position 

for Deputy Assistant Secretary— 

Mr. MONTOYA. Yes, sir. 

Mr. FITZPATRICK. —hired a person who wasn’t qualified, paid her 

more than the position otherwise would have paid, and then she 

failed to file financial disclosure forms. Was anybody disciplined 

within the organization for this course of conduct? 

18 

Mr. MONTOYA. No. In fact, the Office of General Counsel parsed 

words and definitions with us over whether she should or shouldn’t 

have filed a financial disclosure form because of her—but it is my 

belief that because of her position and the sheer salary alone she 

should have. 

Mr. FITZPATRICK. My time is up. 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Maryland, Mr. 

Delaney, for 5 minutes. 

Mr. DELANEY. Thank you, Mr. Chairman. And I want to thank 

the witnesses for their testimony, which is obviously very concerning. It is concerning on an absolute basis in terms of actually 

what happened and what you are reporting. But it is also concerning because, like most of my colleagues, I believe HUD does extraordinarily important work. And as my friend from Pennsylvania 

had pointed out, this is not a hearing about HUD. But HUD does 

do extraordinarily important work. And the overwhelming majority 

of the employees at HUD are dedicated public servants working 

hard in an honest and ethical manner for the good of the taxpayers. 

But this kind of situation tends to put them and the whole organization in a negative light, which is unfortunate for the taxpayers, 

for the organization, and for the people. And so when thinking 

about—kind of lifting up a little bit and thinking about some of 

your observations about things in terms of how they are run at 

HUD and how these things can happen, and just thinking about 

my own experience in the private sector running a public company 

that was subject to lots of regulations and lots of compliance, we 

kind of had four pillars that we tried to build upon in terms of 

making sure we had an organization that ran to the highest standards of ethical and compliance behavior. 

The first was making sure we had really good training so that 

people understood what the rules are. Second, we made sure we 

had the infrastructure in place for ongoing monitoring and compliance. Third, we made sure we had a culture of accountability so if 

people actually broke the rules there were real consequences and 

people saw that there were consequences. And then finally, it was 

really important to set the right tone at the top. In other words, 

making sure that senior management, when they are talking about 

mission and execution, they are also talking about culture and behavior. And I was pleased about the joint letter that you sent with 

the Secretary, and I think the Secretary is doing a terrific job at 

the organization and is really bringing fresh energy in general. 

But I am interested, Mr. Montoya, in your observations on how 

HUD operates as it relates against those four—at least in my 

words—pillars: training; compliance infrastructure; a culture of accountability; and setting the right tone at the top that actually this 

stuff is really important. 

Mr. MONTOYA. Thank you for the question, sir. And I will tell 

you, it is music to my ears. Because what you are really talking 

about is building an ethical culture in an organization. Unfortunately, the government, unlike the private sector, doesn’t always do 

such a great job at that. And I would agree with you, a lot of it 

has to do with the tone at the top, the very beginning. And I beVerDate Nov 24 2008 13:23 Jul 31, 2015 Jkt 095053 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\95046.TXT TERRI
19 

lieve that is why the Secretary signed that joint letter and why I 

am so encouraged. 

Certainly, the supervisory enforcement—that their ethical conduct is beyond reproach, and the training to be better supervisors 

when it comes to dealing with misconduct. And then, of course, you 

need the peer commitment, where you have individuals supporting 

each other to come forward. And we see a lot of that in these cases 

that we have where they are coming forward on this. 

It is hard for me to put a finger on exactly what the culture is 

or what the attitude is, except to say that I think when nothing 

is done, nothing substantive is done with misconduct, people sort 

of lose their oomph, their desire to really do anything. 

Mr. DELANEY. It is disrespectful to them in a way, right? 

Mr. MONTOYA. Yes, it is. 

Mr. DELANEY. Because they are doing their job, correct? 

Mr. MONTOYA. And again, the government does not do a good job 

of this. I would agree that every government organization should 

publicize, maybe not using the names, but publicize it. ‘‘Unfortunately, we had an employee who did this. This is the penalty they 

received.’’ So that everybody knows that, one, they take this stuff 

seriously; and two, there are consequences for misconduct. And 

then what that misconduct was. It goes to building that ethical culture. HUD does not do that, and I don’t know of many agencies 

who do that, quite frankly, in the government. 

Mr. DELANEY. What about the training as it relates to really 

what the limitations are? How do you feel that is done? 

Mr. MONTOYA. In some of the employees who come to us, and we 

ask them why are you coming to us, I am not your first-line supervisor, many times their answer is, ‘‘My manager is incompetent, 

they need training, they don’t know how to handle this, they won’t 

handle it.’’ So I think HUD would do better at getting their managers trained. But, unfortunately, the examples we are talking 

about today are at the highest levels of the organization. The Assistant Secretary is a political appointee, Mr. Mincberg was a 

schedule C, Ms. Gross was in the GS–15 position. Those are highranking positions. Those are not rank-and-file positions. 

Mr. DELANEY. Right. 

Mr. MONTOYA. So that is a larger concern for me. 

Mr. DELANEY. Right. Again, I am really gratified that the Secretary is working with you in sending out those messages. Because 

that is exactly the kind of tone at the top I think we need. And 

it sounds like there is a lot to build on that, so— 

Mr. MONTOYA. Absolutely. 

Mr. DELANEY. But, again, I appreciate both of your testimonies. 

Mr. MONTOYA. Thank you— 

Mr. DELANEY. And I thank you. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentleman from Maine, Mr. 

Poliquin, for 5 minutes. 

