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Henson Ridge gets FBI, HUD scrutiny

U.S. attorney involved in fraud investigation

of federally funded projects in the District

(Published June 30, 2003)

By JOHN DeVAULT

Staff Writer

A joint federal-local task force is investigating possible criminal fraud in a multimillion-dollar, federally funded city housing program.

The investigation, confirmed last week by a spokesman for U.S. Attorney Roscoe Howard, is focused on the District’s portion of a national program called HOPE VI, being used in Washington to replace large public housing complexes with mixed-income developments that combine government-subsidized and market-rate housing. The investigation also is examining development activity at some non-HOPE VI sites in the Washington area funded with federal block grant monies, said S. Channing Phillips, a spokesman in the Office of the U.S. Attorney for the District of Columbia.

The inquiry is being conducted by investigators from the Federal Bureau of Investigation, the U.S. attorney’s office, the federal Department of Housing and Urban Development’s inspector general’s office and the D.C. inspector general’s office, Phillips said. He declined to provide further details of the task force’s investigation.

The joint investigation centers on the process in the District’s HOPE VI program under which the D.C. Housing Authority partners with private developers to design and build the new developments and also contracts with nonprofit and for-profit companies to provide federally mandated job-placement and renter/homeowner counseling services. Services provided under the HOPE VI program are intended to ensure that as many displaced public housing residents as possible are financially able to return to the new developments, while also bettering their lives.

The District is a national leader in winning HOPE VI grants, with five projects at various stages of completion located across Southeast Washington. The projects have a total estimated capitalization of at least $740 million, with some of it coming from local tax dollars.

Locally, the program is run by the D.C. Housing Authority, with additional funding and administration by the D.C. Housing Finance Agency and the Department of Housing and Community Development. The HOPE VI program is administered nationally by HUD.

Recent indications are that at least part of the investigation is centering on the troubled Henson Ridge HOPE VI project, a $100 million, 600-unit development now under construction at Alabama Avenue and Stanton Road SE. The site formerly housed tenants of the Frederick Douglass Dwellings and Stanton Dwellings projects.

The Henson Ridge project has been the site of recent protests by former public housing residents and by the D.C. chapter of the National Association of Minority Contractors. In addition, two recent house fires at the construction site were determined by D.C. Fire Department investigators to be arson.

In recent months, HUD inspector general’s office investigators have questioned officials of a nonprofit group formerly employed on Henson Ridge work and interviewed residents who testified at a recent D.C. City Council hearing on problems at Henson Ridge.

Last month, HUD IG investigators made a surprise visit to the offices of the resident-run nonprofit group called Just U Wait N See. The visit occurred just after the dissolution of ties between the group and the housing authority in a dispute over who was responsible for a failure to provide mandated job and renter/homeowner services at Henson Ridge.

The investigators arrived as housing authority officials were removing computers, file cabinets and other office equipment from the Just U Wait N See offices.

HOPE VI project manager Lawrence Dwyer assured the investigators that the authority was only removing items belonging to the housing authority, since the authority had been providing office space and equipment to Just U Wait N See.

But after a subsequent inquiry by the HUD IG’s office, the housing authority acknowledged that it had taken some Just U Wait N See financial records and turned them over to the HUD IG, a housing authority spokeswoman said. She said the removal of the records was inadvertent.

Just U Wait N See board co-chairman Brenda Graham said last week that her group distributed HOPE VI funds to three for-profit companies that the housing authority recently fired for alleged failure to effectively deliver services to former residents of the site.

She said the HUD IG investigators asked her for access to Just U Wait N See’s bank records, which she said was granted.

Graham also said the investigators indicated the scope of their inquiry was "the whole HOPE VI project" at Henson Ridge.

"They asked if I suspected mismanagement of HOPE VI money, and I said I did, because we’re not seeing any of it trickling down to the community level," she said.

She said the investigators queried her about her group’s disagreement with the housing authority and about the projects’ developer, Mid-City Urban LLC.

A spokeswoman for Mid-City Urban told The Common Denominator that the Maryland-based company is fully cooperating with "federal oversight" of the project and "we’ll continue to do so."

HUD investigators also sat in on a recent contentious public hearing on Henson Ridge chaired by D.C. Councilwoman Sandy Allen, D-Ward 8, in whose ward Henson Ridge is located. Afterward, the investigator interviewed several residents who spoke at the hearing.

Sheila Robinson, a member of the Henson Ridge steering committee, declined to give details of her interview with the HUD IG’s agents.

"They just said they’re looking into the HOPE VI program," she said.

Speaking at the hearing, Joyce Scott sharply questioned what had happened to funds paid by the housing authority to partners who, she said, failed to deliver HOPE VI-mandated services to local residents.

Scott, a board member of the Far Southwest/Southeast Collaborative of social service groups, said she recently spoke to I. Toni Thomas, president of I. Toni Thomas Associates, one of the recently fired service providers, at a collaborative board meeting.

"She said, ‘[provision of services] just didn’t happen.’" She told us, "‘We just didn’t get there,’" Scott said.

Scott called for an investigation into the expenditure of funds at Henson Ridge.

"They have pimped on us long enough," she said.

Thomas could not be reached for comment.

Scott’s language was taken up by Allen, who scolded housing authority and Mid-City Urban officials, who spoke at the hearing in defense of their performance at Henson Ridge.

"It saddens me to think that tax dollars are being used for purposes other than they were intended," Allen said. "It’s a sad thing when people in the community feel they’re being pimped."

But housing authority Executive Director Michael Kelly defended his agency’s conduct of the District’s HOPE VI projects. He noted that the agency has been awarded HUD’s "best practices" award for its HOPE VI work.

"HOPE VI is a people program, it’s not just about bricks and sticks," he said. "We’re committed to helping former residents rebuild their lives."

"No one’s expectations are higher than those of [housing authority board chairman] Russell Simmons and myself," Kelly said.

Copyright 2003, The Common Denominator