HUD Auditors Complete CHA Oversight Study

October 11, 2012
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Federal Housing and Urban Development auditors studying the Chelsea Housing Authority’s annual independent financial audit, which HUD received recently from the CHA as mandated, have packed up their laptops having completed their visit after a thorough review of financial records.

The auditors finished at the CHA on Wednesday.

The auditor’s visit was prompted by items in the CHA independent audit that raised eyebrows, according to HUD regional spokesperson Rhonda Siciliano.

“The housing authority a few weeks back submitted their independent financial audit to HUD. HUD officials reviewed it and noted there were questionable items in that audit that required more careful checking. HUD has done just that. It has conducted a more thorough audit in order to review everything in it more carefully,” Siciliano added.

HUD protocol requires that all the information now be reviewed again and for a response to be sent back to the CHA in order to let officials of the CHA know what HUD auditors found and whether or not action must be taken and what action exactly will be required.

“We already know action will be required in this instance as deficiencies were found in the independent audit,” said Siciliano.

The alleged deficiencies found in the CHA’s independent audit concerned the use of capital funds.

Capital funding earmarked for the repair of housing nits and the CHA’s physical plant cannot be used to off-set negative balances in its operational account.

It is alleged by HUD that former CHA executive director Mike McLaughlin used as much as $3.5 million of capital funding to meet obligations with CHA’s operational account.

McLaughlin, it is believed, used the capital funding to partially pay for his bloated salary of more than $360,000 a year and for questionable positions he created including one for a so-called travel companion who was receiving $100,000 a year.

“If the funds are found to have been used improperly, the CHA might have to pay back the money to HUD,” Siciliano said.

She said she was not aware of any criminal investigations into the CHA. However, she said if anything were deemed to be criminal and that it was being investigated, then it was the Inspector General’s office that would be conducting it.

“We don’t comment on any of our investigations,” said Marta Metelko, Director of Public Affairs for the Inspector General’s office.

McLaughlin resigned in disgrace last year moments before Governor Deval Patrick was to have him removed.

His downfall has resulted in close scrutiny of all CHA business matters for the past decade.

To date, no criminal charges have been filed against McLaughlin.

However, a grand jury has apparently heard from at least a half dozen witnesses called before it to discuss CHA matters.


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