[Federal Register Volume 73, Number 133 (Thursday, July 10, 2008)]
[Notices]
[Pages 39712-39713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-15663]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5230-01]


OIG Fraud Alert: Bulletin on Charging Excess Rent in the Housing 
Choice Voucher Program

AGENCY: Office of the Inspector General, HUD.

ACTION: Notice.

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SUMMARY: This Federal Register notice provides important information 
recently issued by HUD's Office of the Inspector General (OIG) on a 
recurring problem in the Housing Choice Voucher program. The problem, 
which this notice

[[Page 39713]]

addresses, is landlords submitting false claims for periodic payments 
under housing assistance payment (HAP) contracts.

FOR FURTHER INFORMATION CONTACT: Bryan P. Saddler, Counsel to the 
Inspector General, Office of Legal Counsel Office of Inspector General, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 8260, Washington, DC 20410-4500, telephone (202) 708-1613 (this is 
not a toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal 
Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Mission of HUD's OIG

    The mission of HUD's OIG is to provide policy direction to HUD and 
to conduct, supervise, and coordinate audits, investigations, and other 
activities for the purpose of promoting economy and efficiency in the 
administration of the programs and operations of HUD and preventing and 
detecting fraud and abuse in such programs.
    Consistent with this mission, Section II of this notice presents 
OIG's fraud information bulletin on charging excess rent in the Housing 
Choice Voucher program.

II. Fraud Information Bulletin: Excess Rent

Purpose

    This Bulletin highlights a recurring problem in the Housing Choice 
Voucher (HCV) program. Specifically, this Bulletin discusses the 
submission by landlords of false claims for periodic payments under 
Housing Assistance Payment (HAP) contracts, where such landlords have 
violated their continuing obligations to not charge tenants rents in 
excess of what is authorized by the HAP contracts.

The Problem

    Improperly requiring tenants to pay rent in excess of what is 
authorized by the applicable HAP contract represents both an actionable 
offense under the False Claims Act and deplorable behavior directed 
towards the very persons whom the HCV program was designed to serve. 
(Additionally, depending on the intent, such an action may qualify as a 
criminal offense under 18 U.S.C. 287, 1343, etc.) OIG will not tolerate 
such conduct, and rather will cooperate with efforts to bring offending 
landlords to justice and to remedy their wrongs.

Background

    HUD administers Federal aid to local housing agencies (HAs) that is 
intended to implement housing assistance programs for low-income 
residents. With respect to the HCV program, HUD funds HAs via annual 
contributions contracts. The HAs, in turn, enter into HAP contracts 
with individual landlords. These HAP contracts provide for periodic 
housing assistance payments on behalf of eligible low-income tenants. 
The HAP contracts also may require eligible tenants to make 
supplemental rent payments; however, the contracts expressly prohibit 
landlords from requiring tenants to pay rent in excess of what is 
authorized by the HAP contracts.
    Pursuant to qui tam complaints and citizen complaints filed 
throughout the nation and subsequent activities, OIG has become aware 
of a number of landlords who have improperly required tenants to pay 
rent in excess of what is authorized by the HAP contracts, and thereby 
submitted or caused to be submitted false claims for HAP contract 
periodic rent payments.

Example

    On July 29, 2005, a Connecticut tenant filed a qui tam complaint, 
under 31 U.S.C. 3730, against her former landlord. See Coleman v. 
Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained 
that pursuant to a HAP contract the landlord had agreed to accept 
$1,550 per month for the rental of an apartment in Stamford. Of this 
$1,550, the tenant was personally responsible for $20, and HUD via the 
HA paid the complementary $1,530. In spite of the explicit prohibition 
in the HAP contract, however, the landlord required the tenant to pay 
an ``additional rent payment'' of $60 on six separate occasions. In 
other words, the landlord inappropriately extracted an additional $360 
from the helpless tenant.
    OIG is aware of numerous similar examples of this sort of egregious 
conduct nationwide.

Penalty

    Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons 
who submit to HUD or a HUD intermediary claims that are false, 
fictitious or fraudulent are liable for an assessment equal to three 
times the amount of the claim, plus a penalty of between $5,500 and 
$11,000 per claim. The United States may take the position that the 
entire amount of its HAP payment, not merely the amount of the excess 
payment by the tenant, is the claim that should be trebled where 
landlords make false certifications concerning excess rent charged. 
Additionally, each periodic rent payment constitutes a separate claim; 
thus, in the Coleman case the court levied a $33,000 (6 x $5,500) 
penalty against the landlord for her $360 victimization of the tenant.

Pertinent Information

    If you have pertinent information regarding this bulletin, please 
contact: Office of Legal Counsel, Office of the Inspector General, 
Department of Housing and Urban Development, 451 Seventh St., SW., Room 
8260, Washington, DC 20410.

    Dated: July 1, 2008.
Kenneth M. Donohue,
Inspector General.
 [FR Doc. E8-15663 Filed 7-9-08; 8:45 am]
BILLING CODE 4210-67-P