oversight

Analysis of Project Funds West Street Apartments New Haven, Connecticut

Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-12-22.

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

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                                             U.S. Department of Housing and Urban Development
                                             New England Office of District Inspector General
                                               for Audit, 1AGA
                                             Thomas P. O’Neill, Jr. Federal Building
                                             Room 370
                                             10 Causeway Street
                                             Boston, Massachusetts 02222-1092



                                            Audit Related Memorandum
                                            No: 99-B0-183-1801



December 22 , 1998


MEMORANDUM FOR: Miniard Culpepper, Assistant General Counsel, 1AC


FROM: William D. Hartnett, District Inspector General, Office of Audit, 1AGA


SUBJECT:      Analysis of Project Funds
              West Street Apartments
              New Haven, Connecticut


Per your request, we examined the Project’s three bank accounts to determine the disposition of
funds from September 1, 1996 to July 24, 1998. Our review identified $1,871,062.09 disbursed
to a total of 103 payees. Payees who received a total disbursement of less than $750 were not
reviewed, ($11,864.90). Because of the inadequate accounting records, we could only
substantiate $195,086.81 as eligible project related expenses. As a result, $1,664,110.38 should
be considered as a possible diversion from Project operations during this period. In our prior
review, we identified $347,254.84 as unauthorized distributions to the Owner, thus, we suggest
you seek damages for equity skimming in the amount of $2,011,365.22.

The Owner was unable to demonstrate that the disbursements made during this period of time
were incurred in accordance with the Regulatory Agreement. In addition, the Owner needs to
account for $16,723 in tenant rents and $16,442 in negative rents owed tenants. If these amounts
are not substantiated, you should also seek damages against the Owner for these potential
diversions.




Background
On July 12, 1995, Michael Kantrow, as General Partner (Owner) and Management Agent, ceased
making payments on the HUD insured mortgage. On August 1, 1995, the HUD insured mortgage
of West Street Apartments was declared in default.

In January 1996, we began a review of West Street Apartments since the Project’s annual audited
financial statements showed indications of possible equity skimming. We determined that the
Owner diverted $347,254.84 in unauthorized distributions from March 4, 1993 to August 31,
1996. On March 27, 1996, the mortgage of West Street Apartments was assigned to HUD.

On April 25, 1996, an equity skimming case against the Owner of West Street Apartments, with
the assistance of the HUD Boston Office of General Counsel staff, was presented to the United
States Attorney’s Office, District of Connecticut. The case was accepted and out of court
settlement negotiations began. HUD requested the Owner to replace his Identity of Interest
Management Agent with one acceptable to HUD. HUD formally declared the Owner of West
Street Apartments in technical default of the Regulatory Agreement. A request was made to the
Assistant Secretary of Housing to suspend the Owner.

On September 13, 1996, the United States Attorney’s Office, with guidance from the Boston
Office HUD Attorneys, filed a complaint in U.S. District Court alleging, that the Owner (1) failed
to pay mortgage payments on West Street Apartments since July 1995; (2) skimmed Project
equity in excess of $330,000 which includes over $220,000 paid directly to the Owner since the
mortgage default; and (3) failed to replace the Identity of Interest Management Agent as
instructed by HUD. The Government sought double damages, constructive trust on all Project
assets received in violation of the Regulatory Agreement, possession of the property, and a
preliminary injunction preventing the Owner’s use of assets for other than applicable expenses.
As of September 20, 1996, the $4.2 million dollar mortgage of West Street Apartments was
$684,424 in arrears.

On September 30, 1996, HUD issued a suspension to Kantrow and his affiliated company,
Premier Management Company, suspending them from doing any new business with HUD
pending a debarment hearing. In October 1997, the defendant’s request for a debarment hearing
was withdrawn. Subsequently, Kantrow and his affiliated management company were indefinitely
debarred from participating with HUD and throughout the Federal Government.

In November 1996, West Street Associates Limited Partnership, the Owner/mortgagor of West
Street Apartments, filed for Chapter 11 bankruptcy. Court proceedings in the equity skimming
litigation were subsequently stayed. In January 1997, the Government filed motions to dismiss
the bankruptcy case and relief from the automatic stay to permit foreclosure of the property. On
June 26, 1997, an agreed upon stipulation of dismissal of the bankruptcy action was entered by
the bankruptcy court. Under the stipulation, HUD agreed to forgo resumption of foreclosure and
the double damages litigation in District Court until July 21, 1997, in exchange for dismissal of
the bankruptcy with a 360 day restraint to re-file. The Boston Office HUD General Counsel staff
played an instrumental roll in obtaining the dismissal of the bankruptcy case.




