Rampant Fraud Revealed in Providence Public Housing

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Tuesday, July 10, 2012

Dan McGowan, GoLocalProv News Editor

When it comes to investigating residents cheating the Providence Public Housing system, Dan Murphy and Jack Costa have seen it all.

There was the woman who was receiving subsidized housing based on a claim that she was bringing in no earned income until Murphy walked into the grocery store she owned on Elmwood Ave. and purchased a soda. The woman was forced to pay back $11,000.

There was the scheme a paralegal from a local law office pulled with her husband and elderly aunt that involved the use of both her maiden and married names to obtain a cheaper rent. She was found guilty of obtaining money under false pretenses and forced to pay back $13,000.

And of course, there was the recent case where a staffer in the Taveras administration was charged with conspiracy after investigators found she was renting a federally subsidized home from her stepfather for a decade, an act the Department of Housing & Urban Development (HUD) forbids. She owes over $85,000.

Murphy, an investigator at the Providence Housing Authority (PHA) and Costa, a security operations manager at the PHA, are the primary players in the agency’s efforts to crack down on Section 8 fraud in the capital city. Their work has led to the arrests of 15 individuals in the past year and since fiscal year 2008, 137 residents have been kicked out of public housing after the investigators found they weren’t reporting their income.

The total amount they’ve managed to recover since FY 2008: $565,940.33

“We’re not here to come in and throw the old lady off a cliff,” Murphy said during an interview last week. “These are people that have been doing this for five years, ten years. These are cases of blatant fraud.”

Paper Trail is Key

Murphy said the agency has only recently begun filing criminal charges against the worst offenders. He said residents can be charged with obtaining money under false pretenses, conspiracy or giving false documents to public officials.

Both former police officers, Murphy and Costa, who work with HUD on all cases, say their investigations mirror the criminal investigations police departments all over the country are conducting. The key, they say, is following the paper trail.

And while both concede that nabbing someone in, say, a bank robbery might be more glamorous, Murphy and Costa are quick to note that the white collar criminals are probably stealing significantly more money.

Providence is hardly alone when it comes to public housing fraud. According to a report issued last September, HUD recovered $292,397,572 nationwide in fiscal year 2011 thanks to investigations. Over 1,400 arrests were made and nearly 1,500 subpoenas were issued.

For all the money Murphy and Costa have been able to recover, residents have still managed to defraud the government out of millions of dollars, they say. Providence alone received $1.5 million per month from HUD specifically for Section 8 housing and Costa said the tips about people cheating the system are endless.

The agency even includes a link on its website for residents to report fraud.

“It’s important to know that these are mostly hard working people living in public housing,” Costa said. “They don’t like to see people getting by either. So we see people turning each other in all the time. Family members even do it.”

One of the best ways to investigate fraud claims: Facebook.

“I love Facebook,” Costa said. “What an investigative tool.”

“It’s like Technology Came up and Bit You”

Between tips, social media and a game-changing tool known as the Enterprise Income Verification (EIV) system, Murphy and Costa say public housing agencies all over the country have at least been able to begin going after the people defrauding the system.

The EIV, which basically streamlines all of the employment and income information for anyone participating in public housing, was launched in Providence several years ago and is now mandatory across the country. Murphy said they warned all recipients that a new computer system was going to be able detect if they were defrauding the system and even gave the residents an amnesty period where they could state their previously unreported income and simply pay a small fine.

Many came forward.

Many did not. And some have paid the price.

In the case of the Taveras administration staffer, Murphy said they began looking into the woman’s living situation last April and after raising some initial questions, they asked her to pay back less than $2,000. When she blew them off, they launched a full investigation, which led to her owing nearly 45 times the original amount.

“It’s like technology came up and bit you,” Costa said. “The EIV is to us what [criminal background checks] are for police officers. Once word was out on the street that we had these tools, a lot changed.”

Murphy and Costa both agreed that while the system is working, there are always going to be flaws and there are always going to be people that attempt to defraud public housing. The problem, they say, is that in a down economy, the demand for public housing is great and people cheating the system are actually hurting other families.

In Providence, the Section 8 waiting list hasn’t opened up since 1998. 14 years. And there are still over 1,400 people on that list.

That’s the real crime, Murphy said.

“People think they are stealing for the government and that’s okay,” he said. “But they’re actually stealing from other people on the waiting list who need housing.”

 

Dan McGowan can be reached at dmcgowan@golocalprov.com.

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