Report: Obama administration kept HUD fraud reports hidden


At least 14 reports were withheld by a government watchdog organization that revealed numerous problems allowing fraud and waste at the Department of Housing and Urban Development.

According to The Daily Caller News Foundation’s Investigative Group (DCNF), “The reports concern issues plaguing the Department of Housing and Urban Development (HUD), including felons illegally living in federally-funded homes, tax fraud and millions of dollars sitting in unused bank accounts for years. The department’s 2017 budget is $48.9 billion and it has 8,375 employees.”

By comparing the HUD inspector general’s (IG) systemic implication reports—analyses which discover opportunities for fraud in agency programs — to a list that the DCNF previously obtained through a Freedom of Information Act request, it was found that 14 reports from 2011 through 2014 were excluded from the IG’s list posted on their website.

Further investigation revealed that at least three of those reports were also kept from HUD, meaning high-level department officials might not have been briefed on the issues, and suggested recommendations to address the problem.

The DCNF previously reported that “[o]ne unreleased 2011 report revealed that 1,300 fugitives – including rapists and murderers – were illegally living in HUD-funded homes, and local authorities managing the properties refused to evict them.”

IG spokesman Darryl Madden contended that the 2011 report “should not have been released” to the DCNF, and claimed that the data on which it was based was not valid. The IG ignored the issue until 2016 when Sen. Chuck Grassley (R-Iowa), chairman of the Senate Judiciary Committee, requested an update and learned that the IG was unable to determine the number of fugitives living in HUD-funded housing.

Grassley then tasked the Government Accountability Office (GAO) to step in and conduct the analysis.

It was discovered another report was withheld by the IG in 2011, revealing that a rural Missouri town had not spent $78 million of federal tax dollars it was granted in 2008 for disaster funds.

“There is also an apparent inability/unwillingness/no need to spend these funds,” the unpublished report said. “Considering the relatively small size of this area, it seems improbable that there is any unidentified need or opportunity eligible for the expenditure of these funds.”

“It seems unreasonable, given the current budgetary situation, that funds with this type of designation can remain un-obligated for an indefinite period of time,” the report continued. “If $78 million are available in a mostly rural area like Joplin, Missouri, there is a very good likelihood that similarly large pools are available [elsewhere] for recovery.”

HUD was instructed by the IG to establish an annual review to identify unspent funds that could be sitting in open bank accounts. The DCNF states that “[t]he IG reported in 2014 that another HUD program left its old grants open, while a 2016 GAO review of other federal agencies found nearly $1 billion sitting in expired grant accounts.”

The DCNF had also requested records about a 2012 IG report revealing that Florida residents living in HUD-funded housing claimed earned income tax credits on their tax returns, despite having earned no income.

“When questioned regarding the discrepancy, the tenants report that they did not, in fact, receive income, and lied to the [IRS] in order to obtain a higher income tax return,” the report said.

The DCNF notes that they “received the report in the same release as the document regarding fugitives. It, too, was left off the IG’s website.

“Other reports kept off the IG’s website found additional systemic issues, including a weak vetting process to verify loan applicants’ identities, fraudsters exploiting easily-fixed loopholes to purchase discounted property, and manipulating taxes and debts to secure loans.”

The IG contends that the reports were left off its website because the data they contained was “unreliable” or the reports were allegedly drafts which were never officially forwarded to HUD.

H/T: The Daily Caller

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