2 Indiana Businessmen Indicted on Charges of Defrauding HUD

A grand jury indicted two Indiana businessmen Wednesday on charges of defrauding federal housing programs.

The federal indictments were the first in the state from a nationwide probe of theft and political decision-making at the Department of Housing and Urban Development, U.S. Atty. Deborah J. Daniels said.

“I would say these two cases are symptomatic of the types of cases you will see across the country in fraud on the government in HUD programs,” she said.

Named in separate indictments were Zionsville real estate agent Joseph W. Cirillo and Indianapolis businessman Garry W. Newman, a former closing agent for HUD sales.

Daniels said Cirillo made false statements to help applicants for low-income housing assistance obtain HUD-insured mortgages for properties for which Cirillo was the broker.

Cirillo, 37, provided forged letters or documentation on applicants’ credit history and opened bank accounts in applicants’ names to create the false impression of financial stability, the indictment alleged.

Once the loans were approved, Cirillo’s company received profits from the sale of the properties and brokerage fees. In each of seven cases, the loans went into default, costing the government about $200,000, Daniels said.

If convicted on all counts, Cirillo could face up to 19 years in prison and a fine of $2 million.

Newman, 36, is charged with embezzling $54,425 from February until April this year when his company, Closing Services Inc., acted as a closing agent at the sale of HUD-repossessed properties.

If convicted, he could face up to 10 years in prison and a $250,000 fine.

Meanwhile, HUD is seeking to recover about $700,000 from a former Ronald Reagan campaign adviser and his partners in a Georgia project, a HUD official said Wednesday.

The department will seek repayment from the owners of the Cypress Mill Plantation in Brunswick, Ga., including Edward Weidenfeld, legal counsel to Reagan’s 1980 campaign and an adviser to his 1984 reelection effort.

Previously, HUD auditors had questioned more than $750,000 of the project’s costs, alleging that a construction company in which two of the partners were principals was not entitled to some profits and overhead it received.

But R. Hunter Cushing, then a deputy undersecretary at HUD headquarters, earlier this year reduced the amount to $88,000. Cushing later left HUD for a Commerce Department post.

Neil Zittrauer, HUD’s housing chief in Atlanta, said he was informed by C. Austin Fitts, the department’s new assistant secretary for housing, that she supported the results of the audit.