Federal prosecutors said they plan to present evidence to a grand jury this month on allegations that current or former tenants and employes of a federally subsidized housing project in Seat Pleasant defrauded the government of more than $200,000 in rent payments.
According to government sources, the U.S. Department of Housing and Urban Development and federal prosecutors are investigating charges that some tenants who earned too much to qualify for federal housing assistance may have conspired with certain employes at Pleasant Homes to win admission to the 286-unit development and receive rent subsidies to which they were not entitled.
At least 30 current or former tenants and employes of the garden apartment complex, located in Prince George's County just over the District line, were involved, the sources said.
Investigators are looking into the management of Pleasant Homes by Edgewood Management Corp., the sources said.
The Bethesda-based firm manages Pleasant Homes and about 7,000 units in nearly 40 developments across the country. They include Brentwood Village, Frederick Douglass Garden Apartments and Washington Apartments in D.C., and La Salle Park Apartments and Queenstown Apartments in Prince George's County.
"There is an ongoing investigation and we are cooperating," said Elliott Bernold, Edgewood's chief operating officer, and until 1981, housing director in HUD's Washington-area office.
"The company per se is not a target, as far as we know, of the investigation," Bernold said. He said he did not expect any officers of Edgewood to be indicted.Bernold attributed the problems at Pleasant Homes to "one bad apple. I doubt that the one bad apple infected anybody else," he said.
Sources familiar with the probe said HUD has conducted only a handful of investigations of this type around the country, and few have involved as much in allegedly improper rent subsidies.
Assistant U.S. Attorney Wendy P. Arnell said the government may also charge some Pleasant Homes tenants and some employes with giving and receiving bribes in connection with the alleged rent fraud.
Government sources said they believe that tenants paid about $50,000 in bribes and kickbacks to employes of Pleasant Homes, a well-maintained complex of three-story brick buildings at Greig Street and George Palmer Highway.
According to Archibald Alexander, acting director of the Prince George's County Housing Authority, the tenants were among those who moved into Pleasant Homes when the project, designed for low- and moderate-income families, reopened in 1982 after extensive renovations.
In September, Alexander said, HUD sent the county a list of 17 families no longer eligible to live at Pleasant Homes. Alexander said he believed that those families had already moved from the project.
Under HUD's Section 8 rental assistance program, families whose incomes are low enough to qualify for federal help pay rent of only 30 percent of their income, adjusted for various deductions, and the federal government contributes the rest. The income ceiling is currently $27,000 for a family of four.
As a result, although rents at Pleasant Homes range between $512 and $519 for a one-bedroom apartment and from $562 to $593 for a two-bedroom unit, tenants with no income can have their rent completely subsidized and may actually receive reimbursements for their utility costs.
The renovation of Pleasant Homes, formerly Gregory Estates, was financed with $11,748,200 in tax-exempt bonds issued by the county housing authority.
"It was completely run down," Alexander said of the development. Edgewood Management, he said, "really turned that property around. They not only provided some better housing for Prince George's County but removed a lot of blight from that area. This is unfortunate that something like this has happened."
Pleasant Homes is owned by a partnership headed by Edgewood owner Eugene Ford.