HUD Recovers $81 Million After Audits

The Department of Housing and Urban Development is recovering about $81 million of federal funds lost through widespread fraud and mismanagement, HUD’s inspector general said Friday.

“The department recovered $18.6 million in the six-month reporting period as a result of our audits and investigations, and HUD management made commitments to recover another $62.3 million,” Inspector General Paul Adams told a Senate Banking Committee hearing.

That amount would be only a small fraction of the estimated $6 billion to $8 billion lost by the department during the eight-year term of former HUD Secretary Samuel R. Pierce Jr. The estimate comes from congressional committees investigating HUD.

Pierce is under investigation by an independent prosecutor over his role in the scandal. He has denied any wrongdoing.

Adams said 185 individuals and firms had been indicted in the six months that ended last March, and 144 had been convicted.

Marilyn Louise Harrell, a former HUD official, was recently sentenced to 46 months in prison and fined $600,000 after being convicted of embezzling $5.5 million from the department.

Adams said about 700 cases were being investigated, many of them with the help of the FBI, and 200 more cases are awaiting action by U.S. attorneys.

He said current HUD Secretary Jack Kemp was making changes in management and policy that were eliminating the abuses.

“The Kemp team has, with the cooperation of Congress, begun to initiate numerous corrective actions, and it won’t be very much longer before our reports begin focusing on the effectiveness of those actions,” Adams said.

“I am optimistic that HUD is going in the right direction.”