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HUD ACTS AGAINST SIX PEOPLE AND THREE COMPANIES IN CRACKDOWN ON WASTE, FRAUD & ABUSE IN IL, MA, MO AND NY
WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has taken legal action against six people and three companies as part of the Department's continuing crackdown on waste, fraud and abuse. The cases involve people from Illinois, Massachusetts, Missouri, and New York.
Under the actions, four of the people and the three companies were barred from working as contractors for the federal government for varying periods. This strikes a financial blow against the individuals and businesses because federal contracts are a major source of income for many businesses. Each of the other two people was barred from participating in a HUD program for a year.
"HUD's days as a mugging victim are over," Cuomo said. "Anyone who tries to rip off this Department will be caught and punished to the full extent the law allows. Waste, fraud and abuse are an ugly part of HUD's past that have no place in our present and future."
"Today's announcement reflects the coordination and teamwork that exists between HUD, the Justice Department and U.S. Attorneys' offices as we work to ensure the highest standards of integrity in HUD programs to protect taxpayer dollars," Cuomo said. Cuomo launched the "Get Tough" initiative to crack down on waste, fraud and abuse in HUD programs in March. Actions taken so far include: a 500 percent increase from 1996 in the number of regulatory enforcement actions taken against bad landlords; collecting over $11 million in fines and awards from bad landlords; a doubling in the number of enforcement actions taken against officials responsible for administering programs in public housing; protecting senior citizens from reverse mortgage scams; and aggressively pursuing cases of illegal housing discrimination.
Debarments are for specified periods, while suspensions are in effect until the conclusion of an indicted individual's trial. If individuals are convicted, HUD will propose debarment action against them. Following is a summary of the actions announced by Cuomo today:
Mary Volpe, Executive Director of the Northeast Austin Organization (a non-profit organization), was issued a limited denial of participation that prohibits her participation in HUD's home mortgage insurance program for one year. Volpe allegedly purchased a HUD property for Northeast and then resold the property to another company within one year in violation of a HUD rule. Northeast allegedly purchased the property from HUD in February, 1996, and then resold the property to another company in May, 1996.
Tatiana Machoukova of Framingham, MA, who was a tenant in HUD-assisted housing, was suspended and proposed for a three-year debarment after being convicted in U.S. District Court in Massachusetts for making a false statement to HUD. She told HUD in 1994 and 1995 that her family was without assets except for AFDC payments. It was discovered later, however, that she and her husband were running a clothing resale business in their apartment. She was sentenced to probation for 12 months, fined $1,000, and required to pay $9,395 restitution to HUD.
Genice Barnes of University City, MO, was suspended by HUD after being indicted in the U.S. District Court in Missouri for making or publishing false information and offering the information to HUD for the purpose of receiving a HUD-insured loan. Barnes allegedly provided a loan applicant with false pay stubs, W-2 forms, and a false Social Security number to conceal her poor credit history. Providing a lending institution with such false financial information can result in a borrower obtaining a loan larger that he or she can afford. If the mortgage loan goes into default because the borrower can't repay it, HUD would have to pay for the financial loss to the lender.
Orville R. Johnson of Creve Couer, MO, was issued a limited denial of participation in HUD's single-family mortgage insurance program for a year. He worked as a contractor doing repair work on properties for which owners were receiving funds through HUD's 203K mortgage loan/home rehabilitation program. He allegedly was paid $2,550 after filling out a HUD form for roof repairs he had never completed. He also was allegedly paid for heating and cooling work, but then failed to pay a subcontractor who did some of the work. As a result, the subcontractor allegedly refused to perform warranty service work on the property for the owners. Johnson also allegedly forged names of the owners on two payment checks for $4,833 and $7,141 that were issued to him and the property owners through HUD.
Ronald Bohlen of St. Louis, MO, was suspended and proposed for a three-year debarment after being convicted of embezzlement of HUD funds in U.S. District Court in Missouri. He allegedly stole over $16,000 as an agent of an organization that received funds from HUD's Drug Elimination Grant program and was sentenced to home confinement for up to six months, two years probation, a fine of $2,000, and ordered to repay HUD $16,717.
Douglas Rotundi, and three companies affiliated with him -- St. James Partners, Blue Waters Holding Corporation, and Black Hills Associates -- were suspended after Rotundi was indicted in the U.S. District Court in New York and charged with conspiracy, extortion, and mail fraud. Rotundi's real estate development company builds single-family properties and has built more than 100 such properties between 1989 and 1996.
St. James Partners allegedly built 17 single-family properties and sold them without first obtaining the required certificates of occupancy in violation of the Village of Wyandanch, NY requirements. Some of the town's public officials allegedly demanded and were paid approximately $10,000 by Rotundi to keep the violations quiet.
Rotundi also allegedly assisted a purchaser in getting a second mortgage for $17,000 to pay for closing costs and other expenses on a property. The second mortgage was allegedly not disclosed to the original lender, resulting in the receipt of money under false or fraudulent pretenses. If Rotundi is convicted, HUD will pursue debarment action.
Content Archived: January 20, 2009