35. Click.  DAVID SCHIPPER'S BOOK ON THE IMPEACHMENT ILLUMINATES EFFORTS BY CISNEROS/HUD TO ASSIST GORE WITH USE OF INS TO CREATE DEMOCRATIC VOTES IN 1996 CAMPAIGN; FOCUS INCLUDES LA; INVOLVEMENT OF ELAINE KAMARK AND OFFICE OF REENGINEERING GOVERNMENT IN PUSHING INS TO CREATE NEW CITIZENS; WERE HUD'S TRACS DATABASE AND VIOLATIONS OF THE PRIVACY ACT INVOLVED?

From http://www.gao.gov

High Risk Series: Department of Housing and Urban Development (Letter Report, 02/95, GAO/HR-95-11).

In 1990, GAO began a special effort to identify federal programs at high risk of waste, fraud, abuse, and mismanagement. GA issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas. This report on the Department9===siasm and momentum generated thus far and to successfully transform HUD into a well-managed federal agency.

2. MARCH 19, 1996 GAO PUTS DOJ AND TREASURY ASSET FORFEITURE ON HIGH RISK LIST (DYNCORP IS DOJ ASSET FORFEITURE

KNOWLEDGE MANAGER. APPOINTED EARLY 1990's WITH 5 YEAR CONTRACT, REAPPOINTED AROUND 1996 TIME FRAME)

From http://www.gao.gov

Asset Forfeiture: Historical Perspective on Asset Forfeiture Issues

(Testimony, 03/19/96, GAO/T-GGD-96-40).

3. MARCH 1996 DYNCORP AWARDED JUSTICE CONSOLIDATED OFFICE NETWORK.

From: http://www.dyncorp.com

(NOTE: During the 1995-1996 period DynCorp also won a second five year renewal of its five year contract to serve as the knowledge manager for the DOJ Asset Forfeiture Fund)

Contact: Doug Cheek (doug.cheek@dyncorp.com) (703) 818-4139

(Lockheed and the TRACS staff blocked access/made access difficult for Hamilton in 1996 and 1997 despite HUD’s orders that Hamilton access; Hamilton was removed from access to the HUD network in the summer of 1997; the network was run by Lockheed)(From http://www.hud.gov ; found on search on November 26, 2000)

U.S. Department of Housing and Urban Development Washington, D.C. 20410-8000

OFFICE OF THE ASSISTANT SECRETARY AUG 2 6 1997

FOR HOUSING-FEDERAL HOUSING COMMISSIONER

Dear Project Owner/Management Agent:

This letter is a follow-up to a previous letter from Assistant Secretary Nicolas Retsinas, dated June 27, 1997, sent to Project Owners/Management Agents concerning the electronic submission of subsidy billings as required under 24 CFR Part 208, published in the Federal Register November 19, 1993, and August 24, 1994 (also known as the TRACS Automation Rule). HUD will soon be making subsidy payments based on the required electronic billing. Processing of subsidy payments through the TRACS Automated Payments System will begin on September 1, 1997 for all Rent Supplement, RAP, Section 8 HAP, PAC and PRAC contracts, with the exception of HAP contracts administered by a contract administrator under an Annual Contributions Contract (ACC). Contracts under the Section 8 Certificate, Rental Assistance Voucher, and Moderate Rehabilitation programs are not in TRACS and are not affected.

Paper copies of Form HUD-52670 and all supporting documentation are still required and should be sent to the Field Accounting Division (FAD) and to the appropriate field office or the Kansas City Voucher Processing Hub. As of September 1, 1997 all electronic vouchers processed through TRACS need the paper versions of the forms to be stamped or marked with "Copy of Electronic Submission" before sending them to the FAD and field office or Hub.

Since some covered projects may not be submitting payment requests to TRACS by the September lst Automated Payments implementation date, HUD will continue to make subsidy payments from the paper vouchers for a period of time for projects not yet submitting electronic vouchers.

However, payments from paper vouchers after September lst may be delayed. Owners/agents are strongly encouraged to begin electronic voucher submissions as soon as possible. HUD will discontinue payments from paper vouchers on December 31, 1997 for all HAP contracts in TRACS not administered under an ACC. (This does not mean that your requirement to submit paper vouchers ends on December 31st, however. You should continue to submit the paper vouchers indefinitely, i.e., until HUD notifies you to do otherwise.)

Please be advised that HUD field offices are issuing specific special claims ID numbers with special claim approvals. Including the Field-issued ID number in your electronic HAP payment request will assure prompt verification of special claim amounts.

For those project owners/agents not currently reporting to TRACS who plan to have a service bureau submit their electronic vouchers, verify that the selected bureau is using software that is compliant with Automated Payments. It is the project owner/agents' responsibility to see that the bureau is supplied with the following information which, if incorrect, will delay processing of payments:

Project and contract numbers

Claim IDs for approved special claims

Voucher ID (if submitting a correction or delete voucher)

Missing or more than one Transmission header record (MATHR) and/or End of Transmission record

(MATND) - Record counts in header records that do not equal the MAT calculated counts and/or the Record

Number sequence field is not in sequence.

_ Invalid project and contract numbers, or the project and contract numbers are not a valid combination.

_ Claim ID submitted in an invalid format and/or without an approved special claim

_ Incorrect Voucher ID (if submitting a correction or delete voucher).

For all project owners/agents submitting directly to TRACS, to assure that your project will receive subsidy funds on time, you must successfully transmit MAT information. Most projects should be submitting both tenant information and voucher information, which are contained in separate TRACS files. With very few exceptions (e.g., certain preservation projects or elderly group homes), failure to submit timely and accurate tenant information can result in suspension of subsidy payments On successful transmissions, the TRACS system will return information to you. To be sure that TRACS processed your data, you must receive information back from TRACS that notifies you of the status of the information you transmitted. For voucher summary transmissions, the information consists of:

A record showing that the voucher file was processed;

A text message on the status of your payment request (example shown below);

Different software programs translate messages returning from TRACS in different ways, so the messages may vary. Please check your software manual or call your vendor to determine exactly how the return messages are translated.

Do not confuse the messages referenced above with the message that Sprintmail has received your transmission. Presence of a Sprintmail "RECEIVED" message does not mean that the file has been processed by TRACS. To be sure that TRACS processed your file(s), you must also receive the information listed above. One or two days after you transmit the voucher summary file to TRACS, look for a TRACS message similar to the one below:

Posted: Mon, May 12, 1997 7:36 PM EDT Msg: GMJH_1631_7432

From: TRACS.MMCOUT

To: TRACS99999

Subj: HUD CFS TRACS DATA 970512 480615

@*@ TRACS99999TRACS99998

Transmission Date/Time: 1997-05-12/13:40:49

Project Name : EXAMPLE APARTMENTS

Project No. : 12345678

Contract No. : VT30LOO1009

Voucher (yr-mo) : 1997-06

THE GENERATED VOUCHER ID FOR (yr-mo) is: 9706123456

VOUCHER AMOUNT SUBMITTED FOR PAYMENT: 00015190

Since different software programs translate messages returning from TRACS in different ways, the message may not be identical. Look for the phrases such as "The generated voucher ID for (yr-mo)" and "The voucher amount submitted for payment," as in the example above. If you do not receive a message back from TRACS containing status phrases within a few days of your original submission,

you may have to retransmit your voucher file. Please read your software manual or call your vendor to determine exactly what to do to retransmit the file.

Complete technical submission instructions can be found in the TRACS Monthly Activity Transmission (MAT) User's Guide. This document can be downloaded from the TRACS Home page of HUD's Internet web site (http://www.hud.gov/fha/mfh/trx/html/trxsum.html ) Additional assistance

concerning MAT transmissions is available by contacting the TRACS Hotline at 1-800-767-7588 (HUD apologizes that the phone number printed in the previous correspondence was incorrect).

If you need to contact a third-party service bureau or a software vendor, a list can be obtained from the National Leased Housing Association (NLHA), 1300 19th Street, NW, Suite 410, Washington, DC 20038 (202)785-8888. HUD does not provide information on software vendors, service bureaus, or management companies with service centers nor is responsible in any way for information you receive from NLHA, other trade organizations or other industry members.
Sincerely,

Marc Harris, Acting Director

Program Support Division
Office of Multifamily Housing
Asset Management and Disposition

4. JANUARY 1999 ARTICLE ON CUOMO'S PAST INVOLVEMENT WITH FINANCIAL FRAUD IS IN AMERICAN SPECTATOR; 1998 AP STORY

Banking On Andy Cuomo
HUD Secretary and rising Democratic star Andrew Cuomo wants to go places--assuming he can leave some baggage behind.

