Sunday, August 12, 2007

Man's past didn't keep him from HUD grant - Supportive Housing for Mentally Ill exploited

By LEE HANCOCK - The Dallas Morning News - Sunday, August 12, 2007
It sounded good on paper: A Dallas nonprofit could transform a run-down Oak Cliff apartment into supportive housing for people with mental illness. All it would take was $1.1 million in federal housing money.

The catch was in other federal, state and local government files. Ryan T. Jones, the man in charge, had just left the Dallas Police Department as a dirty cop and felon. He ran a string of low-rent boarding homes and a crumbling apartment building that had a permanent place on police and code enforcement radars.

How could a million dollars go to a group with no discernible history, controlled by a man like Mr. Jones – whose rap sheet involved a multimillion-dollar computer theft ring? How could it happen through a charitable program that's been a feel-good story for the U.S. Department of Housing and Urban Development since 1990?

It may be the price of official indifference toward some of Dallas' most vulnerable residents. Despite a decade of problems, no one in government has kept up with the Joneses.

Dallas city code inspectors have repeatedly found broken doors and walls and windows, leaking sewage, bad wiring and filth at Mr. Jones' properties. They closed cases after the Hummer-driving DeSoto resident did some repairs and promised others. In 2006, a state agency found that one of Mr. Jones' boarding homes was an illegal, unlicensed assisted-living facility.

But it did nothing beyond sending him a warning letter.

Dallas police have responded to so many disturbances at Mr. Jones' properties that they have labeled some neighborhood nuisances. Those include the apartments that became federally subsidized housing and his main boarding house. But police have also told worried neighbors that there's not much they can really do.

In April, city code officers again started targeting Mr. Jones' main boarding house. He has agreed to pay more than $3,000 in fines for code violations. Last month, city attorneys sued to try to force his home to comply with health and safety standards or close. It is the first such lawsuit against a Dallas boarding home in years.

The city's actions came only after The Dallas Morning News began asking questions about Mr. Jones' properties.

HUD officials shifted their position, from praising the project to sending inspectors there Thursday for an earlier-than-scheduled management audit. This came after The News asked what the agency knew about Mr. Jones' past and his role in the group that got the million-dollar grant.

HUD's inspector general may be asked to investigate because at least one document required for the nonprofit's grant was apparently faked, a representative said. Dallas officials say a letter on city stationery and an accompanying HUD form required for the application wasn't from City Hall. A document expert who examined those records for The News said it is "highly probable" that both are "cut-and-paste" forgeries.

Mr. Jones, 38, declined to be interviewed about the apartments or at least seven board and care homes he has run in Dallas since 1999. He and his wife refused to release financial records or tax returns for his nonprofit organizations, though state and federal laws require it.

His wife, Mariscia Sanders Jones, executive director of the nonprofit that got the million-dollar federal grant, says her husband is "a Christian-based man" helping people with nowhere else to turn.

"He has a passion for it. If he didn't, it wouldn't be in business that long," she said in a brief interview. She declined to answer most questions. "We're basically hardworking people whose first priority is to make sure we take care of those clients.

"It's not a slum. It may look like one because it's you or me trying to do upkeep," she said of their property. "We can't keep it as a beautiful mansion and this and that, but keep it where it can be successful."

Chaotic places

Mr. Jones' apartments and board and care homes are chaotic places, current and former residents say. A mental health caseworker says one of the homes went weeks without a toilet in winter 2006. Its residents had to relieve themselves in the yard or walk blocks to a convenience store bathroom. A resident of the same house said it had no hot water for most of the following summer.

Since 2004, police and ambulance crews have been called weekly to Mr. Jones' properties, records indicate, costing taxpayers more than $2,500 a month for emergency runs. The 911 calls range from assaults and drug overdoses to a resident who had to be subdued with a Taser after swinging a nail-studded fence post at police.

A pastor says his ministry's van was chased from Mr. Jones' main West Louisiana Avenue house. The driver was told not to return after the ministry helped a mentally retarded resident there relocate.

That resident, who has the mind of a slow 9-year-old, was preyed on by other residents, court and police records indicate. He once had to be hospitalized after another resident bashed in his nose. His family says he lived there several years because they couldn't find anyplace else to take him. There are few options in a region where the mentally disabled cycle between locked hospital wards, jail cells and an underworld of unregulated flophouses that experts call "mental health slums."