                                                2
On July 23, 1997, a motion was filed in Connecticut Federal District Court to reopen the double
damages civil litigation against the Owner of West Street Apartments, its General Partner, and its
Identity of Interest Management Company based on improper distributions of Project funds.

On December 1, 1997, the parties involved met with the court and agreed to file summary
judgment motions on December 19, 1997, with reply briefs on January 12, 1998, instead of going
to trial. On January 26, 1998, the Government filed a motion seeking possession of West Street
Apartments as a sanction for the defendants’ failure to respond to discovery request for
documents.

On July 20, 1998, the court granted the Government’s motions for summary judgment and motion
for possession of West Street Apartments. The defendants’ cross motions for summary judgment
were denied. On July 24, 1998, HUD took possession of West Street Apartments. Since the
Project default on August 1, 1995 until July 24, 1998, the Owner collected the rents and the
Section 8 subsidies while not making any mortgage payments and not providing any monthly
financial reports to HUD. As of October 1, 1998, the Project is in foreclosure and the mortgage
was accelerated. The total amount due HUD is $6,276,130.42.


Results of Review
The Management Agent did not maintain an adequate accounting system to ensure the proper
accountability of Project funds. Because the accounting records failed to meet basic accounting
standards, there is no assurance the financial transactions were proper. Our review disclosed that:

       •   Transactions were not posted to the general ledger.

       •   Financial records are not closed at the end of each fiscal year.

       •   Accounting records were, at times, incomplete and contained inconsistencies.

       •   Supporting documentation was not maintained.

Deposits in the Project Bank Accounts - $1,825,562.31

We analyzed the deposits made to the three checking accounts to assure all Section 8 Subsidy
payments were deposited and to identify the source of other funds. The Section 8 Subsidy
payments were verified to the New Haven Housing Authority records. However, due to the poor
record keeping, we were not able to verify the accuracy of the tenant rents and other deposits.


                                  Source Of Deposits                Amount
                        Section 8 Subsidy                           $1,595.848.00
                        Tenant Rents                                $ 135,601.00
                        Other                                       $ 94,113.31
                                         Total                      $1,825,562.31



                                                 3
We analyzed the Owner’s Section 8 requisitions for the period September 1996 to July 1998. The
New Haven Housing Authority disbursed $1,595,848 which agrees to the amount deposited in the
West Street bank account. Based on the Owner’s certification, Premier Management was
responsible for collecting $152,324 from the tenants. We could only identify $135,601 as tenant
rents collected leaving an unaccountable difference of $16,723. In addition, the Owner requested
negative tenant rents of $16,442 on the Section 8 requisitions. Negative tenant rents are
adjustments for utility allowance which the tenants are suppose to receive from the Management
Agent. Although the funds were deposited in the Project’s bank accounts, there was no evidence
that the funds were ever paid to the tenants.

Possible Diversions Totaling $1,664,110.38

Our review of the bank account statements identified $1,871,062.09 disbursed to 103 payees. We
could only substantiate $195,086.81le disbursements related to the West Street Apartment
operations and identified $1,664,110.38 as possible diversions of Project funds. We did not
review $11,864.90 paid to 37 payees who received less than $750.


                     Total Disbursements = $1.87 million




                                  10% 1%




                                           89%

                            Total Possible Diversions
                            Total Supported
                            Amount Not Reviewed



In most cases, the supporting documentation provided by the Management Agent for the
disbursements failed to adequately support the costs charged to the Project. Our review
disclosed:

       •   Project funds disbursed to various entities with the checks deposited into the Owner’s
           bank account.

       •   Disbursements made for non-project related costs.


                                                 4
         •   Various invoices and Project’s payroll not allocated to the Owner’s other activities.

         •   Invoices did not identify that goods and services were used for West Street
             Apartments.

         •   Unsupported costs (no documentation).

The following examples illustrate the Management Agent’s failure to properly maintain reasonable
documentation to adequately support the disbursements of the West Street Apartments. In the
examples, we provided details for $1,180,073.07 of the $1,504,288.19 in possible diversions. A
complete list of disbursements to payees with the amount of possible diversions is shown in
Appendix A. Thirty-three payees received $324,215.12 in possible diversions and are not
included in the examples (Appendix A footnote (a)). The $324,215.12 is considered a possible
diversion due to the lack of supporting documentation and/or the payments are not Project
related.

Premier Management (Management Agent)

The Management Agent received a total of $716,402.17 which could be a possible diversion of
Project funds.

