Wednesday, September 02, 2009

Elias Castellanos indicted, questions about HANO-backed nonprofits abound

Don't know if you caught this but Mr. Castellanos, a former CFO of the Housing Authority of New Orleans while it was under HUD's federal receivership, was charged with embezzling nearly a million bucks.

HANO was notoriously corrupt for about three decades before it was finally taken over by HUD under President Bush. Unfortunately, it has emerged from that receivership as bad or worse than before because of the corrupt leadership Alphonso Jackson, who was GW Bush's HUD chief.


Jackson resigned in disgrace toward the end of the Bush administration after Philly's top housing guy blew the whistle on Jackson's move to withhold federal money from Philly public housing residents in a transparent attempt to extract payments for a derelict contractor and Bush supporter. Carl Greene of PHA knew how to save emails.

There have been widespread allegations of corruption in Jackson's office and some of them involve his stewardship of HANO.

I've worked on this a lot. Check out my archives for Alphonso Jackson for more.

Anyway, the little T-P blurb gives absolutely zero context on Mr. Castellanos, who worked at HANO under Jackson.

But the minutes of March 19th meeting of the Legislative Audit Advisory Council in Baton Rouge provides some details.

LAAC03172009

Crescent Affordable Housing Corporation and Lune d'Or Enterprises. LLC

Elias Castellanos with Crescent Affordable Housing Corporation, a nonprofit of the Housing Authority of New Orleans, and Jamora Erwin with the Housing Authority of New Orleans and Crescent Affordable Housing came forward to state their case. Mr. Castellanos said that like most of the entities that they oversee, HANO has been in a continuation of rebuilding from Hurricane Katrina. Crescent Affordable is a managing member of some of their operations that were going through the mixed planned development. As those audits were held back and must be completed so that the audit of Crescent Affordable could be finished. They are in the process of completing those audits. Crescent Affordable audit for 2006 should be delivered to them today, and upon their review and approval it would be released to the Legislative Auditor. They will have all related audits completed within the next month and ready upon approval and release from the auditors, will then be released to the Legislative Auditor. He further stated that Lune d'Or Enterprises, LLC is a member of Crescent Affordable Housing Corporation.

Mr. Purpera said that the report pending is the 12/31/2007 reports. Mr. Castellanos said that their auditors have indicated that Lune d'Or will be released on April 30th • Crescent Affordable audit will be released to them today for review. Senator Murray asked if Crescent Affordable Housing is an affiliate of HANO in New Orleans. Mr. Castellanos said that it is a nonprofit organization created by HANO to help support the redevelopment effort. The mixed plans developments they are entering into require separate partnership entities to initiate the financial transaction and because HANO is an agency funded through HUD, and they have certain restrictions on obligating our resources, they have to create the nonprofit in order to facilitate these mixed line developments.

Senator Murray asked if each one of the nonprofits is responsible for a separate development in New Orleans, or if all combined together. Mr. Castellanos said Crescent Affordable is generally the parent and then the nonprofits and related LLC's are under Crescent. Senator Murray asked if Crescent Affordable Housing was standing in the shoes of HANO overseeing all. Mr. Castellanos said it is the nonprofit parent entity for all mixed plan developments that they enter into. He explained that Lune d'Or Enterprices, LLC was the managing member for the Fisher 1, Fisher 3 and Gus 1 properties. Also Crescent Affordable is the sole owner of Lune d'Or, and throughout the audit it is still Crescent Affordable

Senator Murray asked if all are private nonprofits. Mr. Castellanos responded that the sole owner of Crescent Affordable is the Housing Authority of New Orleans, but it does not stand in the shoes of HANO. Senator Murray asked if HANO owned Crescent Affordable Housing and Mr. Castellanos said yes. Senator Nevers moved to grant the extension and with no objections, the motion was granted.

Senator Murray asked Mr. Castellanos to provide to himself the names of the board members of the respective nonprofits for Crescent Affordable Housing and Lune d'Or and any other ones that are in the City of New Orleans that are operating under these housing redevelopments. Mr. Castellanos said he can provide the information through the Legislative Auditors. Senator Murray said they can provide it directly to his office on Broad Street in New Orleans.


For more on Lune D'or and Crescent Affordable Housing, I found this HANO RFP (pdf) from 2007 that includes some helpful background information.

Crescent Affordable Housing Corporation (CAHC), a non-profit corporation, was created in December 2003 by HANO to facilitate the development of affordable housing. CAHC is the sole member of Lune d'Or Enterprises LLC, a for profit entity created by HANO that serves as the managing member of several for-profit Limited Liability Corporations (LLC's) that own and operate affordable housing projects developed on HANO properties. Through Lune d'Or, CAHC serves as the managing member of each of the LLC's, including those named in this Request for Proposals (RFP). Each LLC owns a phase of development at the given site. Those sites are part of the new comprehensive redevelopment strategy HANO has developed to accelerate the revitalization of low income and affordable housing. HANO and eighteen (18) affiliates of HANO have received or expect to receive tax credit allocations for Low Income Housing Tax Credits (LIHTC) to assist in its redevelopment efforts and are seeking a qualified, full service certified public accounting firm with expertise in affordable housing and tax credits to conduct full spectrum audits, cost certifications, tax credit carryover, 10% tests, financial statement audits, tax valuation, and provide litigation support, trust and general consulting services.

