HUD CONTINUES CRACKDOWN ON WASTE, FRAUD AND ABUSE BY BARRING 14 PEOPLE FROM DOING BUSINESS WITH FEDERAL GOVERNMENT

The debarments arose out of cases in Maryland, New York, Virginia and Wisconsin and also involved people from Georgia, North Carolina and Texas.

Twelve of the 14 people have already been convicted of illegal conduct for improperly collecting HUD funds. The new action announced by Cuomo strikes an added financial blow against the individuals, depriving them of all federal contracts for varying periods of years. Such contracts are a major source of income for many businesses.

"HUD's days as a mugging victim are over," Cuomo said. "Anyone who tries to rip off this Department will be caught and punished to the full extent the law allows."

"This is the latest in a series of actions we're taking at HUD to stop people from abusing our programs," Cuomo said. "Waste, fraud and abuse are an ugly part of HUD's past that have no place in our present and future."

"Today's announcement reflects the coordination and teamwork that exists between HUD, the Justice Department and U.S. Attorneys' offices as we work together to ensure the highest standards of integrity in HUD programs and to protect taxpayer dollars," Cuomo said.

Cuomo launched the "Get Tough" initiative to crack down on waste, fraud and abuse in HUD programs in March.

Actions take so far include: a 500 percent increase from 1996 in the number of regulatory enforcement actions taken against bad landlords; collecting over $11 million in fines and awards from bad landlords; a doubling in the number of enforcement actions taken against officials responsible for administering programs in public housing; protecting senior citizens from reverse mortgage scams; and aggressively pursuing cases of illegal housing discrimination.

Here is a summary of the debarments announced by Cuomo today:

MARYLAND

Anthony R. Snell of Baltimore, MD, president and owner of Bryce Construction, was convicted of Federal Program Bribery in the U.S. District Court for Maryland. The conviction stems from charges that he was part of a scheme to overbill HUD for construction costs. It is alleged that while his construction company was performing work for the Housing Authority of Baltimore, Snell and a project engineer schemed to inflate the amount of an invoice that was to be charged to the project. In 1992, Snell allegedly paid the project engineer $5,500 in kickbacks. He was debarred by HUD on September 24 for three years.

Robert Doran of Rocky Point, NY, was convicted of Bank Fraud, Aiding and Abetting, and Mail Fraud Aiding and Abetting in the U.S. District Court for Maryland. Doran, who was the seller of three properties, participated in a scheme with a buyer, broker, and loan office in which they created documents that inflated a property's true value in order to obtain a higher loan from a mortgage company. Doran was sentenced to imprisonment for a period of 30 days, supervised release for a period of five years, payment of $129,941 in restitution, a $1,000 fine, and a $100 assessment. He was debarred by HUD on September 24 for five years.

NEW YORK

Buovodantona Aliperti, of Rocky Point, NY, was convicted in U.S. District Court IN New York City of Bank Fraud and Filing a False Tax Return. From 1985 to 1991, as a member of the Brookhaven Planning Board, he allegedly obstructed or delayed processing of applications and proposals affecting HUD/FHA insured properties in exchange for money and favors. He allegedly received $12,000 in cash; proceeds from the sale of property; the purchase and servicing of a car at favorable terms; and the ability to rent cars at favorable terms in exchange for his improper actions. Based on his conviction, he was debarred on September 24 for five years.

Peter Sapienza, of Garden City, NY, also a member of the Brookhaven Planning Board, allegedly took part in the scam with Aliperti. Sapienza allegedly obstructed and delayed processing of applications relating to HUD assisted or insured properties in exchange for cash. He received about $250,000 from one company, $27,600 from another company, $21,873 in improvements to his home, and $6,619 in improvements to his son's home. He was debarred by HUD for five years on September 15, based upon his conviction in the U.S. District Court for the Eastern District of New York for Interference with Commerce by Extortion and Tax Evasion.

In all of the other cases announced today, debarment were based on court convictions. However, in some cases, debarment result strictly based upon a HUD investigation, and the allegations must be proven in an administrative hearing, not a court of law. The following is such a case:

Carlos Sanchez, a Brooklyn, NY owner of C & S International Equities, Ltd., and Daniel J. Doran of Bayside, NY, a property closing agent for HUD/FHA insured loans, conspired to provide false financial information to HUD concerning various properties, using unaccounted for funds as kickbacks. Sanchez was accused of submitting false information to HUD regarding 17 properties. He also allegedly received kickbacks related to the sale of six properties for a total of approximately $39,236. Doran allegedly submitted false information to HUD regarding five sales transactions and gave kickbacks from the five properties to Sanchez totaling approximately $39,236. Sanchez and Doran were debarred on September 30 for three years. C & S International Equities, Ltd., controlled by Sanchez, was also debarred for three years.

VIRGINIA

Edward T. Flanagan of New Bern, NC, pleaded guilty in the U.S. District Court for the Eastern District of Virginia to Conspiracy to Make False Statements. Flanagan was charged with submitting false information to HUD concerning his income, employment, and debts in order to obtain 12 HUD insured properties. Each of the properties have been foreclosed on and losses to HUD are expected to exceed $350,000. On May 2, Flanagan was sentenced to two years imprisonment. He was debarred on September 24 for three years.

WISCONSIN

The following individuals, all associated with the Family Farm Preservation company, were part of a bogus money order scam that spanned several states (including Wisconsin, New Mexico, Texas, Mississippi, Missouri, and Virginia). The scam involved creating and distributing fake money orders to homeowners to be used to pay on HUD-insured mortgage loans.

Homeowners were advised by Family Farm that using these fake money orders was a legal way to pay off debts. In exchange for the money orders, homeowners were told they should send a "donation" ranging from $100 to $500 to Family Farm. By using these fake money orders to pay a legitimate debt, the risk of foreclosures and financial loss were increased for the Department. Each participant in this scheme was convicted of Bank Fraud and/or Mail Fraud in the U.S. District Court Eastern District of Wisconsin.

Thomas F. Stockheimer and Leonard Allen Peth, both of Tigerton, WI, directed and controlled the activities of Family Farm and were debarred for an indefinite period of time on September 30. Family Farm Preservation was also debarred on September 30 for an indefinite period of time.

Others involved with the company and this scheme were: Mark Francis Van Dyke of Clintonville, WI, who was debarred on September 29 for five years; Harry Days of Hyattsville, MD, debarred on September 29 for four years; Gladys M. Lee of Marietta, GA, and Ingeborg Kelly of Kings Beach, CA, debarred on September 25 for three years; and David Krieger of Canton, TX, debarred on September 29 for three years.