During a House Financial Services Committee hearing prior to the congressional recess, Rep. Bryan Steil (R-WI) questioned Stephen Begg, the Acting Inspector General of U.S. Department of Housing and Urban Development, about consequences for those who engage in waste, fraud, and abuse of housing funds.
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00:00General Lady Yields, gentleman from Wisconsin, Mr. Stile, who is also the chair of the Subcommittee on Digital Assets, is now recognized for five minutes.
00:08Thank you very much, Mr. Chairman. Thank you for holding today's hearing. Mr. Begg, thanks for being here.
00:14I want to talk to you about the waste, fraud, and abuses occurring in Milwaukee, Wisconsin.
00:19As you may know, $2.8 million in rental assistance funds went to other purposes, went to payroll, to oversight, to administrators, not to helping people in the city of Milwaukee get housing, many of whom are challenged.
00:37We face national challenges with housing right now. But I want to talk about what went on.
00:42We have a new CFO at the Milwaukee Housing Authority, who I know is engaged in this and trying to get this back on track.
00:47But what are the consequences for individuals who caused the problem?
00:52And what is the consequences across the board at HUD? Are people arrested? Are there charges made?
00:57What are the penalties? And how did this occur for years in the city of Milwaukee before this came to light?
01:05Well, thank you for the question. We're acutely aware of the scenario of Milwaukee.
01:09It's one we've been tracking, and it's one that we've considered doing our own oversight over.
01:13And quite frankly, it's a crowded room there. There are many, many people looking at this issue now based on the status.
01:20But in terms of penalties, if employees of a housing authority are found to have misused federal funding, we would investigate those potential crimes and refer them for prosecution.
01:32We would work with HUD's Office of General Counsel to seek to debar them from federal programs, and we would seek any other potential administrative penalties for others involved in the actions.
01:46I appreciate you engaging on this and being serious.
01:50I think the new administration, the Trump-appointed administration at HUD, we have a big opportunity to get to the bottom of the waste, fraud, and abuse, because what we want to do is actually help people who are challenged and need the assistance.
02:04What we don't want to see is it going into programs that it's not designed for.
02:09But walk me through how no penalties came to be over the course of three years, in particular as it relates to the $2.8 million in misused funds, the Milwaukee Housing Authority.
02:18Well, if you're referring to penalties from HUD, I can't speak to their specific decision-making, but they do have penalties and remedies available to them, which can include limiting and withholding assistance to housing authorities.
02:33And at what point does HUD apply those penalties?
02:36That's a discretionary function for the program offices to decide. It's a policy call for them, ultimately.
02:42In many instances, they will try to work with housing authorities to get out of troubled or difficult situations where things aren't going correctly before going to the penalties.
02:54Because I mentioned earlier, there aren't a lot of non-federal funds available from housing authorities to pay penalties.
03:00So if you withhold new funding from them, it can't—
03:03We enter a catch-22 once there's a bad problem, which kind of brings the question of how problems like this stem and grow over a period of years before they're caught.
03:13Is there an unwillingness, do you think, in some housing authorities to correct bad behavior?
03:19I wouldn't say that.
03:20What I would say is that many housing authorities are facing the same capacity challenges that HUD and its staff are facing.
03:27They frequently don't have adequate systems in place.
03:32They might not have processes in place necessary to run efficiently and effectively.
03:37And they have a large charge.
03:39And frequently, it's one that's difficult for them to manage.
03:42So the problems snowball over time.
03:45But it seems to me, at least, that HUD appears asleep at the wheel while this is ongoing in the city of Milwaukee,
03:52that this isn't being covered and held accountable.
03:54Because you're exactly right, the longer it takes for this to come to light, these penalties are simply pulling money back from a system that doesn't have it
04:01because the money was swindled in the first place, which puts us in a catch-22 and shows the need to investigate this and hold people accountable in the first place.
04:11Let me go big picture, because I think one of the questions is, are the people who are engaged in this inappropriate behavior nervous of being caught?
04:18How often is HUD applying penalties?
04:20Is HUD arresting people, making charges across the board of housing authorities across the United States when they see this type of waste, fraud, and abuse?
04:28Well, what I can tell you is our office is responsible for doing the criminal investigations.
04:33And almost half of our portfolio is dedicated to public corruption in these programs.
04:38But how often are people actually held accountable?
04:40We could point to investigative case outcomes, prosecutions, sentencing, weekly.
04:49It happens all the time.
04:51And in many ways, we're only scratching the tip of the iceberg.
04:56That's my concern, is we're only scratching the tip of the iceberg.
04:59Your words.
05:00That's my concern, is that we're not taking this seriously enough to root out the waste, fraud, and abuse.
05:05Because every dollar that is wasted inside HUD is a dollar that's not going to improving the housing or providing access to individuals who do need housing.
05:14Appreciate the work you're doing at HUD and others to root out this waste, fraud, and abuse.
05:18Thank you, Mr. Chairman.
05:18Thank you for holding the hearing.
05:19I yield back.