July 23, 2019

Durbin, Duckworth bill inspired by Cairo would allow HUD to redirect fines to communities harmed by fraud

Source: The Southern


WASHINGTON — A bill introduced Monday night by U.S. Sens. Dick Durbin and Tammy Duckworth would allow the U.S. Department of Housing and Urban Development to redirect any fines and assessments collected from the program fraud cases to communities that have been harmed.

Under current law, when HUD brings an administrative claim against a public or private landlord, any money collected goes back to the U.S. Treasury, and is not recouped by HUD.

The Fairness for Housing Communities Act would direct certain public housing-related funds collected under the Program Fraud Civil Remedies Act into a fraud compensation fund at the agency. Public housing authorities that were defrauded of funding by an employee would be eligible to apply for the funding.

“Cities like Cairo that have been the victims of mismanagement deserve accountability and restitution, and this legislation is a small step towards providing justice and reinvestment in these neglected communities,” Duckworth said.

The bill was introduced in direct response to the housing crisis in Cairo, the Democratic senators said in a joint press release. James Wilson, the former longtime director of the Alexander County Housing Authority, was ordered by HUD to pay $500,000 in fines and assessments for mismanaging federal housing funds during his tenure.

Former ACHA employee Mathta Franklin also agreed to pay $30,000 to settle claims the agency made against her under the act. Franklin served for years as the agency’s finance director under Wilson, and then briefly as executive director after Wilson retired.

Franklin has paid in full. Wilson has yet to make any payments, according to an agency spokesman. The Program Fraud Civil Remedies Act does not provide any direct recourse for agencies to collect fines from individuals who do not pay. Rather, it requires the U.S. Department of Justice to take action in order to collect debts owed.

The agency has indicated its legal counsel is working with DOJ on next steps, though no new information was available Monday. If the bill becomes law, any money collected from Wilson or others upon its passage would go to HUD rather than the U.S. Treasury’s general fund.

“We’ve seen in Cairo, Illinois, the damage caused when federal housing dollars are misused. This bill is about basic fairness and justice," Durbin said. "It ensures that when financial penalties are collected, that the money returns to residents and communities that were robbed blind. No community should ever go through what we saw in Cairo." 

By:  Molly Parker