                               Amount of Possible
         Description              Diversion                                    Reason
 Management Fees                 $159,822.19            Agent not approved by HUD
 Payroll Reimbursement           $386,615.13            See details below.
 Other/Miscellaneous             $104,138.40            34 checks issued to Premier Management without
                                                        adequate support. The checks ranged from $495 to
                                                        $8,300.
                                                        22 checks deposited into Owner’s own account
                                                        ($70,195.19)
 IRS P.R. Deposit                  $ 18,281.43          Unsupported - payroll related charge (check # 56)
 Unsupported Payroll               $ 15,247.19          (check # 44 & 305)
 Advanced Mgmt. Fees               $ 9,300.00           Unallowable expense (check # 099 & 1132)
 Legal Fees                        $ 7,152.48           Unsupported (check # 70)
 Outside Labor                     $ 6,500.00           Unsupported checks deposited into Owner’s own
                                                        account
 Exchange                          $   6,070.00         Unsupported - See details below.
 Employee Bonus                    $   3,275.35         Check indicates “employee bonus”, supporting
                                                        invoice describes repairs (check # 38)
 Total                             $716,402.17

         Management Fees

         HUD instructed the Owner to replace Premier Management as the Project’s management
         agent, however the Owner did not comply with HUD’s instructions. Since Premier




                                                    5
Management was not approved by HUD during the period, we are considering the
payments as possible diversions.

Payroll Reimbursement

The following employees were charged to payroll during the 23 months:

        Employee                                 Title               Amount Charged
 George Kelly                           Maintenance Supervisor          $99,500.00
 Alan Faulkingham                        Maintenance Employee           $58,409.62
 Juan Robles                             Maintenance Employee           $50,346.87
 George Kelly, JR.                       Maintenance Employee          $ 6,678.00
 Unknown                                 Maintenance Employee          $ 6,886.85
 Sophie Stoyak                          Administrative Employee        $ 60,248.89
 Mary Venuto                            Administrative Employee        $ 7,516.00
 Wanda Aponte                           Administrative Employee        $ 2,250.00
 Unknown                                Administrative Employee        $ 10,828.15
 Unknown                                      Bookkeeper               $    100.00
 Employer Taxes                                                        $ 63,195.49
 Workers Compensation                                                  $ 19,734.80
 Employee Taxes/Workers Compensation                                   $    920.58
 Miscellaneous Errors - Reconcilable Items                             ($      .12)
                                  Total                                $386,615.13



The Management Agent did not maintain supporting documentation to show where the
employees worked, such as work orders, and the basis for charging the payroll to the West
Street Apartments Project. Michael Kantrow and his associates operate various
businesses both commercial and residential properties in the New Haven area. The payroll
journal kept by the Management Agent does not show any allocated charges to the other
activities of the Management Agent. The Maintenance Supervisor and Maintenance
Employees are charged 100% to the West Street Apartments for 40 hours per week.
There is no assurance that these employees worked exclusively on the West Street
Apartment Project.

We found two West Street Apartment checks issued to Premier Management and
identified as payroll reimbursements. However, there are no payroll records to
substantiate the validity of these payments.




 Description                                                             Amount

 Check # 44 - identified as payroll -employees not identified           $ 11,216.31



                                                6
        Check # 305 - identified as payroll -employees not identified             $ 4,030.88

                                          Total                                   $ 15,247.19



       Exchange

       Four checks issued to Premier Management Company did not have supporting
       documentation and were identified as “Exchange” in the Cash Disbursement Journal. The
       endorsement on the checks indicate that the four checks were deposited in the owner’s
       account. These checks are as follows:

           Check Number                      Date                        Amount
                112               October 16,1997                        $1,145
                158               December 2, 1997                       $ 500
                228               February 27, 1998                      $2,350
                268               March 21, 1998                         $2,075
                                 Total                                   $6,070



Other Unsupported Wages

In addition, the following persons were paid directly from the West Street Apartments bank
accounts for Outside or Temporary. Labor. There was no supporting documentation to show that
these people worked at the West Street Apartment Project site and not at other locations.


                         Person                                         Amount
                    Jessie Criscuolo                                    $ 6,905
                    George Kelly Jr.                                    $ 5,821
                    Luber Mayberry                                      $ 4,816
                   Theadora Targuino                                    $ 1,475
                   Alan Faulkingham                                     $ 1,251
                          Total                                         $20,268




Cash Removed from Bank Account

We identified disbursements of $44,640.05 which we believe may be unauthorized withdrawals by
the Owner.