SAM DEALEY & JAMES RING ADAMS © 1999
Copyright 1999 © The American Spectator

It couldn't have been more straightforward. The Senate Banking, Housing, and Urban Affairs Committee had a form. The form was entitled "Statement for Completion by Presidential Nominees." The nominee was President Clinton's choice for housing secretary, 41-year-old Andrew Cuomo, who was to complete the questionnaire and return it before his confirmation hearing in January 1997. Simple, no?

Evidently not. One question read: "Give the full details of any civil or criminal proceeding in which you were a defendant, or any inquiry or investigation by a Federal, State, or local agency in which you were the subject of an inquiry or investigation."

One of the cases he listed, Smith v. Cuomo, et al., had been brought against him and others by the owner of a south-Florida savings and loan, alleging an illegal takeover attempt. But Cuomo failed to disclose a later suit, brought by the S&L itself, and settled only two months before his hearing.Why? Perhaps because Oceanmark v. Cuomo, et al. revealed that in 1988, federal banking regulators investigated Cuomo and fellow investors for possible change-in-control violations. The nominee should have listed that investigation, too, in answer to the second part of the question. He did not.

How serious is this? Reagan White House aide Edwin Meese was investigated by an independent counsel for incomplete personal financial disclosures. Several Reagan administration officials were prosecuted in the Iran-contra matter for withholding information from Congress. Interior Secretary Bruce Babbitt has his own special prosecutor, probing the question of false statements to Congress. And then there's Cuomo's predecessor at HUD, Henry Cisneros, who resigned in the face of an independent counsel investigation.

 The allegation? Making false statements to the FBI about pay-offs to a blackmailing mistress during a routine background check. The Justice Department apparently has not investigated Cuomo's responses. But it has looked at him for another reason. The issue: Did Cuomo retaliate against Oceanmark by pressuring the federal agency charged with thrift oversight to close the S&L?

After a preliminary investigation, Attorney General Janet Reno concluded that the standard for appointing an independent counsel had not been met. Yet Reno's inquiry was narrowly tailored. Abroader review of Cuomo's involvements with Oceanmark reveals serious questions of bank_regulation skirting. Some of Cuomo's fellow investors in Oceanmark are also prominent figures in an array of political and financial scandals. And the secretary clearly grows anxious when asked about his past business associates and their affairs. HUD lawyers even threatened a lawsuit when TAS submitted detailed questions.

THE SON ALSO RISES

During his father's years in the governor's mansion, young Cuomo refined his political touch. He campaigned hard for Walter Mondale's presidential bid, bringing in savvy media consultants. And he was largely responsible for staging one of his father's most memorable moments, the carefully crafted speech at the 1984 Democratic National Convention.

Young Cuomo also got an education in hard-nosed politics. In 1983, the New York State Investigation Commission (SIC) concluded that Cuomo and two other aides--including current NBC News star Tim Russert--bullied members of the allied Liberal Party to support a Cuomo-favored candidate to head the party. According to the SIC report, the three men "intervened in the internal affairs of the Liberal Party in order to obtain a resolution of the factional dispute." Party members testified that the governor's aides threatened them with the loss of lucrative state jobs and patronage if the party's fight was not resolved in a way "acceptable" to the governor.

After this brush with notoriety, Andrew left Albany in 1984 for Manhattan to join the staff of New York District Attorney Robert Morgenthau. In 1985 he became a partner in the Park Avenue law firm of Blutrich Falcone & Miller, a haven for his dad's financial boosters. One partner, Lucille Falcone, was Mario's chief fundraiser and, according to reports, Andrew's girlfriend. In his memoirs the governor even wrote he would likely join the firm when he left public service. (It ceased to exist before he could do so.)

Also in 1985, Andrew took a leaf from the playbook of his future brother-in-law Joseph Kennedy, who had started his career by founding a non-profit corporation to provide low-cost heating fuel to the poor. Andrew's variant was a non-profit called Housing Enterprise for the Less Privileged (HELP), which provides transitional homes and services to the homeless. In 1988 he quit his law practice to work full-time as president of HELP, a post he manned until joining HUD as assistant secretary for community planning and development in 1993.

Paul Feiner, then a county legislator who was skeptical toward HELP, says Cuomo interrupted a telephone conversation one night in 1988 with an emergency breakthrough by an operator. Cuomo's call was a tongue-lashing for Feiner's position on HELP. "There was a tremendous amount of pressure," recalls Feiner.

At the time he told a reporter that Cuomo had threatened him, saying, "I'll ruin your career. I'll break every bone in your body," unless Feiner supported the project. Cuomo dismissed these allegations. "It's sad that [Feiner's] mind would work in such a way," he said. "I think it's even ethnically disparaging."

Now the Democratic supervisor of a Westchester town who holds a seat on HELP's advisory board, Feiner hardly seems out to get Cuomo. In fact, he calls HELP a "total success" and says that "perhaps without the pressure it would have been impossible to get the complex built.... But I would have preferred a little more compromising with the community. It was a bad taste of government where things were being rammed through."

THE OCEANMARK BOG

A constant theme in this convoluted legal history is the political well-being of Andrew Cuomo. The New York Group offered to settle this first suit in 1990, just an hour before the Fensters' legal team was set to take a deposition from Andrew. (Several months before, Cuomo had backed out of another scheduled deposition, submitting an affidavit that he was sick with nausea, diarrhea, and headaches. The next day the New York Post had run a picture of Cuomo, wearing black tie at a party the previous night, over the caption, "He's one sick puppy.")

The 1990 deal looked like a total victory for the Fensters. The New York investors agreed to put their stock in trust for five years and then give Oceanmark first dibs on buying it back.

Despite its clear interest in knowing about the agreement, Oceanmark only learned about it by chance in early 1991. For the next three years, the thrift tried without success to get a copy from the Office of Thrift Supervision (OTS), the new federal regulator set up after the savings-and-loan debacle. Finally, in 1994, the Fensters took Cuomo and his group to state court in Florida, charging them with "an illegal conspiracy to commit fraud" by failing to abide by the supervisory agreement.

The suit dragged on until 1996, when suddenly an armistice was reached. Oceanmark received a copy of the federal order, and the New York Group agreed to exchange their stock for a largely worthless class of non-voting shares. The bank withdrew its suit. But what astounded Lynn Fenster was the speed with which the settlement was approved. "It went through like a rocket," she says.

The Fensters were especially impressed when Cuomo assured them he could clear up a residual problem with the OTS office in Atlanta, which supervises Florida thrifts. "One of the things that Andrew said," recalls Ms. Fenster, "was, 'Don't worry about a thing. I know people in Atlanta and I can take care of this.'"

AN INDEPENDENT COUSEL ALL HIS OWN

Why did the settlement come so quickly? To the Fensters it seemed that members of the New York Group, even those no longer active in the case, had suddenly decided to smooth the path for Andrew's career. Indeed, just three weeks later Cuomo was nominated to replace Henry Cisneros as HUDsecretary. But the Fensters were less inclined to throw rose petals on his progress. The result was a nasty face-off that led to the Justice inquiry.

As part of the 1996 settlement, Cuomo asked for another public apology. This time the Fensters refused. Explains their lawyer William Friedlander, "If Oceanmark said publicly that their claim had no merit, then everything we had negotiated for--which was the right to bring it again, to dismiss it without prejudice--would have gone out the flue."

According to the Fensters, Cuomo took "no" very badly, threatened reprisal, and retaliated by pushing the OTS into an extended examination aimed at closing Oceanmark down. "Within a month after we refused to do what Andrew demanded," says Friedlander, "the OTS was back on this bank like white on rice.And they ate us for lunch."

The ombudsman considered the charge against Cuomo a political hot potato and passed it on to the Treasury Department's inspector general. The FBI launched its own investigation. In late July 1998, even as FBI agents were still conducting interviews, the ombudsman revisited the complaint and concluded that OTS personnel might have been "plain_spoken," but they "did not act in a retaliatory manner." He found "no information" showing Cuomo's influence.

In early September 1998, the Fensters filed yet another suit, charging Cuomo, Retsinas, and current OTS Deputy Director Richard Riccobono with a "conspiracy" to ruin Oceanmark. Cuomo, they said, had used his political power to pressure the others into harassing Oceanmark. But the real news was buried deep inside the lawsuit. The Fensters said they had been interviewed by the FBI, and that the bureau appeared to be conducting its own investigation of Cuomo and his associates.

A similar letter to TAS from Cuomo's private lawyers states, "We intend to protect his interests and will not tolerate any purported reporting, based on smear tactics, to enhance anyone's private business agenda or to increase circulation."

