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Federal Housing Official Says Fraud Charges Building Over NYCHA No-Bid Contracts

New York’s top federal housing official, citing an investigation by THE CITY revealing how NYCHA spends millions on no-bid contracts, declared Monday that “fraud charges are forthcoming.”

Lynne Patton, regional administrator for the U.S. Department of Housing and Urban Development’s New York-New Jersey office, also tweeted that NYCHA’s federal monitor “has already found THOUSANDS of examples of no-bid abuse & more.”

She added: “Make no mistake, fraud charges are forthcoming either via the SDNY [Southern District of New York, aka Manhattan federal prosecutors] criminal division or HUD’s Program Fraud Civil Remedies Act. Game over!”

THE CITY reported earlier Monday that low-level NYCHA managers have doled out thousands no-bid contracts, under $5,000, that are subject to little oversight.

Since 2014, NYCHA has spent $250 million on so-called micro purchases — despite three internal warnings from the city Department of Investigation that such contracts are vulnerable to corruption.

Residents ‘Still Suffer’

In one case, an internal DOI report that found evidence of a contractor billing NYCHA for work that apparently was done by the agency itself. Another report found a small number of select vendors are getting the bulk of these contracts, and that NYCHA managers aren’t inspecting the work to make sure it’s complete.

“Worse, the residents have nothing to show for it & still suffer,” wrote Patton, who retweeted THE CITY’s report from her official HUD account.

She contended federal monitor Bart Schwartz, who was appointed to oversee reforms of the troubled agency under an agreement the city signed in January with HUD and the Justice Department, already discovered evidence of “abuse.”

Schwartz’ appointment followed an investigation by the Manhattan U.S. attorney. Prosecutors from that office are still involved in tracking how NYCHA responds to the monitor’s proposed reforms.

A spokesperson for the federal prosecutor did not respond to a request for comment about the no-bid contracts.

‘Chronic Fiscal Mismanagement’

On Monday night, Schwartz held a roundtable with a group of tenant leaders, elected officials and representatives of various city agencies called the Community Advisory Committee. He did not address the issue of no-bid contracts.

A spokesperson for Schwartz declined to comment on Patton’s statement.

But city Comptroller Scott Stringer cited THE CITY’s findings as another example of the housing authority’s many challenges.

“Our audits have repeatedly shined a light on NYCHA’s chronic fiscal mismanagement, and this [report] is yet another troubling example of their dysfunction,” he stated.

Councilmember Ritchie Torres (D-The Bronx), chair of the Council’s investigations and oversight committee, noted the no-bid problem in January after DOI found a NYCHA manager had awarded five under $5,000 contracts at the Throggs Neck Houses.

“The deregulated world of micro-contracting — $250 million and counting — is a breeding ground for corruption and influence-peddling,” he said in a statement to THE CITY. “NYCHA’s process for administering micro contracts needs to be fundamentally re-thought.”

Source – THE CITY

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