Mr. POLIQUIN. Thank you, Mr. Chairman. And thank you very 

much, Mr. Montoya and Ms. Perez, for being here today. We really 

appreciate you being here and being forthright with us. 

20 

Mr. Montoya, Deborah Hernandez and Sandra Henriquez—am I 

correct in assuming they were senior personnel at HUD or are senior personnel at HUD? 

Mr. MONTOYA. Ms. Henriquez was the Assistant Secretary, and 

that is a politically-appointed position. She is no longer with the organization. 

Mr. POLIQUIN. Right. Is that a senior position at HUD, sir? 

Mr. MONTOYA. Absolutely, sir. 

Mr. POLIQUIN. Okay. And how did they both meet Debra Gross? 

Mr. MONTOYA. I think Deb Gross came to their attention, quite 

frankly, by somebody in, at the time, an appropriations committee 

who was forwarding her name to HUD to hire. 

Mr. POLIQUIN. Okay. And Debra Gross was a lobbyist advocating 

for the funding of taxpayer dollars for affordable housing. And so, 

that might have been how they got to know Ms. Hernandez and 

Ms. Henriquez, who had senior positions at HUD. Is that correct? 

Mr. MONTOYA. That is correct. And our indication is that they actually have a personal relationship outside the workplace. 

Mr. POLIQUIN. They did, or they do not? 

Mr. MONTOYA. That they did at the time, and I believe they still 

do at this— 

Mr. POLIQUIN. And am I correct in assuming that Ms. Gross was 

paid more than the normal Federal employee at that grade level? 

Mr. MONTOYA. Yes, sir, that is correct. 

Mr. POLIQUIN. Okay. And she was hired by Ms. Hernandez and 

Ms. Henriquez. Is that correct? 

Mr. MONTOYA. That is correct. 

Mr. POLIQUIN. Okay. Am I correct in assuming that Ms. Gross, 

when she was at HUD but still a lobbyist for funds dispersed by 

HUD for programs she was lobbying for, also hired two other employees who were former lobbyists to come and work with her at 

HUD? 

Mr. MONTOYA. One of them was a former lobbyist. The female 

she hired I don’t believe was a lobbyist. 

Mr. POLIQUIN. Yes. 

Mr. MONTOYA. But I don’t—I would have to go back and check 

my records. 

Mr. POLIQUIN. Do you find that odd? 

Mr. MONTOYA. I don’t find it odd that you would bring people 

into an organization that you had worked with if they were good. 

I do find it odd that she was bringing them in for the purposes of 

helping her deregulate— 

Mr. POLIQUIN. Sure. And part of that work, I believe, Mr. Montoya, was Ms. Gross—who is a former lobbyist now—working at the 

organization that she used to lobby for. 

Mr. MONTOYA. Correct. 

Mr. POLIQUIN. Okay? She was attempting to weaken the income 

verification system such that taxpayers who were funding affordable housing would have less of an opportunity to verify that those 

taxpayer funds were going to the right people in the right amount. 

She attempted to weaken that system. Is that correct, sir? 

Mr. MONTOYA. Yes, sir. A system that, at one point, was costing the Department $3 billion. 

Mr. POLIQUIN. Okay, and in 2000— 

21 

Mr. MONTOYA. They brought it down to $1 billion. 

Mr. POLIQUIN. Okay. In 2013, I believe, there were $1.2 billion 

of improper payments— 

Mr. MONTOYA. Correct. 

Mr. POLIQUIN. —made by HUD, who shouldn’t receive those payments, or they received too much. Is that correct? 

Mr. MONTOYA. That sounds about right, yes, sir. 

Mr. POLIQUIN. Okay. And Ms. Gross—who is the former lobbyist, 

now working at HUD—was attempting to weaken that system with 

two other people that she hired from the outside. Is that correct? 

Mr. MONTOYA. That is correct, sir. 

Mr. POLIQUIN. Do you think it is normal practice here in Washington, sir—I am a freshman Congressman—for these large agencies that are responsible for disbursing taxpayer dollars for good 

causes to hire people who used to lobby them? Isn’t that sort of like 

hiring the fox to guard the chicken coop? 

Mr. MONTOYA. It depends on what position you put them in. In 

this case— 

Mr. POLIQUIN. Yes, but these are senior officials at HUD. Is that 

correct, sir? 

Mr. MONTOYA. Yes, sir. 

Mr. POLIQUIN. Okay. Am I correct in assuming that former Deputy Secretary Maurice Jones, Jennifer Jabroski, Francey 

Youngberg, Jonathan Horowitz, and Elliot Mincberg sent out an 

email to 1,000 individuals, including 47 of their HUD staffers, lobbying, or asking them to lobby, 17 U.S. Senators to pass legislation 

favorable to HUD where they worked? Is that correct, sir? 

Mr. MONTOYA. That is correct, sir. 

Mr. POLIQUIN. Yes. Is that against the law? 

Mr. MONTOYA. That would be a determination by DOJ. 

Mr. POLIQUIN. And what have they determined? 

Mr. MONTOYA. They didn’t accept the case from us as a referral. 

They referred it back to HUD for administrative action. 

Mr. POLIQUIN. Okay. So they did not—Justice decided not to determine if this was illegal or not. 

Mr. MONTOYA. Correct. 

Mr. POLIQUIN. Do you think it was illegal, sir? 

Mr. MONTOYA. Sir, I am not in a position to be able to answer 

that. 

Mr. POLIQUIN. Do you think it broke the spirit of what we are 

trying to do here in government? 

Mr. MONTOYA. Absolutely, it broke the spirit. 

