CUOMO CONTINUES CRACKDOWN ON WASTE, FRAUD AND ABUSE IN ACTION AGAINST SEVEN PEOPLE AND FIVE COMPANIES IN OHIO

WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has proposed prohibiting seven people and five companies in Ohio from doing business with the federal government for three years, as part of HUD's continuing crackdown on waste, fraud and abuse.

The individuals controlled companies that owned and/or managed HUD-assisted housing in Dayton and Cincinnati, OH. Each is accused of serious HUD contract violations.

The proposed debarment actions announced by Cuomo would strike a financial blow against the individuals and their affiliated companies by depriving them of all federal contracts for three 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. Waste, fraud and abuse are an ugly part of HUD's past that have no place in our present and future."

Cuomo said HUD began debarment action against:

• Terry Gardner, Lenore Varney, Lloyd Dalton, Boyd-Entowne, Ltd., Terra Management Co.,Inc., and Terra Developers and Associates, all of Wooster, OH. The individuals and companies controlled and/or managed companies that owned Parkside Apartments in Dayton and Ridgewood Hills Apartments in Cincinnati. At Parkside, it is alleged that the owners: failed to maintain adequate bookkeeping/accounting systems; failed to maintain information on the pricing of goods and services from identity-of-interest firms; violated a drug elimination grant agreement by failing to install and maintain security surveillance equipment; received below average and unsatisfactory physical inspection and management review ratings; and failed to make required mortgage payments, causing Parkside to go into default. At Ridgewood Hills, it is alleged that during the years 1994 through 1997, various HUD contract requirements were violated, including: repayment of owners when the project was not in a surplus condition; failure to make required mortgage payments; making false claims for subsidy payments on vacant units; receiving unsatisfactory physical inspection and management review ratings; and charging excessive management fees. Terra Developers and Associates, Terra Management Co.,Inc., and Boyd-Entowne, Ltd., are also being proposed for debarment because of their affiliation with Gardner, Varney, and Dalton. HUD was able to recover a $100,000 settlement from project owners.

• Sam Britton, Kaye Britton, John Weld Peck, Robert Anning, Britton and Associates, and El Jay Entowne Houses, all of Cincinnati. The individuals controlled companies that owned and/or managed El Jay Entowne Apartments in Cincinnati. A HUD investigation found serious violations of various contract requirements, including: falsely receiving payments for vacant units; making false claims that roofs were replaced in satisfactory condition when they were not; charging excessive management fees; and receiving below average and unsatisfactory physical inspection and management ratings. El Jay Entowne Houses, Ltd. and Britton and Associates were also proposed for debarment because of their affiliation with the Brittons, Peck, and Anning.

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.

Cuomo launched the "Get Tough" initiative to crack down on waste, fraud and abuse in HUD programs last March 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.