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Hiding The Ball

By February 9, 2023No Comments

D.C. Housing Authority withholds fraud allegations from Inspector General

D.C. Housing Authority Executive Director Brenda Donald sequestered notification of possible voucher fraud by a DCHA employee at a brand new housing development for 40 days, after her office received the allegation from the private management company at the property. 

Donald shared the “relevant information” with D.C. Inspector General Daniel Lucas only after he requested it in response to District Dig’s repeated attempts to confirm a tip it received from inside the management company.

“To date, the OIG has not been notified by DCHA regarding the matter described below,” Lucas wrote, in an email to Donald’s Chief of Staff, Rachel Molly Joseph. The ensuing missive came after The Dig tried to confirm the notification met with unwillingness by DCHA’s executive leadership and Board of Commissioners, and At-Large D.C. Council Member Robert White–who chairs the Committee on Housing–to confirm or deny that anything was amiss.

By Saturday, Lucas was displeased, as if Donald and her team were disrespecting his authority–or trying to bury the matter. (D.C. law grants the Office of the Inspector General access to “mere allegations” of wrongdoing at DCHA for review and possible referral to federal law enforcers, according to Lucas’s email.)

Which would be the second time in recent months that Donald has sidestepped allegations of misconduct at the beleaguered agency she has directed since August 2021. (In October 2021, she stonewalled former Commissioner Bill Slover’s request that she investigate a conflict of interest involving former Board Chair Neil Albert and his then-domestic partner, who is part of a developer team that now owns DCHA’s former headquarters. Albert had resigned just nine days earlier over the same conflict on a pair of unrelated contracts.)

But Lucas was having none of it.

“Please note that D.C. [law] states the OIG ‘shall have access to records, reports, findings, and all other papers’ held by District agencies and departments … ‘including agencies which are subordinate to the Mayor, independent agencies, boards, and commissions […] necessary to facilitate an audit, inspection or investigation,’” he began, in an email copied to the DCHA Board, members of the Housing Committee, U.S. Department of Housing and Urban Development’s Office of the Inspector General, and HUD officials Marilyn B. O’Sullivan and Patricia A. Knight

(Last October, Knight and O’Sullivan released a 72-page report detailing dysfunction and wrongdoing at DCHA, including instances of fraud that an internal DCHA auditor already has investigated and reported on. HUD has given DCHA until March 31 to “make material progress in resolving these issues,” and warned that “inability or refusal to take serious and immediate remedial action…may eventually lead to HUD making a determination of DCHA’s default under…the U.S. Housing Act of 1937.”)

Last year, Lucas continued, the Council amended the OIG’s legislation to allow for unencumbered reviews and investigations of DCHA at his direction: 

“Further, the mere allegation of fraud invokes criminal statutes that are adjudicated through the judicial system,” he wrote.  

“As such, my Office is responsible for expeditiously engaging with the [U.S. Attorney’s Office] when we believe there has been a violation of Federal or District law criminal law, in accordance with D.C. [law].  We will coordinate any criminal investigative activity with HUD OIG.”

***

The Dig received the tip in late January regarding potential fraud at DCHA from a source who said they were an employee at Kettler Management Company, managers of The Rise at Temple Courts, a 220-unit residential property developed under the New Communities Initiative, an affordable housing program that has been years in the making.

According to the tipster, Kettler informed DCHA officials in late December of “possible fraud committed by a DCHA employee” in an email copied to DCHA, the office of Mayor Muriel Bowser, the office of Deputy Mayor for Planning and Economic Development John Falcicchio, and principals at MidAtlantic Realty Partners, which developed the property. 

“There was an internal investigation by DCHA but we do not have access to that report,” the employee said. “DCHA investigators contacted us after we made the complaint. We know there is a report but I wouldn’t be included [in] any information about the report.”

The notice from Kettler to DCHA occurred just over a week after Donald and Mayor Muriel Bowser had appeared together on December 19 at a ribbon cutting for the Rise building, at 2 L Street N.W. 

Touting “historic investments” in the New Communities Initiative, Bowser praised her own administration that day for its “steadfast, relentless commitment to making D.C. a place where Washingtonians can live and thrive and stay and raise their children.”

Donald then boasted of 65 project-based housing vouchers at Rise that allowed former residents of Temple Courts–which was demolished almost 15 years ago–to come back to their old neighborhood, and delivery of 85 “affordable dwelling units” to eligible residents from elsewhere in the city. 

She gave props to the Housing Choice Voucher Program’s “relocation team”–one of whom is named in the Kettler tip as the subject of the fraud allegations–and expressed optimism that she can fix the broken agency. 

“I basically need three things,” she said at the time: “I need an amazing team, I need resources, and I need a supportive board. I have two of those three things right now.” 

