Housing Fraud Could Be Next Great Idea for Reality TV

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The U.S. Department of Housing and Urban Development and many state agencies provide housing assistance to needy individuals and their families. Unfortunately, unscrupulous individuals fraudulently acquire low-income and Section 8 housing vouchers, which prevents those who truly need the benefit from receiving assistance. Sometimes, even the landlords have been known to participate in the scam.

Today’s Fraud of the Day reads like a script for a reality television show, Housing Fraud Gone Wild. According to the Telegram & Gazette, from 2008 – 2012, the Worchester Housing Authority (WHA) reviewed 2,000 suspected cases and discovered close to $1.6 million in housing fraud. A possible idea for upcoming episodes of this fraud reality series could include a woman who failed to report that her husband (who has a salary that pushes them over the qualifying limit) was sharing her Section 8 housing benefits by living with her. A dramatic episode could cover a patriotic landlord, who reported that a veteran was living in his Section 8 housing even though the veteran decided not to live there. And then there’s the heartwarming story of a needy resident living in an elderly community who drives a luxury car. (I guess he forgot to add that last zero on the income line of his application.? Yes, these are all real examples of fraud discovered through the recent WHA investigation.

Even though the amount of fraud discovered by these types of investigations is significant, there is little incentive to take legal action against the perpetrators. After adding in the costs for investigating the fraud, the WHA ends up losing money. (This is a problem.? The WHA is allowed to use two-thirds of the recovered money from state public housing fraud, but the other one-third reduces the federal subsidy received on a dollar-for-dollar basis. In the case of Section 8 leasing fraud, the WHA can use 50 percent of the repaid money for the administration of the program. The other 50 percent is allotted to the Housing Assistance Program reserve, which helps with the cost of rental payments for people who have vouchers. (Wow, this is progressive and making a huge impact.)

Here’s the good news. Since the investigations began over five years ago, the amount of fraud has decreased. The WHA attributes the decline to resident education and word-of-mouth. The WHA regularly holds resident orientations and communicates the penalties for committing housing fraud. The residents are also introduced to their property’s own personal fraud investigator. (A new version of neighborhood watch?? It helps to publicize that actions have consequences and honesty is always the best policy. (Imagine that.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Report Finds $1.6M in Tenant Fraud at Worcester Housing Authority,” published in the Telegram & Gazette on January 23, 2013.

WORCESTER —The Worcester Housing Authority has identified nearly $1.6 million in fraud over the past five years — from residents reporting false income, landlords lying about tenant occupancy and people living in housing without the public housing agency’s knowledge, for example.

The fraud has been identified in public housing, leased housing (Section 8) and by the landlords of Section 8 housing, a WHA report states. The amount of fraud discovered is significant, WHA Executive Director Raymond V. Mariano said. WHA receives roughly $50 million a year in taxpayer support from state and federal sources. About 10,000 people live in the city’s public housing and another 12,000 in leased housing.

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Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.