Mr. POLIQUIN. Okay. Am I also correct that one of these individuals, Elliot Mincberg, tried to impede or did, in fact, impede your 

investigation regarding the lobbying of 17 Senators to pass legislation favorable to HUD? And he did that by intimidating staffers, 

and by also trying to influence testimony of other witnesses? Am 

I correct, sir? 

Mr. MONTOYA. That is correct. 

Mr. POLIQUIN. Okay. Does the new HUD Secretary, Julian Castro, have any experience in dealing with affordable housing issues? 

Mr. MONTOYA. Sir, I believe when he was the mayor in San Antonio, he— 

22 

Mr. POLIQUIN. Does he have any experience in dealing the affordable housing issues, sir? 

Mr. MONTOYA. I don’t know that I could answer that. 

Mr. POLIQUIN. Okay. One last question, if I may, Mr. Chairman. 

I am going to ask you if these individuals are still working at 

HUD? And if not, what are they doing? Former Deputy Secretary 

Maurice Jones is no longer at HUD. Is that correct? 

Mr. MONTOYA. That is correct. 

Mr. POLIQUIN. Okay. Deborah Hernandez, where is she? 

Mr. MONTOYA. She is now in the— 

Mr. POLIQUIN. Is she at HUD, sir? 

Mr. MONTOYA. She is at Ginnie Mae. She is still— 

Mr. POLIQUIN. Okay, she is still at HUD, and still being paid by 

taxpayer dollars, even though she has been involved in this mess. 

Mr. MONTOYA. That is correct. 

Mr. POLIQUIN. Okay. 

Chairman DUFFY. The gentleman’s time has expired. 

Mr. POLIQUIN. May I have another minute, sir? I am a freshman. 

I think you would—that is a request that is fair. 

Chairman DUFFY. The gentleman will be recognized for 1 more 

minute. And we will offer a 6-minute questioning to— 

Mr. GREEN. If you would, Mr. Chairman, I will claim that additional minute. Thank you. 

Chairman DUFFY. Very well. The gentleman is recognized for an 

additional minute. 

Mr. POLIQUIN. Thank you, Mr. Chairman. And thank you, Mr. 

Green, for that consideration. I appreciate it. 

Mr. Montoya, are you surprised that hardworking American taxpayers have lost their trust in government? When you have huge 

agencies like HUD that are responsible for doing good things for 

the American people, but abuse and misuse taxpayer dollars, hire 

lobbyists who used to be pulling for funding and now are advocating on the inside for their former organizations, that hire individuals without interviewing them and pay them more than they 

should, and then when they are caught they try to impede your investigation by intimidating staffers and trying to influence the testimony of others, do you think there is any reason why the American people have lost their faith in government, sir? 

Mr. MONTOYA. I would want to categorize the career Federal employee versus what we have here. In many of the examples, these 

were not career Federal employees. They were in the Department 

for a very short period of time— 

Mr. POLIQUIN. So you think this is all—do you think— 

Chairman DUFFY. The gentleman’s time has expired. 

Mr. POLIQUIN. Thank you very much, sir. I appreciate it. 

Chairman DUFFY. Thank you, Mr. Poliquin. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman, and thank you to 

Ranking Member Green. 

Not to be argumentative, but the Secretary was mayor of San 

Antonio, the second-largest city in Texas. I was mayor of the largest city in the State of Missouri. And it is virtually impossible for 

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23 

ing almost on a daily basis. And it would be rare, maybe nonexistent, that a mayor of one of, say, the top 50 cities in the country would not—maybe top 75—deal with affordable housing, including probably some of the smaller cities. 

But my question goes to the disagreement, Mr. Montoya, between the IG’s office and HUD’s, not in terms of the overall reported wrongdoing, but rather, I think, on some key points that I 

would like to get into a little deeper. Your report suggests that 

HUD paid the IPA a full salary and that is a violation, whereas 

HUD says that there is no mandate by OPM that there should be 

cost-sharing. OPM does not demand or require cost-sharing. Is that 

correct? 

Mr. MONTOYA. I am not sure that I said it was a violation. It 

does not demand cost-sharing, but I think it does raise the question 

as to why. 

Mr. CLEAVER. I want to go in this direction. Do you think that 

there is a need for greater clarity in what happens when we have 

this transfer of personnel to another Department as to the payment 

of the salary? Does your report at least imply that there should be 

clarity, or are you saying there is clarity? 

Mr. MONTOYA. No, there should be more clarity. For example, 

OPM says that there is no restriction for these IPAs to hire people, 

right? OPM, I think, says though that the spirit of it suggests that 

they shouldn’t be in hiring positions, they should be more in advisory. So that has to be cleared up. And I think, yes, the pay issue 

needs to be cleared up, as well. 

Mr. CLEAVER. And I think that may be something that this committee needs to deal with. And my second and final point that 

deals with some disagreement is the fact that HUD suggests that 

based on the advice of the General Counsel, Ms. Gross was not required to submit disclosures or attend the ethics training. Is that 

correct? 

Mr. MONTOYA. Yes, sir, that is their position. We wholeheartedly 

disagree. We recommend that they go to the Office of Government 

Ethics to get an opinion from them. I don’t believe they have done 

that at this point, though. 

Mr. CLEAVER. Do you disagree that the General Counsel said 

that this was not required? 

Mr. MONTOYA. No, I agree. They said it was not required. I disagree with their opinion and their position. I believe it is required. 

I believe it should be required. 

Mr. CLEAVER. So, there is a disagreement between the General 

Counsel and the IG? 

Mr. MONTOYA. Correct, sir. 

