Other Fraud/Crimes
Other Fraud/Crimes
Other Fraud/Crimes
Other Fraud/Crimes
Following a “Qui Tam” complaint, a $2 million settlement agreement was reached between the United States Attorney’s Office,
Indianapolis, IN, and Phoenix Fabricators
and Erectors, Inc. Phoenix received HUD CPD and U.S. Department of Agriculture (USDA) program funds to weld steel water storage tanks throughout the United States In 1996, Phoenix began generating false testing records to show that installed tanks met contractual standards, causing the submission of false claims to HUD and USDA for payments. According to the consent judgment, the U.S. Department of Justice (DOJ) and the “Qui Tam Realtor” will receive $1.75 million, with the remaining $250,000 designated for mandatory extended warranties on all tanks constructed during the relevant period.
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Anthony and Teresa Auyer each pled guilty in U.S. District Court, Chattanooga,
TN, to conspiracy, bank fraud, and mail
fraud charges. Anthony and Teresa Auyer received a HUD CDBG loan through Tennessee Department of Economic and Community Development to purchase lumber mill equipment. The Auyers submitted phony invoices, showing lumber mill equipment purchases, but never purchased lumber mill equipment and failed to repay the CDBG loan. As a result, HUD realized a loss of $458,821.
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HUD OIG received and probed allegations of unfair grant distributions by Empire State Development Corporation (ESDC), New York, NY, a HUD-funded nonprofit created to administer and distribute Small Firm Attraction and Retention Grants (SFARG) and Business Recovery Grants (BRG) for redevelopment of lower Manhattan after the September 11, 2001, terrorist attacks. As a result, Dart Courier Service, the recipient of SFARG and BRG
funds totaling $692,500 and $300,000, respectively, returned $422,425 in SFARG funds to ESDC.
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Chang Sheng Yu, a Chinese national and president of American McKinley Venture Management, Inc., pled guilty during his trial in U.S. District Court, New York, NY, to theft of government funds, mail fraud, and submission of false Social Security numbers (SSN) for his role in a scheme to defraud HUD and Empire State Development Corporation (ESDC) of $118,876 in federal grant money. Yu falsely obtained a BRG and attempted to obtain an SFARG through ESDC. ESDC, a HUD-funded nonprofit established to provide assistance to businesses in lower Manhattan after the September 11, 2001, terrorist attacks, established BRG and SFARG programs after receiving a $700 million appropriation from HUD.
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Roderick Caston, a former member of the City of Shreveport Zoning and Appeals Board, was sentenced in U.S. District Court,
Shreveport, LA, to 12 months confinement
and 3 years supervised release and ordered to pay City of Shreveport Department of Community Development (SDCD) $107,000 restitution for his earlier guilty plea to theft of government funds. Caston applied for and received HUD CDBG funds through the SDCD Small Business Loan Program to construct a carwash business in downtown Shreveport, then diverted loan proceeds at closing through two vendors. The vendors funneled back to Caston most of the borrowed money, which he used for personal expenses. As a result, HUD realized a loss of $107,144.
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John J. Walsh, doing business as J. Walsh and Sons Building and Remodeling, was sentenced in U.S. District Court,
Springfield, MA, to 6 months confinement
at a community corrections center, 6 months house arrest with electronic monitoring, 3
years probation, and 200 hours of community service for his previous conviction on false statements to a federal agent and perjury charges. Walsh provided false statements to a federal grand jury and federal agents when questioned about his role in the laundering through his business of HUD CDBG funds earmarked for the Façade program, a program providing funding for renovations at specific restaurants in Springfield, MA.
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Harry Diaz pled no contest in Seventh Judicial Circuit Court, Deland, FL, to charges of grand theft. Diaz was placed on 36 months probation and ordered to pay $1,400 restitution to Health Planning Council of Northeast Florida (HPCNEF), a nonprofit organization and subrecipient contracted to administer HUD HOPWA funding. Diaz used the identity of another incarcerated but active participant in the HOPWA program, forged his signature on a HPCNEF rental assistance contract agreement and checks issued by HPCNEF, and deposited HPCNEF checks totaling $1,400 into his personal account.
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Lori Thompson, also known as Lori Hyman; Lori Gribbin; Christine Hyman; Suzanne O’Leary; and/or April Atkinson, a former Shelter Plus Care Section 8 tenant through Shalom House, a HUD CPD- funded housing assistance program, pled guilty in Cumberland County Court,
Portland, ME, to theft by deception and
aggravated forgery. Thompson was sentenced to 10 years incarceration (5 years suspended) and 3 years supervised probation for defrauding HUD and State of Maine Health and Human Services by creating false identities, failing to report tenants and income, creating identifies for
fictitious children, and receiving additional benefits for children not in her custody. In addition to the above charges, Thompson pled guilty to previous charges of theft by deception and was sentenced to an additional 3 years incarceration (to be served concurrently with her above imprisonment) for fraudulently receiving $105,121 in state and/or federal funds and benefits. As a result of her actions, HUD realized a loss of $23,069.
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James Thomas Jr., owner of Thomas Wrecking, was sentenced in U.S. District Court, St. Louis, MO, to 60 days home confinement and 3 years probation for his earlier guilty plea to tax evasion. Thomas admitted using his company as a “front” for Spiritas Wrecking to satisfy St. Louis Community Development (SLCD) regulations regarding minority business participation in the $8 million renovation of the old St. Louis City Hospital. Thomas funneled Spiritas Wrecking payroll checks through Thomas Wrecking to create the façade that a minority contractor participated in the SLCD project as certified.
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Michael Caridi, president and owner of SRC Industries, pled guilty in Rockland County Court, New City, NY, to falsifying business records and offering false instruments for filing. Joseph Rotonde, vice president of SRC, and Orry Osinga, a subcontractor for SRC, each pled guilty to charges of offering false instruments for filing. SRC, a general contractor for Jawanio, a HUD-funded nonprofit created to build housing for developmentally disabled adults, falsified payrolls submitted to HUD and failed to pay employees Davis-Bacon wages as agreed.
HUD’s Community Planning and Development Programs 95