CUOMO CONTINUES CRACKDOWN ON WASTE, FRAUD AND ABUSE IN ACTION AGAINST FATHER AND SON IN INDIANA

WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has proposed prohibiting a father and son who own an Indiana apartment complex from doing business with the federal government for five years, as part of HUD's continuing crackdown on waste, fraud and abuse.

Cuomo said HUD has proposed debarment against William K. McBride and his son William I. McBride, general partners of a company that owns Cross Creek Apartments, a HUD-insured project in New Albany, Indiana. A HUD inspection of Cross Creek revealed that the owners had failed to maintain the project in good condition and failed to meet HUD's management standards.

The proposed debarment actions announced by Cuomo would strike a financial blow against the McBrides and deprive them of all federal contracts for five years if finalized. Such contracts are a major source of income for many businesses.

"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."

"This is the latest in a series of actions we're taking at HUD to stop people from abusing our programs," Cuomo said. "Waste, fraud and abuse are an ugly part of HUD's past that have no place in our present and future."

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.

HUD’s investigation found that, in violation of HUD contract requirements, the McBrides:

• Made $48,637 in unauthorized withdrawals from apartment project funds.
• Failed to maintain the proper amount of money in the apartment project's tenant security deposit account.
• Failed to provide HUD with acceptable project year-end financial statements in 1995 and 1996.
• Failed to provide monthly accounting reports to HUD.

HUD insures mortgages to encourage lenders to approve loans, thereby increasing homeownership and the availability of affordable housing. If a HUD- insured loan goes into default, HUD may have to pay for the financial loss to the lender. Since HUD takes the risk of a possible loss when it insures a loan, project owners must remain in compliance with HUD's rules.