Mr. CLEAVER. Okay. So the point I am trying to make, and perhaps poorly, is that there seems to be a number of points that are 

not clear. And so the agency is now getting tagged with being— 

having major ethical lapses on some issues that are not clear. Now, 

I am not defending anything, any wrongdoing. But I am saying 

that it might not be in the best interest of the Federal Government, 

at a time when there are folks who are preaching and pushing distrust in the government of their own country. And so, do you agree 

that we need to clear up at least these two points? 

24 

Mr. MONTOYA. I don’t know just how much clarity one needs. I 

think that, one, HUD is looking at these things. And there were 

a number of people who felt that this issue was an appearance 

issue. I will give credit to CLPHA. Even their Executive Director, 

before she let her Deputy Director go to HUD, raised the concerns 

that she thought this was a conflict, correct? There were several 

employees within the Department who raised concerns that it was 

a conflict. They were retaliated against and reassigned to other locations. 

So I don’t know how much clarity you need if appearances tell 

you. 

Mr. CLEAVER. I agree, that was wrong. We cannot ever support 

wrongdoing. That was wrong. But if the General Counsel says that 

it is not required to submit disclosures—and I am getting ready to 

deal with the IPA—what do I do? 

I didn’t go to law school and—thank you, Mr. Chairman. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentleman from Arkansas, Mr. 

Hill, for 5 minutes. 

Mr. HILL. I appreciate the opportunity. Thank you, witnesses, for 

being with us today. I want to associate myself with the remarks 

of Mr. Delaney from Maryland on those of us who come to Congress 

from the private sector who spend hours and hours of personnel 

time trying to comply with a myriad of government regulations and 

duties and responsibilities. And I thought he summarized that 

quite well. 

Mr. Montoya, is there a whistleblower program at HUD? 

Mr. MONTOYA. I don’t know that HUD itself has one, but we 

have one in the OIG’s office. 

Mr. HILL. Is each cabinet agency required, under OPM requirements, to have an independent whistleblower process connected to 

their Departmental IG, for example? 

Mr. MONTOYA. Yes, sir. 

Mr. HILL. And how long have you been at HUD? Remind me. 

Mr. MONTOYA. I have been there for 3 years now, sir. 

Mr. HILL. Have you been at another cabinet agency before that? 

Mr. MONTOYA. Several others, yes, sir. 

Mr. HILL. So how does the whistleblower activity at HUD compare to previous places you have been? Are there more complaints? 

Mr. MONTOYA. I don’t know that I have enough background to 

answer that question except to say that even with regards to the 

Gross case, we still see retaliation of employees when they bring 

up issues like questioning the propriety of bringing in a lobbyist 

and their being reassigned. So that does raise concerns for me. 

Mr. HILL. Yes, because the private sector—since Sarbanes-Oxley, 

of course—all have the public companies all have responsibility 

under whistleblower statutes. So I am not sure the government 

would be very accommodating or thoughtful in a response like that 

if it were a private sector player. Who is the executive officer at 

HUD responsible for H.R. policy? 

Mr. MONTOYA. I don’t know off the top of my head who that current person is. I think it was Mr. Anderson, but I think he is leaving, so I am not sure who is in the acting role at this point. 

25 

Mr. HILL. It is surprising to me that you don’t know that, as a 

part of this investigation. Wouldn’t the Assistant Secretary or Undersecretary for Administration responsible for the Department’s 

H.R. practices be somebody you would have questioned in your investigation? 

Mr. MONTOYA. Well, not necessarily. It just depended on the circumstances. I don’t believe we had to interview him in this particular case. Because it was an IPA process that didn’t necessarily 

go—and HUD is very stovepiped, right? So when this was happening in a PIH, that is who primarily was dealing with it. It 

wasn’t necessarily the overall human resources manager at HUD. 

Mr. HILL. So do you think that is a weakness, a management 

weakness, in the Department that they don’t have an overall personnel person who oversees this in all their independent—quasiindependent Departments or agencies? 

Mr. MONTOYA. We testified on a number of occasions that we 

think the Department is too stovepiped on a number of issues, including their IT systems, that there is not this enterprise-wide 

view of a lot of these things: H.R.; legal; and in some cases, their 

IT system. There are a number of areas that have caused us concerns. 

Mr. HILL. Do you think the idea of an IPA as a concept has been 

taken advantage of here in this particular instance? And do you 

think that this merits a more systematic overview by Congress in 

the use of the IPAs by Executive Branch agencies? 

Mr. MONTOYA. We have seen in HUD’s situation that it looks like 

they have misused it on a couple of occasions. And we are looking 

at the other 16. That would draw a question for me as to what the 

rest of the government is doing with these IPAs. 

Mr. HILL. Does the Office of Personnel Management have some 

responsibility in setting the best practices for use of IPAs across 

cabinet agencies? 

Mr. MONTOYA. Yes, sir. They are the ones who set the standards 

and the guidelines for that. 

Mr. HILL. Were the actions at HUD reported to OPM, and did 

they take any action in the process of reviewing this particular 

matter? 

Mr. MONTOYA. I believe we did refer it to OPM. I couldn’t tell 

you off the top of my head, sir, what response we received from 

them on that. I would have to get back to you on that. 

Mr. HILL. I would appreciate it if you would sort of respond to 

my line of questioning on IPAs, what the best practice policy is 

from OPM on that. And then I would be very interested in the results of your review of the other 16 at HUD. 

Mr. MONTOYA. Yes, sir. 

Mr. HILL. Thank you for your service to your country. 

And I yield back, Mr. Chairman. 