                                                       7
                        Check
         Payee          Number              Date                Amount                Total
 Check                    2046     August 27, 1996            $ 3,987.00
 Check                    2045     August 30, 1996            $ 4,175.00
 Check                    2068     September 19, 1996         $ 4,750.00
 Check                    2067     September 20, 1996         $ 3,000.00
 Check                    2074     September 20, 1996         $ 15,000.00
 SubTotal                                                                          $30,912.00
 M. C. Kantrow             1069    April 11, 1997             $ 1,500.00
 Michael C. Kantrow        1102    May 16, 1997               $   691.25
 Michael Kantrow           2123    January 15, 1997           $ 1,800.00
 Michael Kantrow            27     August 19, 1997            $   847.50
 Michael Kantrow            85     October 1, 1997            $   467.80
 Michael Kantrow           106     October 15, 1997           $   850.00
 Michael Kantrow           144     November 13, 1997          $   727.50
 Michael Kantrow           180     December 24, 1997          $   900.00
 Michael Kantrow           213     February 12, 1998          $   300.00
 Michael Kantrow           288     May 11, 1998               $   750.00
 Sub Total                                                                         $ 8,834.05
 Other                     no #    September 30, 1996         $ 3,904.00
 Sub Total                                                                         $ 3,904.00
 Cash                      1003    December, 13, 1996         $    450.00
 Cash                      251     March 25, 1998             $    540.00
 Sub Total                                                                         $ 990.00
 TOTALS                                                                            $44,640.05


There is no indication for what the items listed as “Checks”, “Other” and “Cash” were used for or
even who received the funds. The canceled checks were removed from the bank statements.

Deposits into Owner’s Bank Account

We identified disbursements of $314,061.24 paid to four different companies and where the
majority of the checks ($240,322.18) were deposited back into the Owner’s personal bank
account. In addition, each company utilized generic invoices that did not disclose the companies
address and phone number. The companies and the amounts paid are:

 Payee                               Amount Paid               Amounts Deposited in Owner’s Acct.
 Inner City Repair                   $221,493.10                         $211,730.10
 W & D Contractors                   $ 65,093.14                         $ 17,277.18
 G & L Builders                      $ 17,415.00                         $ 3,765.00
 R.K. Electric                       $ 10,060.00                         $ 7,550.00
 Total                               $314,061.24                         $240,322.18

       Inner City Repair

       The majority of the disbursements to Inner City Repair were unsupported. Of the 76
       disbursements to Inner City Repair; 73 checks were deposited directly into the Owner’s



                                                8
         own personal checking account; 1 check was deposited in the Management Agent’s
         account; and 2 were unsupported with no deposit account identified on the canceled
         check. We also found that 1 of the 73 checks was recorded as being paid to Inner City in
         the Cash Disbursement Journal while the check written to Premier Management. The
         invoices that were prepared did not identify the location where the work was performed.

         W & D Contractors

         Of the 20 disbursements to W & D Contractors; 10 disbursements were unsupported,
         with 6 of the 20 checks were deposited directly to the Owner’s own personal account.
         There was no indication where the funds were deposited for the 14 checks. The invoices
         reviewed did not identify the location where the work was performed.

         G & L Builders

         This company is operated by family members of the Project’s maintenance supervisor,
         George Kelly. Of the 6 disbursements to G & L Builders; 4 disbursements were
         unsupported, with 1 of those disbursements going directly to the Owner’s personal
         account; and 2 disbursements had invoices, but no indication where the funds were
         deposited.

         Given the relationship between this company and the Project’s maintenance supervisor,
         the fact that at least one of the checks was deposited into the Owner’s own account, and
         the lack of supporting documentation, all disbursements to this company could be possible
         diversion of funds. The invoices prepared did not identify the location where the work was
         performed.

         R.K. Electric

         Of the 3 disbursements to R.K. Electric; all 3 checks were deposited directly into the
         Owner’s own personal checking account. Also, there were no supporting invoices to
         identify where the work was performed.

Non-Project Related Disbursements/Unsupported Costs

We identified numerous checks that were issued to Attorneys totaling $181,970.06. The services,
when indicated, were not related to Project operations, and all other disbursements were
unsupported.


                                 Check
 Payee                          Number               Date               Amount           Total
 Robert S. Evans, Trustee        2105         November 18, 1996        $ 45,000.00
 Robert Evans, Trustee           201           January 22, 1998        $ 5,000.00
 Robert Evans, Trustee           247            March 20, 1998         $ 5,000.00




