Feds seeking Prince George’s repayment of mismanaged Johnson-era housing funds

September 20, 2012

Federal housing officials are weighing how best to recoup as much as $2.4 million linked to financial mismanagement during the administration of now-imprisoned former Prince George’s county executive Jack B. Johnson.

A report by the Department of Housing and Urban Development’s regional inspector general said the Johnson administration had provided federal funds to at least two ineligible nonprofit groups and then failed to track their work carefully.

The organizations were supposed to create or rehabili­tate moderate-income housing through HUD’s HOME Investment Partnerships program. But no new housing was built, the report said, and homes that were supposed to be rehabilitated were not repaired and appear to have been abandoned.

The report — released in August by HUD’s regional inspector general, John P. Buck — urged HUD to recover its funds from the county.

The HUD inquiry is the latest fallout from a federal corruption probe in Prince George’s County. Johnson (D) is serving seven years in prison for his role in a wide-ranging conspiracy that included bribe payments of at least $1 million. In many instances, he used the county’s housing department to advance his schemes, federal prosecutors said.

Allegations of pay-to-play politics in Prince George’s circulated for years. The FBI began an investigation in January 2006, authorities say, after agents learned that “real estate developers . . . were regularly providing things of value to public officials in exchange for official acts that were favorable to these individuals and their companies.”

The HOME program was a key element of the corruption scheme, federal officials have said. Some of the $28 million in HOME funds the county received were used to make deals in which Johnson and then-housing chief James Johnson, now serving 37 months in prison, took bribes. In exchange, they approved development projects, including some that, according to the HUD inspector general, failed to meet basic federal standards for self-
governance and oversight.

Bribery conviction

In one project cited by the HUD inspector general for lax county oversight, Johnson authorized payment of $1.2 million in HOME funds to Mirza H. Baig. The Laurel doctor was convicted of bribery after paying Jack Johnson and James Johnson between $400,000 and $1 million in bribes, according to federal prosecutors. Baig is serving an 18-month sentence; he was fined $50,000 and ordered to forfeit $250,000.

Baig’s HOME project, Romwood Square, a collaboration with Roots of Mankind, a Prince George’s nonprofit group, was supposed to rehabilitate 11 houses but did not. The HUD investigators found that “no renovations had been completed and the properties were vacant. There were several signs of neglect or abandonment.”

Baig became a witness against Johnson and was videotaped by FBI agents handing Jack Johnson $15,000 in cash on the day of Johnson’s arrest in 2010.

The county government, now headed by County Executive Rushern L. Baker III (D), is negotiating with Roots of Mankind to try to get the money back, said the current county housing director, Eric C. Brown. County officials have proposed taking title to the group’s 13.4 acres and the unrenovated houses. The county would then try to sell the property and use the proceeds to repay the federal government, Brown said. Brown said the county plans to sever ties with Roots of Mankind.

“It occurred before we got here, and we are trying to clean it up,” Brown said.

Officials from Roots of Mankind did not respond to requests for comment.

The HUD inspector general also faulted Kairos Development Corp. — founded by the Rev. Kerry A. Hill, pastor of New Chapel Baptist Church in Camp Springs — saying the nonprofit had overspent on pre-development work and mismanaged two pre-development loans.

In total, HUD asked the county to repay about $1 million attributable to Kairos projects. Neither Harold Davis, Kairos’s executive director, nor Hill responded to requests for comment.

Seeking a compromise

The county and Kairos have agreed that the nonprofit group will turn over its 1.4-acre property to the county, which will try to sell it, Brown said, but HUD has not yet agreed to any payment plan.

“We are hoping for an amicable compromise short of the county going into its coffers and paying the money back,” Brown said.

A third nonprofit group cited by the inspector general, Omega Gold Development Corp., is seeking to build 18 duplexes in Suitland. The company was awarded $100,000 by the Johnson administration for operating expenses, but the inspector general said the county had failed to ensure that Omega Gold was eligible to receive the funds.

Bleu Colquitt, Omega Gold’s executive director, said in an interview that the organization had complied with federal requirements and had provided all proper documentation to the county before it received operating funds between 2006 and 2008. Colquitt said the organization is resubmitting the documents, which Brown said should allay any concerns.

“We are going to show them that we provided them everything, and hopefully, we are going to resolve this,” Colquitt said.

Meanwhile, HUD officials are continuing their examination of the county housing department, which Baker administration officials said was in disarray when they took over in late 2010. HUD consultants are working with Brown and his staff, training employees to manage program funds and installing systems to ensure that spending is closely tracked.

Most of the housing department’s $91 million annual budget comes from the federal government. The county allocates about $3.1 million a year, and the state provides about $250,000.

“We’re working very closely with the county’s new administration to resolve these issues identified in the audit,” a HUD spokesman said in a statement.

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