Melvin Smith, 51, a former resident of the North Marsalis Avenue apartments who has schizoaffective disorder, said drug abuse was so rampant in the apartments that "you practically didn't have a choice. Everybody in there was doing drugs." Before he moved out earlier this year, Mr. Smith recalled, Mr. Jones confiscated his ATM card. He "told me I was using way too much money on cocaine. He was telling me I couldn't continue to pay my rent otherwise."

"You have to learn how to survive. You never know when somebody might come with a knife," said Gaylord Guajardo, a former resident who has severe depression. The 31-year-old said he lived there for much of 2006 before finding a place to move so he could get away from the fights and access to prostitutes and crack cocaine.

"This project shows how easily the program can be abused," said Ann O'Hara of the Technical Assistance Collaborative, a Boston group known for disability housing work. "If HUD had people reviewing these applications who know something about housing and disability services, this project would never have been funded."

Dallas cop

Mr. Jones began running boarding houses as a Dallas cop. A South Oak Cliff High graduate, he took community college criminal justice classes and worked as a jailer before getting into the Dallas police academy in 1991.

His police personnel file suggests an average patrol career, with a few notes of praise and a few unfounded complaints.

One 1999 police internal affairs report indicates that Mr. Jones dealt with mental illness within his own family. His father accused him of assault after Mr. Jones came to his parents' home in uniform and confronted his father about getting rough with his mother. Mr. Jones was cleared after relatives told investigators that his father had a history of mental problems.

Mr. Jones was working patrol in Oak Cliff in April 1999 when he registered the name of a new business, Superior Boarding Homes.

Three months later, he and partner Stanley Durane Williams got a contract to house and feed clients of the Dallas County Welfare Department. Mr. Williams, an insurance adjuster then on probation for state felony theft, could not be reached for comment.

Like other boarding home operators, Mr. Jones and Mr. Williams were promised $10 per day per person to provide safe, supervised shelter and meals for each indigent county client, county records indicate. The typical client was homeless and mentally ill.

Mr. Jones and Mr. Williams rented a 44-year-old boarding house at 114 W. Louisiana Ave., on a weedy street of run-down houses between South Beckley Avenue and Interstate 35E.

They sent the county a handbook touting Superior Boarding as "home away from home." It listed the two men, Mr. Jones' wife, and one of her relatives as directors. Superior Boarding would serve people with "a pronounced history of physical, mental, visual or hearing and speech handicaps."

"You are the most important person in my Superior Boarding Home," the company handbook told would-be residents. "I promise to care for you with kindness and courtesy, and I will never forget that you are a guest in my home. I will go the extra mile to have qualified staff, the right supplies and equipment, and caring people available to help you heal."

Mr. Williams and Mr. Jones shared another sideline – one that had the attention of the FBI.

FBI investigation

Investigators had evidence that Mr. Williams was selling hot goods for a computer theft ring plaguing shippers and Fortune 500 firms across North Texas. His confederates grabbed shipments. Mr. Williams then peddled the hot Apples, Compaqs and other gear as far away as California, according to court and police records.

Police began chasing the ring in 1997, the year Mr. Williams was arrested for state felony theft.

By September 1999, FBI agents had enough evidence to get a wiretap on Mr. Williams' phone, court and police records indicate. Former FBI agent Tom Hugonett said investigative evidence and informants indicated that Mr. Williams and Mr. Jones frequently discussed their boarding home business. It was striking, the former agent said, how the two men ridiculed their residents' pleas for food and medicine.

"They'd be laughing," said Mr. Hugonett, now a detective for the Austin Police Department. "They were saying things like, 'That guy wants to eat; he's asking for groceries. They can forget about it.' "

The police officer and his partner discussed their boarding home making "three to four times" what a rent house might bring, and they made plans for more, Mr. Hugonett said. "You could tell, whatever they were involved in, they weren't in it for the care of the individuals. They were in it for the money."

It was also clear that Mr. Jones was involved with the hot computers. That September, Mr. Jones and Mr. Williams discussed a stolen computer that Mr. Jones was trying to sell, court filings indicate. Two weeks later, records indicate, Mr. Jones loaned his pickup to move nine stolen iMac computers.

"We knew he was a dirty cop," Mr. Hugonett said.

Business shift

The men's focus appeared to be shifting to boarding homes. Prices on stolen tech equipment were falling and heists were getting harder, the former agent said. "Slowly but surely, they [Mr. Jones and Mr. Williams] were getting out of the computer business."