OTS recently withdrew its examiners from Oceanmark, and the Fensters' latest suit alleging an elaborate "Cuomo Conspiracy" seems strained at best. But there do appear to have been violations of the supervisory agreement, which federal regulators have failed to pursue--specifically the divestiture of the investors' stock. The case also puts a spotlight on some people who Cuomo perhaps wishes would remain in the dark.

THE NEW YORK GROUP

Heading up the New York Group was Sheldon Goldstein. Originally from Brooklyn, Goldstein moved to nearby Rockland County in the mid_fifties, where he set up shop as a real-estate developer and businessman. By the 1980's he was a millionaire several times over and had a long list of corporations to his name.

Goldstein was also a chief client of Cuomo--and Blutrich and Falcone--at their law firm. Other aspects of the cozy Goldstein-Cuomo relationship frequently cropped up in New York papers during the mid-1980's, including:

Arco is currently a "prime contractor" for HUD property management in Minnesota, D.C., Puerto Rico, the Virgin Islands, and every state east of the Mississippi River. Upon becoming HUD secretary, Cuomo recused himself from decisions directly involving Arco.

Goldstein, according to the New York Times, had extensive property interests in the area and, in 1986, attempted to purchase the 30-square-mile forest. Andrew Cuomo was his attorney in the deal.

When questioned about his ties to Goldstein, Cuomo has distanced himself. "I am one of 10, 15, 20 lawyers who represent him," he told the New York Times in December 1987. But the April memo from earlier that year suggests a closer relationship.

"I really don't know what you did on your taxes," Goldstein wrote Andrew. "I called and found out you filed for an extension. Please, please let's put it together or some day it will come back and bite us."

THE WITNESS FORMERLY KNOWN AS BLUTRICH

Another New York investor in Oceanmark was Michael Blutrich, a name partner in Cuomo's firm. In 1996 Blutrich was exposed as a target in one of the largest-ever FBI fraud probes, and in November 1998 was convicted on 22 counts of racketeering, fraud, and money_laundering. In that scam, Blutrich and others plotted with the then_chairman of the Orlando, Florida-based National Heritage Life Insurance Company to loot some $237 million from the company through inside loans and sham real-estate deals.

In 1990 the Blutrich group approached Heritage and offered to invest $4 million. There was just one problem: They only had a million. So the investors illegally "borrowed" the rest from an escrow account at Blutrich's firm. Soon after, a $3-million advance for "future commissions" was drawn from the insurance company by the Blutrich group and deposited into the firm's escrow account. The investors bought land near the Catskills in New York, then billed Heritage for millions more than they had paid.

In exchange for testifying and helping the FBI, Blutrich recently entered the federal Witness Protection Program--and a substantially discounted lifestyle. In court documents, one of Blutrich's former associates, Shalom Weiss, charges that during the heyday of the scam Blutrich dropped $50,000 per week "supporting a lavish lifestyle and expensive habits." The lavishness included a Porsche, a yacht, and a $12,000 wristwatch, all of which he gave up as part of his plea agreement.

BETTER LEFT UNSAID

His HUD lawyers wrote TAS that "The FBI, Department of Justice, and U.S. Senate (Republican controlled) have all stated that all nomination forms and procedures were correctly complied with by Mr. Cuomo." But there is no public record of any such statements. What's more, according to the Office of Government Ethics, only the Senate Banking committee would have evaluated Cuomo's questionnaire. Asked why Cuomo did not divulge that he was investigated by federal banking regulators, HUD lawyers reply with word games. "Mr. Cuomo was merely a witness in connection with an FHLBB examination of Oceanmark," they claim, and consequently not directly the subject of the inquiry.

Young Cuomo is considered one of the Democratic Party's fastest-rising stars. He has indicated he'd like to play a major role in Al Gore's New York campaign machine in 2000, and Washington rumor holds that he's a strong contender for the second spot on a Gore ticket. More recent speculation predicts a possible run for retiring Senator Daniel Patrick Moynihan's seat in 2000. The GOP opponent in that race could turn out to be none other than Alfonse D'Amato. If that's the case, you can bet the bank on one mud ball that neither candidate will be throwing.

Sam Dealey is TAS's assistant managing editor. James Ring Adams is an investigative writer for TAS.

Justice To Represent Cuomo in Suit

WASHINGTON (AP)  After investigating allegations surrounding Housing and Urban Development Secretary Andrew Cuomo's involvement with a South Florida bank, Attorney General Janet Reno had decided against seeking an independent counsel, according to court papers filed Tuesday.

The Justice Department, instead, has decided to represent the housing secretary and other officials named as defendants in a lawsuit brought by the bank, Oceanmark Bank, F.S.B. of North Miami Beach.

The lawsuit alleges that Cuomo, deputy director of the Office of Thrift Supervision, Richard Riccobono, OTS executive Nicolas Retsinas and others were involved in a conspiracy to take over the bank or ruin it financially.

``The Justice Department reviewed the matter, found the accusations to be without merit, and now is representing the secretary against the lawsuit. There is no stronger endorsement than that,'' said HUD spokesperson Karen Hinton.

The bank alleged that Cuomo and others were the subject of a criminal investigation and that a special prosecutor could be appointed to investigate the housing secretary. But the Justice Department said these claims were false, adding that there is no current investigation under way and that the attorney general had determined there were no grounds for appointing an independent counsel.

After reviewing the bank's complaints, the Justice Department decided to represent Cuomo, Retsinas and Riccobono ``in regard to allegations of constitutional violations and official wrongdoing,'' said department spokesman Bert Brandenbrug.

The Justice Department has not yet filed a response to the bank's civil suit.

5. MARCH 1999, GAO AFFIRMS HUD ON THE HIGH RISK LIST

From http://www.gao.gov

Major Management Challenges and Program Risks: Department of Housing and Urban Development (Other Written Prod., 01/01/99, GAO/OCG-99-8).

--------------------------- Indexing Terms -----------------------------

REPORT NUM: OCG-99-8

TITLE: Major Management Challenges and Program Risks: Department of Housing and Urban DevelopmentDATE: 01/01/99

SUBJECT: Accountability. Federal agency reorganization, Financial management, Risk management, Mortgage programs, Personnel management, Housing programs,Management information systems, Internal controls
IDENTIFIER: Performance and Accountability Series 1999HUD Grants Evaluation Management System

HUD 2020 Management Reform Plan

6. JUNE 15, 1999 GAO REPORTS THAT LOAN SALES WERE POSITIVE FOR COMMUNITIES

From http://www.gao.gov

On Impact on Homeowner's Equity: Homeownership: Information on Single-Family Loans Sold by HUD (Letter Report, 06/15/99, GAO/RCED-99-145).

7. JULY 19 1999 GAO REPORT CONFIRMS $2.2 BILLION OF SAVINGS ON LOAN SALES PROGRAM BEFORE CUOMO CANCELLED IN OCTOBER 1997

(Note: GAO reports in private that savings were significantly understated)

From http://www.gao.gov
On Savings to Taxpayers from Loan Sales: Housing Finance: Budget Savings From the Sale of HUD Loans (Letter

Report, 07/19/1999, GAO/RCED-99-203).

--------------------------- Indexing Terms -----------------------------

REPORT NUM: RCED-99-203

8. MARCH 17, 2000 DYNCORP PRESS RELEASE ANNOUNCING 10 YEAR CONTRACT BY HUD OIG TO DYNCORP (ALREADY IS SUBCONTRACTOR TO LOCKHEED MARTIN ON HUD SYSTEMS; PRIME CONTRACTOR ON DOJ ASSET FORFEITURE FUND AND MANAGER OF DOJ JUSTICE AUTOMATION NETWORK AS WELL AS OTHER DOJ LITIGATION SUPPORT AND CASE MANAGEMENT CONTRACTS)

From:

http://www.dyncorp.com
Search Results

Title: DynCorp Client: The Department of Housing and Urban Development (HUD)
Last Modified: 4/13/99 8:42:55 PM

to Lockheed Martin, DynCorp, I&ET, Inc. 

DynCorp does the following: Staffs the HUD Headquarters’ computer systems peration Monitors environmental and operations.

