The defrauders next door

Posted: Aug 09, 2001 12:00 AM
Fraud is so inherent to the operation of the U.S. Department of Housing and Urban Development that "HUD Scandal" might as well be one word. The latest hudscandal involves a feel-good program (what else?) for cops and teachers. Since 1997, police officers have been able to snag cheap housing in supposedly low-income neighborhoods under the guise of "strengthening community ties." The Clinton administration expanded its so-called "Officer Next Door" program in 1999 to include public- and private-school educators. In exchange for promising to settle for three years in "distressed" regions, participating cops and teachers receive 50 percent discounts on HUD-owned homes (which were taken over by the government when previous owners defaulted on federally insured loans). Lucky public servants can score down payments as low as $100 on their half-price homes if they agree to use federally backed mortgages. The government's noble idea (aren't they all?) was that if law enforcement officials and teachers lived in the 'hoods where they worked, proximity would make residents' hearts grow fonder. Flowers would bloom. Crime would drop. Student test scores would skyrocket. The drug dealer would toss out his crack pipes and peddle gardening tips instead. The home-invasion robber would borrow a cup of sugar -- and give the cup back. The gang leader would pull up his low-riding pants, ditch his Uzi, and drop by for tea and crumpets. Alas, this idyllic garden of good intentions fell victim to greedy weeds and bumbling caretakers. The agency had no way of checking whether participants actually lived in the homes they purchased. Moreover, HUD bureaucrats under then-Secretary Andrew Cuomo -- now running for governor of New York -- shrugged at a flimsy safeguard requiring participants to pay the full home price if they did break the rules. Naturally, dozens of cops and teachers who were supposed to serve as "role models" for their neighbors cashed in on taxpayer-funded compassion. According to HUD's inspector general, 54 participants defrauded the program to the tune of $1.2 million. Swindlers in Miami, Manassas, Va., Memphis, Tenn., and Springfield, Mass., rented out, sold or abandoned the homes in violation of their contracts. Others were able to secure the home discounts in upper-income neighborhoods and gated communities -- miles from the urban inner cities the program was designed to help. Investigators believe that as many as one in four participants nationwide are bilking the system for untold amounts. At least 10 officers have pleaded guilty to defrauding the program; 14 more have been indicted. The culprits include a former vice detective with the District of Columbia's Metropolitan Police Department, a former New Orleans police officer, and a lieutenant in the Dallas school district police. Eighty-one other cops and teachers are currently under investigation. The Bush administration has taken small steps to stop the hemorrhaging. HUD suspended the Officer Next Door/Teacher Next Door programs for four months, and unveiled new paperwork-shuffling protections last week. But such baby band-aids can't hide the fact that this un-neighborly racket was ill-conceived from the start. To this day, there is nothing requiring HUD to demonstrate that the programs actually succeed in reducing crime, raising test scores, or promoting better relations between inner-city residents, cops and teachers. And that is what the core enterprise at HUD is all about: throwing money at public relations gimmicks with reckless disregard for the costs and consequences. In 1999, the agency's inspector general failed to complete an audit of HUD's 300-plus programs because the books were such a mess. Congress has yet to review HUD's 2000 audit. At least $60 billion in HUD funds are missing, according to investigators, yet Congress continues to fork over budget increases. Thanks to bipartisan support, HUD is here to stay. It's a cozy den of thieves who have established permanent residence in Washington's Home Sweet Swindle.