A damning June audit performed by the HUD Office of the Inspector General has resulted in people leaving the Port Arthur Housing Authority. Joe Guillory, the first to go, claims he was fired by PAHA Executive Director “Cele” Quesada for giving information to the inspector used in compiling an audit report revealing roughly $6 million in questionable spending at the housing authority. Guillory filed a wrongful termination suit against PAHA on Oct. 30.
PAHA board commissioner Farhana Swati also, in a manner of speaking, filed her own paperwork against the housing authority. On Oct. 29, she forwarded a resignation letter to fellow commissioners, Port Arthur Mayor “Bobbie” Prince and HUD officials. According to Swati, she was added to the board in an effort to make change. Attempting to fulfill her duties, Swati said she has been on a mission to address fiscal mismanagement noted in the Inspector General’s audit report, although it ultimately proved to be a losing battle. After her resignation, Swati told The Examiner, “It was a waste of my time and energy” to be a member of a board unwilling to take fiscal responsibility for a governmental agency spewing taxpayer money.
Wanted: $6 million
A June 1, 2012, audit report filed by Fort Worth HUD Regional Inspector General for Audit Gerald Kirkland detailed a pattern of what he says is misappropriation of funds, abuse of publicly funded credit cards, questionable payroll payouts, and faulty bid award procedures, to name just a few of the infractions by Port Arthur’s public housing authority listed in the 59-page document. Kirkland’s findings also contend that then-board commissioner Desireé Edwards received an illegal monthly stipend on top thousands of dollars charged to PAHA for personal use of a rental car and numerous trips and outings. Various developers and vendors are likewise in possession of ill-gotten taxpayer dollars meant to provide housing to low-income Southeast Texans, according to Kirkland’s report, as are various past and present board commissioners who absconded with up to $120,000 in computer equipment.
Kirkland said he was commissioned to perform the June audit “due to deficiencies noted in a prior audit.” Kirkland referred to his 2011 report titled “The Housing Authority of the City of Port Arthur, TX, Mismanaged Its Recovery Act Funding.”
“The Authority poorly planned its Recovery Act activities, violated procurement regulations and Recovery Act requirements, did not practice sound financial controls, failed to meet reporting requirements, and commenced site work for its project before receiving environmental clearance to proceed,” Kirkland’s 2011 report read. “The Authority violated procurement requirements designed to ensure full and open competition and reasonable cost and did not practice sound financial controls over the grant.”
As a result of Kirkland’s recommendations, PAHA was forced to forfeit a $657,906 Recovery Act grant provided by the government for the express purpose of demolishing the dilapidated Carver Terrace apartments. A little more than a year later, Kirkland was again reporting that PAHA lacked sufficient financial controls.
“(The Authority) failed to enact policies and procedures to ensure the integrity of financial operations and compliance with procurement requirements, even after repeated findings regarding financial and procurement weaknesses,” Kirkland reported June 1, 2012.
“Instead,” Kirkland insisted, “they abused the Authority’s charge card accounts and received ineligible and unsupported compensation.”
According to the most recent audit, “(PAHA’s) lack of controls put it at substantial risk for fraud, errors and financial mistakes.” Which is exactly what happened, Kirkland said.
“The Authority charged in excess of $199,000 to its American Express charge card account, $23,205 to its gasoline charge card account, and $5,352 to its Lowe’s charge card account during the audit period,” Kirkland reported. “The Authority did not maintain control of its charge cards to ensure that only authorized personnel used the cards. The executive director acknowledged allowing five employees and a contractor to use his Authority-issued American Express card. Documentation also reflected that unauthorized personnel used the Authority’s gasoline charge cards.
“Many of the American Express charges did not appear to fulfill a housing authority mission or business purpose,” Kirkland continued. “Instead, the charges appeared to benefit the Authority’s commissioners, management, employees and contractors.”
Among some of the questioned items billed to the American Express card during the audit were more than $3,000 in charges at the Holiday Inn, $14,600 spent at Walmart, more than $4,000 spent at the Woodlands Conference Center, and thousands of dollars spent on items such as groceries, grilling supplies, party supplies, local restaurant charges and gasoline.
“Not only were these charges unreasonable, they did not appear to support the Authority’s or its related entities’ missions,” Kirkland surmised. “In addition, (PAHA) failed to provide requested payroll data, resulting in $2.9 million in unsupported payroll expenses.”
