Housing Authority Finances Under Federal Scrutiny

Persistent allegations of financial wrongdoing at public housing projects have triggered a federal audit of the Los Angeles Housing Authority and a third lawsuit in three years charging retaliation against people who complained.

At issue, city officials said, is whether the agency or others misspent some of the $25 million in federal funds funneled to residents for providing security, janitorial and moving services at the 20 city-run housing developments.

“There is an audit in progress,” said Mimi Lee, district inspector general for the U.S. Department of Housing and Urban Development.

Tenant leaders, agency contractors and their attorney said they have met with federal auditors and turned over a large number of documents generated by the latest lawsuit. If the audit determines that federal money was misused, HUD could seek reimbursement from the Housing Authority. There is no criminal investigation.

In two previous lawsuits, the agency has been ordered to pay judgments totaling $1.8 million to whistle-blowers.

Federal auditors are reviewing the latest lawsuit, in which a moving company owner alleges that agency managers received cash meant for poor residents, manipulated bids on contracts, tolerated double billing by a well-connected consultant and retaliated against those who got in the way.

Several tenant leaders alleged in depositions that managers took away contracts when they complained about excessive consultant costs and double billing.

Among the allegations in the lawsuit are those made by Barron Gardner, who owns Barron’s Moving and Storage in Van Nuys. He accuses the Housing Authority of taking away business and withholding payments after he rebuffed a longtime authority consultant who wanted a 10% payment to help Gardner get a moving contract that eventually was worth more than $300,000.

“I think the evidence shows that the Housing Authority is involved in the misappropriation of funds,” said Lenton Aikins, the attorney who is handling the latest lawsuit. He won the two earlier suits.

Martha Shen-Urquidez, an attorney for the Housing Authority, said there is no merit to the allegations, which she described as coming from disgruntled former agency contractors. She said some of the allegations were “fabricated.”

The lawsuit, scheduled for a hearing Wednesday in Los Angeles Superior Court, also alleges that officials engaged in “misuse and mismanagement” of funds that were meant to help poor residents of the projects. It seeks unspecified damages and a court order requiring reform of agency contracting practices.

At the center of the controversy is private consultant Dwayne Williams, who has received $125-an-hour contracts to help resident groups organize security, moving and janitorial services at six city housing projects. Williams is a defendant in the lawsuit.

Based on billings Aikins obtained from the agency, he estimated that Williams has been paid more than $1.2 million since 1995 by the agency and resident groups at Jordan Downs, Pueblo del Rio, Estrada Courts, William Mead, San Fernando Gardens and Aliso Village.

The lawsuit alleges that tenant complaints about double billing and excessive charges by Williams were ignored by agency Assistant Director Lucille Loyce.

Dorothy Toliver, former president of the Resident Management Council at Jordan Downs and former head of the Jordan Downs Management Group Inc., said in a deposition that Williams was hired to help her council set up a thrift store to employ residents.

The store was never opened, but tenant leaders said in depositions and interviews that they paid themselves bonuses at the urging of Williams, who managed the finances for the corporation. Officials denied that Williams approved bonuses.

Toliver, who headed the Resident Management Council from 1995 to 2000, said in a deposition taken by Housing Authority attorneys that she accepted bonuses of about $500 twice. She also said in the statement that she gave Loyce $500 in cash twice and bought a $400 purse for Loyce.

“That is an absolute, outright fabrication,” Shen-Urquidez said.

Loyce and other Housing Authority officials deny that they received money or that Williams acted improperly.

Shen-Urquidez said the tenant leaders made allegations against Williams after he reported improper bonuses and other spending.

“He is the whistle-blower. That is why they are going after him,” Shen-Urquidez said, adding that agency officials are considering whether to pursue criminal charges against some tenant leaders who allegedly misused money.

She credited Loyce and Williams with bringing millions of dollars to job-creation programs in Jordan Downs and other housing projects.

Gardner, the Van Nuys mover who has done business with the agency for 15 years, alleged in the lawsuit that Williams “demanded” a 10% payment “in return for a guarantee that [Gardner] would receive the William Mead [moving] contract.” Gardner said he rejected Williams’ demand and lost the contract.

In a previous suit against the Housing Authority, Margaret Gardenhire, an agency manager who oversaw activity at Jordan Downs and was once named employee of the year, was awarded $1.3 million for claims of retaliation for reporting complaints about Williams.

In 1997, Housing Authority contracting director George Marioneaux alleged retaliation for his “refusal to violate the law and engage in fraudulent and excessive invoicing of the federal government” related to the 1994 Northridge earthquake. A jury awarded him $572,992 in damages. The two parties later reached a confidential settlement, which ended an appeal of the lawsuit.