9. MARCH 22, 2000 GAFFNEY TESTIFYS RE MISSING $59 BILLION

http://www.conspiracyplanet.com/channel.cfm?channelid=46&contentid=75
by SUSAN GAFFNEY TESTIMONY SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION AND TECHNOLOGY

Committee on Government Reform 

Chairman Horn, Ranking Member Turner, and Members of the Subcommittee, I appreciate the opportunity to appear before you today to give you my perspectives on the status of financial management at the Department of Housing and Urban Development (HUD). I am accompanied by Kathryn Kuhl-Inclan, Assistant Inspector General for Audit; James Heist, Director of theFinancial Audits Division; and Benjamin Hsiao, Director of the Information Systems AuditDivision. As the subcommittee is aware, the Office of Inspector General (OIG) reported on March 1, 2000 on our efforts to audit HUD’s fiscal year 1999 consolidated financial statements and issued a disclaimer of opinion.

10. APRIL 3, 2000 GOVERNMENT EXECUTIVE MAGAZINE REPORTS THAT GOVERNMENT FAILS AUDIT; HUD DROPPED TO "F".

Source: Government Executive Magazine http://www.govexec.com/dailyfed/0400/040300k1.htm 

April 3, 2000 DAILY BRIEFING 

Government fails third annual financial audit By Katy Saldarini ksaldarini@govexec.com 

The government has failed the third annual audit of its financial statements, the General Accounting Office announced late last week. At a hearing before the House Government Reform Subcommittee on Government Management, Information and Technology on Friday, Comptroller General David Walker said that most agencies' financial systems aren't in good shape. 

So far in 1999, 13 of the 24 largest agencies have received a clean opinion on their financial statements. A clean opinion is a sign of financial health. Based on GAO's report, Subcommittee Chairman Stephen Horn, R-Calif., issued grades to each of the government's 24 largest agencies. As a whole, the government received a D+ for its fiscal 1999 audit. But only the Department of Housing and Urban Development's grade dropped compared to last year. HUD received an F, down from a D+ in 1998. 

At least nine agencies improved their grades from 1998, but seven agencies were still handed F's, while only two, NASA and the National Science Foundation, got A's. Walker applauded the Social Security Administration for its timeliness in completing its annual financial audit and congratulated the Energy Department for improving weaknesses in its financial statements. But the Defense Department was singled out as one of the worst examples of financial mismanagement in the federal government. Still, agencies that received clean opinions on their audits aren't off the hook. 

Clean opinions can be misleading, Walker said, because "they do not guarantee that agencies have the financial systems needed to dependably produce reliable financial information." The government's finances are still a tangled mess, with serious challenges remaining if they are to be straightened out in the future, Walker said. The federal government, he said, doesn't have accurate cost information, reliable data about loan programs, or reliable inventories that document its physical assets. "I hope during my 15-year tenure I'll be able to express an unqualified opinion on the financial statements of the U.S. government," said Walker. Government wide, a major challenge continues to be accounting for transactions between agencies, which often buy and sell services from each other. 

Assistant Treasury Secretary Donald Hammond said the Treasury Department is making progress on such transactions by disciplining agencies to routinely reconcile them. Joshua Gotbaum, executive associate director and controller at the Office of Management and Budget, noted that just 10 years ago almost no agencies produced financial statements, much less had them audited. I

n 1999, timeliness and quality of agency financial statements improved, Gotbaum said. "We expect much more in the coming years, for this is a process of years, not months." 

Rep. Horn's Financial Management Status Report Agency 1998 grade 1999 Grade NASA A A NSF A A GSA B- B- Labor B- B- SSA B- B- Energy C B- FEMA D+ D+ HUD D+ F NRC D+ D+ HHS D- D+ Treasury D- D- VA D- D+ AID F F Agri. F F Defense F F Justice F D- OPM F F Commerce F D+ Education F D- EPA F D- Interior F F SBA F D+ State F F Transportation F D+ Source: House Government Reform Subcommittee on Government Management, Information and Technology

11. MAY 3, 2000 HUD LOAN SALE QUI TAM LAWSUIT UNSEALED AFTER FOUR YEARS.

http://solari.com/gideon/documents/

 FOR IMMEDIATE RELEASE: May 3, 2000 HUD Loan Sale Qui Tam Lawsuit Unsealed After Almost Four Years.

 Last week, the Department of Justice declined to participate in a qui tam lawsuit filed by a private party who alleged that Hamilton Securities, HUD's lead financial advisor during 1994-1997 mortgage loan auctions, provided insider information to and rigged bids for Wall Street companies including Goldman Sachs, BlackRock Capital (PNC Bank Corp) and Ocwen Financial Corporation (formerly Berkeley Federal Bank & Trust). 

After DOJ notified the Court of the government's decision, United States District Court Judge Louis F. Oberdorfer unsealed the Complaint. Hamilton had filed a motion to unseal the entire file in May 1999, when the case was before recently retired Judge Stanley Sporkin. "When the government decides not to intervene in a qui tam case, that usually indicates that the government doubts that the private party presented a legitimate claim worth pursuing," explains Hamilton's attorney, Michael J. McManus. "Unfortunately, they took far too long to reach that conclusion and a great deal of damage to Hamilton occurred during that time. A proper investigation would have reached the same conclusion years ago." 

The False Claims Act allows 60 days for DOJ investigations into qui tam allegations made by private parties. This suit was filed in June of 1996. DOJ's decision not to intervene in this case comes after a 1,400-day investigation, or 1,340 days beyond the investigation period envisioned by Congress. Hamilton Securities consistently has maintained that the allegations in the qui tam complaint are not true and there is no evidence to support the false accusations. 

HUD security procedures and overlapping levels of review associated with the bidding process made the alleged bid rigging and insider trading impossible. The daily involvement in the loan sales of dozens of HUD employees, including representatives of the HUD Office of General Counsel and HUD's Inspector General's Office precluded this type of alleged fraud. This has been corroborated by HUD's own audits. The HUD Inspector General took the lead in the investigation of Hamilton, and her refusal to publish those exculpatory audits is the subject of a lawsuit brought by Hamilton to ensure that the true facts come to light. 

Every year, HUD issues approximately $70 billion of mortgage insurance that guarantees mortgages used to finance homes, apartment buildings, nursing homes, assisted living facilities and hospitals. HUD pays out approximately $6 billion on claims on defaulted mortgages every year and receives a like amount in defaulted mortgages, which the agency then must manage at great cost to taxpayers. Before the HUD loan sales, HUD was losing approximately 65 cents on the dollar on these defaulted mortgages. The loan sales improved HUD's recoveries significantly so that HUD lost only 10 to 30 cents on the dollar. Optimization bidding software and on line access to information permitted large and small investors access to a wealth of information on HUD and its portfolio and the opportunity to compete directly in the auctions. In October 1997, the Chairman of one oversight committee referred to the loan sales as generating "eye-popping" yields.

From 1994-97, these "eye-popping yields" saved HUD approximately $2.2 billion on HUD's $12 billion mortgage portfolio. It also permitted HUD to issue far more new mortgage insurance at a lower cost. HUD suspended the successful loan sales program due to the investigation. Prior to that suspension, the $2.2 billion in budgetary savings generated by the loan sales was money that could be used for other purposes useful to taxpayers such as deficit reduction or funding other HUD projects. The General Accounting Office confirmed the savings figures in July 1999. 

Under the False Claims Act, a private party who files suit on behalf of the government can receive 15-30% of any recovery if the government's claim is successful. Ervin and Associates, Inc., the private party who filed this qui tam lawsuit, was a servicing contractor to HUD, essentially responsible for debt collection and landlord contract oversight. As the loan sales reduced HUD's portfolio of defaulted mortgages, Ervin's opportunity to do work for HUD diminished. Pursuant to qui tam disclosure rules, Ervin disclosed that its sources for alleged bid-rigging evidence included: · Jeff Parker of the Cargill Group; · Terry R. Dewitt of J-Hawk (FirstCity Financial Corporation of Waco, Texas, a Cargill investment and joint venture partner); and · Michael Nathans of Penn Capital Corporation. 

As its source for alleged insider-trading evidence, Ervin referenced: · William Richbourg of the FHA Comptrollers Office. Since the loan sales commenced, in addition to this qui tam lawsuit, Ervin has sued HUD and several former HUD officials personally and - according to the General Accounting Office - filed 37 bid protests concerning HUD contracting actions. Hamilton currently is pressing forward with litigation to recover money owed to Hamilton by HUD for work completed pursuant to Hamilton's contract to provide services on the loan sales. "HUD is withholding about $2 million of funds owed to Hamilton for services performed for HUD. 