                                                 9
                                Check
 Payee                         Number              Date                 Amount           Total
 Robert Evans, Trustee          269           April 21, 1998        $ 5,000.00
 Sub Total                                                                            $ 60,000.00
 R. Evans/M. C. Kantrow,        1051         March 21, 1997         $ 17,000.00
 Trust (Mortgage)
 Fleet Bank Trust (Mortgage)    1067          April 10, 1997        $ 17,000.00
 R. Evans/M. C. Kantrow,        1089          May 12, 1997          $ 17,000.00
 Trust (Mortgage)
 Sub Total                                                                            $ 51,000.00
 Atty. Robert Evans             1050          March 21, 1996        $   5,000.00
 Atty. Robert Evans             1071          April 14, 1997        $   5,000.00
 Atty. Robert Evans              64           June 11, 1997         $   7,500.00
 Atty. Robert Evans             107           June 13, 1997         $   3,582.56
 Atty. Robert Evans              63         September 11, 1997      $     640.00
 Atty. Robert Evans             103          October 14, 1997       $   7,500.00
 Atty. Robert Evans             132         November 10, 1997       $   7,500.00
 Atty. Robert Evans             297           May 16, 1998          $   5,000.00
 Atty. Robert Evans             314           June 11, 1998         $   2,500.00
 Atty. Robert Evans             330            July 9, 1998         $   2,500.00
 Sub Total                                                                            $ 46,722.56
 Cumming’s Lockwood             2110        November 18, 1996       $ 13,872.50
 Sub Total                                                                            $ 13,872.50
 Robert Evans, P. C.            175         December 10, 1997       $ 10,000.00
 Sub Total                                                                            $ 10,000.00
 Atty. Herbert Hyman             17         December 18, 1996       $     375.00
 Sub Total                                                                            $    375.00
 Total                                                                                $181,970.06

Credit Card Payments

There were payments to three Oil/Gas credit card companies totaling $12,896.26. Supporting
credit card slips do not identify the vehicles for which the purchases were made. The purchases
were made in Connecticut, Massachusetts, Vermont, New Hampshire, New York, New Jersey,
Pennsylvania, Virginia, North Carolina, South Carolina, Georgia and Florida. The disbursements
made were as follows:

            Payee                Number of Payments                       Amount
 Texaco                                 22                               $ 7,845.76
 Mobil Oil Credit Corp.                 14                               $ 4,059.59
 Sunoco                                 19                               $ 990.91
 Total                                                                   $12,896.26




Payments to New Haven Savings Bank (NHSB)

There were 33 disbursements to the New Haven Saving Bank totaling $74,319.22. We identified
two payments totaling $24,549.74 which directly related to a transfer of funds between accounts.


                                              10
The 31 checks paid to the NHSB totaling $49,769.48 were for unsupported payments. The 31
disbursements are as follows:

 Check No       Date      Amount            Wife’s                   Comments                      Description
                                            Loan
   2091        10/30/96   $ 2,465.04    $2,465.04                     Notes-WIFE                    Unsupported
   2108        11/11/96   $   616.26    $ 616.26                      Notes-WIFE                    Unsupported
   2117        11/21/96   $   100.00                               DIP Tax Account              Open NHSB Tax Acct.
   1049        03/20/97   $ 4,880.26                                  Equity loan                   Unsupported
   1052        03/21/97   $ 1,232.52    $ 1,232.52                    Note-WIFE                     Unsupported
   1075        04/19/97   $ 1,232.52    $ 1,232.52                    Note-WIFE                     Unsupported
   1091        05/13/97   $   616.26    $    616.26                   Note-WIFE                     Unsupported
    117        06/13/97   $   616.26    $    616.26                   Note-WIFE                     Unsupported
   1126        06/16/97   $ 1 ,640.20                                                               Unsupported
No Check No.   07/02/97   $ 4,469.53                           Payroll Taxes (starter Ck?)          Unsupported
No Check No.   07/08/97   $ 3,767.03                       Crest Vehicle Exp.(Purchase Izuzu)       Unsupported
    12         07/17/97   $ 1,561.64                                  Equity loan                   Unsupported
    13         07/17/97   $   616.26    $    616.26                   Note-WIFE                     Unsupported
    39         09/05/97   $ 1,848.78    $ 1,848.78                    Note-WIFE                     Unsupported
    41         09/05/97   $ 1,950.00                                      Rent                      Unsupported
    42         09/05/97   $ 5,528.35                                      Int.                      Unsupported
    51         09/08/97   $ 1,950.00                                                                Unsupported
    95         10/10/97   $ 1,613.70                                  Equity loan                   Unsupported
    96         10/10/97   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    142        11/14/97   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    143        11/14/97   $ 1,613.69                                                                Unsupported
    181        12/31/97   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    200        01/22/98   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    214        02/16/98   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    238        03/18/98   $   616.28    $     616.28                  Note-WIFE                     Unsupported
    244        03/20/98   $ 4,379.94                                      Loan                      Unsupported
    262        04/15/98   $   908.62                                      Loan                      Unsupported
    298        05/19/98   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    311        06/10/98   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    316        06/12/98   $   616.26    $     616.26                  Note-WIFE                     Unsupported
    333        07/13/98   $   616..26   $     616.26                  Note-WIFE                     Unsupported
                          $49,769.48    $15,406.52


We found that the Owner continued to use Project funds to pay for a Bank loan made to his wife
in August 1990. For this loan, we identified 18 loan payments totaling $15,406.52 from October
30, 1996 through July 13, 1998. This loan was identified as a personal loan during the previous
review.