More worrisome, Mr. Jones discussed using police contacts to get confidential information and then did that, telling Mr. Williams the name of one of his associated who was under investigation. Mr. Jones was overheard assuring his partner that fellow cops also would alert him before anyone came after them.

Turmoil ensued within the FBI and Dallas police headquarters over the apparent police corruption. The computer case dragged on more than a year.

In the meantime, Mr. Jones filed papers in November 2000 registering "Community of Family and Friends" as his business at the West Louisiana address. Eleven months later, he bought the house on West Louisiana that he and Mr. Williams had rented for their boarding home. He signed the deal a few weeks before police raided the place for evidence in the computer case.

Mr. Williams began cooperating with the FBI and pleaded to theft charges in March 2001. The next month, Mr. Jones and 11 others were indicted on charges of conspiracy and interstate transport of stolen property. Mr. Jones was also charged with obstruction of justice and false statements.

In June 2001, Mr. Jones pleaded guilty to lying to the FBI. He resigned from the Police Department, writing that he was "going into the real estate business."

Playing 'the game'

He wasted little time. He kept the contract to house county welfare clients. He also kept buying run-down rent houses in Oak Cliff, turning some of them into boarding homes.

In September 2001, Mr. Jones incorporated Community of Family and Friends Resource Center as a Texas nonprofit. Its corporate address was his neat, two-story brick home in DeSoto. Its three directors were Mr. Jones, his mother and his wife.

Mr. Jones returned to federal court the next month and got three years' probation.

He bought a decaying, 12-unit apartment building on North Marsalis Avenue in June 2002, almost a year to the day after he pleaded to federal charges. One in a row of faded, '50s-era apartments along Marsalis, the two-story building neighbored an elementary school. Mr. Jones financed it with two notes totaling $207,000.

Over the next two years, city code inspectors would repeatedly document leaking plumbing, a hole-riddled interior, bad wiring and no working smoke detectors. In November 2002, a code inspector reported the second floor had no power.

But Mr. Jones was only fined once, in 2005, paying about $500 for a fire code violation. City reports indicate Mr. Jones kept inspectors at bay by starting some repairs, promising others and pleading that he was a new owner.

"It appears that he knows how to play the game," said Tyrone McGill, a supervisor with the city's code compliance department.

In June 2003, the Joneses' nonprofit applied for a federal HUD 811 grant. It wanted HUD funds to buy the apartments from Mr. Jones and rehabilitate them as supportive housing for people with severe mental illness.

The 811 program

In 1990, Congress created the 811 program to address a national shortage of safe, affordable housing with supportive services for people with disabilities.

The lack of such housing is acute nationwide. A recent study by the Boston-based Technical Assistance Collaborative estimated that average rent for efficiency apartments in Dallas would eat 98 percent of a monthly Social Security disability check in 2006, and a one-bedroom apartment would take 109 percent.

HUD officials and outside housing experts say the 811 program has helped thousands of Texans who otherwise might be marooned in substandard housing or institutional care. The program is small – statewide, there are 93 projects with 964 units. Dallas County has five projects with 72 units, and Tarrant County has 12 projects with 125 units.

New 811 grants are awarded annually to nonprofit organizations. They don't have to be repaid if a project houses qualified residents for 40 years. HUD also provides each 811 project ongoing rent subsidies amounting to 75 percent of annual operating costs.

In exchange, rent can be no more than 30 percent of a tenant's adjusted gross income. That's not much, because most qualifying residents get only Social Security disability – about $623 a month in Texas.

Most grants in the region have gone to established housing providers such as Volunteers of America and mental health providers such as Behavioral Health Services in Dallas. Experts say smaller, newer groups don't often apply because the process is complicated – so much so that many applicants hire grant consultants to navigate it.

"It requires a lot of expertise," said HUD spokeswoman Patricia Campbell. "We want to make sure the money is well spent and is going to benefit the people the program was designed to benefit."

An 811 application must include certifications from the city and state that the project is consistent with local planning goals and has a support plan that meshes with the mental health system.

That plan must detail how the organization will help residents connect with mental health providers, job training and other services. Such support is considered crucial to keeping residents stable and out of the destructive cycle of repeat hospitalization, homelessness and jail.

But HUD's expertise is in development – not social work. As a result, some experts say, agency reviewers don't closely examine a support plan.

"The only thing that usually governs who gets this money is the art of writing a good application," said Ms. O'Hara, a former Massachusetts assistant housing secretary who reviewed Mr. Jones' 811 application for The News.

