Emails Show HUD Hot on the Trail of Missing Millions at City Hall

Dallas City Hall has always taken the Cookie Monster approach to handling money from HUD.
Dallas City Hall has always taken the Cookie Monster approach to handling money from HUD.
Alvaro Diaz Rubio

City officials are ready to jump out of their skins. A series of recent City Hall internal emails, apparently already in the hands of the Justice Department in Washington, show Dallas' city auditor, Craig Kinton, accusing City Hall of lying to federal officials about millions in unaccounted federal housing funds.

Shirley J. Henley, a regional U.S. Housing and Urban Development official in Fort Worth, has been dinging city housing officials persistently since late September to come up with documentation for $29.9 million worth of HUD-funded city projects.

It’s not like HUD noticed the money was missing. Henley only knows about it because last March Kinton published a report saying records for 54 HUD-funded projects were either “absent, limited, inconsistent or incomplete.” And by the way, that was just what he found missing from a sampling of the city’s books, not a full audit.

In the emails (see below), Henley wants to know what happened to that money. But City Hall has been giving her the same answer they gave Kinton: just don’t know, dang it.

You think I’m making this up? Listen, it’s the same hillbilly defense City Hall has used for decades, every time anybody tries to chase some money up a tree. They don’t keep false books. They don’t keep any books.

When Kinton asked them what their policy was for keeping books on federally funded housing projects, they said they didn’t have any of those, either. They don’t keep false policies. They don’t keep any policies. Pretty slick, eh?

Kinton said in his audit (sounding a tad incredulous for an auditor): “(The Dallas Housing Department) does not have formal written approved and dated policies and procedures for the 1) solicitation, evaluation, selection of developers and underwriting of projects and, 2) monitoring of the financial assistance contracts.”

Get it? You ask them, “Where’s the money?”

“Don’t know.”

“Where are the books?”

“Don’t got 'em.”

“Well what are your policies about keeping books? What are your policies about selecting projects and contractors? What is your policy for making sure any of this stuff gets built?”

“Don’t got no policies.”

What are you gonna do?

By mid-October Henley was getting more insistent in emails to Chan Williams, the city’s assistant director of financial services for grant administration, and Bernadette Mitchell, head of the housing department. Henley basically told them to come up with some kind of a something even if they had to scratch it out on a napkin.

“What is the current, documented [housing department] process for project selection?” she asked. “Please identify even if in DRAFT. What documentation was evaluated and maintained by [housing] staffs, prior to FY 2015, for developers’ financial and compliance history and what changes in this documentation, if any, are in place in response to the March 18, 2016, report?”

The March report she refers to is Kinton’s report. Poor lady. She’s really saying (my own words here): Look, folks, your own auditor says you can’t account for almost 30 million bucks of our money. Just give me something, anything, so I can say I asked.

But in his response, Williams does the old City Hall aw-shucks tooth-pickin’ routine, telling Henley that Kinton never really came up with any proof that any of that $29.9 million was truly missing or undocumented or whatever, and Kinton was so vague about it in fact that figuring out what he meant would be just too much work:

“The City Auditor’s Office has not provided specific details on their file review; only generalization of the concerns. Given the number of files and projects reviewed; in the absence of additional information, we have no way to direct follow up or whether our follow up will address the concerns noted in the audit report.”

Well, that shit gets back to Kinton. He immediately fires off a blistering email last week accusing Chan Williams of saying things that just aren’t true:

“Multiple discussions were held with management throughout the audit,” Kinton writes back. “There were many opportunities to discuss and resolve any concerns about the results or conclusions of this audit. An exit conference was held with Bernadette Mitchell and [city housing official] Allen Sims which I attended."

Kinton denies that anybody from housing or Williams’ office has ever even tried to get details from him on why he said the records were AWOL:

“To my knowledge, at no time during the course of this audit, during the exit conference or after the report release did management question the conclusion stated in the report that the documentation of monitoring practices was ‘either absent, limited, inconsistent or incomplete.’”

He says if they didn’t know what he was talking about or had some kind of confusion about it, they had plenty of opportunity to mention that fact when the audit was presented to the City Council:

“Additionally, when this audit was briefed to the Housing Committee, management had an opportunity to voice any concerns about the audit. I recently reviewed the recording of this meeting and there was no mention in the testimony by either Ms. Mitchell or Mr. Sims regarding concerns about the conclusions of the audit.

“Furthermore, no one from management has requested any additional details about the files reviewed subsequent to the audit completion.”

Kinton clearly is not happy that somebody is trying to blame his audit: “To suggest that this office ‘has not provided specific details on their file review, only generalization of the concerns’ is disingenuous at best.”

Disingenuous. That’s bureaucratese for lying.

But here’s the killer part: Kinton tells Williams and Mitchell that the $29.9 million he came up with as unaccounted might be a drop in the bucket. That was only the amount he found, he says, by merely sampling their books:

“Finally, please understand that the scope of the audit was projects identified by management as completed in FY 2012 through FY 2014 and that establishing ‘questioned costs’ was not an objective of the audit. The auditors stopped their sample tests after reviewing 10 project files and confirming with management (Cynthia Rogers-Ellickson) that the files reviewed were representative of the remaining files.”

In other words, who knows how much money will be missing if somebody does a comprehensive forensic audit of all of Dallas’s HUD-financed projects?

Until the end of last week, I would have said such an audit would never be done. I figured HUD, which has a terrible record of keeping track of its own money or even appearing to give much of a damn, would stand around for a while like a 19th century lady with her hoop skirt pulled up over her head by some mean boy, mumble and burble for a while, and then go home. I still say the last thing HUD wants to do is let everybody know how much of its money just leaks out the windows and falls into who knows whose hands.

But I change my mind in this case. In this case, I have learned from reliable sources that these emails already have flown into the hands of people at the Justice Department. Now, Justice — that’s different.

Think about this. The FBI has spent five years trying to jack up Dallas County Commissioner John Wiley Price over some tiny fraction of the amount of money that has washed through city hands from HUD over the last decade or so. Price is accused of enriching himself by influencing the contracting process at the county.

Former San Antonio Mayor and fellow Democrat Julian Castro, newly appointed as Obama's Secretary of HUD, was only too happy to help Dallas Mayor Mike Rawlings deep-six a five-year federal probe of the way Dallas had handled ten year's worth of HUD money.
Former San Antonio Mayor and fellow Democrat Julian Castro, newly appointed as Obama's Secretary of HUD, was only too happy to help Dallas Mayor Mike Rawlings deep-six a five-year federal probe of the way Dallas had handled ten year's worth of HUD money.
hud.gov

So City Halls says they don’t even have a process. They don’t keep books. They don’t have policies. They don’t have time to do a lot research. They think that makes them clever, because they think it means they can’t get caught. Plus, our mayor is on record thanking HUD Secretary Julian Castro for killing a five-year federal probe of the way Dallas City Hall spent HUD’s money over a 10-year period.

I’d say this thing is getting dangerously close to the moment when people start having chats with assistant U.S. attorneys. I am told that the standard line is: “Which would you rather be? A witness or a defendant? Your choice.”

Emails.docx by Schutze on Scribd


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