While PAHA executive director Quesada admitted some of the charges were misappropriated, he said he generally disagreed with Kirkland’s audit. Quesada also refuted the notion he or his staff was improperly paid and said, “Miscommunication − rather than intentional obstruction or neglect − likely explains any purported deficiencies in the production of payroll data.”
Kirkland said if the audit was incomplete in any way, it was due to the uncooperativeness of the management at PAHA.
“The Authority did not provide all of the documentation requested, even after requests for status updates, and refused to provide employee data on the advice of its attorney,” Kirkland reported. “Because of the Authority’s lack of cooperation, we issued an OIG administrative subpoena and then a demand letter to obtain materials necessary to conduct the audit. The Authority did not fully comply with either requirement that it produce data and records.
“Meanwhile,” Kirkland continued, “they spent lavishly on items that benefited them personally. As a result of their actions, the Authority incurred questioned costs of more than $5.9 million and was in violation of its annual contributions contract.”
Anyone who did cooperate with the audit was subject to stiff repercussions, former employee Joe Guillory said. Under a Whistleblower Act claim filed Oct. 29, Guillory, former PAHA director of Property Services, asserts that he came into knowledge that “Quesada was committing various illegal acts” and that “the chairman of the board (Ronnie Linden) was fully aware of these illegal activities.” Guillory then reported the activity to the HUD Office of the Inspector General, which, he said, resulted in “harassment and ultimate termination from employment.”
Guillory said he was abruptly terminated from his decade-long position with PAHA two days before Kirkland’s 2012 audit rough-draft was issued. Days later, Guillory challenged his termination and begun a six-month trek through the PAHA “grievance hearing” process. Still, Guillory says, he has not received “documentation or explanations” as to why, if not as the result of retaliation, he was suddenly fired from his job.
In addition to confirming or supplying information revealed in Kirkland’s audit reports, Guillory said he also turned over evidence alleging Quesada ordered the destruction of multiple boxes full of documents in anticipation of Kirkland’s audit. And according to Guillory, Kirkland’s audits “cover only a small portion of the wrongdoings, corruptions and illegalities that have been taking place within the Authority.”
Guillory, in addition to legal fees associated with fighting a wrongful termination, is seeking back pay, front pay, damages from mental anguish, exemplary damages and other compensation.
PAHA board commissioner Farhana Swati said she, alone, couldn’t steer the housing authority back on course.
“When I’m constantly out-voted as a sole dissenting vote on a board, there’s nothing I can do,” Swati said. “I could do more good as a citizen than I could as a voiceless member of this board.”
In light of the Inspector General audits, Swati has promoted measures to bring PAHA into HUD compliance such as commissioning a forensic financial audit and hiring outside legal consultants specializing in HUD audits, all to no avail. Quesada, in response to Swati’s written recommendations last month, said, “It seems a bit premature to decide, what, if any, additional outside specialized services are needed.
“The Housing Authority is in great financial position.”
And although Quesada assured Swati that, “with the Board’s continued support, I can assure you there are better days ahead for all of us,” the commissioner had doubts.
In her resignation letter dated Oct. 29, Swati said she approached the housing authority board as if it were her own company.
“I have taken seriously my fiduciary duty to the citizens of the city of Port Arthur,” she said. “This being said, I believe the Authority has spent funds inappropriately. In some cases, this spending appears to have been wasteful and egregious.
“I believe the Board has a fiduciary duty to initiate an outside forensic audit of the Authority’s finances. … The board members and staff believe the annual audit is sufficient. Given the fact that annual audits did not uncover the improper spending (which is now the subject of an Office of the Inspector General investigation), we need a deeper inquiry.
“If, as the OIG report indicates, there has been improper spending, there needs to be serious change in how the Authority conducts its business, and someone needs to be held accountable for the current situation. The citizens of Port Arthur deserve it and HUD will demand it, even if the Board won’t.”
Swati said she found herself “alone on the Board with a vote that does not count. Given their refusal to support an outside forensic audit, I can only assume that the other Board members either don’t recognize the seriousness of the situation or they choose to ignore it.
“I do recognize the seriousness of the situation and cannot ignore it, but neither am I able to effect change with a single vote.”