The services contemplated herein are also required for any future affiliates created by HANO in 2007.

The current Housing Authority of New Orleans affiliates include the following:

Crescent Affordable Housing, LLC

Lune D'Or Enterprises, LLC

Place D'Genesis, LLC

Fischer I, LLC

Fischer III, LLC

Guste I, LLC

Florida IIA, LLC

Mazant Royal, LLC

General Ogden, LLC

Imperial I, LLC

Imperial II, LLC

Guste ll-B, LLC

Fischer IV-3, LLC

Tchoupitoulas, LLC

CJ Peete I, LLC

St. Bernard I, LLC

CJ Peete III, LLC

BW Cooper I, LLC

HANO is currently designated by HUD as a Troubled Agency. Further, H ANO has been placed under an administrative receivership, whereby an Administrative Receiver has been charged with the responsibility of quickly transforming the agency's overall operations and performance into one reflective of a standard or high performing public housing authority. To that end, HANO's success will, in part, be contingent upon verification of its compliance with laws and regulations applicable to all federal assistance programs.



That's all for now. This is not the first time in recent memory that a quasi-governmental nonprofit in the housing field has allowed massive graft and corruption to go under the radar. I hope that major audits of all affiliated non-profits are underway.

Would appreciate any tips in the comments section. I won't be able to google through all of these by myself. There are lots of other pdf docs online that will at least provide better context on this.

I'm curious how Mr. Castellanos came to be employed at HANO and wonder if he had a personal relationship with Mr. Jackson directly or through the contractors that were awarded funds to redevelop the Big 4.

9 comments:

jeffrey said...

I need help understanding this:

HANO has been placed under an administrative receivership, whereby an Administrative Receiver has been charged with the responsibility of quickly transforming the agency's overall operations and performance into one reflective of a standard or high performing public housing authority. To that end, HANO's success will, in part, be contingent upon verification of its compliance with laws and regulations applicable to all federal assistance programs.

And this:

The mixed plans developments they are entering into require separate partnership entities to initiate the financial transaction and because HANO is an agency funded through HUD, and they have certain restrictions on obligating our resources, they have to create the nonprofit in order to facilitate these mixed line developments

Fit together. Is Castellanos saying here that the non-profits had to be created because HUD regulations are too restrictive?

If so, what is the point of placing HANO under HUD receivership in the first place?

Of course I could be reading that poorly.

lil'oya said...

it's important to find out if they hired Bruno & Tervalon for accountants, and if so, who's the managing partner?

Anonymous said...

Thank you for writing this up. I have a feeling that you are completely right about massive corruption involving HANO and these groups. Quite unfortunate. Oh I listened to this today and thought that this was a great little lecture on social integrity. Maybe you'll enjoy too. Good job on Charity events! http://www.ted.com/talks/lang/eng/barry_schwartz_on_our_loss_of_wisdom.html

-A

Anonymous said...

http://www.ted.com/talks/lang/eng/barry_schwartz_on_our_loss_of_wisdom.html

Anonymous said...

blah...

It's called "On Our Loss of Wisdom"
Barry Schwartz

Concerned HANO employee said...

"and Jamora Erwin"

Please correct your reporting. This is a very sensitive case and Jamora Erwin is not in any way connected with what Elias Castellanos is charged.

Thank you.

E said...

Concerned HANO employee,

The reference to Jamora Erwin is not my reporting. It is taken verbatim from the minutes of the March 19th meeting of the Legislative Audit Advisory Council in Baton Rouge. If in fact Jamora Erwin did not step forward with Mr. Castellanos to provide testimony, that is the record that needs to be corrected.

Concerned HANO employee said...

"If in fact Jamora Erwin did not step forward with Mr. Castellanos to provide testimony, that is the record that needs to be corrected."

Did you check? Could it be that he only started at that time when the Legislative Office called him and he has no clue on what's going on yet?

It's good for you to find out. You'd be surprised instead of making some charges.

E said...

What charge did I make against Erwin?

Seriously, I merely copied and pasted the minutes provided by the Legislative Audit Advisory Council. I make no charge against Jamora Erwin and I think you must be overreacting or misinterpreting what I said or what appears in the minutes.

The minutes state that Erwin was present with Castellanos when he was in front of the LAAC and make no charge against Erwin.

If it is untrue that Erwin was in Baton Rouge at the meeting of the LAAC, then you should probably contact the Legislative Audit Advisory Council for an explanation.

Again, Erwin's name appears on my blog as it appeared in a government document. I did not create that document and do not have the power to edit it.

But that even seems beside the point because that document doesn't say anything negative about Erwin. And neither do I.

So your comment makes no sense at all.