Hamilton understands that this withholding is at the request of the Justice Department and the party who they delegated the investigation to, the HUD Inspector General," says Catherine Austin Fitts, President of Hamilton Securities and former Assistant Secretary of Housing-Federal Housing Commissioner in the Bush Administration. Hamilton also is moving forward with the suit it filed against Ervin last year for his tortious actions. Hamilton's total losses to date - including losses to former employees and shareholders - are approximately $250 million. "As the lead investment banker on $10 billion of loan sales, we are pleased that we have been able to preserve the integrity of these transactions. We intend now to take whatever steps are necessary to ensure we do as good a job recovering our employees' and shareholders' value as we have done for the taxpayers. Step one is that the unsealing of the qui tam lawsuit should free HUD to meet its outstanding contractual obligations to Hamilton as quickly as possible", says Ms. Fitts. 

For more information on the loan sales investigation, see www.solari.com/gideon. All press inquiries should be directed to Hamilton's attorneys, Michael J. McManus or Kenneth E. Ryan at Drinker Biddle & Reath LLP (202/842-8830, mcmanumj@dbr.com; or 202/842-8807, ryanke@dbr.com).   

11. 5 MAY 10, 2000 HARVARD ENDOWMENT & CAPRICORN SELL LARGEST HUD MULTIFAMILY MORTGAGE BROKER.

Sale of WMF Group by Harvard and Capricorn On May 10, 2000, Prudential Mortgage Capital Company, LLC, a Delaware limited liability company, entered into a Stockholders Agreement (the "Stockholders Agreement") with each of Capricorn Investors II, L.P., Capricorn Holdings, Inc., Demeter Holdings Corporation, Phemus Corporation, Commonwealth Overseas Trading Company Limited, Mohammed A. Al-Tuwaijri, J. Roderick Heller, III, John D. Reilly and Shekar Narashimhan (collectively, the "Selling Stockholders"). Under the Stockholders Agreement, the Selling Stockholders are obligated to tender to Prudential Mortgage Capital Company, LLC their shares of The WMF Group, Ltd. ("WMF") representing in total approximately 65% of the outstanding shares of WMF on a fully diluted basis. 02: Prudential Mortgage Capital Acquisition Corp. is a wholly-owned subsidiary of Prudential Mortgage Company, LLC. Prudential Mortgage Capital Company, LLC is a wholly-owned subsidiary of The Prudential Insurance Company of America.  

12.  MAY 18, 2000 MISSING MONEY AT DEPARTMENT OF DEFENSE FROM SAM SMITH'S PROGRESSIVE REVIEW 

From: http://prorev.com/ Taxpayers for Common Sense http://www.taxpayer.net

The Pentagon’s accounting records are so convoluted that billions of dollars cannot be accounted for, charges a new government report. In fact, no major part of the Department of Defense has ever passed an audit, according to recent congressional testimony by the non-partisan US General Accounting Office, the investigative arm of Congress. Some of the GAO’s findings are astonishing: 

- About 58 percent of the material the Pentagon possesses ($37 billion worth) are items it does not need. 

-  Over the past three years, the Navy lost track of $3 billion in equipment and other items. 

-  At one distribution center for the Navy, there was a backlog of over 122,000 items that had not been properly processed, leading the Navy to purchase items it didn’t need. The GAO testimony follows a March report by the office of the Defense Department’s Inspector General that concluded that the Pentagon’s books were in such disarray that they couldn’t be audited. In fact, the Pentagon’s books are in such poor shape that the military’s money managers last year made almost $7 trillion in adjustments to their financial ledgers in an attempt in make them add up. The Inspector General also concluded the Pentagon could not show receipts for $2.3 trillion of those changes and half a trillion dollars of the adjustments were corrections of earlier mistakes. TAXPAYERS FOR COMMON SENSE http://www.taxpayer.net

13. JUNE 21, 2000 HOUSE VOTE ON HUD APPROPRIATIONS 

From http://thomas.loc.gov/

FINAL VOTE RESULTS FOR ROLL CALL 309 (Republicans in roman; Democrats in italic; Independents underlined) 

H R 4635 YEA-AND-NAY 21-JUN-2000 9:36 PM QUESTION: On Passage BILL TITLE: Departments of Veterans Affairs and Housing and Urban Development Appropriations for FY 2001 YEAS NAYS PRES NV REPUBLICAN 212 5   4 DEMOCRATIC 43 163   5 INDEPENDENT 1 1   TOTALS 256 169   9     --- YEAS 256 --- Abercrombie Gilman Oxley Aderholt Goode Packard Archer Goodlatte Pease Armey Goodling Peterson (PA) Bachus Goss Petri Baker Graham Pickering Ballenger Granger Pickett Barcia Green (WI) Pitts Barr Greenwood Pombo Barrett (NE) Gutknecht Porter Bartlett Hansen Portman Barton Hastings (FL) Price (NC) Bass Hastings (WA) Pryce (OH) Bateman Hayes Quinn Bereuter Hayworth Radanovich Berry Hefley Rahall Biggert Herger Ramstad Bilbray Hill (IN) Regula Bilirakis Hill (MT) Reynolds Bliley Hilleary Riley Blunt Hobson Rogan Boehlert Hoekstra Rogers Boehner Holden Rohrabacher Bonilla Horn Ros-Lehtinen Bono Hostettler Roukema Boswell Houghton Royce Boucher Hulshof Ryan (WI) Boyd Hunter Ryun (KS) Brady (TX) Hutchinson Salmon Bryant Hyde Saxton Burr Inslee Scarborough Burton Isakson Schaffer Buyer Istook Sensenbrenner Callahan Jenkins Sessions Calvert John Shadegg Camp Johnson (CT) Shaw Canady Johnson, Sam Shays Cannon Jones (NC) Sherwood Castle Kanjorski Shimkus Chabot Kaptur Shows Chambliss Kasich Shuster Chenoweth-Hage Kelly Simpson Coble King (NY) Si sisky Coburn Kingston Skeen Collins Knollenberg Skelton Combest Kolbe Smith (MI) Cooksey LaHood Smith (NJ) Cox Largent Smith (TX) Cramer Latham Souder Crane LaTourette Spence Cubin Leach Stearns Cunningham Lewis (CA) Stump Danner Lewis (KY) Sununu Davis (FL) Linder Sweeney Davis (VA) Lipinski Talent Deal LoBiondo Tancredo DeMint Lucas (KY) Tauzin Diaz-Balart Lucas (OK) Taylor (MS) Dickey Maloney (CT) Taylor (NC) Dicks Manzullo Terry Dooley Martinez Thomas Doolittle Mascara Thornberry Doyle McCollum Thune Dreier McCrery Thurman Duncan McHugh Tiahrt Dunn McInnis Toomey Ehlers McIntosh Traficant Ehrlich McKeon Turner Emerson Meek (FL) Upton English Metcalf Vitter Evans Mica Walden Everett Miller (FL) Walsh Ewing Miller, Gary Wamp Fletcher Mink Watkins Foley Mollohan Watts (OK) Forbes Moore Weldon (PA) Fossella Moran (KS) Weller Fowler Moran (VA) Whitfield Franks (NJ) Murtha Wicker Frelinghuysen Myrick Wilson Gallegly Nethercutt Wise Ganske Ney Wolf Gekas Northup Young (AK) Gibbons Norwood Young (FL) Gilchrest Nussle Gillmor Ose   --- NAYS 169 --- Ackerman Green (TX) Olver Allen Gutierrez Ortiz Andrews Hall (OH) Owens Baca Hall (TX) Pallone Baird Hilliard Pascrell Baldacci Hinchey Pastor Baldwin Hinojosa Paul Barrett (WI) Hoeffel Payne Becerra Holt Pelosi Bentsen Hooley Peterson (MN) Berkley Hoyer Phelps Berman Jackson (IL) Pomeroy Bishop Jackson-Lee (TX) Reyes Blagojevich Jefferson Rivers Blumenauer Johnson, E. B. Rodriguez Bonior Jones (OH) Roemer Borski Kennedy Rothman Brady (PA) Kildee Rush Brown (FL) Kilpatrick Sabo Brown (OH) Kind (WI) Sanchez Capps Kleczka Sanders Capuano Klink Sandlin Cardin Kucinich Sanford Carson LaFalce Sawyer Clay Lampson Schakowsky Clayton Lantos Scott Clement Larson Sherman Clyburn Lazio Slaughter Condit Lee Smith (WA) Conyers Levin Snyder Costello Lewis (GA) Spratt Coyne Lofgren Stabenow Crowley Lowey Stark Cummings Luther Stenholm Davis (IL) Maloney (NY) Strickland DeFazio Markey Stupak DeGette Matsui Tanner Delahunt McCarthy (MO) Tauscher DeLauro McCarthy (NY) Thompson (CA) Deutsch McDermott Thompson (MS) Dingell McGovern Tierney Dixon McIntyre Towns Doggett McKinney Udall (CO) Edwards McNulty Udall (NM) Engel Meehan Velazquez Eshoo Meeks (NY) Visclosky Etheridge Menendez Waters Farr Millender-McDonald Watt (NC) Fattah Miller, George Waxman Filner Minge Weiner Ford Moakley Weldon (FL) Frank (MA) Morella Wexler Frost Nadler Weygand Gejdenson Napolitano Woolsey Gephardt Neal Wu Gonzalez Oberstar Gordon Obey   --- NOT VOTING 9 --- Campbell Kuykendall Serrano Cook Rangel Vento DeLay Roybal-Allard Wynn

