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Whistleblower: HUD funded empty apartments in former tenants' names

A former employee of a nonprofit management company alleges taxpayer dollars were improperly taken after tenants moved out of government-funded apartments. (WSYX/WTTE)

A former employee of a nonprofit management company alleges taxpayer dollars were improperly taken after tenants moved out of government-funded apartments.

Lisa Carkin worked for Beacon 360 Management as an assistant manager overseeing government assisted housing in Newark at Washington Square II Apartments.

She contacted ABC 6 On Your Side Investigates and shared pictures of apartments sitting empty, along with internal documents. Carkin claims she was fired after raising questions about company practices.

“I think it’s because I opened a can of worms,” Carkin said. “There’s nobody in that apartment. Nobody lives there.”

The U.S. Department of Housing and Urban Development helps those in need by providing hundreds of dollars in monthly subsidies to qualifying families to assist with rent and utilities. HUD oversees hundreds of apartment communities across the country and grants are provided to some nonprofit groups to manage and run those places.

Internal documents obtained by 6 On Your Side show federal payments still being received by Beacon 360 Management, in the tenant’s name, months after some moved out.

“That’s a lot of money being wasted basically,” Carkin said. “They’re defrauding the government or whatever the case may be…it’s just wrong.”

Court documents show a single mother lived in one of the apartments and illegally supplied electricity to another apartment. She was forced to leave and threatened with eviction. ABC 6 On Your Side tracked her down now nearly 10 months later.

“I can’t find an apartment because of it and I don’t know what to do,” mother Keirstin Steele said. “I just want help.”

Court paperwork shows she agreed to move out by the end of October 2016. Steele is now living blocks away from her old apartment at her grandmother’s home.

“We all sleep on this air mattress,” she said. “That’s crowded, very crowded.”

Records provided by Carkin show Steele was getting a government subsidy of $977 for rent and $155 for utilities paid to the management company by HUD each month. However, a screen shot exposes that even after she moved out in October, Beacon 360 continued to receive payments in November, December, January, February and March. In total, $5,662 listed under her name was accepted.

“That’s ridiculous. That’s something they shouldn’t do,” Steele said. “People depend on that money. It’s wrong. Something needs to be done about it.”

ABC 6 On Your Side Investigates dug deeper after Carkin provided more screen shots. She even filed a complaint with HUD about what she said was potential fraud.

“This is government money that could go to people who actually need it,” Carkin said.

Another resident’s ledger shows she moved in, in 2014, but court documents prove she was evicted in August 2016. Still, apartment records show managers kept collecting her government assistance including $1,125 a month for rent and $119 for utilities totaling more than $7,800 for seven months.

HUD was also found to be overpaying at least $2,200 over two months for a third renter, according to internal records. Court records confirm the person no longer lived at that address.

Pictures inside some of the apartments show them undergoing renovations or sitting empty. When Steele saw this she emailed leaders at Beacon 360 and said “this is very alarming to me.” The property manager responded and said, “A property is entitled to receive subsidy and rent until the move out is complete.”

HUD told ABC 6 On Your Side that the maximum time an apartment can sit empty and still receive money is 60 days.

Federal documents show Washington Square II was 94 percent full during an inspection in July 2016.

When ABC 6 asked Beacon 360 Management specific collecting subsidies for people who no longer live there, Investigator Brooks Jarosz was hung up on.

Beacon 360 requested questions be submitted via email. In the end, only was response was received that said, “U.S. Department of Housing & Urban Development conducted a thorough investigation into this matter and at this time we consider this matter to be closed.”

The director of the HUD Columbus field office said that after a complaint was filed, there was an extensive review and a need for corrections. It was explained that it was administrative and the result of a staffing change and not criminal. Additionally, the director said Beacon 360 “reimbursed HUD and taken steps to prevent this in the future.”

HUD has not referred anything to the Office of Inspector General regarding this issue.

Carkin plans to go after Beacon 360 for wrongful termination.

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