Fraud plagues Chattanooga Housing Authority

Fraud plagues Chattanooga Housing Authority

March 9th, 2012 by Yolanda Putman in News

Roxann Larson, president of the residents association at Dogwood Manor.

Roxann Larson, president of the residents association at...

Photo by Tim Barber /Times Free Press.


• 1,250 cases of fraud investigated over eight years

• 625 cases, or 50 percent, resulted in residents signing repayment agreements and have paid or are making payments as outlined in the agreements

• 312 cases, about 25 percent, were criminally charged in either local or federal courts and residents or clients were mandated to pay restitution by the courts

• 312 cases, about 25 percent, were investigated and found to be in compliance with CHA rules/regulations, meaning that no fraud was discovered

Source: CHA


CHA has five fraud cases now in the U.S. Attorney's Office awaiting prosecution.

Most fraud cases are below $2,000, CHA's threshold for repayable amounts. If the tenant owes $2,000 or more, the person may be terminated from the Section 8 program or evicted from public housing and possibly sued for the money owed. All CHA residents have 10 days to report any change in income or household composition.

Source: CHA

In the past eight years, Chattanooga Housing Authority officials have found hundreds of housing tenants deceitfully living in government-subsidized homes while thousands waited for housing.

CHA investigated more than 1,250 cases since 2004 and found fraud in three-fourths of them, officials said. In all, the fraud cost the housing authority about $225,000 a year in that time, or a total of $1.8 million in lost rental and utility payments for Section 8 and low-income public housing.

The cases uncovered included:

• A Section 8 tenant who was married to the landlord, with both living in the rental unit while CHA made the housing payments.

• A landlord posing as a tenant while a friend pretended to be the landlord. The friend cashed the Section 8 checks and gave the money to the landlord.

• A CHA tenant who had an apartment at two different public housing sites at the same time.

The revelations about fraud in public housing came in response to a Times Free Press query after CHA officials unveiled a new, stiffer work requirement in response a few housing tenants who were getting jobs to qualify for housing preference, then quitting work after getting into a housing unit.

When fraud is uncovered, the perpetrators are usually given opportunity to establish a payment plan and pay the money back. If they don't pay back the money, they are evicted, said Betsy McCright, CHA's executive director.

Half of the cases investigated since 2004 resulted in voluntary repayment agreements.

An additional one-fourth of the investigations resulted in criminal prosecution.

Paul Hattendorf, a 52-year-old homeless man who has applied for public housing, says that anyone defrauding the system should be evicted.

Hattendorf said he's been sleeping in tents, under bridges and in abandoned homes for more than a year. He's been on the public housing waiting list for four months.

"If they're cheating, throw them out," he said Wednesday while eating lunch at the Chattanooga Community Kitchen.

Hattendorf is among nearly 2,000 people waiting for public housing and more than 5,000 waiting for rental vouchers, formerly known as Section 8, for private housing.

"A lot of people are on the list for public housing, willing to follow the rules and report their income as they are required to do, and we want to encourage that honesty," said CHA Executive Director Betsy McCright.

Dogwood Manor Resident Association President Roxann Larson said the housing authority should do a better job of checking out public housing tenants and those who get vouchers, which they can use to pay rent on privately owned residences.

"The housing authority is also at fault because they did not check it out," Larson said. "Sometimes people with felonies are in public housing. Somebody is not checking."

CHA's Public Safety Division performs a criminal background check on all people 16 and older before admission into low-income public housing or the rental voucher program. Once they enter into housing, criminal background checks are conducted annually, said CHA officials.

Public housing should be reserved for people who play by the rules, said Hattendorf.

"We're being straight. We're selling newspapers on the street for money and we're not on disability," he said while his girlfriend, 44-year-old Keila Knight, sat next to him.

He said he signed up for housing at College Hill Courts and was told it would be June or July before housing would come available.

Hattendorf said it's unfair for honest people to wait for housing while some units are occupied by people operating dishonestly.

The scam involving a landlord and a friend came crashing down when the two had an argument and one reported the other. The case was referred to the U.S. attorney's office for prosecution, officials said.

The fraud involving the married landlord and tenant was uncovered when the tenant went to the housing voucher office to recertify. When reviewing the paperwork, a customer service representative noticed that the landlord's name was on a child's birth certificate along with the tenant's.

The landlord was prosecuted in state court and ordered to repay $11,000. The tenant had to repay the utility assistance payments, which totaled about $2,400, according to the news release.

In the case involving the tenant who had two public housing units, further investigation revealed that the tenant's sibling had forged the tenant's name on a lease to receive one of the apartments. The sibling didn't qualify for housing on his own because of criminal history.

The original tenant was allowed to remain, but the sibling who forged the signature is no longer in public housing, said CHA officials.