14. JUNE 22, 2000 FITTS FAMILY AND SOLARI EMPLOYEES SEND LETTERS TO CONGRESS RE HUD'S REFUSAL TO PAY OUTSTANDING DEBTS TO HAMILTON (TRIGGERING HUD ANNOUNCEMENT TO START LOAN SALES AND ASSUME CREDIT FOR $2.2 BILLION SAVINGS) 

Catherine Austin Fitts PO Box 157 Hickory Valley, Tennessee 38042 catherine@solari.com 

June 22, 2000 

Representative Ed Bryant 5909 Shelby Oaks Drive Suite 213 Memphis, TN 38134 

Dear Representative Bryant: 

I am seeking your support for efforts to get the Department of Housing and Urban Development (HUD) to pay $2.1 million (plus interest) to the Hamilton Securities Group (Hamilton), in connection with HUD's program to sell its growing inventory of defaulted mortgages in open competitive auctions to private bidders. My personal interest in the matter is that I am Hamilton's founder and am responsible for closing down the company and ensuring that outstanding bills are collected and monies owed are paid. Hamilton, which is no longer in operation, was an employee-owned business. 

Between 1994 and 1997 Hamilton had a contract with HUD to serve as its lead financial advisor. Briefly, the events surrounding HUD's failure to pay (see greater detail in the attached summary) are these: as the defaulted loans were sold, three things occurred: · First, HUD saved $2.2 billion between 1994 and 1997 as a result of the program Hamilton designed and for which Hamilton served as financial advisor(see summary of attached GAO report); · Second, homeowners in communities benefited as fewer homeowners were displaced (see summary of attached GAO report) and the size of HUD's foreclosed and troubled property inventories decreased; and · Third, as large HUD inventories require large contracts to service defaulted loans and troubled and foreclosed properties, traditional HUD contractors, along with defaulted borrowers, experienced diminished earnings. 

One servicing contractor, Ervin and Associates, filed a Federal False Claims Act case in June, 1996, alleging improper bidding procedures by Hamilton and two of the successful bidders, Goldman Sachs & Company and PNC (Blackrock). The Department of Justice (DOJ's) investigation, which the statute dictates should take place within 60 days, took nearly four years. 

Starting in October 1997, HUD withheld $2.1 million due Hamilton for services rendered and invoiced for work done since 1994, forcing Hamilton to cease operations. It wasn't until April of this year that DOJ, having concluded its investigation, determined that there was no basis for criminal indictment or civil charges. Nevertheless, HUD has yet to pay Hamilton any of the $2.1 million due. I have exhausted not only Hamilton's assets but my personal assets to pay the bills owed by Hamilton when HUD withheld $2.1 million, and legal and administrative costs which arose from the Federal False Claims Act case and DOJ's resulting investigation. 

I hope to pay as much of the remaining obligations as possible. It is only just that HUD pay its outstanding bills to Hamilton. Many former employees and small businesses and consultants are owed money. We did the work that HUD accepted, the profits of which funded HUD programs, and we very much need to be paid what HUD agreed to pay before we did the work. I believe that HUD is not unopposed to paying the $2.1 million owed Hamilton if we are able to demonstrate Congressional support. Therefore, I hope you will support my efforts to have HUD pay its outstanding bills to Hamilton. 

I would like the opportunity to meet with you to outline the merits of our request. Thank you for your consideration to this matter. 

Very Truly Yours,   Catherine Austin Fitts 

cc: Representative, Ed Bryant, 408 Cannon HOB Washington, DC 20515-4207   Attachments: Summary of Events Summary, 3 GAO Reports Summary, Hammer Award Database FBI Letter     Summary of Events   

 Background. Catherine Austin Fitts served from as Assistant Secretary ofHUD and Commissioner of the Federal Housing Administration during the Bush Administration from 1989-1990. After leaving the Administration, in 1991 she founded Hamilton, a small employee-owned company. o Loan Sales: When HUD issued a contract to sell its growing inventory of defaulted loans and foreclosed properties to private bidders, Austin Fitts, who between 1982 and 1989 had been a Managing Director of Dillon, Read and lead banker in its public finance department, competed for and won the contract to serve as financial advisor.   

Greater Proceeds: Hamilton, by using sophisticated computer technology to maximize information available to bidders and ensure greater participation of all bidders, including smaller bidders, was able to generate proceeds far in excess of what would otherwise have been the case. o Greater Recovery Rates: The loan sales themselves improved recovery rates from $.35 to $.70-$.90 on defaulted mortgages. This generated $2.2 billion savings, savings that could then be reallocated to expand housing programs and to reduce the federal deficit. (See summary of attached GAO report.) 

Greater Homeowners' Equity: Subsequent audits by GAO and HUD show that faster resolutions meant more properties remained in the hands of homeowners (See summary of attached GAO report.) and fewer homes and buildings were abandoned, boarded up or in disrepair, diminishing the surrounding homeowners' safety, quality of life, and equity.   

 Federal False Claims Act Case: Hamilton's success did not go unnoticed. Since 1989 a company called "Ervin and Associates" received an estimated $ 7.0 million each year in HUD contracts to service HUD defaulted mortgages and manage foreclosed properties. Ervin's business opportunities diminished rapidly in the wake of HUD's loan sale program. In June, 1996, Ervin filed a Federal False Claims Act case against Hamilton, and two successful bidders, Goldman, Sachs & Company and PNC (BlackRock), charging them with improper bidding procedures and insider trading. The case if successful would yield bounty to Ervin of from 15-30% of the recovery. In October 1997, HUD withheld $2.1 million due Hamilton for services rendered and invoiced to HUD, forcing Hamilton to cease operations; terminated its contract; and cancelled the loan sales. HUD cancelled the loan sales shortly thereafter, although design books prepared by Hamilton and owned by HUD and additional financial advisors on contract made it easy for HUD to continue operationally without Hamilton.   oThe Investigation: DOJ and HUD took four years to complete an investigation the statute dictates should take 60 days, and which generally take one year. In May 1999, DOJ indicated that the criminal investigation was over, In August 1999, the FBI, to which the DOJ had referred the criminal part of the investigation, documented that they found "no concerns, suspicions, or evidence of collusion involving the sales. Even losing bidders did not attribute their lack of success to collusion, or other bidders having inside information." (See attached FBI letter.) In April 2000, DOJ closed its investigation on the civil claims and notified the Court it declined to participate in the case.   

Conclusion: A statute designed to save the government money was used by a company benefiting from the status quo to close an innovative small business which had already saved taxpayers and homeowners substantial sums and would, but for the case, have saved taxpayers and homeowners substantially more.   o HUD still won't pay its debt to Hamilton: As the founder and person who stayed on to close the company, Austin Fitts used her personal funds to liquidate Hamilton's assets to pay employees and creditors; acquire legal representation in connection with the Federal False Claims Act case and DOJ's four-year investigation; and to seek recovery of the $2.1 million due Hamilton. Her personal resources are now exhausted. Even though the investigation has concluded, HUD has still not paid its debt. Instead HUD takes the position that Austin Fitts should prosecute her claim for $2.1 million in the U.S. Court of Claims, which could take years. Litigation against HUD, with resources as limitless as hers are now limited, is as illusory a remedy as a determination, three years and ten months too late, that Federal False Claims Act case was without basis. oRequest for your Support: Austin's family is both Democrats and Republicans with a long-standing tradition as private citizens of active involvement with federal, state, and local government. Her late grandfather, as dean of the Wharton School, conducted research which paved the way for the first unemployment offices in Pennsylvania. Her late father, as chief of surgery at Penn Medical School, used the specialty he acquired serving in the China-Burma-India Theatre in World War II, to regionalize the treatment of trauma throughout the country. One of her uncles, a retired business school professor, counsels in New Hampshire's schools and prisons on alternatives to war. Her brother, as dean of Penn Law School, consults to citizens groups which monitor the integrity of the electoral process. Her late grandfather and step-grandfather, medical partners, worked with the U.S. Senator, our great uncle, to bring penicillin to Tennessee. Her late aunt served on the local school board in New Hampshire. Another uncle, an academic surgeon, built the first organ bank in South Carolina. Her stepmother works to ensure that women are appropriately represented on Tennessee's juries. One of her uncles, trained also as an engineer and lawyer, serves Tennessee directly as chief architect, to ensure that it's public buildings are safe, functional, and attractive. Her sister serves as vice president of the Massachusetts Lawyers' Alliance for World Security, which works to advance the rule of law as an alternative to war. Her cousin in Hickory Valley, Tennessee serves on our city council and supports her husband in helping the local farm bureau and co-op and promoting conservation efforts. The events described here, and their effect on a small business and personal assets within the family, have shaken our family's confidence in government and the judicial system. HUD's immediate payment of what it owes Hamilton would help to restore our confidence. 

