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We reviewed the Malakoff Housing Authority, Malakoff, TX. The review was part of a joint initiative between the HUD Office of Inspector General’s Office of Audit and Office of Investigation. We completed the review and referred the former executive director’s improper use of Authority funds by hiring and contracting with family members to HUD’s Office of Program Enforcement for action under the Program Civil Fraud Remedies Act of 1986.

On May 21, 2015, the Office of Program Enforcement entered into a settlement agreement with the former executive director under the Program Fraud Civil Remedies Act of 1986. The action centered on improper use of Authority funds to hire and contract with the former executive director’s family members. The Authority hired several of the former executive director’s family members during her tenure. Additionally, the Authority contracted with immediate family members of the former executive director, including making contract payments to the former executive director. The total amount of inappropriate expenditures was $249,556. All of the issues violated the conflict-of-interest provision of the annual contributions contract between HUD and the Authority. The former executive director had a strong case for lack of ability to pay. According to her financial disclosures, she had limited income, and no assets were found. To avoid further litigation and seek a satisfactory resolution of the dispute without further expense, the former executive director agreed to pay HUD $2,000. The former executive director denied liability in agreeing to the settlement.  As of the date of this memorandum, the settlement amount due HUD was paid in full. Therefore, no further action is required by the Office of General Counsel.