"If you hire one of these consultants who can generate a cut-and paste job like this one and have a [development] site and a bunch of lower-level people in a [mental health and social support] service system who are willing to sign a letter saying you've got a good program," Ms. O'Hara said, "you can get a million dollars."

Grant application

Mr. Jones hired consultant G. Keith Harlin of DeSoto to prepare a HUD application for Community of Family and Friends.

Mr. Harlin was a one-time social worker who had worked for Dallas's Day Resource Center, the Dallas County Welfare Department and area social service groups. He said he met Mr. Jones in spring 2003 at a Dallas meeting for groups involved with the homeless. Mr. Harlin had just started a grant consulting business.

He said he worked with Mr. Jones and his wife to prepare a nearly 300-page application for Community of Family and Friends and to get the Joneses through the grant process. He said he couldn't recall or find records of his fee. The nonprofit reported paying him $24,000 in grant funds.

Mr. Harlin said he was impressed with Mr. Jones' interactions with his residents, most of which he witnessed by watching Mr. Jones field phone calls.

"I think that he was doing the best that he could do with what he had to work with. Ryan, I believe, cares deeply for these folks. These people call him at all hours," Mr. Harlin said. "He has the patience of Job.

"Some of these folks are the hardest people to serve," he added. "They are people that can't go anywhere else because of their histories, because they burned down buildings or they had violent histories or they are noncompliant with medicine. These are peopling that, but for boarding homes, would be homeless."

Mr. Jones mentioned being a former officer, Mr. Harlin said, so he assumed that Mr. Jones, "like a lot of other cops, got burned out."

Told of Mr. Jones' history, Mr. Harlin said: "Oh, my God ... I had absolutely no idea. I don't do background checks on the applicants. Maybe I should."

Mr. Harlin couldn't explain why the nonprofit's HUD application listed Mr. Jones' wife as its executive director when Mr. Jones was really in charge.

Odder still, Mr. Jones' wife signed the HUD application for the nonprofit using her maiden name instead of her married name. A review of deed records by The News found that Ms. Jones has used her married name in real estate transactions for nearly a decade.

The June 2003 HUD application also obscured Mr. Jones' key role and family ties to others involved in the nonprofit project, though there are clues.

One filing named Mr. Jones assistant executive director and contact person for the nonprofit's 811 application. A copy of the nonprofit's original incorporation papers listed Mr. Jones as a director. And there was also an option to buy the apartments from Mr. Jones.

But the paperwork didn't explain Mr. Jones' relationship with the organization or its other principals. And he wasn't on the 10-member board of directors identified in the nonprofit's application.

In August 2003, Mr. Jones' wife sent annual corporate reporting forms to the Texas Secretary of State listing only herself, her husband and her mother-in-law as Community of Family and Friends' directors. She signed her name Mariscia Jones.

One possible reason Mr. Jones' involvement wasn't made clearer to HUD: He was on federal probation. HUD requires applicants to submit a sworn statement that no board members, key employees, directors, management or other principals have recent convictions. The required disclosure form warns that falsehoods or misrepresentations could mean losing the grant – even prosecution.

Mr. Jones' wife signed the disclosure form on June 1, 2003. Using her maiden name, she affirmed that none of Community of Family and Friends' principals had criminal convictions within three years for violations including false statements. Mr. Jones pleaded guilty to that offense two years before.

'Life changing'

Community of Family and Friends' HUD application to renovate and run the Marsalis property as supportive housing described its programs in effusive but vague terms.

The focus was on allowing people with serious mental illness "to live with a certain amount of dignity." The group said it offered such services as free transport and group and individual counseling with two staff social workers.

"CFFR offers life changing treatment, practical support, useful education, comfort and understanding to those in the greater Dallas area who are suffering from neurobiological disorders," its application stated. To demonstrate its qualifications, the nonprofit pointed to its experience in helping and housing people with mental illness at Louisiana House.

The group sent recommendation letters from Veterans Affairs' homelessness outreach program in Dallas, the county welfare department and several regional mental health providers. Of nine recommendations, eight referred to Mr. Jones as owner, executive director or operator of Community of Family and Friends.

Many of the officials who wrote the letters said they had met Mr. Jones only in passing and knew his grant consultant. Mr. Jones seemed well-meaning, they said, and housing was in short supply.

Ms. O'Hara, the housing expert, said mental health providers and advocates "will sign anything," because the housing is so needed. "It's not about whether these people are qualified," she said.

