Inspector Criticizes HUD for Solicitation

The inspector general of the U.S. Department of Housing and Urban Development has criticized top agency officials for soliciting developers, contractors and realtors doing business with HUD to pay for a publicity roadshow promoting HUD Secretary Samuel R. Pierce and the nation’s fair housing laws.

HUD officials, including Benjamin F. Bobo, who runs the Los Angeles office, made their solicitations in a way that does not appear to have violated criminal statutes, but “may have created the appearance of preferential treatment and loss of independence or impartiality . . . adversely affecting the confidence of the public in the integrity of the department,” according to HUD Inspector General Paul Adams.

The inspector general’s inquiry was prompted by disclosures in The Times last December. His 400-page report on the matter was released to several congressmen this month.

Still under investigation by the Office of Government Ethics is whether the conduct of various HUD officials violated federal conflict-of-interest regulations prohibiting employees from soliciting or accepting, either directly or indirectly, anything of monetary value from a person who has, or is seeking, business relations with the department.

Not Applicable to HUD

Pierce and the general counsel at HUD contend that these regulations are not pertinent to this case, but several members of Congress hotly disagree.

Among the questionable solicitations cited in the inspector general’s report is an instance where Bobo “personally solicited over $15,000” from the Southwest Los Angeles Board of Realtors “whose members have interests that may be substantially affected by the actions” of HUD officials. The money was used to pay for printing campaign posters.

In other cases, Deborah Gore Dean, former executive assistant to Pierce, asked a representative of a builders group from Greater New York to raise $15,000. And Pierce’s special assistant, David Turner, was reported to have personally placed a telephone call to solicit money from a Riverside businessman who owns and operates hundreds of HUD-subsidized housing units.

In one case, a Los Angeles developer contributed $100 instead of the minimum $3,000, only to have the money sent back along with a note chiding him for sending such a “ridiculous” amount. The letter advised the developer, who manages hundreds of HUD-subsidized rental units, that “with your involvement in housing and benefits from doing business with HUD, you should want to make a better impression. . . .”

The letter was not signed by a HUD official but by Charles Z. Wilson, a private businessman whom Bobo had designated to head a private committee in charge of fund raising. Similar committees were set up in six of the eight cities visited by the National Campaign of Public/Private Partnerships for Fair Housing.

However, the inspector general concluded that these committees “did not operate independently of HUD. . . . In our view, (they) . . . were a facade for HUD’s fund-raising efforts.”

No Evidence of Coercion

The inspector general reported finding no evidence to establish that donors were coerced into making contributions nor any link between contributions and subsequent HUD actions affecting the donors.

But several legislators have expressed concern about the propriety of the HUD fund-raising drive.

In a letter urging a full-fledged inquiry into the matter earlier this year, Rep. Howard L. Berman (D-Panorama City) said that “it was extremely improper” that people doing business with HUD were “being pressured by HUD officials to pay for Secretary Pierce’s grandstanding. . . . I am disgusted by this entire episode.”

Federal Standards of Conduct prohibit employes from soliciting anything of monetary value from a person who has or is seeking business with the department.

But HUD’s general counsel, J. Michael Dorsey, has dismissed the standards as inapplicable to the HUD officials in this case because their activity was “pursuant to a high-level, official departmental policy decision,” according to a memo Dorsey sent the inspector general.

The standards, he said in the memo, are “not the yardstick” by which to measure the wisdom of the publicity campaign or the employees who implemented it.

An aide to Sen. Carl Levin (D-Mich.), chairman of a subcommittee overseeing the federal ethics system, said, “There is some real concern about this case. We will use this as an opportunity to review the strength of the HUD ethics program.”

Bob Malekoff, counsel to the Senate housing subcommittee, said there are “broad principles” at stake. He is concerned, he said, by HUD’s assertion that the Standards of Conduct do not govern employes carrying out a department’s “mission.”

“That’s the Ollie North line--that the mission is more important than the law,” Malekoff said.

The fair housing campaign was conducted in Baltimore, Dallas, New York, Oakland, Columbus, Philadelphia, New Orleans and Los Angeles between 1983 and 1985. Cocktail parties, luncheons, press conferences and, in Los Angeles, a big balloon show costing $10,000, were staged.

HUD attorneys advised top agency officials that the campaign presented “some potential for adverse criticism.” They proposed as “common-sense rules” that HUD employees not participate in fund-raising activities and that money not be solicited from people under investigation or in litigation with the department.

While these guidelines “were not followed,” Dorsey concluded, adherence to them was not required.

Among the solicitations questioned by the inspector general was a $15,157 donation by the Southwest Los Angeles Board of Realtors.

In March, 1987, Bobo, HUD’s Los Angeles area chief, solicited the money to enable HUD to pay a bill for posters.

Went to Board Meeting

According to the report, Bobo went to a board meeting on March 17, 1987, to pick up the check from the realtors, only to discover the directors were meeting and debating whether they should pay the debt, because it was twice as much as they had thought it would be.

“Bobo said he advised them that it was . . . a strictly voluntary contribution, but that he would personally appreciate it if they would pay the debt as agreed,” the inspector general’s report said.

When Bobo returned later to pick up the money, there was an error in the check’s amount, D. Leatrice Vine, realty board president, told investigators. She recalled that “Bobo was anxious to get a corrected check” which required the signature of a board member who was not present. So “he hand-carried it to the other member’s personal residence for her signature.”

At Bobo’s request, Vine said, the check from the realty board was not made out to HUD, but to a community-based charitable organization--the Brotherhood Crusade--which in turn paid off HUD’s 2-year-old bill for campaign posters.