                                                      11
                                                                                       Appendix A



                         West Street Apartment
                        New Haven, Connecticut
                    Summary of Disbursements by Payee


                                                                                              Amount of
                                 Rental Acct.   Debtor NHSB   Debtor Fleet                 Possible Diversion
            Payee                  NHSB           Account      Account         Total
Premier Mgmt. - Payroll          $256,189.28 $33,438.23 $96,987.62           $386,615.13     $386,615.13
Reimbursement
Premier Mgmt. - Mgmt. Fees       $114,602.44 $5,842.52 $39,377.23            $159,822.19     $159,822.19
Premier Mgmt. -                   $75,129.40 $4,750.00 $24,259.00            $104,138.40     $104,138.40
Other/Miscellaneous
Premier Mgmt. - IRS P.R. Dep.     $18,281.43                                  $18,281.43      $18,281.43
Premier Mgmt. - Unsupported       $15,247.19                                  $15,247.19      $15,247.19
Payroll
Premier Mgmt. - Advanced Mgmt.                                 $9,300.00       $9,300.00        $9,300.00
Fees
Premier Mgmt. - Legal Fees         $7,152.48                                   $7,152.48       $7,152.48
Premier Mgmt. - Outside Labor      $3,500.00            $3,000.00              $6,500.00       $6,500.00
Premier Mgmt. - Exchange           $6,070.00                                   $6,070.00       $6,070.00
Premier Mgmt. - Employee Bonus     $3,275.35                                   $3,275.35       $3,275.35
Inner City Repair                $184,023.10 $3,175.00 $34,295.00            $221,493.10    $221,493.10
Imperial Premium Finance          $55,246.70 $9,281.88 $23,204.70             $87,733.28   a) $87,733.28
New Haven Savings Bank            $46,101.20           $28,218.02             $74,319.22      $49,769.48
W & D Contractors                 $40,923.14 $4,495.00 $19,675.00             $65,093.14      $65,093.14
Robert Evans Trustee              $60,000.00                                  $60,000.00      $60,000.00
Regional Water Authority          $38,454.48           $14,969.17             $53,423.65           $0.00
R.Evans/M.C. Kantrow Trustee                           $51,000.00             $51,000.00      $51,000.00
Atty. Robert Evans                $33,140.00           $13,582.56             $46,722.56      $46,722.56
Water Pollution Control Auth.     $28,428.34           $11,399.40             $39,827.74           $0.00
Grand Paint                       $24,999.52 $2,110.62 $10,993.74             $38,103.88   a) $38,103.88
ITT Hartford                      $23,109.27            $8,258.14             $31,367.41   a) $31,367.41
Check                             $30,912.00                                  $30,912.00      $30,912.00
Blue Cross & Blue Shield          $19,928.06 $1,602.50 $7,213.57              $28,744.13   a) $28,744.13
Collector of Taxes                                     $24,886.69             $24,886.69   a) $16,287.11
Michael Kantrow                   $19,842.80            $2,191.25             $22,034.05       $8,834.05
The Prindle Co. (Trash)           $15,930.00   $445.20 $5,342.40              $21,717.60           $0.00
United Illuminating               $10,766.14 $1,127.82 $5,522.34              $17,416.30           $0.00
G & L Builders                               $8,115.00 $9,300.00              $17,415.00      $17,415.00
Dunlap Insurance                  $10,854.00            $5,500.00             $16,354.00   a) $16,354.00
Cumming’s Lockwood                $13,872.50                                  $13,872.50      $13,872.50
Internal Revenue Service          $12,347.85                                  $12,347.85   a) $12,347.85
George Kelly                       $4,513.87   $972.05 $5,182.47              $10,668.39   a) $10,668.39
Home Depot                         $5,804.84            $4,953.76             $10,758.60   a) $10,758.60
West Haven Lumber                  $5,817.51            $4,722.14             $10,539.65   a) $10,539.65


