FBI and HUD investigating former GHA vendor
By Michael Gonzalez Post-Tribune correspondent October 20, 2011 5:20PM
Updated: November 22, 2011 8:36AM
GARY — Gary Housing Authority attorney Tony Walker confirmed FBI and HUD investigators were at the agency office Thursday seeking information on allegations of theft and fraud by Woodlawn Community Development Corp., a Chicago-based social services agency headed by a well-connected pastor and businessman.
The GHA has not been accused of wrongdoing, but anonymous sources said the Gary Housing Authority may have lost $850,000 over three years to Woodlawn’s alleged misappropriation of federal funds to boost its payroll.
Virgil Savage, a Merrillville resident and former chief financial officer for Woodlawn from 2006 to 2010, said Thursday he filed a whistleblower complaint in federal court on his former employer and its CEO, the Rev. Leon Finney Jr., earlier this year, for ghost payrolling and other claims.
“(Woodlawn officials) were allocating salaries using GHA money to people who weren’t even working in Gary or were getting paid for properties they weren’t even working on,” said Savage, who filed his lawsuit in federal court in Hammond earlier this year.
Savage said his office did not oversee payroll. Instead, Finney ordered his human resources department to take money from GHA funds inappropriately, Savage said.
That money was paid to Woodlawn employees in Chicago or workers based in Gary who received extra money from properties they didn’t work on, Savage alleged.
Finney, pastor at the Metropolitan Apostolic Community Church in Chicago, did not return calls left at the church or at his Woodlawn office Thursday afternoon.
HUD, which provides GHA millions of dollars in housing funds, required GHA to outsource much of its property management and financial operations in 2008. It also required GHA to outsource much of its financial management activities.
GHA selected Woodlawn and began paying fees for the company’s services. The work included updating housing units, managing rent payments and other finances. GHA also hired New Jersey-based Tatum and Associates to manage much of its finances.
“We saw the numbers going up, but we couldn’t see why,” Walker said of the GHA. “The final reports that Woodlawn was providing did not have a sufficient level of detail, and (Woodlawn) resisted requests by the Gary Housing Authority to provide a sufficient level of detail.”
After Woodlawn’s and Tatum’s contracts were terminated this year, and GHA resumed its own financial management, an internal audit corroborated Savage’s claims, and GHA began working to recoup its money, including filing a claim against Woodlawn’s liability insurance company, Walker said.
“GHA was the one that uncovered the misuse of funds,” he said. “And GHA was the one that initiated procedures with Woodlawn to get them to repay the money.”