Mr. MONTOYA. Thank you, sir. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentlelady from Ohio, Mrs. Beatty. 

Mrs. BEATTY. Thank you so much, Mr. Chairman, and Mr. Ranking Member. And thank you also to our witnesses today. 

Let me just first say that I certainly join my colleagues in wanting to be on the record for saying how concerned I am about the 

26 

instances of impartiality, the conflict of interest that you both have 

outlined in your testimony. And also, the improprieties with HUD’s 

use of the IPA funds. 

Second, let me just say how appreciative I am for the joint letter. 

And especially in paragraph one, when you both talk about if, together, we can take care of the mismanagement and the waste, we 

can do what our real mission is, and that is to expand the opportunities for all. 

And that ties into my third statement, as I go into my question, 

is several of my colleagues have said it is not about HUD and the 

programs. I want to be on the record saying that I somewhat disagree with that. Because every time you come into a hearing and 

we talk about the wrongdoings, the rogue employees, it frequently, 

down the road, leads to the culture of the entity and the organization and how we put dollars in it. 

I am very much a proponent of HUD and the services that they 

provide. With that said, when I go to your testimony you stated 

that HUD cannot know whether the policy decisions enacted during 

the Deputy Director’s tenure were inappropriately influenced or in 

the best interest of HUD and all of it’s stakeholders. 

Can you place explain this finding, and how HUD can mitigate 

or eliminate the IPA mobility program improprieties? And especially since you talked about the clues that you saw. 

Mr. MONTOYA. Yes, ma’am. Thank you for the question. There is 

only so much we can get from witnesses and what they tell us, and 

sort of the spirit as to what was going on. We obviously weren’t 

privy to a lot of the conversations that Ms. Gross and Ms. 

Henriquez and Ms. Hernandez may have had with the regulated 

industry. 

So we are putting it back on HUD to sort of dig a little deeper 

with their staff to feel them out, and figure out whether, in fact, 

there were things that were changed that maybe shouldn’t have 

been or that they should call into question. 

My larger concern with making that statement was that Ms. 

Gross at one point had inquired as to how to avoid going through 

the Departmental clearance process, having to go through the OIG. 

She was actually trying to find a way to keep us from seeing and 

hearing, through that clearance process, what she was doing. 

So because of that, I do have some concerns that maybe something slipped by us. And so we are putting it back on HUD to review themselves the policies before, during, and after she left to ensure that nothing got by any of us. 

Mrs. BEATTY. Do you think that we should be looking at putting 

more human and financial resources into different, better or more 

training on accountability, management or the rules and regulations? Because these things, earlier you said these are very clear 

rules and regulations of what a person could do, whether hiring or 

bringing someone in at the appropriate salaries for the GS–13s or 

GS–15s. But yet I heard a figure of $40,000 more given to this person, being given bonuses when Federal employees did not get— 

Mr. MONTOYA. Well, ma’am, I guess my answer to that would be 

that I don’t think there are enough rules, regulations, policies, procedures or training that are going to influence a person’s conduct. 

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27 

duct themselves in the workplace, especially as Federal employees. 

We have this stewardship responsibility that we are entrusted to 

care for these very sensitive positions that we hold on behalf of the 

taxpayers. So I think it boils down to the person. 

I just don’t believe—I am not a proponent of more and more 

rules, rules, rules, regulations, much like the two gentlemen testified or commented about in the regulated industries. It really boils 

down to how people are going to behave. And I think that is more 

of a conduct ethical issue with the individuals. 

Mrs. BEATTY. You just mentioned how people behave. Do you believe that the vast majority of the HUD employees are doing the 

fair due diligence, or can you compare it to saying that maybe what 

we are hearing today; are these just a few bad actors? 

Mr. MONTOYA. All I can say to you is that a vast majority of the 

employees at HUD are really hardworking, conscientious civil servants. They have an honorable mission, one that I thoroughly enjoy 

myself. 

And, quite frankly, there are a number of them—a number of 

conscientious employees who were the ones who called us on these 

issues. They saw the wrongdoing, they saw these misconducts. 

They are the ones who are calling us. And I think that is fantastic 

that employees feel good enough to call us. And hopefully, today 

they are hearing that my office will, in fact, do something about 

that when they do call. 

Mrs. BEATTY. Thank you. 

Chairman DUFFY. The gentlelady yields back. 

The Chair now recognizes the gentleman from Virginia, Mr. 

Hurt, for 5 minutes. 

Mr. HURT. I thank the chairman for holding this hearing. This 

is my first appearance on this Oversight Subcommittee, and I can 

tell you I represent Virginia’s 5th District. And I think that my 

constituents, if they were hearing what we are hearing today, 

would be bewildered. Perhaps not surprised, unfortunately, but bewildered by what we are hearing. And I guess a couple of quick 

questions for Mr. Montoya. 

Where is Ms. Hernandez now? 

Mr. MONTOYA. She is now with Ginnie Mae in— 

Mr. HURT. And Ms. Henriquez? 

Mr. MONTOYA. Ms. Henriquez left. She is with another housingtype association. I couldn’t tell you off the top of my head— 

Mr. HURT. A lobbying association, like— 

Mr. MONTOYA. I don’t know if it lobbies or not, sir, to be honest 

with you. 

Mr. HURT. What about Ms. Gross? Where is she? 

Mr. MONTOYA. She has gone back to CLPHA in the role that she 

held the whole time, the Deputy— 

Mr. HURT. Let’s talk about CLPHA. It is actually called the 

Council for Large Public Housing Authorities, right? 

Mr. MONTOYA. Correct. 