                                                12
                                                                                             Amount of
                                 Rental Acct.   Debtor NHSB   Debtor Fleet                Possible Diversion
              Payee                NHSB           Account      Account        Total
R.K. Electric                      $7,550.00                   $2,510.00     $10,060.00        $10,060.00
Robert Evans, P.C.                $10,000.00                                 $10,000.00        $10,000.00
Kostin & Company                   $9,895.00                                  $9,895.00   a)    $7,695.00
Medford Inc.                       $9,000.00                                  $9,000.00   a)    $9,000.00
Texaco                             $5,721.40       $389.72     $1,734.64      $7,845.76         $7,845.76
Jessie Criscuolo                   $6,905.00                                  $6,905.00         $6,905.00
George Kelly, Jr.                  $4,568.00                   $1,253.00      $5,821.00         $5,821.00
Luber Mayberry                     $4,039.00                     $777.00      $4,816.00         $4,816.00
Gallo Appliance                    $2,161.20       $869.20     $1,738.40      $4,768.80   a)    $4,334.20
Linx                               $2,953.44       $627.52     $1,028.67      $4,609.63   a)    $4,609.63
West Street (Transfer between                    $3,500.00     $1,000.00      $4,500.00             $0.00
Project’s Bank Accounts)
Southern New England Tel.           $2,982.87   $251.54        $1,049.67      $4,284.08   a) $4,284.08
Mobil Oil Credit Corp.              $2,413.41                  $1,646.18      $4,059.59      $4,059.59
Other                               $3,904.00                                 $3,904.00      $3,904.00
American Business Credit            $1,877.93 $1,204.52          $280.99      $3,363.44   a) $3,363.44
Staples                             $2,396.24                    $824.76      $3,221.00   a) $3,221.00
559 Sherman Parkway                 $2,900.00                                 $2,900.00   a) $2,900.00
Atty. Herbert Hyman                 $1,170.00   $375.00        $1,330.00      $2,875.00        $375.00
Edwards Answering Service           $2,000.08   $175.96          $676.00      $2,852.04   a) $2,852.04
A & A Appliance                       $536.87 $1,068.32        $1,062.37      $2,667.56          $0.00
Grainger                            $1,427.88                    $454.75      $1,882.63   a) $1,882.63
Purchase Power                      $1,840.22                    $500.00      $2,340.22   a) $2,340.22
Ford Credit                                     $882.78        $1,446.02      $2,328.80   a) $2,328.80
SNET Wireless Service               $1,752.17                                 $1,752.17   a) $1,752.17
Whites Plumbing                       $772.95                    $890.03      $1,662.98   a) $1,591.30
Lonnie Bannas (Deputy Sheriff)                                 $1,649.63      $1,649.63   a) $1,649.63
Insulpane                           $1,469.80        $46.17      $126.40      $1,642.37          $0.00
Theadora Tarquino                   $1,475.00                                 $1,475.00      $1,475.00
Wooster Street                      $1,400.00                                 $1,400.00   a) $1,400.00
The Info. Center, Inc.              $1,197.00                     $74.00      $1,271.00   a)    $82.00
Allan Faulkingham                     $996.00                    $255.00      $1,251.00      $1,251.00
Air Touch Paging                    $1,064.33                    $178.08      $1,242.41   a) $1,242.41
Safeguard Business Systems            $497.31      $290.92       $397.26      $1,185.49   a) $1,185.49
G.E. Auto Lease Inc.                  $260.00                    $886.99      $1,146.99          $0.00
G.C. Services                       $1,043.43                                 $1,043.43   a) $1,043.43
Sunoco                                $635.15       $48.40       $307.36        $990.91        $990.91
Cash                                  $540.00      $450.00                      $990.00        $990.00
Sophie Stoyak                         $875.35                                   $875.35   a)   $875.35
M.T.A. Travel Group                   $816.00                                   $816.00   a)   $816.00
U.S. Trustee (Office)                                            $750.00        $750.00   a)   $750.00
Message Center                        $171.66      $164.93       $388.67        $725.26       N/A
Southern Conn. Gas Co.                $348.52                    $375.22        $723.74       N/A
Alarmguard                            $588.30                    $127.20        $715.50       N/A
New Haven Masonary                    $462.09                    $227.26        $689.35       N/A
Knightbridge                                       $197.51        $91.62        $638.73       N/A
Dept. of Revenue                      $578.90                                   $578.90       N/A
Danka                                 $523.78                     $42.30        $566.08       N/A
S.P.M.                                                           $545.16        $545.16       N/A
Juan Robles                           $428.13        $18.00       $88.00        $534.13       N/A



