Alexander M.M. Uballez, United States Attorney for the District of New Mexico, and Bertrand Nelson, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Southcentral Region, announced today that landlords for properties located in Roswell and Albuquerque paid $30,000 and $12,000, respectively to settle allegations that they violated the anti-fraud False Claims Act by charging low-income tenants more than the amount permitted under HUD’s Housing Choice Voucher Program, commonly known as “Section 8”.

What sets this story apart is the involvement of New Mexico Legal Aid. After our demand letters to the landlords were ignored, we filed whistleblower suits, known as “qui tam” suits, in federal court on behalf of the US government. The US Attorney’s Office then took over the cases, conducted thorough investigations, and negotiated settlements with the landlords. Our clients, the tenants, received a portion of the settlements.

The Section 8 program, which is administered by local housing authorities throughout New Mexico and the country, provides a Government subsidy to enable tenants to secure decent housing.  The tenant’s share of the rent is determined based upon ability to pay.  The total rental amount is determined based upon market rental rates.  The program therefore enables tenants to secure decent housing while ensuring that landlords realize full market value for their rental properties.   

In the Roswell case, the government alleges that apartment complex operator Turnaround Properties overcharged a vulnerable low-income Section 8 tenant for a period of twelve months, despite notices from the Eastern Regional Housing Authority setting forth lawful rental levels.    The Government alleges that Turnaround then retained the excess payments despite a request for a refund from the tenant, who suffers from physical and cognitive limitations. Turnaround collected $832 in excess rent.

In the Albuquerque case, landlord Santana Ortiz demanded excess rent payments from his tenant for a period of more than four years; even documenting the unlawful payments in a sham lease agreement that was concealed from the local housing authority.  The Albuquerque tenant felt compelled to comply with the landlord’s demand for excess payments because she had struggled to find safe, decent housing.  Mr. Ortiz participated fully in the Government’s investigation and provided a copy of the improper second lease to Government investigators.  Mr. Ortiz collected $5,217 in excess rent. 

“Low-income families, the elderly, and the disabled deserve dignity in housing,” said U.S. Attorney Alexander Uballez. “That is why Section 8 secures for them the right to decent, safe, and sanitary dwellings. When predatory landlords steal from both the taxpayers and the most vulnerable, we will stand with low-income New Mexican tenants to levy substantial sanctions against those who prioritize profit over people.”

“These settlements represent HUD OIG’s priority in protecting HUD beneficiaries from bad actors who prey on their vulnerability for self-enrichment,” said Special Agent in Charge Bertrand Nelson. “HUD OIG is committed to working with Federal prosecutors to pursue and bring to justice landlords who fraudulently overcharge HUD-assisted tenants in violation of Federal law.”

“A cornerstone of HUD’s Section 8 program, and the key to housing affordability in Section 8, is the Brooke Amendment: a Section 8 tenant pays no more than 30% of their monthly income toward rent and utilities. The local public housing agency which is funded by federal grants pays the rest,” said Attorney Thomas Prettyman, who represented both tenants on behalf of New Mexico Legal Aid. “A small but significant minority of Section 8 landlords flaunt these rules and require tenants to pay extra for rent or utilities, making the housing unaffordable and contravening the very purpose of the Section 8 program.  Tenants agree to pay the extra money because they are scared.  These extra costs often lead to nonpayment, eviction, loss of vouchers, and homelessness. The results achieved by the US Attorney’s Office in these two cases demonstrate the stiff penalties for Section 8 landlords that cheat.  We hope these cases will help to discourage Section 8 landlords from breaking the rules, so that the Section 8 program can remain affordable for low-income New Mexicans.”

The allegations against Turnaround and Ortiz were brought to the attention of the United States by whistleblowers. The False Claims Act provides for whistleblowers to receive a portion of the amount recovered because of their disclosures. The whistleblowers will receive a share of the settlement proceeds.  Absent the willingness of these individuals to come forward, the Government would not have learned of the misconduct by these landlords.

The government’s investigations were led by Assistant United States Attorney Sean Cunniff and Auditor Julie Chappell, and investigators from the U.S. Department of Housing and Urban Development, Office of Inspector General.

This case was prosecuted as a part of the Department of Justice’s Environmental Justice Strategy.  Environmental Justice is the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies. This strategy prioritizes cases that will reduce public health and environmental harms to overburdened and underserved communities, including those that hold violators of federal housing laws accountable for their actions. The United States Attorney’s Office for the District of New Mexico partners with federal, tribal, state and local housing agencies and organizations to enable people across the country to live in healthy, thriving communities, and to confirm that justice under the law is justice for all. To learn more about environmental justice or to report a known or suspected environmental violation in New Mexico, please email our Environmental Justice Coordinator at USANM.Environment@usdoj.gov.

Story originally published by the United States Attorney for the District of New Mexico.