Mr. HURT. What is its purpose? 

Mr. MONTOYA. To engage not only Congress, but the Department. 

Mr. HURT. Who does it represent? 

Mr. MONTOYA. They represent the housing authorities, the 

large— 

28 

Mr. HURT. And so the employees of this organization, they advocate for policies that are favorable to these authorities. 

Mr. MONTOYA. Yes, sir. 

Mr. HURT. Also called ‘‘lobbying,’’ in the— 

Mr. MONTOYA. Yes, sir. 

Mr. HURT. So how long had Ms. Gross worked for this lobbying 

outfit prior to being engaged at HUD? 

Mr. MONTOYA. I don’t have an exact date in front of me. For a 

number of years. 

Mr. HURT. What was she being paid when she was hired? 

Mr. MONTOYA. I couldn’t tell you the exact salary. I know the 

GS–15 salary is at about $155,000, so she was making just under 

$200,000— 

Mr. HURT. Working for the Council. 

Mr. MONTOYA. For the Council, correct, sir. 

Mr. HURT. And so I guess my question is, is when they went 

through the process and she was denied initially, it sounds like 

that was voided, and then she was sort of hired on the side through 

this IPA. Is that right? 

Mr. MONTOYA. Yes, sir. And we have emails to the effect that 

they, in fact— 

Mr. HURT. Why was she hired? Why do you think that she was 

hired? 

Mr. MONTOYA. According to— 

Mr. HURT. Share that with us? 

Mr. MONTOYA. According to Ms. Henriquez—and I will quote 

her—‘‘She wanted to shake it up.’’ 

Mr. HURT. What does that mean? What do you think it means? 

Mr. MONTOYA. I think, quite frankly, it meant that she wanted 

to shake it up so they could deregulate. Because that is in the— 

that is in— 

Mr. HURT. That was the—in the interest of the— 

Mr. MONTOYA. Of the regulated. 

Mr. HURT. —of the—and in the interest of those who pay to be 

members of this authority’s— 

Mr. MONTOYA. Correct. 

Mr. HURT. —Council, correct? 

Mr. MONTOYA. That is correct, sir. 

Mr. HURT. So that was why she was brought in? 

Mr. MONTOYA. That is what it looks like. 

Mr. HURT. And she was denied, based on that fact alone, from 

the ordinary hiring process? 

Mr. MONTOYA. I don’t know— 

Mr. HURT. Is that how I understand it? 

Mr. MONTOYA. I don’t know why she was denied, except that 

she— 

Mr. HURT. You said that she was disqualified, or I saw on your 

report that you said she was disqualified. 

Mr. MONTOYA. Right. 

Mr. HURT. Disqualified. 

Mr. MONTOYA. The email communication suggests was wanted to 

hire her under the IPA so she could make more money, so she 

could maintain her salary. 

29 

Mr. HURT. And so the concerns—what is it that dictates the concerns that the rules or the statutes in the subject—is it a conflict 

of interest? Is that the concern for why somebody would not be 

hired as an ordinary employee? 

Mr. MONTOYA. Yes. Not only does— 

Mr. HURT. A conflict of interest? 

Mr. MONTOYA. Yes, sir. An inherent conflict of interest. 

Mr. HURT. Okay, so why is it that she could be hired as an— 

under this intergovernmental personnel agreement without concern 

for conflict of interest, but she couldn’t if she was being hired as 

an ordinary employee? 

Mr. MONTOYA. I don’t think that she couldn’t. I think maybe her 

qualifications would have been satisfactory. I don’t think it had to 

do with that. I think they disqualified her so that they could then 

hire her under the IPA. And therein lies the little conspiracy, if you 

will. 

Mr. HURT. So when your office confronted Ms. Henriquez and 

Ms. Hernandez, did they tell you the truth? Did they tell you the 

truth about whether or not they had communicated with her in advance? 

Mr. MONTOYA. Yes, Ms. Henriquez was very quick to tell us, yes, 

that is what I did. It was Ms. Gross and the two employees that 

she hired who were less than forthcoming. 

Mr. HURT. Okay, so what does that mean? Did they lie to impede 

the investigation? 

Mr. MONTOYA. I guess if you want to go down that road, yes. 

That—we like to call it—because we don’t really know, in some 

cases, exactly where that fine line was. But yes, they were absolutely less than truthful with us. 

Mr. HURT. Really quickly—my time is running out—but Ms. 

Perez, following up on Mr. Hills’ question, I would love to get your 

thoughts on the differences between the hiring practices for an ordinary employee, Federal employee, versus under this intergovernmental personnel agreement. Why on earth would the concerns relating to conflicts of interest be different? 

And my time has expired, so— 

Ms. PEREZ. Sir, actually we haven’t done any work in that area. 

Mr. HURT. Okay. 

Ms. PEREZ. We are aware generally of the Act, but haven’t 

worked on that area. 

Mr. HURT. Thank you. 

Ms. PEREZ. Thank you. 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Capuano, for 5 minutes. 

Mr. CAPUANO. Thank you, Mr. Chairman. I want to thank you 

two for testifying today, and I apologize for not having been here 

but you know how it is. We are between two committee hearings. 

So I didn’t hear it all, so some of the stuff I might have to ask or 

say might be repetitive. And for that I apologize, but that is what 

we do here. 

I guess I want to put things in perspective. As I understand it, 

there are about 9,000 HUD employees. Is that a reasonable estimate? 

30 

Mr. MONTOYA. Actually about 8,000, sir. 

