Bizarre Congressional Hearing on Housing Features Convicted Felons

Lawmakers hear from those who helped perpetrate the HOME program.
by , | November 3, 2011 AT 4:35 PM

In one of the most unusual Congressional hearings of the year, lawmakers questioned an unnamed, convicted felon via video feed linked to her prison Thursday.

The unusual circumstances occurred during a hearing to examine fraud and abuse within the Department of Housing and Urban Development's HOME program, which sends money to state and local governments that they in turn use to build affordable housing.

The program is being scrutinized due to a high-profile Washington Post investigation published earlier this year, which found many projects funded with HOME dollars have languished, and the feds lacked oversight of those who received the money.

The hearing quickly became something of a circus, with Democratic lawmakers loudly objecting to the unorthodox circumstances.

The convict, who lawmakers referred to as "Jane Smith," donned baggy prison clothes and a black do-rag as she spoke from a federal penitentiary. She identified herself as the former executive director of Gary Urban Enterprise Association, an Indiana non-profit that received HOME funds, who had been convicted of mail fraud and tax evasion.

That information correlates with Jojuana Meeks, who led the same organization and pleaded guilty to the same charges 2007. Meeks also made political contributions to the same organization and in the same amount that "Smith" described during the hearing.

A spokesman for the House Financial Services Committee said he didn't know the identity of "Smith." The Federal Bureau of Prisons asked that she be allowed to testify anonymously, since there is a general concern that fellow prisoners would react negatively to an inmate who cooperates with authorities.

"Smith" was one of two convicts that spoke to a joint hearing of two subcommittees of the House Financial Services Committee. Republicans reasoned that there was no one better to explain fraud within the program, and thus how to prevent it, than the very people who exploited it. But that approach may have backfired.

Neither of the convicts’ scams was particularly innovative or complicated. Timothy Truax, a former Dauphin County, Pa. employee, simply took kickbacks from contractors, and "Smith" stole money from her non-profit (throughout the testimony, "Smith" repeatedly said she “misappropriated” funds, rather than stole them, frustrating several lawmakers).

Democrats also announced that "Smith" made a $5,000 contribution to the National Republican Congressional Committee, insinuating that Republicans profited from her actions. "Smith" said the money she contributed to Republicans came from her salary, not the "misappropriated" funds. Democrats made the point that money is fungible so there's really no distinction. Republicans didn't ask her to elaborate.

Several Democrats (most prominently Rep. Luis Gutierrez of Illinois) expressed outrage at the convicts' appearance before the committee, arguing that they had no credibility. The video and audio feeds to the prison housing "Smith" repeatedly malfunctioned throughout the hearing, which only heightened the tension, since both she and lawmakers often had to repeat themselves and speak loudly. Democrats seemed to believe Republicans had invited the convicts to testify in order to undermine the HOME program itself, rather than find ways to combat fraud.

"In my nearly 20 years in Congress, I have never heard testimony from a convicted felon," Gutierrez said in a statement.

Republicans said they want to remove waste from the program so deserving projects can receive more funds.

Rep. Maxine Waters, D-Calif, at one point called Truax a “liar.” She suggested that the only reason he appeared before the panel was to increase the likelihood that he'll get a lesser sentence. Waters repeatedly asked Truax if he had discussed that possibility with his lawyer, and Truax declined to answer.

Rep. Michael Capuano, D-Mass., tried to get large portions of Truax’s testimony stricken from the records since he didn’t consider it germane to the hearing. He feared that the testimony – in which Truax tries to portray himself as a sympathetic character who was struggling financially and was manipulated by contractors – may be used during the sentencing. Capuano’s efforts were unsuccessful.

In May, the Washington Post published an investigation of the HOME program and reported that it "squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developer of the local housing agencies that funded them."

The program distributed $1.8 billion last year, according to HUD officials.

The paper identified 700 projects that had been awarded $400 million and then went idle for years. The bulk of the investigations focused on the minimal oversight HUD has on the local organizations that eventually receive the funds.

In the past, HUD officials have said the newspaper overstated the extent of the problems, and they are working on reforms.

Both witnesses did reveal information about HUD that helped underscore the need for reform. Truax said he was visited by a HUD supervisor from Philadelphia just once every three years. "Smith" said she was completely unqualified to run a non-profit (she was originally hired as a temporary receptionist), and nobody in her organization knew anything about affordable housing. Despite that, her organization received HOME funds thanks to a consultant who expertly filled out applications on the organization’s behalf. “If you read the application, we looked like we knew what we were doing,” "Smith" said. “Anyone can put anything on paper and make it look good.”

Indeed, during a second panel, HUD’s acting deputy inspector general, John McCarty, said that his office has found a lack of monitoring in the program, and those who are ultimately caught defrauding the program have said they too were aware of the minimal oversight.

Still, McCarty said HUD officials who run the program have generally been receptive to reforms that are suggested.