The Source of Dallas' HUD Problem
Not that you asked, but here's what it's like to be me. I'm walking my dogs, Penny and Dorothy, up and down alleys in East Dallas, and I've got my little cell phone ear-bug deal going so I can talk to people and keep my hands free for clean-ups. And this is what I hear in my ear:
"... white scientists, well-known fact, created AIDS, took it to Africa (click, ring); mayor of Dallas, well-known fact, member of Mafia (click, ring); Masonic conspiracy to divert Trinity River, well-known fact (click-ring); Elvis, well-known fact, moved to Dallas after sex change, was elected to City Council ..."
Maybe I ask, "After the sex change operation, what race was she?" But most of the time I just keep walking and cleaning up, because those are my jobs — talking to people and cleaning up after my dogs.
Do I even check out what people tell me? Of course I check out what they say or you'd be reading here how the mayor is a Martian with a sex-change operation who's trying to divert the Trinity River and give people AIDS. But people do call. And I do listen. All. Day. Long.
So last week I'm doing another part of my job, patrolling court documents online, while somebody on the ear-bug tells me about the Masons, and I stumble across a very unlikely character in a federal court case. Me. Yours truly. Right in the middle of this incredibly complicated federal lawsuit I'm looking at, it says, "Schutze criticizes Dallas City Hall for potentially submitting false claims to HUD (U.S. Department of Housing and Urban Development)."
Schutze? Schutze who?
I tell the guy on the ear-bug there's a city bus careening right at me and I can't get out of the way so no need to call me back, ever. I pull the plug, and I go back and look at this damn thing carefully. I am reading a brief submitted in March 2012 by lawyers for the Dallas Housing Authority in a lawsuit against the DHA and the city by developers Curtis Lockey and Craig MacKenzie, who claim the city has been defrauding the government for a decade or more by deliberately misspending federal desegregation funds. The suit is a whistle-blower action in which Lockey and MacKenzie are claiming a reward under the federal false claims law. That law basically offers payments to citizens who report frauds on the federal government.
I should have read this whole docket more closely long ago, but, you know, I've got the ear-bug, and then there are the dogs. Anyway, I look at the most recent filings and see that Lockey and MacKenzie are back in the court of U.S. District Judge Reed O'Connor. I wonder why.
O'Connor dismissed their whistle-blower case a year ago on some kind of grounds I never fully understood at the time, basically saying they weren't really the whistle-blowers so they couldn't claim a reward. I did know their case was tossed out, just wasn't sure how or why.
The big recent event in this entire picture was the release of a scathing four-year federal investigative report at the end of November accusing Dallas City Hall of engaging in massive concerted fraud against HUD. HUD says Dallas took hundreds of millions of dollars in desegregation money and used it to build fancy condos for white people downtown, among other major no-no's.
The report gives direct credit to Lockey and MacKenzie for tipping HUD off to problems at Dallas City Hall. The report demonstrates, however, that federal investigators, going far beyond the allegations brought to them by Lockey and MacKenzie, discovered a broad pattern of cheating to which Lockey and MacKenzie's allegations were only the tip-off.
In other words, this four-year federal investigation gives Lockey and MacKenzie credit for blowing the whistle, so Lockey and MacKenzie are back in O'Connor's court with a motion asking him to look at the HUD report and reconsider his finding that they were not the whistle-blowers.
I am at my computer looking at the docket. The guy on the ear-bug is talking to me, and I'm saying, "Oh, yes, well, the Masons, yeah, ever since that damn moon shot, well-known facts, yes, sir," and all of a sudden I wonder who the judge thought the original whistle-blower was. So I go back up the list of documents and look at the briefs filed last year by the Dallas Housing Authority and the city.
And there I am! The city and the DHA told O'Connor I was the whistle-blower! They cite a June 10, 2010, article I wrote under the headline, "City Hall had better look over its shoulder because HUD is getting ready to kick some fair-housing butt."
My first thought, when I see that line in the brief is, "Don't tell people I said 'butt'! Not in a federal court document! Goodness gracious."
But when I read on, I get the full drift. The position being taken by the city and DHA is even more ludicrous than I could ever have imagined.
The law says Lockey and MacKenzie are "parasitic relators" of the facts if there were other public disclosures before they made their report. In order to claim a reward under false claims, they have to be the original source of the information that tipped the government off to the fraud.
The city/DHA brief names several sources it suggests should have tipped the feds to the fraud before Lockey and MacKenzie showed up. One argument the city makes is that the city has been cheating on desegregation since the 1990 settlement of a federal lawsuit over housing segregation in the early '90s, so how could Lockey and MacKenzie's claims have been news to anybody? Of course that argument ignores the fact that the city promised to stop cheating then.
The brief also mentions several instances in which writers at the Dallas Observer have reported on housing discrimination over the years. By the way, the HUD investigative report also credits the Observer (not me) with revealing important relevant issues. The brief also mentions articles and editorials in The Dallas Morning News, but not as many.
But then the brief filed by the city and by DHA sort of zeros in on me and says I reported the specific allegations in the Lockey and MacKenzie complaint to HUD before they made their complaint, so therefore they were not the original sources of the information in the complaint. I was.
The brief quotes me at some length: "Schutze states that he is 'trying to figure out whether Dallas City Hall has scammed HUD out of hundreds of millions of dollars over the years by submitting what the law calls "false claims."'"
Trying to figure out. Jeez. Remind me to be less candid.
"He points out that the heart of the controversy is that Dallas has submitted certifications to obtain grant funding. Further, the article discusses the analysis of impediments requirement and insinuates that the defendants have failed to meet that requirement."
They quote me again: "For example, the city has to certify that it has studied all of the things that could stand in the way of the creation of fair and affordable housing and that it has developed strategies for getting past those hurdles."
Wow. How did I know that? I am so impressed with myself! So I'm back in the alley, OK, with my dogs and my poo bags, got the ear-bug going, guy's telling me how the Illuminati made Zero Dark Thirty to make people hate the Masons, and what? I just independently out of the blue on my own personal wattage think, "Gosh darn it, I wonder if in its annual certifications to HUD regarding the affirmative furthering of fair housing the city has truly and fully carried out its analysis of impediments in keeping with the spirit and letter of the law?"
Uh, no. I wish. But, no. How this actually works is that once in every 28 hours of buzzing ear-bug insanitude, somebody like Curtis Lockey or Craig MacKenzie comes on the line and says something in my ear that sounds deeply and disturbingly like it may actually have happened on this planet. An alarm bell rings, and a still small voice says, "All hands report to battle stations." I go back to my desk. I pick up the real phone, and we try again.
Of course I checked out what Lockey and MacKenzie told me. It was totally over my head. I couldn't even have written about it without getting people to tell me what the hell it was all about. And every step of the way I was ready for somebody to tell me Lockey and MacKenzie were full of it, none of their claims held water and here was why.
But it went the other way. The more I learned, the more solid their story became. The recent HUD report demonstrates that the same thing happened for the federal gumshoes. The deeper they got into the Lockey and MacKenzie complaint, the more they realized they had to keep going.
In the end, whatever I have written about these guys has been a fairly superficial skimming of the information they took to the government, in part because they were only ever willing to tell me bits and pieces. I never looked down the full bore of it until I read the HUD report.
Here's the thing, and I would appreciate it if you would keep this just between us. Kind of a trade secret in my line of work. We may speak of it only metaphorically. But if you ever saw a circus parade, you know there's always a high-stepping guy with a whistle out front in a tall black hat, and he's tossing a white baton in the air. So you do know that guy is not actually leading the parade, right? He's just the columnist.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss Observer's biggest stories.