Mr. CAPUANO. So, about 8,000 employees, and looking at a list— 

give or take a dozen names, 15 names here, of people who have 

committed acts that are questionable, ranging from the terrible, 

horrendous crime of nepotism, trying to help a family member— 

which I know is against the rules, I get that—but I don’t think any 

of us want to send anybody to Sing-Sing for that. We want to make 

sure it doesn’t happen to the best of our ability, but there are 

worse—two other people who stole large sums of money, and 

maybe some other things. 

That means roughly—my calculations—0.1 percent of the employees have committed significant enough issues for you to get involved in. Not that that forgives the individual actions at all, but 

I just don’t want anybody to walk away with the idea that somehow HUD or any other agency that I am aware of is full of people, 

all of whom want to commit nefarious, terrible actions. 

I know that is not your intention, but sometimes when we sit 

here and only talk about the bad actors that is what some people 

hear at home: that the world is full of bad actors. And for me, I 

am a former mayor, as are some of my other colleagues. A lot of 

our time is spent dealing with people who do things they shouldn’t 

be doing. 

We don’t spend our time and effort, as you don’t spend much of 

your time, with people who have done the good things. Because 

that is not what you are there for. You are there to police it and 

to do all those things. And that is the right thing. And from everything I have heard, you have done a great job, and the IG’s office 

is an area that we all expect and we all support and appreciate. 

But I don’t want anybody listening to this to think that somehow 

everybody at HUD is scheming to try to deal around the edges. 

I know that for me, one of my biggest problems was my police 

officers. Because, again, they only dealt with people, every day, 

who had committed some action that was wrong, either speeding 

or 10 times worse. And sometimes they might forget that 99.9 percent of us are good, law-abiding citizens. Actually, that is my problem right now, my NSA problem, but that is a different issue. 

So I just wanted to be clear about that. To me, I think that is 

important. And I really do think that—I guess the other thing I 

heard is that there was some concern about unions. I want to be 

really clear. In my—I have negotiated with unions, and unions are 

there. 

You never—unions don’t have to come defend their 99.9 percent 

good members. They only step up when there is a wrongdoing to 

defend their members to make sure that they get proper treatment. 

So I—again, that is their job. It is like a lawyer. They have a responsibility to their membership to make sure that their membership really did do a bad act that was not overly punished. 

And to be perfectly honest, the only thing I found problematic 

about your written testimony is the fair amount of time spent on 

differences of opinion on category or degree of punishment. You 

think that some people should have been punished more severely 

than they might have been. 

I guess that is fair. But I also don’t think that is really—I don’t 

think that is a measure of whether you have been successful or 

31 

whether HUD is a good agency. That is a reasonable difference of 

opinion. I personally think that, for instance, most of the people on 

Wall Street who did bad things all got off. They all got off. Nobody 

from Wall Street has paid an ounce of contrition for the actions 

they took in 2006, 2007, and 2008. 

So I understand the problems, but I don’t want to lose focus as 

to what we are here for. We are here to make sure that HUD employees—and that is your job—toe the line. And when there is a 

wrongdoing, that the HUD administration helps you and others 

correct that situation. 

And from what I have seen and what I have read on you, most 

of that has happened. Is that a wrong impression? Is that a wrong 

conclusion, from your report? 

Mr. MONTOYA. To be clear, sir, the report gives you only a small 

smattering of examples. Unfortunately, there are more. But I 

would say it is not like there is a rampant misconduct issue in 

HUD. I think my major concern is how HUD is dealing or not dealing with misconduct when they do come across it. And I think with 

regards to my written testimony, that is where I do the parsing. 

Not so much about what they did or could have been more, but how 

they are handling what they are doing to create an ethical culture. 

Mr. CAPUANO. And do you feel that the current Administration 

is doing—I am getting—not necessarily everything you are going to 

want, but are they—grade them on a scale of one to 10; 10 being 

perfect, being you being the guy making the decision, one being, I 

don’t know, the most unethical person in the world making the decision. What would you give them as a grade? 

Mr. MONTOYA. Both the new Secretary and the Deputy Secretary 

have only been there maybe 6 or 7 months, the Deputy Secretary 

even less. I will give him a 10 with regards to the Secretary signing 

that joint letter. Because I think that speaks volumes to the tone 

at the top. I could give him higher than a 10 because I think that 

is the best thing he could have done to establish his game plan for 

how he is going to run the organization. And I look forward to 

working with him with that. 

Clearly, these things we are talking about were not under his 

tenure. And so, I do look forward to how he and the Deputy Secretary are going to handle these going forward. 

Mr. CAPUANO. I just want to point out for the record that no one 

has ever given me a ‘‘10’’ on anything. So, that is pretty good. 

Thank you. Thank you, Mr. Chairman. 

Chairman DUFFY. The Chair would agree. The gentleman’s time 

has expired. 

The Chair now recognizes the gentleman from Colorado, Mr. Tipton, for 5 minutes. 

Mr. TIPTON. Thank you, Mr. Chairman. And I would like to 

thank our witnesses for taking the time to be here today. We have 

covered a lot of ground, and I really don’t want to rehash a lot of 

that. But I really wanted to question you, Mr. Montoya. In your 

opening statement, you brought up that you had been threatened 

in the OIG when you are doing some of these investigations. I find 

that pretty curious. How are they threatening you? 

Mr. MONTOYA. In the case of Mr. Mincberg, he threatened to hold 

my agents accountable. He never really clarified what that meant. 

32 

But the fact that he would even threaten the agents to hold them 

accountable in some way, shape or form, to me, is just inappropriate and not something that I would want to start seeing more 

of at HUD. 

