AUDIT RELATED MEMORANDUM 96-CH-212-1808 March 29, 1996 MEMORANDUM FOR: Robert J. Turner, Director of Housing, Michigan State Office FROM: Dale L. Chouteau, District Inspector General for Audit, Midwest SUBJECT: Western Hills Apartments Multifamily Mortgagor Operations Westland, Michigan The Assistant United States Attorney for the Eastern District of Michigan and TR Associates of Western Hills Limited Partnership, the owners of Western Hills Apartments, have entered into a Consent Judgement in settlement of our audit findings. The terms of the Judgment require TR Associates to: deposit the sum of $300,000 into an escrow account to be used to replace and repair capital and maintenance items; complete all needed replacements and repairs by May 31, 1996; and pay audit costs estimated at $30,000. Western Hills Apartments is a multifamily project in Westland, Michigan. It has 144 residential units. HUD insured the project in 1971 under Section 221(d)(4) of the National Housing Act. The original mortgage was $2,136,600. The General Partners of TR Associates are C. Thomas Cummings and Rodney C. Robinson. Mr. Cummings also is the President of All State Management Company which manages the project. Our audit, completed in October 1994, found Western Hills Apartments and its owners improperly withdrew $296,574 of project funds between 1987 and 1991. TR Associates used the distributions to pay a promissory note to the original owner. Contrary to the Regulatory Agreement and the promissory note agreement, the distributions used to pay the promissory note were in excess of surplus cash. The owners also made disbursements between 1991 and 1994 totaling $45,984 that were not necessary to the operations of the project, ineligible, or inadequately supported. During the same period the project had deferred repairs and maintenance totaling $273,980. In January 1995, using procedures developed under Operation Safe Home, we submitted our findings and the auditee's comments to the Assistant U.S.Attorney for civil matters. Subsequent negotiations between the Assistant U.S. Attorney and the owners of TR Associates resulted in entry of the Consent Judgment. If you have questions, please call me (312) 353-7832. Appendix A Distribution Secretary's Representative, Midwest State Coordinator, Michigan State Office (2) Assistant General Counsel, Midwest Field Controller, Midwest Public Affairs Officer, Midwest Director, Accounting Division, Midwest Director, Housing Division, Michigan State Office (2) Assistant Deputy Secretary for Field Management, SC (Room 7106) Acquisitions Librarian, Library, AS (Room 8141) Chief Financial Officer, F (Room 10166) (2) Deputy Chief Financial Officer, FO (Room 10166) (2) Comptroller/Audit Liaison Officer, Office of Housing, HF (Room 5132) (3) Assistant Director in Charge, U.S. GAO, 820 1st St NE, Union Plaza Bldg. 2, Suite 150, Washington, DC 20022 Audit-Related Memorandum Page 2
Western Hills Apts., Westland, MI
Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-03-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)