Housing Management Resources Pays $2.5 Million to Resolve False Claims Act Matter Involving Section 8 Housing Assistance Payments

Housing Management Resources, Inc. (HMR), a full-service affordable-housing property management company, has paid the United States $2.5 million to resolve a civil False Claims Act matter involving Section 8 housing assistance payments at two properties managed by HMR, announced First Assistant United States Attorney John A. Sarcone III.

"HMR's personnel altered and created tenant-file records that caused claims for housing assistance to contain materially false or misleading representations," said First Assistant United States Attorney John A. Sarcone III. "Section 8 housing assistance is an important federal program that depends on accurate information about tenant eligibility and compliance. I commend HMR for accepting responsibility, cooperating with the government's investigation, and taking steps to address the conduct and prevent its recurrence."

Section 8 of the United States Housing Act of 1937 authorizes the U.S. Department of Housing and Urban Development (HUD) to provide housing assistance payments to owners of eligible housing on behalf of low-income tenants. Owners and management agents participating in the Section 8 program are required to maintain documentation supporting tenant eligibility and the amount of assistance claimed and to comply with applicable HUD requirements.

The settlement resolves claims concerning HMR's management of the Albert Carriere Apartments, also known as Champlain Family Housing, in Rouses Point, New York, and Leisure Tower, in Lynn, Massachusetts. All 56 units at the Albert Carriere Apartments currently or previously were subject to a Section 8 contract with HUD, and 180 of the 181 units at Leisure Tower currently or previously were subject to a Section 8 contract with HUD.

As part of the settlement agreement, HMR admits, acknowledges, and accepts responsibility for the following: In preparation for government audits at the Albert Carriere Apartments and Leisure Tower in 2015, HMR personnel reviewed tenant files and identified deficiencies in documentation relevant to tenant eligibility for Section 8 assistance and compliance with applicable program requirements. HMR personnel thereafter altered, supplemented, replaced, removed, or created tenant-file documentation without obtaining the affected tenants' review or approval, for the purpose of addressing deficiencies in the files and causing the files to appear complete and compliant for government review. As a result, HMR personnel caused tenant files to inaccurately reflect the documentation that had existed before the alterations. Certain HMR managers and compliance personnel were aware of, directed, or participated in this conduct. The conduct resulted in false or materially misleading statements and records concerning tenant eligibility and Section 8 compliance that were submitted to, or maintained by HMR for submission to, HUD. Those statements and records were material to HUD's determination of whether housing assistance payments were payable.

This matter arose from a qui tam complaint filed in the United States District Court for the Northern District of New York. The False Claims Act permits private parties, known as relators, to file civil actions on behalf of the United States and share in any recovery. Under the settlement agreement, the relator will receive $437,500 of the settlement proceeds. The case is docketed under case number 1:23-cv-1179.

"Ensuring integrity in HUD's housing programs is central to our mission," said Shawn A. Rice, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General. "HMR's manipulation of tenant-file documentation undermined the accountability which these programs rely on to serve families in need. HUD OIG will continue to work diligently with our law enforcement partners to uncover misconduct and protect the federal funds entrusted to this vital program."

The investigation and resolution of this matter were the result of a coordinated effort between the United States Attorney's Office for the Northern District of New York, the U.S. Department of Housing and Urban Development's Office of Inspector General, HUD Office of Program Enforcement and IRS Criminal Investigation.

The United States was represented by former Assistant United States Attorney Adam J. Katz.