OIG Fraud Alert; Bulletin on Charging Excess Rent in the Housing Choice Voucher Program

Federal Register: July 10, 2008 (Volume 73, Number 133)

Notices

Page 39712-39713

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr10jy08-72

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Docket No. FR-5230-01

OIG Fraud Alert: Bulletin on Charging Excess Rent in the Housing

Choice Voucher Program

AGENCY: Office of the Inspector General, HUD.

ACTION: Notice.

SUMMARY: This Federal Register notice provides important information recently issued by HUD's Office of the Inspector General (OIG) on a recurring problem in the Housing Choice Voucher program. The problem, which this notice

Page 39713

addresses, is landlords submitting false claims for periodic payments under housing assistance payment (HAP) contracts.

FOR FURTHER INFORMATION CONTACT: Bryan P. Saddler, Counsel to the

Inspector General, Office of Legal Counsel Office of Inspector General,

Department of Housing and Urban Development, 451 Seventh Street, SW.,

Room 8260, Washington, DC 20410-4500, telephone (202) 708-1613 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal

Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

1. Mission of HUD's OIG

   The mission of HUD's OIG is to provide policy direction to HUD and to conduct, supervise, and coordinate audits, investigations, and other activities for the purpose of promoting economy and efficiency in the administration of the programs and operations of HUD and preventing and detecting fraud and abuse in such programs.

   Consistent with this mission, Section II of this notice presents

   OIG's fraud information bulletin on charging excess rent in the Housing

   Choice Voucher program.

2. Fraud Information Bulletin: Excess Rent

   Purpose

   This Bulletin highlights a recurring problem in the Housing Choice

   Voucher (HCV) program. Specifically, this Bulletin discusses the submission by landlords of false claims for periodic payments under

   Housing Assistance Payment (HAP) contracts, where such landlords have violated their continuing obligations to not charge tenants rents in excess of what is authorized by the HAP contracts.

   The Problem

   Improperly requiring tenants to pay rent in excess of what is authorized by the applicable HAP contract represents both an actionable offense under the False Claims Act and deplorable behavior directed towards the very persons whom the HCV program was designed to serve.

   (Additionally, depending on the intent, such an action may qualify as a criminal offense under 18 U.S.C. 287, 1343, etc.) OIG will not tolerate such conduct, and rather will cooperate with efforts to bring offending landlords to justice and to remedy their wrongs.

   Background

   HUD administers Federal aid to local housing agencies (HAs) that is intended to implement housing assistance programs for low-income residents. With respect to the HCV program, HUD funds HAs via annual contributions contracts. The HAs, in turn, enter into HAP contracts with individual landlords. These HAP contracts provide for periodic housing assistance payments on behalf of eligible low-income tenants.

   The HAP contracts also may require eligible tenants to make supplemental rent payments; however, the contracts expressly prohibit landlords from requiring tenants to pay rent in excess of what is authorized by the HAP contracts.

   Pursuant to qui tam complaints and citizen complaints filed throughout the nation and subsequent activities, OIG has become aware of a number of landlords who have improperly required tenants to pay rent in excess of what is authorized by the HAP contracts, and thereby submitted or caused to be submitted false claims for HAP contract periodic rent payments.

   Example

   On July 29, 2005, a Connecticut tenant filed a qui tam complaint, under 31 U.S.C. 3730, against her former landlord. See Coleman v.

   Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained that pursuant to a HAP contract the landlord had agreed to accept

   $1,550 per month for the rental of an apartment in Stamford. Of this

   $1,550, the tenant was personally responsible for $20, and HUD via the

   HA paid the complementary $1,530. In spite of the explicit prohibition in the HAP contract, however, the landlord required the tenant to pay an ``additional rent payment'' of $60 on six separate occasions. In other words, the landlord inappropriately extracted an additional $360 from the helpless tenant.

   OIG is aware of numerous similar examples of this sort of egregious conduct nationwide.

   Penalty

   Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons who submit to HUD or a HUD intermediary claims that are false, fictitious or fraudulent are liable for an assessment equal to three times the amount of the claim, plus a penalty of between $5,500 and

   $11,000 per claim. The United States may take the position that the entire amount of its HAP payment, not merely the amount of the excess payment by the tenant, is the claim that should be trebled where landlords make false certifications concerning excess rent charged.

   Additionally, each periodic rent payment constitutes a separate claim; thus, in the Coleman case the court levied a $33,000 (6 x $5,500) penalty against the landlord for her $360 victimization of the tenant.

   Pertinent Information

   If you have pertinent information regarding this bulletin, please contact: Office of Legal Counsel, Office of the Inspector General,

   Department of Housing and Urban Development, 451 Seventh St., SW., Room 8260, Washington, DC 20410.

   Dated: July 1, 2008.

   Kenneth M. Donohue,

   Inspector General.

   FR Doc. E8-15663 Filed 7-9-08; 8:45 am

   BILLING CODE 4210-67-P