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HUD Archives: News Releases
CUOMO NAMES FBI AGENT TO LEAD HUD FIGHT ON WASTE, FRAUD AND ABUSE,
ANNOUNCES AGREEMENT WITH JUSTICE DEPARTMENT
AND STEPS UP CRACKDOWN ON PUBLIC HOUSING VIOLATORS
WASHINGTON -- Secretary Andrew Cuomo today intensified the Department of Housing and Urban Development's "Get Tough" crackdown on waste, fraud and abuse by naming an FBI agent to head a new HUD Enforcement Center. Cuomo also announced a new information-sharing agreement with the Justice Department and proposed sanctions against 26 people convicted or accused of violations involving HUD public housing programs.
"HUD's days as a mugging victim are over," Cuomo said. "We are fighting back hard, and we will spare no effort to catch and punish anyone who tries to steal taxpayer funds from this Department."
Speaking at a news conference where he was joined by FBI Director Louis J. Freeh, Cuomo announced he has appointed Edward J. Kraus, who is Assistant Special Agent In Charge of the FBI's Chicago Division and a veteran of nearly 20 years with the FBI, to be Director of HUD's new Enforcement Center.
Director Freeh said: "I am confident that Special Agent Kraus will do an outstanding job heading HUD's new Enforcement Center. I am pleased to provide this cooperation to Secretary Cuomo, because we share a strong interest in investigating violations of federal law, violations that are often at the expense of the American taxpayer. This is but one more example of the FBI working hand-in-hand with HUD's enforcement personnel toward our common goal."
Also as part of the crackdown, Cuomo said he has reached an agreement with Attorney General Janet Reno for the Justice Department and U.S. Attorneys to provide HUD with monthly reports on individuals and organizations charged with federal criminal and civil violations involving HUD programs.
"We will not tolerate fraudulent activity," Attorney General Reno said. "If you receive federal funds, you must play by the rules. The Justice Department and U.S. Attorneys around the country stand ready to assist HUD in its intensified effort to prevent and prosecute crimes."
In a third action, Cuomo said HUD has proposed debarments of 26 people convicted or accused of violations involving HUD public housing programs.
Debarments prohibit individuals from doing business with HUD and all federal agencies, as well as from working on federally funded programs operated by private businesses, state and local governments, and organizations.
The public housing programs where 26 debarments were proposed were operated in Puerto Rico and the following states: Alabama, Colorado, Florida, Louisiana, Minnesota, Montana, New York, North Dakota, South Dakota, Tennessee, Texas and Washington State.
A 27th person in the crackdown is a landlord who agreed to accept debarment and make a $225,000 payment for alleged violations on an Oklahoma property.
In all of 1996, HUD recommended debarment actions in public housing programs against 13 people -- compared with 26 public housing debarments proposed today.
Cuomo announced plans in June to create a new Enforcement Center at HUD, as part of a far-reaching management reform plan called HUD 2020. He said at the time that he would appoint an FBI agent to head the Enforcement Center.
"The FBI sets the standard for effective law enforcement, and Special Agent Kraus will bring that high standard to HUD," Cuomo said." His appointment shows that we're not just going to talk about fighting waste, fraud and abuse. We're going to get the job done."
Kraus, who will remain with the FBI and be detailed to HUD, will help design the Enforcement Center and make it a key unit of HUD. The Enforcement Center will work to stamp out waste, fraud and abuse by those receiving HUD funds -- housing authorities, private landlords, local governments, businesses, organizations and individuals -- and by HUD itself.
Kraus, who becomes the first employee of the Enforcement Center, will help shape the Center's organization. The Enforcement Center's plans include monitoring, documenting and prosecuting improper activities. The new office will replace independent enforcement functions with different standards and procedures in HUD's program offices.
Kraus, 48, joined the FBI in January, 1978. Before becoming Assistant Special Agent In Charge of the Chicago Division, where he manages all administrative matters, Kraus served in FBI positions in Pittsburgh, national headquarters in Washington, Miami and London, England. Kraus earned his law degree in 1976.
"I look forward to creating an Enforcement Center that meets the goals set by Secretary Cuomo, and I appreciate his confidence in selecting me for this important position," Kraus said.
JUSTICE DEPARTMENT REPORTS
Under the agreement Cuomo announced with the Justice Department, monthly reports by Justice to HUD will provide the names of individuals indicted or convicted in cases involving improper actions against HUD. The reports will enable HUD to take action against those charged, such as proposing debarments. This will increase the existing information exchange between HUD and the Justice Department.
In addition to providing information on all future cases, the Justice Department will provide HUD with information on cases going back to the beginning of 1995.
The proposed debarments announced by Cuomo today are the first of many HUD will seek as it escalates its campaign against waste, fraud and abuse, the Secretary said.
The 26 people who HUD proposed be debarred are former officials, employees and residents of local housing authorities, as well as landlords doing business with the authorities. They have been convicted or accused of violating laws or regulations involving public housing programs.
The 27th person -- Robert L. Dossey, Director and President of the Maricopa Foundation for Affordable Housing in Phoenix, AZ -- has already voluntarily agreed to debarment for at least two years and to pay $225,000 in damages. Dossey agreed to the debarment and the payment to settle allegations that he diverted construction loan funds and project rental receipts from Breckenridge Apartments in Tulsa, OK, in violation of federal law. The 364-unit project was renovated with a HUD-insured mortgage loan to provide housing for poor families. Maricopa Foundation for Affordable Housing defaulted on the mortgage and the mortgage was assigned to HUD.
The other 26 individuals were notified this week and last week of their proposed debarments. They have 30 days to appeal the action to HUD. HUD has suspended the 26 from participating in federal programs while their proposed debarments remain pending. Twenty-five of the proposed debarments range from periods of two years to 10 years, along with one proposed for an indefinite term.
To prevent debarred individuals from doing prohibited business, Cuomo said HUD will inform all 3,400 local housing authorities and all other recipients of HUD funding that debarments will be posted on HUD's Internet site and remind them to check the list regularly.
Content Archived: January 20, 2009