oversight

Bristol House Multifamily Mortgagor Operations, Bristol, Virginia

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-01-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                  U.S. Department of Housing and Urban Development
                                                     Wanamaker Building, Suite 1005
                                                               100 Penn Square East
                                                        Philadelphia, PA 19107-3380

                                                 District Inspector General for Audit




January 29, 1996

                                              Audit Related Memorandum
                                              No. 96-PH-212-1010


MEMORANDUM FOR:    Charlie Famuliner, Director Multifamily
                     Division, Virginia State Office, 3FHM



FROM:   Edward F. Momorella, District Inspector General
          for Audit, Mid-Atlantic, 3AGA

SUBJECT:   Bristol House
           Multifamily Mortgagor Operations
           Bristol, Virginia


Pursuant to your request we audited Bristol House (BH) to determine
whether the owner operated BH according to the Regulatory Agreement
and HUD requirements. Because BH was sold by HUD prior to audit
completion, we did not issue an audit report. However, as reported
to you, two significant findings were developed.

1.    An unauthorized owner and Virginia Retirement Management
Company of Ohio (agent) received BH funds and paid ineligible costs
contrary to HUD requirements.     BH funds converted to owner and
agent use totaled $268,700.        Improper transactions included
unauthorized withdrawals, unauthorized management fees, payment to
a CPA firm and owner costs. The owner of record sold his interest
in BH without HUD approval which caused BH to be managed by the
unauthorized agent.      The agent and owner disregarded HUD
requirements and improperly maintained control of BH financial
activities until it was sold.

2.   The recognized owner of BH improperly administered various
financial aspects of BH's operations contrary to HUD requirements.
The owner: (1) sold his interest in BH with no benefit accruing to
BH, (2) incurred substantial ineligible costs ($212,169) which he
was the main beneficiary, and (3) permitted revenue of $24,666 to
be lost to BH while benefiting a relative and the project
administrator.     As a result of these actions, the owner
significantly contributed to the financial distress of BH.
                                                           2


The foreclosure sale of BH resulted in the entire debt due HUD
being satisfied. Therefore, the finding issues were not pursued by
your office. However, we believe the actions perpetrated by the
recognized owner, the unauthorized owner and officials of Virginia
Retirement Management Company of Ohio, require your office to take
appropriate actions against these individuals to prevent their
future participation in HUD Programs. Accordingly, we recommend
you aggressively pursue debarment against these persons in
accordance with Part 24 CFR - Subpart C - Debarment.

Within 60 days, please give us for the above recommendation, a
status report on: (1) the action taken; (2) the proposed action
and the date to be completed; or (3) why action is considered
unnecessary.

If you have any questions please contact Irving I. Guss, Assistant
District Inspector General for Audit at (215) 656-3401.

Attachment - Distribution
cc:   OSWALD
      CIANCI

3AGA:GUSS:AMP:01/29/96
 Correspondence
 Code             3AGA
 Concurrence      GUSS
 Date
                                                              3


DISTRIBUTION

Director, Multifamily Division, Virginia State Office, 3FHM
Regional Comptroller, 3AF
Assistant Director in Charge, US GAO, 820 1st St. NE Union Plaza,
  Bldg 2, Suite 150, Washington, DC 20002
                       REPORT NAME:      Bristol House
                                         Multifamily Mortgagor Operations
                                         Bristol, VA
                       REPORT NO:        96-PH-212-1010
                       ISSUE DATE:       January 29, 1996




                          REGIONAL OFFICE (OIG)
Charlie Famuliner, Director Multifamily Division,                           1
 Virginia State Office, 3FHM

Regional Comptroller, 3AF                                                   1

                             HEADQUARTERS (OIG)
Director, Planning and Administration, GAP (Room 8180)                      1

Director, Quality Assurance and Audit Follow-up Staff, GAP                  1
 (Room 8180)

Central Files, (Room 8254)                                                  2

Semi-Annual Report Coordinator (Room 8254)                                  1

SAC, 3AGI                                                                   1

SAC, Virginia State Office, 3AGI                                            1

                       DISTRIBUTION OUTSIDE HUD

Assistant Director in Charge, US GAO, 820 1st St. NE Union                   2
Plaza, Bldg. 2, Suite 150, Washington, DC 20002                             11
Attn: Mr. Cliff Fowler

From:
Edward F. Momorella, DIGA, Mid-Atlantic
Wanamaker Building, Suite 1005
100 Penn Square East
Philadelphia, PA 19107-3380