HUD's drops city as target Fraud investigation awaits new criteria, FBI aide writes

'The mayor is pleased'

June 23, 1998|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

Baltimore and two other cities targeted for major probes of alleged housing fraud are no longer scheduled -- at least temporarily -- for the investigations, according to an FBI official.

In a letter to Rep. Jerry Lewis, the California Republican who has pushed for housing probes nationwide, John E. Collingwood said "no city is considered to be selected for this initiative" until new criteria for targeting cities are developed.

Collingwood, who heads the FBI's office of public and congressional affairs, left open the possibility that Baltimore might be selected later by Susan Gaffney, the inspector general of the Department of Housing and Urban Development. The FBI is working with Gaffney on the selection criteria and is scheduled to supply personnel to Gaffney's investigative teams once probes begin.

Mayor Kurt L. Schmoke welcomed the letter. He sparked a nationwide controversy in April by charging that Gaffney's naming of Baltimore, New Orleans and San Francisco for probes was "tainted by issues of race and politics" because the cities have Democratic African-American mayors and housing chiefs. He also complained that objective criteria had not been used to target the cities.

"The mayor is pleased" that the selection process is beginning anew, said Clint Coleman, his spokesman. "What he asked for is a fair and objective process to target cities. He has never been opposed to the intent of this so-called fraud initiative, which is to root out waste, abuse and fraud."

HUD Secretary Andrew M. Cuomo hailed the decision, too.

"For Baltimore, this is a 180-degree turn because you went from a list of three to be investigated to a list of 900 potential investigatees," Cuomo said.

The chance that three investigations would all target cities with African-American, Democratic mayors was one in 50,000, he said.

"Many people in this nation are outraged at the possibility that taxpayer funds would be used for racially motivated or politically motivated hits," Cuomo said.

Gaffney, who works independently of Cuomo, said in April that she was "dismayed and outraged that somebody would call me racist for looking for fraud."

Collingwood's letter, dated Friday, marks the first time that an official has stated explicitly that the three cities are officially off a list of targets.

Others have implied as much by saying that the selections were tentative and that new selection criteria were being drafted.

Lewis yesterday denounced a New York Times article on Sunday that said "lawmakers" had reversed a decision to have Gaffney conduct probes in the three cities and that Lewis had agreed that the three cities should be "set aside."

Saying "the article was just plain wrong," Lewis said, "I was not part of any discussion that involved impacting the list one way or the other in the last several weeks." He said, as he has earlier, that Gaffney is choosing the targets.

On Saturday, Cuomo cited Baltimore "for outstanding management" of HUD programs, saying the city "can serve as a national model."

And yesterday, the U.S. Conference of Mayors, meeting in Reno, Nev., adopted a resolution denouncing the probes and calling for "legitimate criteria" that would be "applied fairly to all HUD grantees -- states, counties, as well as cities."

In Washington, Gaffney's spokesman refused to react to the Collingwood letter. "We're not going to comment on any aspect of our planning for our fraud initiative," said Michael Zerega.

At Lewis' urging, Congress last year gave Gaffney $9 million for probes in selected cities, which it did not name. Last week, Lewis' subcommittee added another $9 million to the probes, funds that could be removed or reduced as the new budget works its way through Congress.

Early this year, Gaffney advertised for investigators to run probes in Baltimore, New Orleans and San Francisco. Schmoke said she told him that 20 to 30 investigators would spend three years in Baltimore.

Later, Gaffney backtracked in the face of criticism from Schmoke and others, saying that "our plans aren't settled" and that "the cities haven't been finally selected."

Gaffney has never released the criteria she used, but in his letter Friday, Collingwood provided a few details on how the cities were targeted.

"In the first selection effort to identify cities, the FBI provided to the IG [Inspector General] our experiences and crime data concerning the cities the IG had under consideration," he wrote. "Because our data is much more limited than HUD's, we were only able to validate two of the three potential locations the IG was considering based on her selection criteria." He did not name the two cities.

The letter continued, "As I understand it, a more comprehensive selection approach is being formulated. Under consideration is a proposal that includes a needs assessment being conducted by the IG of the top 30 urban areas. Again, a significant portion of the assessment information would come from HUD because of their extensive collection of data."

He added that the FBI and the Justice Department "would have the opportunity to contribute our experiences in those locations, i.e., investigations, prosecutions, crime data, etc.

"Ultimately, the HUD IG would provide to the FBI and DOJ her assessment of which urban areas the analysis demonstrates could most benefit from a joint enforcement effort. Until that process is complete, no city is considered to be selected for this initiative."

Pub Date: 6/23/98

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