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Tag: hud

Feds from 3 Agencies Conduct Nighttime Raid at Cleveland City Hall

Cleveland City Hall, via Wikipedia

By Steve Neavling
ticklethewire.com

Federal agents from three agencies conducted a nighttime raid on Cleveland City Hall on Wednesday night as part of a criminal probe.

The IRS, FBI and HUD were involved in the raid, but it wasn’t immediately clear what the agents were investigating, Cleveland.com reports

The feds declined to provide details on the raid and the investigation.

Cleveland FBI spokeswoman Vicki Anderson would only say that agents were at city hall “after business hours for authorized law enforcement activity.”

The city also declined to comment on the raid.

Check back for updates.

Robin Hood in Reverse — A $1.1 Million Scam

2000px-robin_hood_logo-svg

By Greg Stejskal
ticklethewire.com

In 2005 Female Jones (not her real name), an indigent woman living in public housing in Ann Arbor, Mich., discovered she wasn’t eligible for federal housing assistance. The reason she wasn’t eligible was because it appeared she was already receiving “Section 8” voucher payments. Jones wasn’t aware of receiving any assistance. So it was assumed that there was a bureaucratic snafu, but an investigation revealed something far more nefarious.

Section 8 vouchers are so-called because they are authorized under Section 8 of the Federal Housing Act of 1937, part of the New Deal legislation designed to help people suffering the effects of the Great Depression. In 1974 the Housing Act was amended to create the Section 8 voucher program. Low income people would be eligible for vouchers that would pay a percentage of their rent in approved housing facilities. The money for the program would be provided by U.S. Department of Housing and Urban Development (HUD), but the program would be administered by the state and local public housing agencies.

There was only a limited amount of funding available. So not all eligible people would receive vouchers. In Michigan a waiting list existed and waits of 3-6 years were not uncommon.

Greg Stejskal

Greg Stejskal

The voucher payments were made directly to the indigent tenants’ landlords to minimize the opportunity for fraud. Housing voucher agents working for the state prepared the application forms for the indigent applicants. These agents obtained background information and determined whether the applicants met the eligibility requirements.

Female Jones’ caseworker determined that she was enrolled in the Section 8 program, and voucher payments were being sent to Washtenaw Payee Services, a company that appeared to receive Section 8 payments on behalf of several landlords in Washtenaw County. Because the woman was unaware of the payments, and they were not being received by her landlord, the caseworker reported the problem to the Michigan State Housing Development Authority (MSHDA).

MSHDA’s initial investigation indicated there might be some fraudulent activity. As the Section 8 program is federally funded, they reported their concerns to the FBI, and a joint FBI/MSHDA investigation was begun.

Although Washtenaw Payment Services (WPS) appeared to have an office with a street address, it turned out to be a private mailbox service which is often a red flag in a fraud investigation.

The bank records for WPS were obtained via subpoena. Those records showed that WPS was formed in 1990 when LaToya Cotton filed business papers with Washtenaw County and opened a bank account. Since 1994, about 11 years, WPS had been receiving Section 8 voucher payments ostensibly for landlords of low-income tenants enrolled in the program.

The striking thing was the founder of WPS, LaToya Cotton, was a Michigan housing agent responsible for enrolling prospective low-income applicants for Section 8 vouchers. But even more troubling, it didn’t appear that any money had been paid from the WPS account to any landlords on behalf of the Section 8 enrollees.

LaToya Cotton became a Michigan housing agent for MSHDA in 1994. Very soon thereafter she concocted her scheme.

Prior to becoming a housing agent Cotton had setup the WPS account for a legitimate purpose. But after becoming an agent and enrolling applicants for the Section 8 program, she designated WPS as the recipient for some of the applicants’ landlord payments. When the WPS applicants were approved for Section 8 payments, Cotton didn’t tell them they had been approved. Rather, she told them they were not approved, or that they were on the waitlist. None of those enrollees were ever aware that they had been approved for Section 8 payments.

