Cityside Management Corporation Pays $4.3 Million to Resolve False Claims Act Allegations

Date Published: 
July 27, 2017
News Type: 
Press Releases
Program Area(s): 
Single Family Housing

CITYSIDE MANAGEMENT CORPORATION PAYS $4.3 MILLION TO RESOLVE FALSE CLAIMS ACT ALLEGATIONS

Office of the United States Attorney
Eastern District of California

U.S. Attorney Phillip A. Talbert
FOR IMMEDIATE RELEASE
Wednesday, July 26, 2017
www.justice.gov/edca
CONTACT: LAUREN HORWOOD
PHONE: 916-554-2706
usacae.edcapress@usdoj.gov

CITYSIDE MANAGEMENT CORPORATION PAYS $4.3 MILLION TO RESOLVE FALSE CLAIMS ACT ALLEGATIONS

FRESNO, Calif. — Cityside Management Corporation has paid $4.3 million to settle allegations that it violated the False Claims Act by improperly billing the U.S. Department of Housing and Urban Development for the work of Cityside’s subcontractors, U.S. Attorney Phillip A. Talbert announced.
Following the financial crisis, HUD held title to a large volume of repossessed homes acquired by borrowers with FHA financing. HUD contracted with various “Field Service Managers,” including Cityside, to prepare the homes for resale. Cityside’s contract with HUD required that Cityside subcontract with third-party vendors to perform termite inspections, treatments, and repairs on the homes, to be reimbursed by HUD. The United States alleges that Cityside promised to inspect the work of these vendors but nonetheless failed to do so. In neglecting to perform these inspections, the United States alleges, Cityside knowingly deprived HUD of the benefit of its bargain throughout the term of the contract.

“Each federal agency manages a myriad of programs throughout the United States,” U.S. Attorney Talbert said. “This is especially true of HUD, which implements programs that facilitate fair housing, housing assistance, and home ownership. Given their limited resources, federal agencies must be able to rely on their contractual partners to keep their promises. The Department of Justice will continue holding contractors accountable that fail to do so.”

“When our contractors do not fulfill their obligations, it erodes the public’s trust in the Department,” said HUD Deputy Regional Administrator Wayne Sauseda. “Limited HUD resources are a critical source of funding to preserve and improve housing stock in the region. This settlement will help further assure that such future investments yield the expected return to America’s taxpayers.”

James Todak, Special Agent in Charge of Housing and Urban Development’s Office of Inspector General, said, “Due to the size and nature of HUD programs, mismanagement of any kind by contractors exposes HUD to substantial additional costs and delays, undermining the value of HUD homes. HUD OIG is committed to pursuing all acts of fraud, waste, abuse and mismanagement directed towards HUD programs and contracts.”

This case was the product of an investigation by HUD’s Office of the Inspector General. Assistant U.S. Attorney Vincente A. Tennerelli represented the United States in this matter.

The claims settled by this agreement are allegations only, and there has been no determination of liability.
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