Opinion ID: 2320131
Heading Depth: 2
Heading Rank: 3

Heading: Dowling's Commission of Fraud by Participation in the Side Agreement

Text: [¶ 16] Pursuant to 24 C.F.R. § 982.551(k), the recipient of a Section 8 subsidy must not commit fraud, bribery or any other corrupt or criminal act in connection with the programs. 24 C.F.R. § 982.551(k). The definition of fraud is not provided in any of the relevant statutes or regulations regarding Section 8 rental subsidies. Nevertheless, Dowling, the Authority, and the Superior Court analyzed the definition of fraud in sections 982.551(k) and 982.552(c)(1)(iv) with reference to Maine's common law tort of fraudulent misrepresentation. Fraudulent misrepresentation occurs when someone: (1) makes a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or to refrain from acting in reliance upon it, and (5) the plaintiff justifiably relies upon the representation as true and acts upon it to [her] damage. . . . Reliance is unjustified only if the plaintiff knows the representation is false or its falsity is obvious to [her]. Francis v. Stinson, 2000 ME 173, ¶ 38, 760 A.2d 209, 217 (quotation marks omitted) (alteration in original). [¶ 17] In this case, the evidence supports a finding that Dowling committed each element of fraudulent misrepresentation, including the evidence that Dowling falsely represented to the Authority that she was complying with Section 8 eligibility requirements by continuing to benefit from the program without disclosing her participation in an unapproved side agreement with her landlord; that she had actual knowledge that she was not complying with the program by participating in the side agreement for several months; that she secretly participated in the side agreement in order to obtain better housing and/or in order to avoid moving again; and that in reliance on its understanding that Dowling was complying with Section 8 requirements, the Authority continued to subsidize Dowling's rent. Thus, sufficient evidence exists to support the Authority's finding of fraud.