A recent government investigation has revealed millions wasted and fraudulent leadership rampant in a Texas public housing authority.
The Housing and Urban Development Inspector General received anonymous complaints about the Housing Authority in Taylor, Texas, alleging that “the former executive director gave away, sold, or transferred Authority-owned properties to other entities.” The investigators soon found that that was just the tip of the iceberg.
The Housing Authority is responsible for “the construction, maintenance, or operations of decent, safe, and sanitary housing for low income persons.” Beginning in June 2008, its executive director, referred to as Director 1 in the report, started managing several Authority-controlled properties separately, transferring ownership to the Mallard Run Housing Development Corporation–which he also controlled. Director 1 did so without Authority approval, and further blocked Authority-control and supervision of the properties by changing the membership of the properties’ boards.
Director 1 resigned his position as Housing Authority executive director in 2013, but continued to control the properties through Mallard Run, barring the Authority from reviewing its financial information, or having “any type of oversight or control of the transferred properties.” To this day Mallard Run still has control of the properties, which are valued at over $2 million.
This same director also used federal funds to pay Mallard Run employees–“a total of $243,442 in unsupported salaries.” He also transferred $40,600 in government funds to Mallard Run to buy a parking lot that the Authority already owned.
Before going, this director authorized over $10,000 in housing assistance for his son, in direct violation of conflict-of-interest provisions.
While the report does not name him, the executive director of the Taylor Housing Authority is identified as Steven Shorts in a publicly available 2008 letter from the Texas Attorney General’s Office, as well as on this form in which his wife, Norma Shorts, was nominated for “administrative person of the year” in 2011. (She won.) She worked alongside her husband in a variety of capacities at the Housing Authority, even helping investigate a property manager who’d been fired for fraud and theft in 2009.
“Norma has been involved in the Housing Authority business for many years,” the nomination reads. “Her years of experience come from being part of the industry through her husband.”
According to his LinkedIn profile, Shorts became Taylor Housing Authority’s executive director in February 1999.
A second director, who took over after Director 1’s resignation, was found to have authorized nearly $80,000 in “ineligible, unsupported, and unnecessary expenses,” including a $17,000 car the Authority didn’t need. Director 2 also canceled the Authority’s phone contract and signed a new one without authorization, a process that cost the program $11,833.
The report also found that this director, along with two Authority employees, used the Authority’s credit cards “to eat at local restaurants, order pizza, and send a bouquet of flowers to director 1”–the very one who had, in effect, stolen buildings from the Housing Authority that same year. Director 2 also used federal funds to move two of his previous employees from Florida to Texas, and hired them without Authority approval, costing $7,500.
“The employment contracts included severance pay provisions equal to 6-month’s pay if their employment was terminated without cause,” the report explains. “On November 1, 2013, without the board’s knowledge, director 2 terminated the employment of the two new employees. On November 4, 2013, he electronically transferred the net amount of $50,000 in gross severance pay to their bank accounts. Director 2’s check-writing authority was limited to $2,999.” Director 2 resigned just 10 days later. (RELATED: HUD Official Pleads Guilty To Stealing $843,000 In Taxpayer Funds)
In sum, “the Authority lost control and possession of a $255,000 property it owned, lost control of two blended component units with net asset values of more than $1.7 million, and incurred $392,059 in questioned costs.”
The Inspector General recommended that the Departmental Enforcement Center “take appropriate administrative sanctions, including suspensions, limited denials of participation, and debarments” against the two directors, and that the Associate General Counsel for Program Enforcement “determine legal sufficiency, and if legally sufficient, pursue remedies under the Program Fraud Civil Remedies Act, civil money penalties, or both against director 1” for submitting false claims for housing assistance payments.
They also suggested that the Housing Authority “revise its procurement policy to include board review and approval of contracts before they are executed by the executive director” and “take action to reclaim its properties.”
The Texas Housing Authority said it has sent a demand letter “requesting” the return of the properties, but have received no response. “Therefore, THA has hired legal counsel to assist in reclaiming the properties. Our legal counsel has communicated our intention to regain possession of the properties to their attorney.”
Regarding the two employees hired and fired by director 2 in order to game the severance packages, THA “has filed a claim with its insurance provider, Texas Municipal League (TML), to recover the loss of these funds. Civil and criminal penalties will be pursued as deemed necessary.”
Taylor, whose motto is “the zest of Texas,” is a small city with an estimated population of 16,000, and a poverty rate of 16.7 percent.