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Lax oversight blamed for Indian housing fraud

March 12, 1997

WASHINGTON (AP) _ Lax oversight has allowed Indian tribal housing officials to use federal funds to build huge homes for themselves and their friends, HUD’s inspector general told a congressional panel Wednesday.

Susan Gaffney, who serves as the Department of Housing and Urban Development’s watchdog, confirmed allegations of fraud and mismanagement in HUD’s Indian housing program reported in December by The Seattle Times.

In one of 29 cases cited by the newspaper, the director of the Tulalip tribal housing authority in Washington state used HUD money to build a 5,300-square foot home for herself.

``Fraud, waste and mismanagement are much more pervasive in Indian housing programs than in HUD’s standard housing programs,″ Gaffney told a joint hearing of the Senate Banking and Indian Affairs committees.

About 100,000 Indian families nationwide live in shabby, often overcrowded homes, many without plumbing or electricity. Banks rarely lend to reservation residents for housing because of the difficulty in foreclosing on Indian land.

``This draws away from those that need″ the housing, said Sen. Frank Murkowski, R-Alaska. ``That’s the tragedy.″

``Too many people in Indian country are living in Third World conditions,″ said Sen. Paul Wellstone, D-Minn.

But HUD can’t stop further fraud and waste without tougher laws and an overhaul of the agency, Gaffney said.

The department acts as a ``mentor and an advocate″ for the tribes instead of making sure that federal housing money is spent properly, she said.

A 1996 law deregulating the Indian program last year will only make matters worse, Gaffney said. It gave tribes more control over the money and severely restricted HUD’s ability to recover squandered funds, she said.

The newspaper’s allegations involved 29 of the 201 tribal housing authorities nationwide. Additional housing agencies are under investigation, Gaffney said.

HUD’s Mutual Help program provides federal funds to tribal authorities to finance residential construction. The program is kept going by monthly payments from residents, typically 15 percent of household income. More than 50,000 houses were built through Mutual Help in the last three decades.

On the Tulalip reservation north of Seattle, it took $2.5 million to build 18 houses, including the $260,000 home for the housing authority’s director. She has since bought the home for $215,000 and still holds her job.

HUD officials sent a letter to the to the housing authority on Wednesday demanding the remaining $45,000.

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