                                                13
                                                                                                   Amount of
                                     Rental Acct.    Debtor NHSB    Debtor Fleet                Possible Diversion
             Payee                     NHSB            Account       Account           Total
Protile                                   $513.51                                        $513.51      N/A
Danka Financial Services                  $470.90                                        $470.90      N/A
Project Data Systems                                                   $450.00           $450.00      N/A
Postmaster GPO                            $447.30                                        $447.30      N/A
Esperanza DeJesus                         $424.96                                        $424.96      N/A
Viglione Heating & Cooling                 $60.22       $296.80                          $357.02      N/A
Peggy Campbell                            $350.00                                        $350.00      N/A
Pep Boys                                  $338.58                                        $338.58      N/A
Poland Springs                            $237.26          $14.63        $73.15          $325.04      N/A
Falzgrams Court Reports                   $295.44                                        $295.44      N/A
Benders Plumbing                          $255.68                                        $255.68      N/A
Sam's Club                                $242.89                                        $242.89      N/A
Tom D. Driver                             $106.00                      $106.00           $212.00      N/A
A.D. Perkins Co.                          $203.52                                        $203.52      N/A
New Haven Parking Authority               $201.40                                        $201.40      N/A
Walthams                                  $169.60                                        $169.60      N/A
Postage by Phone                          $150.00                                        $150.00      N/A
Columbus Towing Service                    $50.00          $75.00                        $125.00      N/A
Richlins Auto Parts                       $115.39                                        $115.39      N/A
Tom Russo                                  $80.00                        $20.00          $100.00      N/A
Kimberly Boyd                              $79.50                                         $79.50      N/A
All Parts                                  $40.81                        $25.97           $66.78      N/A
Pagenet of Hartford                        $61.10                                         $61.10      N/A
Ray's Auto Parts                                                         $50.24           $50.24      N/A
State of Conn./Dept. of Rev.                $50.00                                        $50.00      N/A
Metro Tool                                                        $42.39                  $42.39      N/A
New England Typewriters                    $39.81                                         $39.81      N/A
City of New Haven                          $10.00                                         $10.00      N/A
Total disbursements/Total           $1,293,944.77 $86,302.74 $490,814.58           $1,871,062.09 $1,664,110.38

                                                    Legend

                               a)     Not included as examples in report

                                N/A     Not Analyzed




                                                      14
                                                                      Appendix B



Distribution

Assistant Secretary for Housing - Federal Housing Commissioner, H, (Room 9100) (2)
Director, Office of Budget, FO, Room 3270)
Director, Housing Finance Analysis Division, REF, (Room 8204)
Chief Financial Officer, F, (Room 10164) (2)
Deputy Chief Financial Office for Finance, FF (Room 10164) (2)
Director, Participation & Compliance Division, HSLP (Room 9164)
Director, Program Research and Planning Division, GAP, (Room 8180)
Acquisitions Librarian, AS, (Room 8141)
Central Records, GF, (Room 8266) (4)
Assistant to the Deputy Secretary for Field Management, SDF, (Room 7106)
Audit Liaison Officer, 3AFI
Inspector General, G, (Room 8256)
Assistant Inspector General, Office of Audit, GA, (Room 8286)
Deputy Assistant Inspector General, Office of Audit, GA, (Room 8286)
Counsel to the Inspector General, GC (Room 8260)
Semi-Annual Report Coordinator, GF (Room 8254)
Director, Financial Audits Division, GAF (Room 8286)
HUD OIG Webmaster-Electronic Format
Public Affairs Officer, G, (Room 8256)
Deputy Assistant to the Secretary for Labor Relations, SLD (Room 7178)
General Counsel (Room 10100) (4)
Secretary Representative, 1AS
Special Project Coordinator, HF, (Room 9116)
Office of the Comptroller, 6AF
Director, Administrative Service Center, 2AA
Director, Field Accounting Division, 4AFA
Ellen R. Connolly, Director, Multifamily Housing Division, Boston, 1EHM (2)

Director, HUD Enforcement Center, 1240 Maryland Avenue, Suite 200, Washington DC 20024

Director, Housing and Community Development Issue Area, U.S., GAO, 441 G Street, NW,
Room 2474, Washington, DC 20548, Attn: Judy England-Joseph

The Honorable Dan Burton, Chairman, Committee on Government Reform and Oversight, House
of Representatives, Washington, DC 20415-6143

Ms. Cindy Sprunger, Sub-Committee on General Oversight & Investigations, Room 212, O’Neill
House Office Building, Washington, DC 20515



                                            15
Mr. Pete Sessions, Government Reform and Oversight Committee, Congress of the United States,
House of Representatives, Washington, DC 20515-4305

The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, United States
Senate, Washington, DC 20510-6250

The Honorable John Glenn, Ranking Member, Committee on Governmental Affairs, United States
Senate, Washington, DC 20510-6250




                                             16