May 26, 2012

Housing authority probe finds no fraud

Oversight office reviews agency spending as result of questions raised and criticism

By John Richardson
Staff Writer

AUGUSTA -- A state oversight office has found no evidence of fraud by the Maine State Housing Authority, according to a report presented to lawmakers Friday.

click image to enlarge

Former MaineHousing executive director Dale McCormick

Staff file photo by Joe Phelan

Related headlines

The Office of Program Evaluation and Government Accountability reviewed about $4.3 million in spending by the housing authority from 2007 to 2011, based on questions and criticism of the authority and its former director.

"All of the business expenses appear to be business related ... and we find no indications of fraud," Beth Ashcroft, the office's director, told the Legislature's Government Oversight Committee.

Ashcroft's report was the product of a "rapid-response" analysis requested by lawmakers in January amid intense criticism of the housing authority by the Maine Heritage Policy Center and Republican state Treasurer Bruce Poliquin, a member of the authority's board of commissioners.

The criticism prompted the resignation in March of Director Dale McCormick, a Democrat who was appointed by the previous administration to lead the housing authority.

McCormick steadfastly denied the accusations of misspending, but said she had to step down to end the rancor. She could not be reached for comment Friday.

The report is considered the first phase of a more comprehensive, ongoing review. It will be the subject of a public hearing before the Government Oversight Committee on June 8.

The report says, "OPEGA judged substantially all of the $4.3 million sampled MaineHousing expenses to be generally consistent with its mission and primary activities."

However, it identifies expenses that "might be questioned as unnecessary" because they are not typical of conventional state agencies, Ashcroft said. Those expenses include professional memberships and donations to advocacy groups, gift-card bonuses for employees, and business meals that were not associated with out-of-town travel.

For example, the authority paid at least $9,625 during the five-year period for business meals for administrators and staff members who were not traveling, a practice that is limited in core state departments, Ashcroft noted.

Ashcroft noted that the housing authority has historically not been held to the same spending guidelines as conventional state agencies and departments. It is a quasi-independent agency overseen by a board of commissioners. Most of its $14 million annual budget comes from mortgage lending activities and fees. It received $374,000 from the state's general fund in fiscal year 2010-11.

Quasi-independent state agencies have come under increased scrutiny since an audit done in 2010 uncovered misspending and fraud by the former director of the Maine Turnpike Authority. A state law that will take effect this summer will impose financial guidelines on those agencies similar to existing guidelines for core state departments.

The review of the Maine State Housing Authority includes an especially close look at McCormick's business expenses, including travel to conferences and meals. It notes, for example, that lodging expenses for most of about 40 trips during the review period appeared reasonable, although her hotel room exceeded $300 per night in three cases.

The report shows no spending of public money for personal travel or meals, like that uncovered during the review of the Maine Turnpike Authority, Ashcroft said.

Ashcroft made several recommendations for tightening up accounting by the housing authority, such as including more detailed expense reports.

Acting Director Peter Merrill said most of the recommendations have already been implemented and the authority has already restricted spending, such as on travel and meals.

The Government Oversight Committee is intended to be nonpartisan, the only legislative committee with an equal number of Republicans and Democrats. However, Friday's presentation led to an exchange of partisan jabs over the report and the successful effort to oust McCormick.

"We can all agree here this was not the Maine Turnpike Authority. There is no fraud," said Sen. Roger Katz, R-Augusta. But he said the donations to interest groups -- such as $350 for the Great Falls Balloon Festival and $2,000 to the Maine Women's Fund -- "are just not related to the clear public mission of this agency."

(Continued on page 2)

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors

Further Discussion

Here at we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)