Free Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS STEPHEN S. ADAMS, et al., Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 90-162C and consolidated cases (Judge Bush)

DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT Pursuant to Rule 56(h)(1) of the rules of this Court, defendant submits these proposed findings of uncontroverted fact. 1. The mission of the Department of Housing and Urban Development ("HUD") is

to "increase homeownership, support community development and increase access to affordable housing free from discrimination." HUD's Mission, available at http://www.hud.gov/library/bookshelf12/hudmission.cfm. HUD's mission during the period 1987-1994 was not materially different than its current mission. United States Government Manuals from the relevant time period state that HUD "is the principal Federal agency responsible for programs concerned with the Nation's housing needs, fair housing opportunities, and improvement and development of the Nation's communities." See, e.g., Def. App. 77, 82; see also Def. App. 72. 2. During the period February 1987 through October 1994, the function of HUD's

Office of Inspector General ("OIG") was defined as follows: "The function of the OIG is to conduct and supervise audits and investigations relating to HUD programs and activities. The audits and investigations are designed to determine the efficiency and effectiveness of HUD's programs and to prevent and detect fraud and abuse. The OIG is also charged with the

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responsibility of keeping the Secretary and the Congress fully and currently informed about problems and deficiencies relating to the operation of HUD programs and the necessity for and progress of corrective action." Organizations, Functions, and Delegations of Authority; Availability of Information to the Public; Production in Response to Subpoenas or Demands of Courts or Other Authorities, 57 Fed. Reg. 2225 (Jan. 21, 1992); Organizations, Functions and Delegations of Authority, 49 Fed. Reg. 11161 (Mar. 26, 1984); see also 73-74, 79, 84. 3. The investigative office of HUD's OIG was "primarily responsible for

investigating alleged violations of Federal criminal statutes involving fraud and corruption relative to [HUD's] programs." Def. App. 52, 56. 4. During the period February 1987 through approximately February 1994,

approximately 98% of a typical GS-1811-12 or GS-1811-13 criminal investigator's time was spent investigating or leading investigations into fraud upon HUD programs, such as HUD's Single Family Mortgage Insurance Program, Multifamily Mortgage Insurance Program and Rental Assistance Program. Id. at 47. 5. Examples of the types of fraud GS-1811-12 and GS-1811-13 criminal

investigators investigated are false statements, embezzlement, bribery and kickbacks. Id. at 47, 92, 111. False statement cases consisted primarily of grantees making false statements in order to fraudulently obtain grant money from the various HUD programs. See, e.g., id. at 86-90,11519. Embezzlement cases consisted mainly of grantees diverting HUD program money for a purpose other than what was authorized by the grant. See, e.g., id. "Kickback" cases consisted largely of people accepting money in exchange for HUD funded loans or grants. See, e.g., id. at 124.

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6.

GS-1811-12 and GS-1811-13 criminal investigators were the senior investigators

in HUD's OIG and typically handled the most complex cases in the office, such as, multifamily program cases, bribery cases and cases with multiple defendants. Id. at 47, 60. 7. The other approximate 2% of a typical GS-1811-12 or GS-1811-13 criminal

investigator's time during the period February 1987 through approximately February 1994 was spent investigating misconduct by HUD employees. Id. at 47. 8. In February 1994, Operation Safe Home was announced. Id. at 47, 122.

Operation Safe Home focused upon three major types of wrongdoing that undermine HUD programs: (a) violent crime in public and assisted housing; (b) fraud in public housing administration; and (c) equity skimming in multifamily insured housing. Id. 9. The only part of Operation Safe Home that was a new investigative focus for

HUD's OIG was combating violent crime in public and assisted housing. Id. at 47. HUD's OIG assisted Federal, state and local law enforcement in protecting HUD's interest in providing safe public housing for HUD's program beneficiaries. Id. For example, GS-1811-12 and GS-181113 criminal investigators worked with Federal, state and local law enforcement officers to investigate gangs and other drug and gun rings in an effort to prosecute their leaders. Id. at 62. 10. Violent crime in public and assisted housing undermines HUD's goal or

providing "decent, safe, and sanitary housing to needy Americans." Id. at 122. 11. After Operation Safe Home started in February 1994, some GS-1811-12 or GS-

1811-13 criminal investigators for HUD's OIG spent a majority of their time working on cases involving violent crime in public and assisted housing, while others continued to spend the majority of their time investigating fraud upon HUD programs. Id. at 47-48.

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12.

During the period from February 1987 through October 1994, the typical

day-to-day duties of GS-1811-12 and GS-1811-13 criminal investigators in HUD's OIG varied depending upon what type of case they were working on. Id. at 48. However, most GS-1811-12 and GS-1811-13 investigators in HUD's OIG spent the majority of their time engaged in typical law enforcement duties such as planning and/or leading investigations, collecting and reviewing evidence, conducting surveillance and interviewing witnesses. Id. at 48, 60-62. 13. For fraud investigations, collecting evidence consisted predominantly of

reviewing paperwork. Id. at 48, 60. For violent crime investigations, evidence was usually collected through warrants or informants, surveillance and purchasing contraband. Id. at 48, 62. 14. Other duties consisted of initiating contact with Federal, state and local officials,

preparing investigative reports, providing advice and assistance to the Department of Justice and United States Attorneys in preparing cases to present before grand juries and at trial and testifying before grand juries and at trial. Id. at 48, 60. 15. A typical GS-1811-12 or GS-1811-13 criminal investigator for HUD's OIG

exercised significant discretion in his or her day-to-day activities. Id. 16. Supervisors of GS-1811-12 criminal investigators provided only "general

technical and administrative direction." Id. at 53. Their work was "reviewed for adequacy and from the standpoint of adherence to policy and exercise of sound judgment." Id. GS-1811-13 criminal investigators in HUD's OIG typically received "only generalized instructions and guidance." Id. at 58.

