The city would pay
"The good news is that the reimbursement to HUD will not come from city property taxpayer resources, but in a reduction in the federal grant," Barrett said.
If councilors agree, the HUD claim will be paid by reducing the city's HOME grant by
According to Barrett, when HOME grant funds are not spent the city is permitted to save the money for future years. Now, there is a balance of
"It's certainly easier given our economic situation," he said, to use savings to return the HUD funds. In the past several years, he said, "we've eliminated 30 positions and are struggling to keep our services going, so I think that's some of the" circumstances that will be taken into account when HUD looks at the city's proposed repayment schedule.
Soule obtained bids from various contractors for rehabilitation of three
He took the loan money for his own use by forging subcontractors' signatures and depositing some of the checks into his personal checking account.
City inspectors at the time failed to check the properties to make sure the work had been completed, including the installation of new heating equipment.
The fraud came to light when apartment house tenants complained they still had no heat in their apartments.
Barrett said the
"I think they took a number of factors into account," Barrett said. "The city immediately made law enforcement and HUD aware of the situation as soon as we were aware. That helped mitigate the situation and we cooperated fully with all the investigations and the court cases."
The city agreed in 2007 to loan Soule
According the agreement, Soule was supposed to submit contractor invoices for the work after it was finished. The city issued Soule
The city learned in 2008 that much of the work Soule had submitted claims for had not been completed, and that he had either forged contractor's signatures or obtained their signatures by misrepresentation.
Barrett said city employees were interviewed extensively by federal investigators but none were charged. None of the employees involved are still employed by the city, he said, and the entire
The city manager at the time of the fraud was
"It sounds like the system that was in place had a little bit of a loophole for somebody to take advantage," Bennett said, adding he was glad to hear the staff was cleared and had nothing to do with the fraud.
"We all know that with any system, it's virtually impossible to guarantee, with somebody that wants to take and be a crook, it's nearly impossible to prevent somebody from doing it," he said.
"Did the city do as good a job monitoring as it should have done?" Barrett asked. "It's clear we could have done a better job. We relied too much on two-party checks, and some were forged and the folks on staff at the time did not sufficiently inspect the properties."
"The city was obviously a victim in this case," he said, and "we have changed our procedures in community development to make sure that something like this doesn't occur in the future."
For instance, "now, before any checks are issued, we do inspections and verify in detail that the work has been performed."
Barrett said the proposed
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