Justice Department Weighs Laws to Ban HUD-Style Influence-Peddling Abuses

Justice Department lawyers are considering proposing legislation to outlaw some of the kinds of influence peddling that have been revealed by investigations of Housing and Urban Development programs, the head of the department’s criminal division said Friday.

Assistant Atty. Gen. Edward S. G. Dennis Jr. said that ethics and conflict-of-interest laws that focus on conduct of government employees after they leave federal employment do not appear to cover the actions disclosed by congressional hearings into the HUD scandal.

Dennis would not outline what legislative possibilities are under consideration. He indicated that measures would not be proposed soon.

The hearings by the House Government Operations subcommittee on employment and housing have developed evidence that political favoritism influenced HUD’s administration of some housing programs, with Republican consultants picking up six-figure fees for representing developers before the department.

Dennis, in an interview, said he did not want his comments to signal that the Justice Department has decided that the hearings have raised “no question of criminality.”

“We can’t say they have,” he said. “We can’t say they haven’t.

“We will be exploring areas we feel are appropriate to be explored,” Dennis said. But he repeatedly emphasized the difficulties of prosecuting individuals who meet with federal officials in an attempt to obtain government grants.

“Listening is never a problem,” Dennis said. “People should have access to their government. The question of whether a decision (to award a grant) has been influenced is difficult to judge. On a criminal basis, it’s a very difficult area to regulate.”

Dennis added that lawmakers and lobbyists naturally represent their constituents and clients before federal agencies. “It’s the duty of senators and lobbyists to weigh in on behalf of their area,” he said. “That’s good. That’s what you want.”

At the same time, Dennis contended, HUD investigations “continue to be a priority item in the criminal division and the attorney general’s office.”

In the wake of the HUD disclosures by the House subcommittee, Justice Department officials have said they are investigating 700 cases of alleged HUD fraud and related violations. However, these cases involve primarily low-level HUD officials and contractors and not the political appointees who have been the focus of the House subcommittee hearings.

Sought Transcripts

Stuart E. Weisberg, staff director of the House subcommittee, said Justice Department officials did not request transcripts of the panel’s hearings until Sept. 20.

In a related development, a HUD audit made public Friday showed that errors in calculating rents for subsidized housing are costing the federal government millions of dollars a year.

The rent study, obtained by the Associated Press under the Freedom of Information Act, involved a review by HUD’s inspector general of 142 of the 2,755 areas for which the department sets fair-market rents for subsidized housing. He found that, in 116 of those areas, the government was paying as much as $39.1 million a year in excessive subsidies.