Federal Indictment Of Guam Housing Authority Attorney Latest Controversy At Agency

GHURA has been under increased federal scrutiny since 2011

By Jasmine Stole

HAGÅTÑA, Guam (Pacific Daily News, March 25, 2017) – The federal indictment of former Guam Housing and Urban Renewal Authority attorney Mark S. Smith on charges of wire fraud, theft and money laundering, comes following increased federal scrutiny the agency has faced in recent years.

Alleged problems at GHURA first surfaced years ago, followed by federal subpoenas, seizure of files, and a call by the federal government for the governor to replace the entire board. Gov. Eddie Calvo refused to do so, saying the board had done nothing wrong, and the federal government had no right to interfere with local board appointments.

GHURA's former executive director, Marcel Camacho, resigned in 2012, stating at the time he had informed the proper authorities about what he called "irregularities" in GHURA's handling of low income housing tax credits during 2011. Camacho wrote in his resignation letter he refused to sign off on the final tax credit agreement, "because I believed it was in my best interest, based on my moral and ethical standards."

GHURA in 2011 had received proposals from several developers interested in receiving $3.6 million in federal tax credits to build affordable housing. The board ignored the rankings of the evaluation committee and awarded the credits to the fourth and fifth-ranked bidders — Great Homes LLC and Tumon Heights Tower.

GHURA started receiving what current Executive Director Michael Duenas called an “avalanche of subpoenas,” beginning in July 2015 through about April 2016, according to Pacific Daily News files. The subjects of those subpoenas were not made public.

Investigators from the FBI, the U.S. Housing and Urban Development's Office of Inspector General, and the local attorney general's office last June served a search warrant at GHURA's Sinajana office. During the search, they they seized documents and electronic information.

Although Smith's federal indictment was unsealed only recently, allegations that Smith had improperly received federal payments as a landlord first were made public in June 2013, in an audit released by the Office of Public Accountability. The report stated that Smith had received federal funds as a landlord under the Section 8 program, beginning in 2004, or about seven years before he was hired by GHURA. The report stated the payments improperly continued while Smith was working for GHURA, which administers the program.

GHURA Board Chairman David Sablan at the time said Smith had sold the property in question, so there did not appear to be a conflict.

The U.S. Department of Housing and Urban Development in 2015 wrote to GHURA about Smith’s conflict of interest and asked that GHURA reimburse the federal government for $197,777 in legal fees that went to Smith and the money paid to him as a Section 8 landlord.

Duenas on Tuesday said that money has not yet been reimbursed and discussions about the reimbursements have been put on hold.

The indictment states Smith illegally rented his properties in Dededo, Mongmong-Toto-Maite, Tamuning and Agat under the federally funded Section 8 program.

As part of the alleged scheme, Smith reportedly transferred his interest in his property to his friend, Glenn D. Wong, and the pair submitted housing contracts for properties Smith owned that listed Wong as the owner, the indictment states. Wong also tried to amend past income tax returns to show that he was receiving rental income, the indictment states. Wong transferred the federal rental money to Smith through deposits, cash, and by putting money into Smith's credit card and loan accounts, the indictment states.

The indictment against Smith states he was paid a total of $ 379,787 between April 2011 and May 2014 when he was legal counsel and for a year afterward. Smith received about an average $10,880 a month in housing payments, based on the deposit amounts in the indictment.

As legal counsel, Smith was not supposed to directly or indirectly receive housing payments under the Section 8 program, the indictment states. This is outlined in the housing contract itself.

Any person who is an employee, a member or officer of the public housing authority, any member of the governing board or public official who exercises functions and responsibilities with respect to the program cannot have an interest in the housing program, the contract states.

Smith was hired as GHURA's legal counsel in 2011, shortly after his then-brother-in-law, Gov. Calvo's, administration took office.

The administration played no role in giving Smith the job, governor's spokeswoman Oyaol Ngirairikl said Tuesday, after Smith's indictment was unsealed.

Smith was hired as legal counsel for GHURA’s board after submitting a bid for GHURA’s request for legal services, according to Duenas.  Duenas said he was part of a three-person review panel which reviewed the bids and recommended that Smith be hired.

Smith was hired in March 2011, the indictment states, and Duenas said Smith resigned in May 2013.

Smith's indictment is not the first time federal prosecutors have pursued criminal charges related to a GovGuam board.

Marilyn Manibusan, a former Republican senator, and James Sablan, who worked as chief of staff for then-Lt. Gov. Madeleine Bordallo, more than a decade ago were indicted and accused of accepting money from real estate developers in exchange for approving their housing projects, according to Pacific Daily News files.

Manibusan was chairwoman of the Territorial Land Use Commission, which regulated land development, and Sablan was president of the Guam Housing Corporation, which provided low-interest federal loans to home builders.

In 2005, Manibusan was sentenced to almost six years, or 71 months,  in prison for multiple charges, including wire fraud, bankruptcy fraud, extortion and others, according to federal court records. Sablan was sentenced to three years of probation and ordered to pay $33,000 in restitution, according to court records.

Smith and Wong are scheduled to appear in federal court Monday to answer the charges against them.

If they are found guilty, Smith and Wong each face a maximum sentence of 20 years for money laundering charges, 20 years for wire fraud charges and 10 years maximum for the charge of engaging in monetary transaction with proceeds of specified unlawful activities, according to federal law.

If Smith and Wong are convicted, prosecutors also want them to turn over the money they obtained in connection with their alleged crimes. If the money is transferred or cannot be located, prosecutors asked that Smith and Wong’s other property be forfeited.

Pacific Daily News
Copyright © 2017 Guam Pacific Daily News. All Rights Reserved

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