Mr. TIPTON. Now, the OIG—obviously, through other Departments—is this just isolated to HUD? Or do you have this type of 

reaction as you are doing other investigations? 

Mr. MONTOYA. I don’t know that we have had anybody—and so 

just to be clear, he was at a very high-ranking position. He was a 

schedule C, he was a political. So for him to do it, that certainly 

doesn’t go well. We don’t get that sort of disrespect, if you will, 

from rank and file. I think most of them are very willing to cooperate with us. And, again, these are good employees just trying to do 

their job every day. 

Mr. TIPTON. So you haven’t experienced it from other appointed 

officials? This is just something that was isolated to HUD, where 

you had threats that were coming back— 

Mr. MONTOYA. This one was isolated to the circumstances. But 

I spoke very loudly about it so that everybody got the message it 

was not something I was going to allow or put up with, quite frankly. 

Mr. TIPTON. Okay, thank you. I did want to follow up on Mr. 

McHenry’s question, as well. You had indicated that you have the 

systemic implementation report that is coming out. And I think 

there is frustration on both sides of the aisle when we are talking 

about $843,000, American taxpayer dollars, which are being lost 

through fraud coming out. When is that report—is that finalized? 

Mr. MONTOYA. Are you referring to the IPA review that we are— 

Mr. TIPTON. I believe so. I think—I am just quoting you. You referred to the systemic implementation report. 

Mr. MONTOYA. Oh, that had to do with how HUD was not appropriately handling personnel background investigations or review 

before they hired them. So we had a situation where they hired an 

individual that they clearly should have done a little bit more of 

a background on before hiring. And so we went in to view why this 

happened. So we don’t just look at what happened, we look at why 

it happened. We issued this report to say we think you could do 

this better, that better, you can create some policies that will help 

you avoid that. That report went to them 5 or 6 months before they 

then hired the individual with a long criminal history who was able 

to steal almost $800,000. 

Mr. TIPTON. So do you feel your report was ignored? 

Mr. MONTOYA. I don’t know. I have my staff following up with 

the Department to figure out did you do anything in that 6 months 

or did you ignore us, or is it just taking you that much longer to 

get this thing in place? I don’t—I can’t answer that— 

Mr. TIPTON. Just by way of timeframe, when did you issue that 

and the follow-ups, and how long has it been since HUD has responded to you? 

Mr. MONTOYA. I don’t know that I have an exact date off the top 

of my head for you on the implication report. I can certainly get 

that back to you. Generally, HUD won’t respond on when they finish it. We just sort of expect that they do. And so that is why I 

have my agents going back to— 

33 

Mr. TIPTON. Has this been a year, 2 years? 

Mr. MONTOYA. I don’t know if I could give you an exact date, sir. 

I would have to get back to you on that. 

Mr. TIPTON. So we have absolutely no idea, and there is no enforcement. They aren’t indicating that—do they feel an obligation 

to get back to you? 

Mr. MONTOYA. In certain situations we do require them to get 

back to us in a sort of 90-day period. I don’t know if we did on this 

implication report or not. 

Mr. TIPTON. Do you think that would be a good idea? In Wash- ington, $843,00 is not a lot of money. But I will tell you, in my 

hometown, it is. 

Mr. MONTOYA. Oh, absolutely, sir. And yes, absolutely, it would 

be a good idea. 

Mr. TIPTON. And was it—in that recommendation or that report, 

also, a look-back? Because you just cited that after you had put out 

this report this person slipped through the crack. So was there also 

a recommendation to be able to have a look-back on employees who 

were hired in that interim period of time? 

Mr. MONTOYA. Yes, and that prompted us to go back to look at 

what is going to go on. And we will put that back to HUD, they 

will go back to review the employees they hired within that timeframe. 

Mr. TIPTON. Okay, great. 

Ms. Perez, I don’t want you to feel completely left out. And Mr. 

Montoya, you might want to speak to this, as well. I am concerned 

about the lobbying issue, as well, going over. And as I understand, 

under Section 716 on the Anti-Lobbying Act, the Deputy Secretary 

is a Presidential appointee. Were any rank and file employees involved in terms of doing the letter or issuing the letter for that lobbying? 

Ms. PEREZ. Yes, sir, there were a number of employees involved 

in preparing the email that the Deputy Secretary transmitted. Our 

focus in the legal opinion was looking at whether the Department 

had violated the anti-lobbying provision of Section— 

Mr. TIPTON. And that was at his direction. So it was an abuse 

of power. 

Chairman DUFFY. The gentleman’s time has expired. 

Mr. TIPTON. Thank you. 

Chairman DUFFY. In the interest of equal time, the Chair now 

recognizes for 1 minute the gentleman from Texas, the ranking 

member, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. And I may give you some 

time back. I want to thank the witnesses for appearing today. I am 

especially pleased to hear you say that you would give the new Secretary, Secretary Castro, a 10, which is an indication to me that 

you are looking forward to good things from him. 

I look forward to working with you, and I believe that HUD is 

going to move in the right direction. There are some things that 

have to be corrected. I think they are taking corrective actions. But 

we are moving in the right direction. And we all agree that HUD 

is a necessary agency and that it does good things. 

Thank you very much. 

Mr. MONTOYA. Thank you, sir. 

34 

Chairman DUFFY. Thank you, Mr. Green. 

The subcommittee thanks both Ms. Perez and Mr. Montoya for 

your work, your service, and your testimony today. We appreciate 

it. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

Without objection, this hearing is adjourned. 

[Whereupon, at 11:40 p.m., the hearing was adjourned.] 

(35) 

A P P E N D I X 

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