Ex-board member of Prince George's nonprofit is indicted over funds
Friday, May 21, 2010
A grand jury in Prince George's County indicted a former board member of a local nonprofit group Thursday who is accused of stealing thousands of dollars in federal funds meant for affordable housing projects, the county's chief prosecutor said.
Randy McRae, 51, of Crofton once sat on the board of the Central Prince George's County Community Development Corp., a nonprofit organization whose mission is to revitalize communities. According to law enforcement sources, McRae duped an investor and the county out of $50,000, using the nonprofit's name to open bank accounts, secure thousands in fraudulent reimbursements through a U.S. Department of Housing and Urban Development program and then cut checks for personal expenses.
He is charged with three counts of theft, one count of forging a signature and one count of forging a document, officials said. He faces up to 65 years in prison if convicted.
"Clearly these are very serious allegations that go to a critical function in Prince George's County. . . . There's a critical need for affordable housing," said State's Attorney Glenn F. Ivey, who added that he was unaware of McRae's location but a that there is a warrant for his arrest. "What was done with the public funds here is something that I think merited . . . the indictment."
Several attempts to reach McRae for comment Thursday were unsuccessful. A HUD spokesman, Brian Sullivan, and Karen Campbell, spokeswoman for the County Council, did not return requests for comment. James P. Keary, spokesman for County Executive Jack B. Johnson (D), and Terry Speigner, chairman of the nonprofit's board and head of the local Democratic Party, declined to comment because the court case is ongoing.
The indictment is the latest in a series of setbacks involving the county's HUD-related activities. Early this year, HUD officials reclaimed more than $2 million granted to Prince George's for affordable housing projects because the county failed to spend the funds within five years. It was the largest amount HUD has ever taken back from a jurisdiction for missing a spending deadline for the HOME Investment Partnerships Program, which began in 1992. In October, the county came within days of missing a deadline that would have lost Prince George's more than $5 million in HUD funds.
According to law enforcement sources close to the investigation, McRae -- who ran unsuccessfully for county executive in 1998 and has served as the nonprofit's general counsel and accountant -- forged signatures when applying for the group to be a Community Housing Development Organization (CHDO) without the knowledge of the other board members. The county granted the designation to the group in 2006, making it eligible for HUD dollars.
McRae then got a $25,000 loan from a private citizen who thought he was investing in an out-of-state venture, the sources said. McRae used the money to secure $25,000 in matching funds from the county through the HUD program, sources said.
McRae deposited the $50,000 in the bank accounts he established and cut checks for expenses not related to CHDO activities, including attorney fees, a land development in North Carolina and a payment to Baltimore Gas and Electric to reinstate electrical service to his residence, the sources said.
Last year, a county audit found significant procedural failings in how millions in federal housing grants given to area nonprofit groups were spent and overseen, and pointed to flaws in the county's system for certifying CHDOs.
The audit also cited an "individual" who established the CHDO on behalf of the nonprofit and made suspicious transactions without the knowledge of board members. The audit did not name McRae, but sources confirmed that it referred to him.
"The questionable activity," the audit said, "can be attributed to weak controls in the CHDO certification process and the process of disbursing CHDO funds or reimbursable expenses."
In a 2008 interview, Speigner told The Washington Post that the group's board voted to remove McRae in July of that year when it learned of the alleged activities. The group's CHDO status with the county has since been ended, Speigner confirmed.
A memo attached to last year's audit said that the department had created a new "comprehensive" checklist for certification and recertification of the CHDOs, which requires the signature of several county officials.