‘Robin HUD’ Pledges to Repay $5.5 Million : Admitted Embezzler Rejects Advice Not to Testify at House Hearing; Thefts May Exceed $20 Million

WASHINGTON — A Bible-quoting real estate agent told House investigators Friday that she stole about $5.5 million from the Department of Housing and Urban Development to help the homeless but vowed to repay every cent of it someday even if she is prosecuted.

Marilyn Louise Harrell, dubbed by investigators as “Robin HUD,” testified that her systematic theft of funds from foreclosure sales of HUD-owned properties went undetected for more than three years despite a rule requiring her and other closing agents to turn over funds from HUD property sales within 24 hours.

Immediately before her testimony, HUD Inspector General Paul A. Adams estimated that Harrell and a dozen other agents under contract to HUD may have stolen $20 million because controls on the foreclosure program were inadequate or non-existent. Adams said two indictments already have been returned and he expects other indictments “very soon.”

Justice Dept. Probe

Rep. Tom Lantos (D-San Mateo), chairman of the House Government Operations Committee’s subcommittee on employment and housing, said, however, that the $20-million figure might turn out to be conservative. Thursday, Atty. Gen. Dick Thornburgh directed federal prosecutors nationwide to check every local HUD office for possible fraud and embezzlement in the program.

“What I find truly shocking is that HUD did not have a system in place to discover that millions of dollars were missing,” Lantos said. “Americans know that, if you are two days late with a mortgage payment, the bank is knocking on your door, asking: Where is the money?”

Harrell, 46, volunteered to tell her story to the panel, which is investigating HUD program abuses, despite warnings from her attorney and members of the subcommittee that her testimony might be used against her in a criminal proceeding.

“If anyone should take the Fifth Amendment, it’s you, ma’am,” Rep. Christopher Shays (R-Conn.) advised her before she testified.

Her attorney, Tony Gallagher, said he had explained to Harrell her constitutional privilege against self-incrimination but that Harrell insisted on testifying.

“I expect no leniency or immunity from prosecution,” she said. “I have come forward, as one who loves the Lord, in an attempt to confess to the world that I am a sinner and I am sorry that I diverted government funds. I am prepared to give everything that I have or ever will have to restore to the government that which was taken.”

She said she already has turned over her own properties, worth about $450,000, to HUD in the hope that that amount could be credited as partial restitution.

Her testimony included several Bible quotations; one was 1 Peter 4:8: “And above all things have fervent love for one another, for love will cover a multitude of sins.”

On this theme, she added: “It was through love and compassion that I diverted the money and tried to help others. I did not keep any for myself . . . I justified my actions inwardly only by reminding myself that I followed a higher law in an attempt to ease suffering.”

Harrell said she created a charity called Friends of the Father that donated money for the homeless and also started four businesses, including a cleaning firm and a construction firm, that hired the poor and benefited charities.

Her eyes filled with tears as she concluded her prepared statement, and Lantos halted the hearing momentarily so she could compose herself.

Despite her emotional appeal, several members of the subcommittee were unmoved.

“I’m uncomfortable with you invoking God,” Shays said. “I don’t believe God would ever motivate people to do what you did.”

Rep. Charles E. Schumer (D-N. Y.) added: “For whatever noble purpose you stole this money, nothing forgives it.”

But the lawmakers were most concerned with HUD’s oversight of contract agents like Harrell who assisted in foreclosure sales of 81,500 properties, usually single-family homes, during the fiscal year that ended last Oct. 1.

Harrell suggested that HUD employees--rather than private agents hired under contract--should handle the foreclosure settlements to avoid theft. She said the Veterans Administration used this system for selling foreclosed properties.

HUD Inspector General Adams said a sharp increase in the workload, along with a decline in the number of HUD employees nationwide, resulted in reduced monitoring of the private agents’ work.

Although “serious program weaknesses” were reported by his office in mid-1987 to top HUD officials, Adams said, there was no effective crackdown on lax procedures until late last year.

Lantos asked why agents like Harrell were not required to post large professional bonds so that any thefts would be covered by insurance.

Adams said Harrell did have a bond--but only for $300,000--and he promised to recommend larger bonds, equal to two months of an agent’s average transactions.