ST. LOUIS REAL ESTATE BROKER SENTENCED TO FOUR MONTHS IN PRISON FOR FRAUDULENTLY ATTEMPTING TO OBTAIN HUD LOAN

WASHINGTON - Real estate broker Karen Smith of St. Louis, MO, has been sentenced to fourth months in prison and two years probation after pleading guilty to charges that she attempted to fraudulently obtain a $65,000 loan insured by the Department of Housing and Urban Development.

Smith was sentenced earlier this month in U.S. District Court in Missouri. She was convicted of lying on her loan application by not stating that she had a previous foreclosure on a HUD-insured loan, by providing fraudulent tax returns and by using a fictitious Social Security number in her attempt to get the loan. She also admitted that she helped two other people apply for HUD-insured loans by providing them with false documents.

"HUD has been victimized far too long by waste, fraud, and abuse," Secretary Andrew Cuomo said. "Those days are over. We are moving aggressively to protect the American taxpayer from those who try to enrich themselves by taking funds improperly from our programs."

This investigation, conducted by HUD's Office of Inspector General and the FBI, was conducted as part of the white collar crime focus of the Operation Safe Home initiative that was created in 1994 to attack crime in public and assisted housing.

In addition to combating fraud in publicly funded housing, Safe Home has been responsible for executing more than 1,900 search warrants and making more than 15,600 arrests. Operation Safe Home has seized more than $29 million worth of illegal drugs, more than 2,100 weapons, and over $4.6 million in drug money.

Under the initiative HUD works along with the Department of Justice, the Treasury Department and the Office of National Drug Control Policy in cooperation with state and local law enforcement agencies and public housing authorities.

In addition, Cuomo launched a "Get Tough" initiative to crack down on waste, fraud, and abuse in HUD programs in March 1997 in partnership with the Justice Department.

A recent report on HUD's Get Tough Initiative found that:

• HUD dramatically increased the number of debarment actions against bad landlords to 122 in 1997 - an increase of over 300 percent from 1996, when just 30 landlords were subject to debarment action that stopped them from doing business with federal agencies for varying numbers of years.

• HUD and the Justice Department worked with the HUD Inspector General's Office, the Treasury Department and state and local governments to nearly double the number of civil cases and settlements resulting in recoveries against landlords of HUD-assisted housing last year. The number of such cases grew to 46 in 1997 - up from 24 in 1996.

• HUD and the Justice Department recovered nearly $25 million in money owed to HUD by landlords as a result of the above actions in 1997 - up from about $18 million the year before.