In September 2005, the FBI obtained a search warrant for Cotton’s office. The records seized revealed that during the 11 years that Cotton was a housing agent, she enrolled 100s of Section 8 applicants. Of those applicants she designated WPS as the recipient of landlord payments for about 40 of the enrollees. Cotton would periodically change the WPS enrollees, removing some and adding others. At the time her office was searched, she had eight enrollees whose voucher payments were going to WPS.

All of the money paid into the WPS account was used by Cotton for personal expenses. Over the 11-year period of the fraud, the total amount paid into the account was $1,051,701. She purchased cars, went on vacations. In April 2004, Cotton purchased a 5,237 square foot home for $830,000.  MSHDA figured that the amount embezzled by Cotton could have subsidized housing for 50 families for more than four years.

In January 2006, in front of US District Court Judge Patrick Duggan (The father of current Detroit Mayor Mike Duggan – ironically the mayor has been trying to turn Detroit around after it has been racked by years of public corruption.), Cotton pleaded guilty to a federal indictment charging her with theft from a federally funded program.

Judge Duggan in May 2006 sentenced Cotton to three and a half years incarceration, three years supervised release and ordered her to pay $1.1 million in restitution.  (Cotton’s house was forfeited and sold with the proceeds used to pay a portion of the restitution.)

At the time I was quoted as saying, “She (Cotton) was living in a mansion and there were low-income people on the Section 8 waiting list. It was Robin Hood in reverse.”

 

Stejskal: Robin Hood in Reverse – A $1.1 Million SCAM

2000px-robin_hood_logo-svg

Greg Stejskal served as an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office.

By Greg Stejskal
ticklethewire.com

In 2005 Female Jones (not her real name), an indigent woman living in public housing in Ann Arbor, Mich., discovered she wasn’t eligible for federal housing assistance. The reason she wasn’t eligible was because it appeared she was already receiving “Section 8” voucher payments. Jones wasn’t aware of receiving any assistance. So it was assumed that there was a bureaucratic snafu, but an investigation revealed something far more nefarious.

Section 8 vouchers are so-called because they are authorized under Section 8 of the Federal Housing Act of 1937, part of the New Deal legislation designed to help people suffering the effects of the Great Depression. In 1974 the Housing Act was amended to create the Section 8 voucher program. Low income people would be eligible for vouchers that would pay a percentage of their rent in approved housing facilities. The money for the program would be provided by U.S. Department of Housing and Urban Development (HUD), but the program would be administered by the state and local public housing agencies.

There was only a limited amount of funding available. So not all eligible people would receive vouchers. In Michigan a waiting list existed and waits of 3-6 years were not uncommon.

Greg Stejskal

Greg Stejskal

The voucher payments were made directly to the indigent tenants’ landlords to minimize the opportunity for fraud. Housing voucher agents working for the state prepared the application forms for the indigent applicants. These agents obtained background information and determined whether the applicants met the eligibility requirements.

Female Jones’ caseworker determined that she was enrolled in the Section 8 program, and voucher payments were being sent to Washtenaw Payee Services, a company that appeared to receive Section 8 payments on behalf of several landlords in Washtenaw County. Because the woman was unaware of the payments, and they were not being received by her landlord, the caseworker reported the problem to the Michigan State Housing Development Authority (MSHDA).

MSHDA’s initial investigation indicated there might be some fraudulent activity. As the Section 8 program is federally funded, they reported their concerns to the FBI, and a joint FBI/MSHDA investigation was begun.

Although Washtenaw Payment Services (WPS) appeared to have an office with a street address, it turned out to be a private mailbox service which is often a red flag in a fraud investigation.

The bank records for WPS were obtained via subpoena. Those records showed that WPS was formed in 1990 when LaToya Cotton filed business papers with Washtenaw County and opened a bank account. Since 1994, about 11 years, WPS had been receiving Section 8 voucher payments ostensibly for landlords of low-income tenants enrolled in the program.

The striking thing was the founder of WPS, LaToya Cotton, was a Michigan housing agent responsible for enrolling prospective low-income applicants for Section 8 vouchers. But even more troubling, it didn’t appear that any money had been paid from the WPS account to any landlords on behalf of the Section 8 enrollees.

