Thursday, April 27, 2017

Feds Bag Attorney Who Accepted Position As Housing Authority Legal Counsel For Allegedly Hiding Conflict Of Interest That He Was Also A Local Landlord Pocketing HUD Financial Benefits From His Section 8 Tenants; Defendant Collected $380K In Federally Subsidized Rent: Indictment

In Hagatna, Guam, The Guam Daily Post reports:
  • Former Guam Housing and Urban Renewal Authority legal counsel Mark Smith denied to the GHURA board any financial interest that conflicted with his role with the agency, but an indictment alleged that he did have a conflict, which he tried to disguise through a series of allegedly fraudulent bank and real estate transactions.

    In March 2011, Smith executed a contract with GHURA to serve as its legal counsel, and "falsely certified to GHURA he had no conflict of interest that would prevent him from serving as its legal counsel," according to the indictment, filed on March Monday [March 22] in the District Court of Guam.

    Smith, a former brother-in-law of Gov. Eddie Calvo, was arrested Monday [March 22] along with Smith's friend, flight attendant Glenn Wong, on a host of charges including 25 counts of wire fraud, and additional counts of theft of government property and money laundering as part of a conspiracy.

    As the legal counsel to GHURA, Smith was forbidden from gaining any financial benefit as landlord to households whose rent is paid through GHURA's federally funded Section 8 housing voucher program, according to the indictment.

    The indictment alleges Smith, in part through Wong, received almost $400,000 in Section 8 payments as landlord to the program GHURA administers.

    To conceal his landlord role and the financial payments to his rental properties, Smith and Wong created real estate transactions to make it appear that Smith had sold his rental units to Wong, according to the indictment. Bank transactions, however, showed that the Section 8 rent payments to Wong wound up in Smith's accounts, the indictment alleges.

    After GHURA found out sometime after March 2011 that Smith did have a conflict, the local housing agency tried to ask the U.S. Housing and Urban Development to give Smith a waiver of his conflict, but HUD denied the request, GHURA has confirmed.

    HUD provides GHURA with more than $30 million a year for the Section 8 housing vouchers of thousands of qualified Guam households who can't pay rent on their own.

    Smith served as GHURA legal counsel from May 2011 until he resigned in May 2013, said GHURA Executive Director Mike Duenas. He said he's not sure when Smith became Gov. Eddie Calvo's brother-in-law.

    The federal investigation into the questioned payments to Smith has become a long, drawn-out experience for GHURA, which was the subject of more than a dozen subpoenas, and a raid in June last year by a team of federal authorities.

    "The joint HUD-Office of Inspector General and FBI investigation has been an arduous, 20-month process for all GHURA employees," Duenas said. "We look forward to the resolution of this case when the trial is completed."

    'Heightened awareness'

    As a result of this investigation, Duenas said, "GHURA management and staff have developed a heightened awareness of our personal responsibility to disclose any real or potential conflict of interest." GHURA employees have also benefited from the ethics and conflict-of-interest awareness workshops presented by HUD-OIG and the FBI agents last year, he said.

    Smith, as landlord under the Section 8 program, directly received $98,665 in federal funds between April 2011 and January 2012, and while serving as GHURA's legal counsel.

    Between March 2012 and May 2014, Smith and Wong caused GHURA to directly deposit approximately $281,122 in Section 8 funds into Wong's bank account during Smith's term as legal counsel with GHURA and one year thereafter, according to the indictment.

    In addition to facing a possible prison sentence if convicted, the federal government is also seeking the forfeiture of cash, real estate and other assets "derived from or traceable to" the alleged crimes.

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