Feds say DuPage Housing Authority misspent $5.8 million
The DuPage Housing Authority improperly spent more than $5.8 million in federal money and failed to adequately document another $4.7 million, according to the latest federal audit of the embattled county agency.
The audit, obtained by the Daily Herald, was prepared by the inspector general's office of the U.S. Department of Housing and Urban Development. Unlike two prior reports, which have housing authority officials scrambling to find the paperwork that would justify years' worth of expenditures, the new audit specifically calls for the repayment of nearly $5.1 million.
“This audit is more troubling and maddening news from the DHA,” said DuPage County Board Chairman Dan Cronin, who demanded the resignation of the agency's former executive director when he learned about the earlier audits. “The misuse of public funds is simply inexcusable.”
The latest report indicates some of the money was spent to buy flowers, meals and clothes for authority employees and Christmas gifts for DHA board members.
Auditors concluded that the Wheaton-based agency failed to follow HUD guidelines and its own policies while administering its Section 8 programs. As a result, HUD officials “lacked assurance that the authority's resources were used to benefit low- and moderate-income individuals.”
Blame for what happened was placed on the DHA board and former Executive Director John Day.
“The authority's board of commissioners did not adequately exercise its responsibility to oversee the administration of the authority's programs,” auditors wrote, adding that Day failed to “implement adequate controls” over the authority's operations.
The report calls for “administrative action” to be taken against Day and the DHA board. But Day resigned and his deputy, Robert Hess, retired earlier this month when Cronin demanded their ouster.
The earlier audits were issued in September 2009 and June 2010. Those reports concluded the authority mismanaged funds and inappropriately administered its Section 8 project-based voucher program.
“Just as I did when we received the previous audit information,” Cronin said, “I will act swiftly to hold folks accountable for the violation of trust and blatant disregard for tax dollars.”
Attempts to reach Day for comment Thursday were unsuccessful. The audit states that Day did not challenge its findings. Pam Fenner, a member of the housing authority board, said she had not seen the latest audit and did not know Day's whereabouts.
The latest report is recommending that HUD's Chicago Office of Public Housing require the housing authority to repay nearly $5.1 million in program funds from “nonfederal” sources.
Most of the authority's budget comes from the federal government. It receives almost $22.7 million a year in HUD assistance, according to the audit.
One of the findings in the new report is that the authority spent more than $2.3 million in program funds “for transactions not related to its program.” The “unallowable” transactions included:
• Loans to affiliates for activities not related to its program.
• Purchase of flowers, meals, clothing and beverages for authority staffers.
• Christmas gifts and laptop computers for board members.
“This noncompliance occurred because the authority disregarded HUD's requirements and directives, lacked an understanding of program regulations, and failed to implement adequate procedures and controls,” the report states.
The authority also didn't follow HUD requirements when it admitted 146 households based on referrals — and not from its waiting list.
As a result, the authority inappropriately paid more than $2.6 million in housing assistance to households that were inappropriately admitted into its program, the report said.
Steve Meiss, director of HUD's Illinois office of public housing, said officials are working with Cronin to address the various issues raised in all three audits.