The following day, by a 9-4 vote, the Council sacked the 13-member Board and replaced it with a nine-member “Stabilization and Reform Board.”(The Council later increased the “STAR Board” to 11.) 

Councilmember White, whose support for the legislation preceded his appointment as chair of the Housing Committee, was equally resolute during the Council debate: “For me the north star is, what is going to make public housing better? Can the current board make public housing better? The answer is no, because if they could they would have done so already. Can the new board? The answer is yes.”

***

Kettler notified DCHA officials of potential voucher fraud on December 27, according to the tip received by The Dig. Donald has since fired the alleged fraudster, according to numerous sources at the agency. 

The Dig is withholding the former employee’s name pending confirmation or release of any internal report and/or any criminal charges. (The tipster said that the individual in question “has always been a character under suspicion because we have multiple videos of [them] coming in and out of [the Rise building] after hours and on weekends–NOT WORK RELATED.”)

If proven, this recent allegation in the voucher program could be a setback for Donald, who thus far has fobbed off persistent revelations of dysfunction and wrongdoing as bothersome matters she inherited from her predecessor, who left the agency 17 months ago.

That’s just one incident. Having shed her old Board–and Slover, a combative overseer who she and Bowser were determined to get rid of– Donald is saddled with a quasi-independent agency full of personnel problems and a culture of failure that the Bowser administration has commandeered to pursue publicly subsidized private development that dilutes the level of affordability. 

As The Dig reported last year, and as HUD echoed in October, by its own count, DCHA has 40,000 people on a waiting list for either a project-based or tenant-based voucher. The waiting list has been closed for years. (In her remarks at the Rise ribbon-cutting, Donald claimed half of the 65 project-based voucher recipients came off that waiting list. The Dig has been unable to confirm that figure.)

Donald’s failure to refer a potential criminal matter to the OIG is an early sign that the Bowser strategy–aided and abetted by White, at the behest of Council Chair Phil Mendelson, who steered the bill to passage during committee assignment season –has succeeded in giving her room to operate with what detractors have depicted as a puppet Board. 

The Board is chaired by Raymond Skinner, who sources tell The Dig presented himself on arrival as a friend of Donald’s. 

It also features a mayoral appointee who directs D.C.’s Interagency Council on Homelessness, the Mayor’s Director of the Office of Budget and Performance Management, an Associate CFO at the Office of the Chief Financial Officer, and a vice president of one of Bowser’s preferred developers.

Questions of the DCHA’s independence arose last week when The Dig was unable to get a response from its members regarding whether they were even aware of any allegations of fraud at the Rise building. An email to the Board last Friday prompted a reply from Commissioner Christopher Murphy, who already had deferred to Donald’s office. 

The inquiry to the Board bounced back the following day with an email from Donald’s Chief of Staff: 

“DCHA is unable to comment on specific personnel matters,” Joseph wrote. “However, when the agency determines an employee has engaged in or attempted fraudulent conduct typically the employee is terminated and a review is undertaken to ensure it cannot happen again. 

“Depending on the type and degree of fraud involved the matter could be referred to either or both the DC and HUD Inspector General.”

But the question wasn’t whether DCHA “could” make a referral of fraud allegations to the OIG; it was whether Donald’s staff actually did inform Lucas’s office or her Board–or the HUD OIG. 

In response to a follow up question, Joseph wrote, “This response is on behalf of the agency and the Board. DCHA has shared all relevant information with DCOIG to let them decide what warrants their review. DCHA is cooperating with all next steps from DCOIG.” (Neither Bowser’s nor Falcicchio’s office, which were copied on the notification from Kettler, responded to questions from The Dig.)

The Council’s Housing Committee wasn’t much help, either. Just one Committee member replied to an email from The Dig, on Saturday, shortly before Lucas admonished Donald’s office. “I don’t know anything about this,” the member said. 

Now, White is charged with oversight of an agency with a dubious Board that he enabled, but with no statutory authority that requires Donald to open her books to him outside the routine annual oversight process. That leaves him having to ask her to inform him of fraud allegations, investigations or reports and wait for her to decide her next move.

Contacted by The Dig last week, White would neither confirm nor deny knowing about an internal investigation and report at DCHA, and would neither confirm nor deny knowledge of any allegation whatsoever. 

One thing is clear: DCHA’s Board is not inclined to help him clean up the agency. Just yesterday, at its regularly scheduled meeting with Donald,  Joseph and their executive staff, not a single member asked about the Rise building allegations–or Lucas’s demand. 

Leaving one to wonder whether Donald works for the Board, or the other way around.

*This is a developing story.

Jeffrey Anderson

Jeffrey Anderson is a veteran reporter and co-founder of District Dig. Drop him a line at byjeffreyanderson@gmail.com for tips or insights.