Summary of GAO Reports   On Savings to Taxpayers from Loan Sales: Housing Finance: Budget Savings From the Sale of HUD Loans (Letter Report, 07/19/1999, GAO/RCED-99-203). Defaults on mortgages insured by the Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA) increased during the 1980s, primarily because of weak real estate markets. By the early 1990s, HUD owned nearly 110,000 single-family and 2,400 multifamily loans that it had insured. In a series of six sales held between 1994 and 1997, HUD sold 98,640 single-family loans and 1,093 multifamily loans. The sales generated more than $2.2 billion in budgetary savings. This report discusses the reasonableness of (1) HUD's estimates of budgetary savings from the sale of its single-family loans and (2) the model HUD used to estimate savings from the sale of multifamily loans. GAO concludes that HUD's estimates of budgetary savings from the sale of the single-family loans it reviewed were reasonable. 

--------------------------- Indexing Terms ----------------------------- 
REPORT NUM: RCED-99-145 TITLE: Homeownership: Information on Single-Family Loans Sold by HUD DATE: 06/15/99 SUBJECT: Mortgage programs Mortgage loans Foreclosures Reductions in force Human resources utilization Loan defaults Loan repayments Internal controls Financial management IDENTIFIER: HUD Single Family Mortgage Assignment Program     On Management Problems from Growing Inventories Since Loan Sales Cancellation and Drop in Recovery Rates: Single-Family Housing: Stronger Measures Needed to Encourage Better Performance by Management and Marketing Contractors 

(Testimony, 05/16/2000, GAO/T-RCED-00-180). Pursuant to a congressional request, GAO discussed the Department of Housing and Urban Development's (HUD)-single family housing, focusing on the implementation of its management and marketing contracts. GAO noted that: (1) HUD has experienced widespread problems with the management and marketing contracts since they started in April 1999; (2) property maintenance and security, which was a problem under HUD's previous property disposition approach, remains a significant problem; (3) although monitoring improvements have aided HUD's ability to detect such problems, these improvements have not had a sufficient impact in remedying them; (4) in addition, older properties have accumulated in inventory as the contractors have focused their sales efforts on the newly acquired, more saleable properties; and (5) also, while HUD encourages contractors to sell properties quickly, it does not provide incentives for the contractors to focus on properties that have been in inventory for a long period of time. --------------------------- Indexing Terms ----------------------------- 
REPORTNUM: T-RCED-00-180 TITLE: Single-Family Housing: Stronger Measures Needed to Encourage Better Performance by Management and Marketing Contractors DATE: 05/16/2000 SUBJECT: Housing programs Contract administration Marketing Federal property management Internal controls Mortgage programs Property disposal IDENTIFIER: HUD Good Neighbor       
Summary of Hammer Award on HUD Loan Sales     Title: Mortgage Sales Team Hammer Awards AGENCY INFORMATION Agency Name: HUD\FHA Subagency(ies): FHA Location: District of Columbia\Washington Nominating Entity: HUD REINVENTION TEAM Team Name: Mortgage Sales Team Team Contact Person: Audrey Hinton & Joe McCloskey Phone/Fax/Email: (202) 708-3730 & (202) 708-1672 Address: 451 7th Street, S.W. City: Washington State: District of Columbia Zip Code: 20410 Program Area: Back to Basic/Streamlining Brief Description: HUD launched an aggressive program to sell defaulted single family and multifamily HUD-owned mortgages. By 1994, HUD owned almost 2,700 multifamily mortgages valued at more than $7 Million. HUD's single family holdings included 92,000 mortgages valued at about $4 Billion. The work required by these holdings adversely affected HUD staff's ability to perform its principle function of servicing and managing the insured mortgage inventory. Now, with fewer HUD owned mortgages, resources are available to ensure homeowners and residents receive good customer service. Agency Contact: Rick Greenfield 202-708-2733 NPR Contact: Jerry Nikolaus 202-632-0391   PRESENTATION Date of Award: 12/11/96 Location: Washington, D.C. Award Presenter: Secretary Cisneros     

FHA COMMISSIONER ANNOUNCES RECORD RETURN ON SALE OF SINGLE FAMILY LOANS WASHINGTON – Housing and Urban Development Assistant Secretary for Housing/Federal Housing Commissioner William Apgar today announced the record-setting results of the Federal Housing Administration's (FHA) highly successful sale of single family loans to the private sector. On September 22, 2000, FHA auctioned 8,053 single family loans (SFLS 2000-1), with an unpaid principal balance totaling $480,868,067. The sale generated gross proceeds in excess of $467 million, or 97.2% percent of the unpaid principal balance of the mortgage loans. Market participation was very strong as evidenced by the fact that the return is the highest generated to date in the agency's mortgage auctions. Salmon Brothers Realty Corporation was the sole winning bidder of the portfolio. Bidders were permitted to submit bids on individual blocks of mortgages as well as combinations of mortgage blocks. FHA determined the bid or bid combinations that provided the maximum return to the taxpayers. "We couldn't be more pleased with this sale," said Apgar. "FHA's mortgage sales have produced over $2.25 billion dollars in budget profits since 1994. These funds continue our housing and neighborhood initiatives and help reduce the deficit. The sales also reduce the burden on HUD administrative personnel, allowing them to concentrate on expanding homeownership and protecting the health of our $400 billion mortgage insurance portfolio." FHA, which is part of HUD, has a wide variety of insurance programs for single family, multifamily and health care facility mortgages. Last year, it insured a record 1.3 million mortgages worth $125 billion. FHA now insures a total of about 6.7 million mortgages for homes located across the country. Through the years, it has unlocked the door to homeownership for 30 million American families, many of them minorities and low or moderate income people. The success of this sale is attributed to the team efforts of the FHA's newly established Asset Sales Office, which is staffed by Karen L. Williams and Mary Joyce Smith. Both are on detail from the Federal Deposit Insurance Corporation's Franchise and Asset Marketing Department with extensive experience in asset sales. Ms. Williams is in charge of the sales office. Ms. Smith was responsible for the coordination of the public and private sector teams involved in the sale. Three private sector firms assisted HUD in this sales effort. Myerberg & Company, L.P., a New York based investment banking firm, was the Transaction Specialist responsible for the marketing and sale of the portfolio. Gardiner, Kamya & Associates, P.C., a management consulting and certified public accounting firm located in Washington, D.C. provided Due Diligence service. Federal Asset Advisory Company, LLC., Program Financial Advisor, a joint venture real estate investment banking firm with offices in New York and New Jersey provided program oversight. The Multifamily & Healthcare Loan Sale is scheduled for November. For additional information see the HUD Asset Sales Website at: www.hud.gov/fha/comp/asset/hsgloan.html   

15. JUNE 29, 2000 ASSOCIATED PRESS REPORTS ON RECENT SENATE GOVERNMENT REFORM HEARINGS RE GROWING DEFAULTED PORTFOLIO (NO LOAN SALES) 

(Note: Various local papers in Memphis, Boston, run articles on HUD foreclosure issues triggering foreclosure moratorium in selected areas by HUD; no mention is made of missing $59 billion or HUD's inability to get financials certified)   

To view the entire article, go to http://www.washingtonpost.com/wp-dyn/articles/A30181-2000Jun30.html

U.S. Conducting 240 Probes of Possible Mortgage Fraud About 240 criminal investigations into possible mortgage fraud are underway in 38 states, including Maryland, and the District of Columbia, federal officials said yesterday at a Senate hearing.

The officials from the inspector general's office of the Department of Housing and Urban Development testified at a two-day session on whether the federal government is facilitating a fraudulent practice known as property flipping. The inspector general's office joined critics who contend that HUD and the Federal Housing Administration fail to properly monitor lenders and appraisers on federally backed loans.

Home buyers nationally are complaining about fraud and abuse in mortgage practices, generally referred to as predatory lending.