LaToya Cotton became a Michigan housing agent for MSHDA in 1994. Very soon thereafter she concocted her scheme.

Read more »

Former Inspector General for HUD is Indicted in Alleged Mortgage Fraud Scheme

By Allan Lengel
ticklethewire.com

A former head of the Office of Inspector General’s Atlanta office faces charges of making false statements to a bank to obtain a mortgage loan and conspiring to obstruct an investigation, the U.S. Attorney’s Office in Atlanta said Thursday.

Herschell Harvell, Jr., 53,  made his initial appearance in federal court in Atlanta.  Harvell’s co-defendant and nephew, Tavus A. Wright also made his initial appearance on federal charges of conspiracy, obstruction of justice, and perjury.

He is accused of obstructing an investigation into his real estate transactions by the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG). He was terminated last year.

 “As a federal law enforcement officer, Harvell was entrusted with supervising mortgage fraud investigations,” said United States Attorney Sally Quillian Yates. in a statement“It is particularly troubling that someone responsible for investigating mortgage fraud is charged with committing it and with obstructing justice to cover up his crimes.”

David Montoya,  Inspector General of the Department of Housing and Urban Development, said in a statement: “It is a regrettable day for the dedicated, hard-working men and women of our organization. We cannot tolerate or condone the abuse of trust and the violation of the very laws that Mr. Harvell was sworn to investigate and that is why I brought this matter to the attention of the U.S. Attorney.  I am profoundly disappointed at that break down of our former employee’s ethical and moral compass.”

A press release issued by the U.S. Attorney’s Office in Atlanta stated:

Between 2007 and 2012, Harvell served as a supervisory Special Agent in several HUD-OIG offices, including as a Special Agent in Charge in Fort Worth and Atlanta. Harvell also owned residential homes in the Atlanta area as investment properties. During 2007 and 2008, he acquired and refinanced several more homes with mortgage loans. In addition, in January and February 2008, Harvell purchased a Precision Tune automobile care franchise, incurring significant expenses in connection with that purchase.

On March 25, 2008, Harvell refinanced one of his rental homes and received over $23,000 in cash. Harvell’s loan application represented that he had a $70,000 certificate of deposit and that he received $6,180 in monthly rental income from six residential homes. The indictment alleges that these representations were false. It is alleged that Harvell had cashed in the certificate of deposit more than a month before, during the time period that he was purchasing the Precision Tune Franchise. In addition, it is alleged that Harvell’s houses were not rented or producing the rental income as stated on his loan application. For example, it is alleged that Harvell in fact received less than $900 in rent in March 2008 and for the year to date, had received less than $6,000 total in rental income.

The indictment alleges that during the course of the HUD-OIG investigation of the accuracy of Harvell’s loan application, Harvell’s nephew, Tavus Wright, provided false information to agents and perjured himself before the grand jury about whether he had signed a document used to demonstrate to Harvell’s lender that one of his houses was rented.

 

 

Former Mayor’s Aide Takes Plea Deal, Talks to Feds

By Danny Fenster
ticklethewire.com

 A corrupt former aide to two Buffalo mayors may help the feds find more corruption.

Timothy E. Wanamaker, also a former economic development chief, pleaded guilty  Tuesday to a felony charge of stealing government funds, reports Buffalo News, and agreed to cooperate with federal investigators. Wanamaker admitted to charging about $30,000 in personal expenses to his City Hall credit card over four years.

“It was a serious lapse in judgment on my part,” Wanamaker told U.S. District Judge Richard J. Arcara, according to the Buffalo paper.

Wanamaker agreed to cooperate with an ongoing investigation between the FBI and HUD as part of his plea deal.

“I very much anticipate that federal investigators will be aggressive in questioning Mr. Wanamaker,” U.S. Attorney William  J. Hochul Jr. said Tuesday according to the Buffalo News. “And those investigators will now be helped by someone who was on the inside.”

To read more click here.