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17.

GS-1811-12 criminal investigators in HUD's OIG had "wide latitude for

individual judgment, initiative and resourcefulness." Id. at 54. Furthermore, although many investigations were conducted jointly with, or under the supervision of, a higher grade criminal investigator, GS-1811-12 criminal investigators in HUD's OIG were "required to exercise sound judgment as situations develop, requiring immediate on-the-spot action where it is not possible to consult" with his or her supervisor. Id. 18. GS-1811-13 criminal investigators had "a wide latitude in planning and

conducting" investigations, Id. at 58, often led teams of criminal investigators and had discretion to add other professional and technical personnel to their teams, such as architects, engineers, construction analysts and appraisers. Id. at 57. 19. The investigators had the responsibility of identifying subjects, witnesses and

coordinating their cases with law enforcement agencies and prosecutors. Id. at 48. GS-1811-12 and GS-1811-13 criminal investigators for HUD's OIG made decisions such as who to interview, when to interview the witness or subject, when and where to conduct surveillance, etc. and kept their supervisors informed of these decisions and the status of the cases. Id. at 48-49. 20. GS-1811-12 and GS-1811-13 criminal investigators did not need supervisory

approval for most day-to-day activities. Id. at 49. GS-1811-12 and GS-1811-13 criminal investigators only needed approval of a supervisor for certain things, such as deputization, subpoenas or warrants and anything that involved a potential safety hazard for the investigator, such as late night surveillance in a dangerous area. Id. at 61.

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21.

Every time a GS-1811-12 or GS-1811-13 criminal investigator in HUD's OIG

interviewed a witness, he or she assessed the credibility of that witness and determined what additional questions to ask based upon previous answers in the same interview. Id. at 49, 61. 22. In reviewing evidence, GS-1811-12 and GS-1811-13 criminal investigators in

HUD's OIG determined which pieces of evidence would prove a case against a suspect or prove exculpatory for the suspect and adjusted their investigations accordingly. Id. GS-1811-12 and GS-1811-13 criminal investigators in HUD's OIG had almost complete discretion to follow a case wherever the evidence led them. Id. 23. In conducting surveillance, GS-1811-12 and GS-1811-13 criminal investigators

made decisions as to when they had seen or heard what they needed to see or hear or when it was unlikely that they would obtain the visual or audio evidence they were seeking. Id. at 63. 24. In investigating violent crime, GS-1811-12 and GS-1811-13 criminal

investigators had considerable discretion. Id. at 62. As in a fraud investigation, the investigators were free to follow the case wherever the evidence led them and needed to assess the credibility of all witnesses they interviewed. Id. 25. GS-1811-12 criminal investigators in HUD's OIG needed to be "thoroughly

familiar with the various programs of [HUD], the Labor Standards Act, and the Davis-Bacon Act, as well as the various Federal criminal statutes relating to fraud and corruption, viz bribery, theft or vandalism of Government property, conflict of interest, [and] fraud against the Government." Id. at 52.

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26.

GS-1811-13 criminal investigators in HUD's OIG must have knowledge of

"admissibility of evidence, rules of criminal procedure and constitutional rights" and that they "must be constantly aware of and follow closely the implications of precedent court decisions." Id. at 57-58. 27. Both GS-1811-12 and GS-1811-13 criminal investigators in HUD's OIG must

possess an extensive knowledge of generally accepted investigative principles, techniques, methods and procedures. Id. at 49, 63. 28. During the period April 1, 1987 through September 30, 1994, investigations by

HUD's OIG resulted in approximately $200 million dollars in savings, recoveries, fines and cost efficiencies. Id. at 91, 94, 96, 98, 100, 102, 104, 106, 108, 110, 113, 120, 125, 127. This amounts to millions of dollars each year during the period 1987 through 1994, as well as significant indictments and convictions. Id. at 50. 29. On October 30, 1994, all GS-1811 criminal investigators in HUD's OIG started

receiving availability pay under the Law Enforcement Availability Pay Act of 1994 at the same time. Id. at 46, 67-69.

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Respectfully submitted, PETER D. KEISLER Assistant Attorney General

/s/ Jeanne E. Davidson by Bryant G. Snee JEANNE E. DAVIDSON Acting Director

/s/ Shalom Brilliant OF COUNSEL: Michael J. Dierberg William P. Rayel Trial Attorneys Commercial Litigation Branch Civil Division Department of Justice SHALOM BRILLIANT Senior Trial Counsel Commercial Litigation Branch Civil Division Department of Justice 1100 L Street, N.W. Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tele: (202) 305-7561 Attorneys for Defendant February 26, 2007

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