Flipping occurs when dilapidated properties, often in distressed neighborhoods, are bought and quickly resold, with only cosmetic repairs and wildly inflated prices. Usually the buyers are unsophisticated first-timers who cannot afford repairs and also make the mortgage payments. The homes often go to foreclosure. 

The HUD inspector general's office has been working with federal prosecutors in six regions of the country since 1999 to detect mortgage fraud by lenders and appraisers. Yesterday, federal prosecutors said they are investigating the inspector general's findings of fraud in the Washington area.

Channing Phillips, a spokesman for the U.S. attorney's office for the District, said he could not comment on the size or scope of the investigation.

The inspector general's office also would not comment.<P> At the Senate hearing yesterday, Philip Kesaris, the assistant inspector general for investigation, called the flipping schemes "the fraud du jour."

According to HUD Inspector General Susan Gaffney, "Massive property-flipping schemes involving FHA-insured mortgages continue to be uncovered" in locations such as New York, Baltimore, Chicago and Los Angeles. 

Gaffney said one investigation involves 1,200 FHA-insured loans totaling more than $160 million. About 25 percent of the loans have already resulted in defaults. Gaffney said "about 100 individuals employed in various segments of the real estate and lending industry requested and paid for" fraudulent documents in the loans.

Sen. Susan Collins (R-Maine), chairman of the Governmental Affairs investigative panel that held the hearings, argued that the FHA and HUD encourage flipping by failing to properly oversee loans and to bar "bad actor" lenders and appraisers.<P> The FHA's role is crucial in cases of flipping, according to these critics, because it insures the loan, gives what appears to be a government stamp of approval to buyers and ends up paying the lender back if the property is foreclosed. The FHA last year insured 1.3 million loans with an all-time record value of $125 billion.

Collins repeatedly disputed Federal Housing Commissioner William Apgar's contention that flipping involving FHA loans is "isolated." 

Collins said her staff's nine-month investigation found "the federal government essentially has subsidized much of this fraud."

HUD Inspector General Gaffney also called on HUD to tighten controls. Gaffney said HUD has halved its housing staff, "overly relied on contractors" to monitor loans and appraisals and missed "obvious fraud indicators."

Collins also released a General Accounting Office report that said HUD needs to "significantly improve" its process for approving lenders.

Apgar claims the monitoring staff has increased "seven-fold" and says most flipping is occurring in the sub-prime market, in which high-interest-rate loans are made to people with poor credit. Federal insurance is not involved.

Yesterday Apgar said flipping was "isolated to what we call hot zones," such as New York, Chicago and Baltimore, "where there is a significant ring of fraud." 

The FHA, HUD and the Treasury Department have pledged for years to fight predatory lending, and recently outlined another series of regulatory steps and legislative proposals. HUD announced initiatives on flipping--including requiring lenders to restructure inflated mortgages--the day before Collins's hearings.     

Senators Denounce Mortgage Abuses 
By Marcy Gordon AP Business Writer Thursday, June 29, 2000; 1:07 p.m. EDT

 WASHINGTON –– Senators of both parties complained Thursday that the government had failed to adequately monitor lenders in the federally-insured mortgage business, and that the unchecked abuses left some homebuyers with crumbling houses and unaffordable payments. At a hearing Thursday, several senators denounced the practice of property flipping – buying homes, often in distressed urban neighborhoods, making cosmetic repairs and quickly selling them at sharply higher prices. The Department of Housing and Urban Development has contributed to the problem with lax oversight of lenders, they said. 

HUD officials, for their part, maintain that instances are isolated of property flipping involving government-backed mortgages. Sen. Barbara Mikulski, D-Md., said HUD Secretary Andrew Cuomo "responded immediately" after she complained to him that the agency had become "an accomplice to the flippers" in Baltimore because of insufficient oversight. "This hearing is about government letting people down," Sen. Richard Durbin, D-Ill., said after the Senate Governmental Affairs investigative subcommittee heard testimony from three homebuyers who were duped by unscrupulous lenders, real estate agents and lawyers. HUD has been "failing to keep an eye on these lenders," Durbin said. Sen. Susan Collins, R-Maine, who heads the panel, said property flipping "increasingly plagues our nation's cities and victimizes first-time homebuyers." She said HUD "has been slow to act to curtail this fraud. ... Surely, HUD has a duty to protect the unsophisticated homebuyers who are the targets of these fraudulent sales and lending practices." Subcommittee investigators found frequent instances of fraud, such as inflated property appraisals and falsified documents attesting that homes have been renovated, in their nine-month inquiry into property flipping. 

While flipping is legal in and of itself, fraudulent practices often are used to lure buyers into investing more money in houses than they are worth. Unsuspecting buyers can be left with dilapidated houses with only minor cosmetic repairs made to jack up prices, as well as high mortgage payments, tarnished credit records and possibly foreclosure. The investigation turned up problems in Baltimore, Chicago, Los Angeles, New York City and South Florida. Collins and Durbin cited a new report by the General Accounting Office, Congress' investigative arm, that found HUD has not done enough to hold banks and other mortgage lenders accountable for poor performance and violations. But William Apgar, HUD Assistant Secretary for Housing, maintains that instances of flipping involving government-insured mortgages are "isolated." "We see isolated examples of fraud and we take strong action against it," he said Wednesday in an interview. "One flipped loan is too many." By contrast, Apgar said, most flipping is occurring in the growing high-rate mortgage market for people with poor credit, which does not involve federal insurance. He also rejected the GAO report's criticism of monitoring by his agency, saying it didn't fairly evaluate HUD's oversight programs. HUD has banned 52 lenders from doing government-insured mortgage business in recent years and has established a program to review home appraisers, he noted. HUD's Federal Housing Administration insures billions of dollars in home mortgage loans made by private lenders for low- and moderate-income people. Many of the loans involved in flipping are insured by the FHA, according to Collins. 

The General Accounting Office report concluded that HUD needs to "significantly improve" its process for approving lenders seeking to make FHA-insured loans. "HUD has not taken sufficient steps to hold lenders accountable for poor performance and (FHA) program violations," said the report, which was requested by Collins and Rep. Rick Lazio, R-N.Y., chairman of the House Banking subcommittee on housing. © Copyright 2000 The Associated Press

16. SEPTEMBER 2, 2000 "BUSHWHACKED" IS LEAD STORY ON MEDIA BY PASS AND CONSPIRACY DIGEST WEBSITES, PICKED UP BY NETSCAPE, SIGHTINGS AND DAVID ICKES MAGAZINE.
http://www.conspiracydigest.com

Click. BUSHWACKED: HUD Fraud, Spooks and the Slumlords of Harvard by Uri Dowbenko © 2000.

17. SEPTEMBER 2, 2000 FBI INVESTIGATING HUD OIG IN BOSTON, FORT WORTH AND DC, STAFF SUSPENDED ASSOCIATED PRESS.

Workers in HUD Watchdog Office Suspended for Misuse of Computer 
By John Solomon Associated Press Writer  Sep 2, 2000 - 12:52 AM 

WASHINGTON (AP) - Several employees at the agency that checks for fraud and abuse in federal housing programs have been suspended in an investigation into the use of government computers to obtain sexually explicit materials, officials said. The investigation into the Department of Housing and Urban Development inspector general's office caught Secretary Andrew Cuomo off guard because the watchdog agency didn't inform the department. "We heard about the allegation. We had not been previously informed," HUD Deputy Secretary Saul Ramirez said Friday. "We're obviously very concerned because such use of government computers is clearly a violation of the department's policy." "We have asked for a response from the IG and she has repeatedly failed to provide that response," Ramirez said in a statement. 

In a letter to Ramirez on Friday, Inspector General Susan Gaffney blamed a canceled meeting for the delay and said, "I now look forward to discussing the issue at our rescheduled meeting" next week. A HUD official familiar with the investigation, speaking only on condition of anonymity, said senior auditing employees at the inspector general offices in Washington, Fort Worth, Texas, and Boston have been suspended in connection with the probe. The official did not know exactly how many employees have been suspended. "The investigation involves the improper use of government computers to download sexually explicit materials and, in some cases, the distribution of the materials via HUD e-mail," the official said. A spokesman for Gaffney declined comment. 

All Cabinet departments and other major federal agencies have an independent watchdog office of inspector general, responsible for guarding against waste, fraud and abuse. The official said the allegations of the misuse of computers by HUD inspector general employees was overseen by the President's Council on Integrity and Efficiency, which monitors the conduct of the inspector generals. The council used FBI agents and investigators from the Labor Department's IG office to conduct the investigation, according to officials