The nonprofit's 811 application included an environmental consultant's report that the Marsalis property had no "open or outstanding" city code violations as of June 5, 2003.

There was no mention of its checkered code history because HUD didn't ask. The building's problems would escalate in the next two years, city records indicate, including failing a 2004 multifamily housing inspection. Dallas police tagged the apartment building as a nuisance after a May 2005 police report described it as "a known hangout for drug users and burglars."

Federal rules require that anyone displaced during an 811-funded renovation must be helped with relocation. The nonprofit's application said only that Mr. Jones planned to move 12 Marsalis apartment residents – all low-income people with mental illness – to Louisiana House, while the Marsalis property was renovated.

"It's very surprising to me that HUD did not investigate that further," said Ms. O'Hara, the housing expert. "The feds have to pay for residents to be relocated. That's why they usually avoid projects that have tenants in the property involved."

Louisiana House was described in the application as "a secure, supervised living environment." Among its amenities: "access to planned recreational activities, shopping, sports, gardening, tending to animals and other opportunities."

There was no mention that the house was in such disrepair that city inspectors would cite it repeatedly within a year for structural hazards. Again, HUD didn't ask.

The pastor

Joel Pulis, head of an Oak Cliff ministry for the mentally ill, said Louisiana House was decrepit from the time he and other volunteers began giving residents rides to church in mid-2002.

He said he began visiting as he started The Well Community at Cliff Temple Baptist Church. The first resident he met there was a man in a wheelchair so incontinent that the room he shared with three younger men reeked of urine. The minister added that beds in the house were crammed three or four to a small room.

"You had females cohabitating [with male residents], and we'd hear stories about a lot of sexual stuff going on," he said.

Several Cliff Temple Baptist Church members joined him in distributing Christmas gifts in 2003. One member was so overcome by the stench in the house, the minister said, that he bolted outside and threw up.

Mr. Pulis and a mental health caseworker who visited regularly said they never saw counselors or social workers there other than state-funded mental health workers. Residents of Louisiana House were ragged and dirty, he said, and they complained that what little they had was often stolen. He added that he saw residents panhandling for drug money or waiting for dealers whenever he drove through the neighborhood.

"The mental health of the guys at Ryan's places are absolutely the lowest we've come in contact with," said Mr. Pulis, whose ministry has received national recognition for its work with people with mental illness.

In November 2005, soon after residents moved out of the Marsalis apartments, Dallas County probate court investigators went to Louisiana House to see a resident under court guardianship. When they arrived, they said, one resident was masturbating in the yard, another ranted at the sky and others huddled around a car in which there appeared to be drug use.

HUD approval

HUD reviewers approved an 811 grant for Community of Family and Friends, plus a rent subsidy of $31,800 a year.

The original grant amount, $769,900, was later upped to $1,118,500 by HUD after the nonprofit reported that no other government agencies or foundations would contribute. HUD officials and housing experts say that such increases are common.

HUD reviewers noted that the nonprofit had no development experience or local government support. But they gave it high marks for experience in disability housing, community ties and fundraising, all based on what the group said on paper.

A state mental health agency official gave no response when asked to assess whether the nonprofit's support plan was "well designed to meet the needs of [its tenants] with disabilities." HUD's internal review forms indicate that anything but a positive assessment from the state agency should have meant automatic rejection of the application. A HUD representative confirmed that the agency never followed up with the state.

Meanwhile, the HUD official who oversees 811 grant reviews said the agency never visited Mr. Jones' boarding homes or did criminal checks on the nonprofits' key personnel.

That's because HUD doesn't require such background checks. "We look at what they put in their application," said Charlotte Mitchell, regional 811-program manager. "We look at the [neighborhood] and what they're trying to do there."

"I think they were a good group," Ms. Mitchell said earlier this summer. "They did what we asked them to do to get their project together."

The nonprofit was named a grant winner in November 2003.

In the 17 months that followed, HUD required the nonprofit to set up a subsidiary nonprofit that would actually own and run the apartment complex.

Mr. Jones was incorporator of that subsidiary, Cherbonay at Marsalis Independent Living Inc., state records indicate. Its business address was – and is – Mr. Jones' main boarding house on West Louisiana Avenue.

HUD did require disclosure of the subsidiary nonprofit's board members. The list submitted to the federal agency included two disabled apartment residents, Mr. Jones' wife, his mother and another of their relatives.

The board chairman, Keith Police of Mesquite, said last month that he got involved because Mr. Jones attended church with him. Asked if he was still on both boards, Mr. Police said. "Yeah, I think so."

