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Housing Groups Allege Pittsburgh Fraud

Monday, March 3, 2014

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Four housing organizations are accusing the City of Pittsburgh and its former wunderkind mayor of systematically defrauding the federal government of tens of millions of dollars in low-income housing funds over six years.

The organizations' federal-court lawsuit says then-Mayor Luke R. Ravenstahl and his administration "knowingly and repeatedly submitted ... false or fraudulent claims or statements" to the U.S. Department of Housing and Urban Development (HUD) to obtain Community Development Block Grants and funds from HUD's HOME Investment Partnerships Program.

Hill District Consensus Group
Hill District Consensus Group Inc.

The four Pittsburgh fair-housing plaintiffs including the Hill District Consensus Group Inc.

Affordable-housing funds were instead "routinely" used for street paving, parking garages, bridge and building repairs, street lights and traffic signals, including millions spent for projects in upscale areas, the groups allege.

Whistleblower Claim

The suit was filed in December 2012 by Freedom Unlimited Inc., the Northside Coalition for Fair Housing Inc., the Hill District Consensus Group Inc., and the Fair Housing Partnership of Greater Pittsburgh.

Because the action was filed under the federal False Claims Act (the federal whistleblower statute), the complaint was sealed while the Justice Department decided whether to intervene on behalf of the plaintiffs. The Justice Department opted Feb. 4 not to join, and the complaint was unsealed Feb. 19 in U.S. District Court for the Western District of Pennsylvania.

Ravenstahl, then 26, was one of the U.S.'s youngest big-city mayors when he was appointed to the office in 2006. He later won special and regular elections, but opted not to seek re-election when his last term ended in 2013.

Annual Certifications Challenged

The housing agencies' complaint accuses the Ravenstahl administration of "annually, but falsely" certifying to HUD that the city had analyzed "known impediments to fair housing and will take appropriate actions to overcome these impediments."

Bill Burke / Page One via Wikimedia Commons

Former Pittsburgh Mayor Luke R. Ravenstahl, shown here in 2009, is accused of making false certifications to HUD to obtain millions in housing funds.

In fact, the community groups say, "Neither has occurred."

Plaintiffs say the city last completed the required annual analysis of "impediments to fair housing" in 2006—"and then only as an 'update' to its 2000 impediments analysis."

"Contrary to their certifications, they have ignored or refused to carry out their duty to principally address conditions which perpetuate residential, racial concentration," the suit says.

In addition, the plaintiffs say the city has denied them access to records of its Community Development Block Grant analyses and expenditures.

The city did not respond to a request for comment on the suit.

$29.5M Challenged

The plaintiffs say they have been raisiing the Community Development Block Grant issue with city officials since at least 2009. However, they say, the City Council has distributed the federal funds evenly across its nine districts, despite wide variations in their constituencies and housing stock.

Southside Works

The plaintiffs contend that federal money for low-income housing was "routinely" shifted to other projects, including Pittsburgh's upscale Southside Works redevelopment.

The complaint includes these allegations:

  • In its 2008 annual action plan, the city failed to explain how it planned to spend $2.9 million in CDBG funds, failed to "identify a specific activity for" an additional $1.4 million, and used an additional $2.5 million for "ineligible activities."
  • In its 2009 annual action plan, the city failed to provide information on how it planned to spend $2.3 million, failed to "identify a specific activity for" $775,000, and used $1.9 million for "ineligible activities."
  • In 2010, the plaintiffs allege lack of information on $2.9 million, insufficient detail on $1.6 million, and $4.8 million in ineligible activities.
  • In 2011, they allege lack of information on $3.7 million, insufficient detail of $2.1 million, and $5.9 million in ineligible activities.
Northside Coalition of Fair Housing

The plaintiffs include the Northside Coalition of Fair Housing. HUD's HOME Investment Partnerships Program works with local nonprofits that are dedicated to affordable housing.

The suit does not specify damages, but plaintiffs' attorney Donald Driscoll told the Pittsburgh Tribune-Review that the total misspent was "at least $29.5 million."

Law or Interpretation?

However, Driscoll also told the news outlet that his clients were "less interested in recovering the money than negotiating a settlement with the new administration" of Mayor William Peduto.

Driscoll also told the Pittsburgh Post-Gazette that he hoped for policy changes from Peduto's administration that would drive more economic support to blighted and low-income communities.

"We do believe that the objectives of the [plaintiffs] in this case are consistent with certain objectives of this new administration," Driscoll said.

Former federal prosecutor Bruce Antkowiak, who is not involved in the case, speculated to the Tribune-Review that the Justice Department's decision to stay out of the suit could indicate that the issues raised are more a matter of policy interpretation than legal violations.

If federal prosecutors suspected ongoing fraud, Antkowiak told the paper, “they would have certainly intervened to protect the government's funds."


Tagged categories: Commercial Construction; Developers; Economy; Government; Government contracts; Housing; Lawsuits; Maintenance + Renovation; Residential Construction

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