U.S, DEPARTMENT OF SetEnd. HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL WASHINGTON, DC 20410-4500 June 9, 2017 Senator Charles E. Grassley United State Senator ‘SH-135 Hart Senate Building Washington, DC 20510-1501 Dear Senator Grassley: 1am in receipt of your letter dated May 26, 2017, regarding a recent story by The Daily Caller concerning unpublished reports by my office. Before I delve into the substance of our response, I wish to bring to light some of the interactions this office has had with The Daily Caller to provide some background. You are aware of their report of July 26, 2016, titled, 500 Fusitives Live in Federally Funded Housing. In my response to you dated September 8, 2016, | laid out the misrepresentations made in their reporting which I will provide again further into this correspondence. The Daily Wire, a sister publication of The Daily Caller, ran a story on April 6, 2017, later republished or cited by other websites, that wrongly credited HUD Secretary Carson with uncovering accounting mistakes within HUD, Ben Carson Finds $500 Billion (Billion!) In Exvors Durine Audit Of Obama HUD, The Daily Caller misinterpreted the timeline of facts ignoring that the OIG first notified HUD officials last year of issues we found during a routine audit required by federal law and which were also transmitted to the Congress with these issues attached. This was approximately three months before Secretary Carson became Secretary. All these facts were brought to their attention and they chose to ignore them. The Daily Wire's reporting was investigated by www. facicheck.org, a project of the Annenberg Public Policy Center of the University of Pennsylvania. Their account of The Daily Wire's reporting can be found here: hitp://www. factcheck.org/2017/04/earson-didnt-find-hud- emors/. By letting this story, we remain concerned that this misleads readers toward making inaccurate assumptions regarding the work of this office. ‘The Daily Caller story which ran April 30, 2017, titled [UD Watchdog Kept 14 Fraud Reports Hidden From Public represents this same form of fact checking, It presents a false impression that this office is remiss in its charge to “promote efficiency and effectiveness in programs and operations; detect and deter fraud and abuse; investigate allegations of misconduct by HUD employees; and review and make recommendations regarding existing and proposed legislation and regulations affecting HUD.” This characterization is not true and offensive to the men and women of HUD OIG that work to not only produce impactful work on a daily basis but also make sure this work can be relied upon once produced to the Department. This office has produced one of the highest returns on investment in the entire Inspector General community‘The Honorable Charles E. Grassley June 9, 2017 Page 2 with, last year, $62 saved for every dollar invested. The HUD OIG is not withholding any information that could be used to improve departmental operations, Our detailed responses to your questions on this matter are below. The Daily Caller story of April 30, 2017, also mentioned its reporting of a similar story published on July 26, 2017, titled, /,300 Fugitives Live In Federally-Funded Housing, And No One Seems To Care. Again, here is yet another example of what we have highlighted above. To be clear there was a “Draft” SIR (Systemic Implantation Report) generated by one of our field offices regarding fugitive felons residing in public housing. As was stated in the article and presented to the reporter and his editor, this information contained in the “Draft” STR was not fully vetted and the data cited by the staffer in the information contained in the report could not be substantiated, or even replicated in a way that showed it was a sound assessment of numbers, so that the analysis was deemed unreliable. Therefore it was not placed in final form and transmitted to the Department based on the undependability of the data and the inability to independently reproduce the conclusion. SIRs are not “Fraud Reports” but rather internally-generated reports that document potential deficiencies related to departmental operations. They are produced by our regional operations staff and undergo a rigorous vetting process that includes inspection by OIG HQ staff and department program liaisons before being designated as “Final.” This process ensures that when. we do submit SIRs to departmental officials to assist them in making program operations better, that they are a verifiable condition that warrants corrective action at the Department level. Until SIRs are presented to the Department, information contained within is considered “Draft” and “Pre-decisional.” As you can imagine, Inspectors General maintain a rigorous intemal review process over its products due to the importance of ensuring striet accuracy of the information contained therein due to its significant impact on external parties. It is important to bring to the Department's attention systematic issues it uncovers in the course of its work that may become final. However, we only do so after ensuring the validity and accuracy of our work products. This particular document did not meet the standard for FOIA disclosure given its “Draft” state. Our internal review noted that this document should have been marked as “Draft.” It was not, and a redacted version was released. This should not have occurred and a procedural process to ensure that drafts are not included in FOIA data calls has been corrected. This release does not change the fact that the data contained in the “Draft” SIR was unreliable and the conclusions were unsupportable. ‘With respect to public disclosure of any documents that are requested under FOIA, I would like to clearly articulate this office's policy. Anytime the OIG receives @ FOIA request for the same document from three or more requestors, that document is posted online in the FOIA Reading Room located on our public facing webpage located here: htts://www.hudoig. gov/ reading-room. This does not mean that every FOIA requested document is placed in the FOIA Reading Room, just those that have received a heightened interest being requested by three or more individuals. We do this for the sake of transparency. foia-The Honorable Charles §. Grassley June 9, 2017 Page 3 HUD OIG investigates potential fraud, waste and abuse in numerous HUD programs. This includes FHA and Ginnie Mae whose combined assets exceed $3.3 trillion, and which present an ongoing oversight challenge in their role as backstop of the U.S. residential mortgage system. In addition, HUD OIG investigates housing and development grants, as part of the Department’s ‘$40 billion appropriation per year, to thousands of grant recipients and millions of individual beneficiaries, as well as tens of billions more in disaster-related aid. The audit and investigation of agency programs is the primary function of cach OIG under the Inspector General Act, and all of HUD OIG’s 195 criminal agents are tasked with this work. While HUD OIG works in conjunction with the U.S. Marshals” Service on fugitive felon issues, it is the Marshal's Service which has primary federal law enforcement authority to investigate fugitive matters. We do assist in the apprehension of fugitive felons when requested by that authorized law enforcement agency. ‘These activities are unlike normal HUD OIG activities authorized under the Inspector General Act in that the alleged criminal misconduct at issue does not relate to a violation of HUD program requirements. While Federal statutes authorize the termination of a felon’s lease agreement, fundamentally termination is an administrative action conducted by the local housing authority/landlord. Housing authorities have the ability to terminate leases of those placed on fugitive felon status under 18 USC 1073, but currently, they are not compelled by HUD policy. | share with you concern that these individuals should not be permitted or tolerated to live in public housing or receive Section 8 benefits. Fugitive apprehension of those that reportedly reside in public housing is a role that is managed by housing authorities, the U.S. Marshals Service and local law enforcement. When asked, and if resources are available, the HUD OIG will assist others with that role. However, the U.S, Marshals have not, to my knowledge, requested our presence during my tenure in this organization. It would be difficult to support such request given the mounting number of multi-trillion assets that where we are obliged to provide oversight and other concordant issues including escalating qui tams and false claims act reviews that we work in conjunction with the Department of Justice. With respect to The Daily Caller’s most recent reporting of April 30, 2017, titled HUD Watchdog Kept 14 Fraud Reports Hidden From Public, below are the responses to your questions: 1. “Why were these reports withheld from both the Department and the general public?” Atno time were any finalized reports withheld from the Department. Of the 14 SIRs referenced, 13 were in draft form and had not been designated as “Final” or pending review. As cited earlier, they were erroneously swept up in a FOIA data call to the field and should not have been part of the package that went out. Subsequently, they were not forwarded to the Department for consideration. Only one SIR was deemed “Final” and it was posted on the OIG FOIA Reading Room based on the fact that it had been requested by at least three separate requesters.‘The Honorable Charles B. Grassley June 9, 2017 Page 4 ‘There are many reasons as to why draft SIRs are not formally submitted to the Department. ‘The most common occurrences are: * substance of the draft SIR is already being addressed by HUD departmental policy * during the review of draft SIR it is determined that itis not a department-wide implication * during the SIR review/approval process the substantive concern was questioned for accuracy at the regional level or after consultation with the Department * draft implication could be addressed and/or corrected by training 2. “Please explain what, if any steps are being taken to ensure that all reports are made available to the Department and the general public?” All SIRs are formally transmitted to the Department once they are finalized. With respect to making SIRs available to the general public, these documents, like all in our possession, are available through a FOIA request. This agency actually takes the additional step of transparency by placing all documents on our public facing FOIA reading room that receive three or more requests. Specifically, you mention “investigative reports.” Investigative documents are not posted online because they contain sensitive law enforcement information regarding our assessment of potential criminal activity. This office does provide a detailed synopsis of our criminal cases in our Semi-Annual Report to Congress. This document is publically available on our website. 3. “Please explain why the Department was not made aware of the unpublished reports and given the opportunity to rectify the systemic problems?” Once a SIR is finalized it is officially submitted to the Department, also wish to bring to your attention that during the vetting of draft SIRs, the OIG consults with the Department prior to a SIR becoming finalized and formally transmitted. It is during this process that some draft SIRs may be abrogated or resolved. It would be irresponsible for HUD OIG to issue a report if the Department has already addressed the issue or the information in the report is determined to be unreliable or unsupportable following a quality analysis process, 4. “What, if any, efforts have been made to implement the recommendations included in the unpublished reports?”‘The Honorable Charles E. Grassley June 9, 2017 Page 5 SIRS arise from completed investigations, where the agent believes the issues in the finding may have broader application. If these concerns are resolved or refuted during the drafting or review process within OIG there are no remaining recommendations I would like to add that under my leadership this office has taken tangible steps to be forthright and transparent with all media organizations that seck our assistance. Despite our best efforts to work openly with the media outlet identified above, we find it necessary to again cite the facts. As always, the HUD OIG will continue to work with your office on these issues and we value our working relationship with you and your staff, We greatly appreciate all the support you have given to the Inspector General community, and to this office, over the years, Should you or your staff have any questions, please contact my Congressional Liaison Kathleen Hatcher at khatcher@hudoig.gov. Sincerely, ce: The Honorable Dr. Ben Carson Inspector General Secretary USS. Department of Housing and Urban Development