"If I've been to meetings, it's been a while," he said, refusing further questions. "I pretty much can't tell you anything other than that. I think you'd have to ask him [Mr. Jones] if you want information."

Mr. Police and Mr. Jones' wife and mother each sent sworn statements to HUD that they had no family ties to the seller of the property or anyone else involved in their project. Their conflict-of-interest statements and a similar form signed by Mr. Harlin, the consultant, also said that they knew of no such ties between the nonprofits' other board members, the property seller or anyone else on their development team.

The disclosure forms, required by HUD, included a warning that false statements could lead to prosecution.

As its paperwork flowed into HUD's regional office, the nonprofit submitted a budget proposing to pay $242,000 for the apartments – $10,000 more than the price suggested by their own appraisal.

In January 2005, a HUD appraiser wrote a concerned letter calling the nonprofit's appraisal "one of the worst that I have seen." It had "incomprehensible" writing, "errors and inconsistencies," the HUD official wrote. There were "large and small violations" of appraisal standards. Bottom line, the HUD official told an 811 program manager: It overstated the building's value by more than $42,000.

Ultimately, HUD approved the $200,000 price tag recommended by their internal appraiser.

Mrs. Jones said she and her husband haven't made money from housing people with disabilities.

"Even from the beginning of it, if you want to talk about a net profit or a loss on it, it was a loss. It wasn't just about, 'I want to put money in my bank account.' You have expenses that overrode," Mrs. Jones said. "Some people [running boarding homes] are driving the fancy cars. This business here is a totally different business."

The Joneses haven't been hurting. Since Mr. Jones was forced out of the Police Department in 2001, they have amassed a real estate portfolio valued at over $1 million. It includes two boarding homes, three recently shuttered boarding properties, seven rent houses and the house occupied by Mr. Jones' mother. Mr. Jones bought four condos in Arlington last year. He and his wife owned little of that in mid-2001, when they bought their 2,811-square foot home off Belt Line Road in DeSoto.

Mr. Jones drives a Hummer H2. He bought it in February 2005, weeks after the nonprofit told HUD they couldn't do the project without a 45 percent increase in the federal grant. The luxury SUV's price was nearly $50,000.

Dead corporation

In December 2006, the Texas Secretary of State suspended Cherbonay's corporate charter for failure to comply with annual public-information and franchise-tax rules. Under Texas law, Cherbonay is a dead corporation.

In February, city code inspectors visited the apartment building and found it in compliance with health and safety codes.

In April, one apartment resident said, Mr. Jones began getting Marsalis tenants to sign lease agreements – a HUD requirement. Another resident and two former residents who lived in the apartments after the renovation said they never had leases.

All four said they paid $250 to $350 per month for a one-bedroom apartment shared with another paying tenant. The rent was half or nearly half of their monthly income – above the maximum rent HUD allows.

Contacted by The News, Mr. Jones refused to release financial records for his nonprofits, including paperwork for federal tax-exemption.

"I have to show my books to a reporter?" he said in May. "Have you asked to look at anybody else's?"

"I can't give you what I don't have," he said in June.

He and his wife have since not responded to repeated written requests for information.

In June, the IRS said neither nonprofit has filed any 990 tax returns, which are required for nonprofits that take in more than $25,000 per year.

Ms. Campbell, HUD's spokeswoman, said agency officials are concerned. But she added that HUD has no documentation that it is anything but a success.

"The property was properly rehabilitated and the nonprofit corporation that's receiving the funds has done their contract, as far as we know," she said. "We're concerned about this because the 811 program is a really successful program. It's been successful for many years. It's helping many people."

Neither Mr. Jones' criminal history nor his marriage to the executive director of Community of Family and Friends was disclosed to HUD, Ms. Campbell said. The relationship also would be "something we would look into" as a possible conflict of interest, she said, because Mr. Jones sold the apartment building to the nonprofit and was paid through federal funds.

Ms. Campbell confirmed Friday that agency auditors did visit the project Thursday for a management review. She declined to say what they found, noting that they will take several weeks to prepare a report and then ask the nonprofit for further comment.

"HUD takes allegations of fraud and mismanagement very seriously," she said. "When allegations are appropriately substantiated, they are referred to HUD's Office of Inspector General for investigation."

Ms. O'Hara, the housing expert, expressed disbelief that HUD didn't spot potential problems sooner. "I'm shocked," she said, "that HUD would fund such a shoddy application."

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