A recent review by the HUD inspector general’s office found that Gross’s hire created a conflict of interest and risked tainting some of HUD’s rule-making from the time she worked with the agency, from February 2011 until February 2014.
“HUD cannot know whether the policy decisions enacted during the deputy director’s tenure were inappropriately influenced or in the best interest of HUD and all of its stakeholders,” the watchdog agency said in a report this week.
Gross joined HUD under a law that allows the federal government to share employees with outside organizations. Sandra Henriquez, the agency’s then-assistant secretary for public and Native American housing, appointed her to serve as deputy assistant secretary of her division’s policy office.
Under the hiring statute, employment costs are supposed to be shared between the federal government and its partner organizations. But HUD paid all of Gross’s salary, giving her $40,000 more than the agency’s advertised salary for the position and covering the cost of her bonuses from the council.
The report said Henriquez, who resigned from the federal government in June, might have used the personnel-sharing program to avoid federal salary limitations. She denied any intentional wrongdoing in an email to The Post on Wednesday.
“During my entire tenure, I never knowingly did anything but follow all of HUD’s protocols, policies and procedures,” Henriquez said. “I would not ever take any action that would harm the department or the people we serve.”
The Council of Large Public Housing Authorities says its members manage 40 percent of the nation’s public housing program. The group describes itself as a “national nonprofit organization that works to preserve and improve public and affordable housing through advocacy, research, policy analysis and public education.”
The council registered as a lobbying organization until September 2009, but its activities suggest the group continued functioning in a similar capacity after changing its status, according to the report.
Gross registered as a lobbyist with the organization before September 2009. She told investigators that her role with the group has not changed since then.
The review found that Gross attempted to sidestep HUD’s rule-making guidelines while pursuing regulatory changes in areas such as reporting requirements, income verification and oversight programs. Industry groups, including the one Gross works for, had previously requested relief from those requirements, according to the report.
The inspector general’s office concluded that Gross’s impartiality was questionable because of her dual roles with HUD and the council.
Investigators discovered emails that showed “at least some CLPHA officials believed that it was appropriate for [Gross] to continue to be involved in CLPHA affairs as they related to HUD business.”
In one message, a council employee asked Gross whether she “had any intel” on an upcoming HUD meeting. Gross downplayed the importance of the meeting in her reply, saying she could try to gather more information but adding that she would “prefer not [to] and save my flame for more significant issues.”
Investigators also found that Gross hired two other industry insiders who were working as permanent HUD staffers at the time, placing them within her division at the second-highest grade for non-executive federal employees without interviewing them. One of the employees had previously worked for her at the council.
Additionally, Gross did not file financial-disclosure forms as required under federal ethics guidelines, the report said.
Gross did not return a call and email at the council on Thursday, and her home phone number could not be positively confirmed. The council did not respond to an emailed request for comment.
Investigators found failures on various levels within HUD. For instance, the agency’s office of general counsel did not question the lack of financial-disclosure forms from Gross until the inspector general’s review began, and HUD did not ensure that Gross completed mandatory ethics training.
HUD spokesman Jereon Brown said the department’s deputy secretary has assigned the agency’s office of general counsel to take permanent responsibility for vetting temporary non-federal employees. He said HUD is also providing additional guidance on the filing of financial disclosure forms.
Brown said the changes will help ensure that the department’s employee-sharing program is “beyond reproach.”