Wednesday, September 30, 2009

Hot on HANO

Just in case you don't remember our friend Elias Castellanos, I wrote about him recently.

I have been meaning to do some follow up on this amazing article by the T-P's Katy Reckdahl, which I think people may have missed because all of the goodies are buried after the fold. While I work on that, I want to make sure you've seen this. (Emphasis mine; bizarre formatting theirs)

Letten's office last month charged Castellanos with embezzling the money over three years. During the same time period, the indictment noted, Castellanos had bought a $1.6 million mansion in Davie, Fla., just north of Miami, and five high-end cars -- a Lamborghini Gallardo worth more than $200,000, a Ferrari F430, a Porsche 911 and two Mercedes-Benzes.

It's not clear whether Castellanos has sold any of his luxury items, but he has repaid $675,037 so far, Letten said.

Alan Baum, Castellanos' attorney, said that his client had no comment.

FBI agents and the U.S. Department of Housing and Urban Development's inspector general's office spent a year sifting through Castellanos' invoices and transactions. Letten said that Castellanos' theft was discovered during an unrelated inquiry. He added that the authority is the subject of other investigations -- "plural" -- that he could not discuss.


Castellanos' successor, Edwin Jamora, said that earlier this year, he had put a stop to years of routine payments made from HANO to Genalyn Duka, a subcontractor with a Florida address who colleagues told him was Castellanos' wife.


Three years ago, HANO hired Cabellero & Castellanos to clean up its finances, and Castellanos soon made the department his own.

"There was a complete turnover of personnel responsible for the accounting and finance activities of HANO, " according to HANO's independent audit that year.

It's unclear how much progress Castellanos made in the department, which had to be re-created from the ground up after the post-Katrina levee breaches inundated HANO's Gentilly offices.

But when Jamora took over the department more than two years later, he found it in disarray.

By then, HANO had cycled through two annual contracts with Castellanos totaling $6 million and was in the middle of a third, this one worth $2.4 million.

Despite that investment, when Jamora arrived in February he found no monthly statements and no general ledger. Annual state-required audits hadn't been correctly filed for years, he said.

The conditions made it "truly difficult" to detect both well-meaning errors and intentional corruption, said Jamora, who was fired from HANO earlier this month and agreed to an interview.

Jamora, who felt he made real progress in cleaning up the mess he found, was told by federal housing executive Karen Cato-Turner that he "wasn't a good fit" for HANO, he said.

Upon his arrival, Jamora, who had been a financial director at Philadelphia's housing authority, was shocked to find HANO paying $8,000 a month for what he called a "Jurassic" computer package, so outdated that it couldn't run financial statements.

Jamora said he began an inventory of HANO's fixed assets, which hadn't been done since 2002. And he recommended that HANO hire independent accountants to implement past audit recommendations, he said.

Audits from each of the past seven years have outlined significant financial problems, but the problems appear to have been ignored.

Terry R. Cassreino, communications director for HANO, issued a statement after Castellanos pleaded guilty.

"HANO and HUD are pleased to see this case come to a quick resolution with Mr. Castellanos pleading guilty. HUD has clearly and consistently stated that neither HUD nor HANO will tolerate any fraud, abuse or misuse of our funds as we carry out our mission of providing housing options for the citizens of New Orleans." Castellanos' plea comes in the midst of a string of scandals at HANO. Early this year, HUD's inspector general found that HANO's financial statements improperly documented or reported at least $7.2 million in voucher and housing expenses.

In May, the housing authority placed three employees on leave because of a ruse that siphoned hundreds of thousands of dollars to an employee's son and former boyfriend.

More recently, the man running HANO's Section 8 program -- designed to help the poor afford rent -- resigned amid allegations that he was benefiting from a voucher administered by HANO, despite earning a $100,000 salary.

Jamora said that agency policies sometimes frustrated his efforts to root out problems. For instance, he said, he wasn't allowed to speak directly with HUD or its inspector general; all conversations had to be routed through Cato-Turner.

HUD spokeswoman Melanie Roussell, speaking on behalf of HUD and HANO, said last week that anyone could talk with auditors.

"Consistent with HUD policy, all staff are encouraged to be responsive to investigative inquiries, " Roussell said.

But a May 1, 2008, memo from Cato-Turner to the staff prohibits anyone from talking to "governmental officials."

That didn't make sense to Jamora. "I used to be an auditor. I speak the same language, " he said.

This sounds like a pretty big deal. Castellanos was stealing money - a million bucks - from HANO in the most blatant way but his graft was stumbled upon accidentally in the midst of "plural" other investigations into white collar crime at HANO.

I'm looking for more information about her, but this Karen Cato-Turner character already sounds like a real winner.

She was appointed as the administrator of HUD's receivership of HANO in November, 2007, at the height of the public housing controversy, by disgraced former HUD chief Alphonso Jackson.


mominem said...

HANO has been a mess for decades. Anyone brought in seems to become mired in the mess.

Perhaps all of the imports are window dressing.

I wonder why no one tells the tail until after they are replaced.

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