HUD probe given boost Investigation wins political backing, new funding promise

Stokes endorses effort

Baltimore, other cities targeted in look at housing fraud

June 20, 1998|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

The chief investigator for the Department of Housing and Urban Development this week gained important political support and the promise of another $9 million for housing fraud probes in Baltimore and other cities.

A House appropriations subcommittee approved the funds Thursday evening as Rep. Louis Stokes of Cleveland, the panel's senior Democrat, publicly endorsed the probes. A 30-year veteran of the House, Stokes was the first African-American on ++ the full Appropriations Committee.

His comments were important because they marked his first public endorsement of the investigations since a controversy erupted over Mayor Kurt L. Schmoke's charge that racism and politics were involved in the probes. City Housing Commissioner Daniel P. Henson III, Mayor Marc Morial of New Orleans, the National Conference of Black Mayors and the U.S. Conference of Mayors joined Schmoke in his criticism.

Schmoke said in April that the selection of Baltimore, New Orleans and San Francisco for investigations was "tainted by issues of race and politics" because all three cities have black mayors and black housing chiefs. He complained that "objective criteria" were not used to choose the cities. The criteria used by Susan Gaffney, the HUD inspector general, have not been released publicly.

Last week, Rep. Jerry Lewis, chairman of the subcommittee, told Schmoke that Gaffney is working with the FBI and the Department of Justice to refine the criteria, a step that Schmoke welcomed. The objective, Lewis said Thursday, is to assure that "very clear criteria" are used.

Lewis, a California Republican, has said he expects more than three cities to be targeted.

Last year, at Lewis' urging, his subcommittee included $9 million in the budget for the inspector general to "conduct a comprehensive and in-depth review of selected cities to identify and prosecute fraud affecting HUD programs and funds." The objective, he has said, is to look at all HUD funds, not just those spent by city governments and housing authorities.

Schmoke said Gaffney told him in April that 20 to 30 investigators would spend three years working in each city. A day after they met, Schmoke made his charge about racism and politics.

Last month, Stokes said he had not "reached a conclusion" about Schmoke's charges.

Thursday evening, noting that "there's been a great deal of newspaper coverage filled with allegations" about the probes, Stokes told the subcommittee, "I happen to concur in the reasons for which the chair wants to spend" the money.

Later he refused to say if he was referring to Schmoke's charges when he talked of allegations in the press.

"It's important that the chair and I are in accord" on the approach to the probes, he said. "That's the real stuff."

The money was added to Gaffney's budget as the Lewis subcommittee approved a $70.9 billion spending plan for

housing, veterans, environmental and science programs. Before Gaffney gets the money, the budget has to clear a number of hurdles on its way to President Clinton's desk. The money could be dropped or the amount changed along the way.

Earlier this year, Gaffney advertised for criminal investigators, one each to head the probes in Baltimore, New Orleans and San Francisco. She told Lewis' subcommittee that she had rented space for investigators in each city. Since the controversy erupted, she has backtracked, telling a House subcommittee, "Our plans aren't settled."

On Thursday, Lewis claimed the selection of the three cities had been tentative.

Lewis has made it clear that he is closely following Gaffney's work and has said that his subcommittee "will be involved in that final decision" on targets for the probe.

Once Gaffney finishes working with the FBI and Justice Department on the criteria, he said, those agencies, along with HUD Secretary Andrew M. Cuomo, will meet with his subcommittee behind closed doors "to discuss the very clear criteria" and "outline what the procedures are." That meeting would be followed by a public forum involving Lewis and Stokes.

Lewis said Thursday that he wants to ensure that the effort is nonpartisan and free "of any implication of racial involvement.

"Our objective is to focus upon fraud where it exists," he said.

Pub Date: 6/20/98

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