Housing inspector general finds backdated records in employee detail case

In June 2005, an obscure federal housing official from California named Lily A. Lee was temporarily detailed to the Washington headquarters of the Housing and Urban Development Department. There was nothing remarkable about the assignment, which Secretary Alphonso Jackson and other top housing officials approved: Government employees are often detailed to Washington to carry out specific tasks.

But Lee's temporary detail turned out to be something special -- it lasted for nearly two and a half years, cost taxpayers more than $155,000 in expenses, and prompted an investigation by HUD's inspector general.

In the end, the inquiry amounted to little more than a slap on the wrist for senior HUD officials -- but an embarrassing one, at that. For much of the time that Lee worked in Washington as acting deputy assistant secretary for single-family housing, her assignment was unauthorized, investigators found. Government regulations require such assignments to be approved every 120 days. Investigators discovered, however, that Lee was continuously detailed without the required written approvals. They found that two documents authorizing her detail were backdated, one by more than a year. HUD Deputy Secretary Roy Bernardi refused to sign the backdated documents, the investigators' report shows.

Lee's assignment also raises questions about Jackson's judgment. In mid-2007, Bernardi informed Jackson that Lee's detail should be ended. But the investigators' report, obtained by National Journal under a Freedom of Information Act request, gives no indication that Jackson acted to end Lee's detail at that time. Indeed, HUD records show that shortly after Bernardi called for Lee's posting to end, Jackson's chief of staff, Camille Pierce, signed an authorization form extending Lee's time at headquarters. The form was dated May 28, 2006; Pierce signed the document on July 19, 2007.

Despite their findings, HUD investigators said that they uncovered no criminal wrongdoing. However, they said that from April 2006 through November 2007 Lee's detail was not properly authorized. The inquiry began after an informant's complaint last summer.

The inquiry is the latest problem to bedevil the HUD secretary. Federal criminal investigators are exploring Jackson's ties to contractors who have been handed lucrative work at the Housing Authority of New Orleans, or HANO, which is under HUD's control. National Journal recently disclosed that Jackson's wife, Marcia, worked as a consultant for two contractors that did business at HANO.

Why Lee was so valuable is not clear, even to some senior HUD officials. One official, speaking on the condition of anonymity, said that the agency could have avoided the "expensive detail" and investigation by placing someone else in the job permanently or having other employees at headquarters perform the work.

Lee worked closely with Frank Davis, the No. 2 official at the Federal Housing Administration. Davis initially selected Lee for the detail and signed an authorization describing Lee's "extensive knowledge of the nation's housing industry" and identifying her as "the key person" to lead the FHA's reform efforts. Davis signed two backdated authorizations last year, the inquiry showed, and forwarded them to Bernardi, who refused to sign them. Davis, who has enjoyed a close relationship with Jackson, did not return a phone call from National Journal.

Jerry Brown, a spokesman for Jackson, acknowledged that Lee's long detail was unusual. Asked why Jackson hadn't filled the job permanently, and whether the secretary considered the expensive detail a prudent use of taxpayers' funds, Brown responded, "The leadership of HUD expects the individuals in charge of the respective program areas to be responsible for managing personnel.... Ms. Lee technically worked for [Davis] and FHA Commissioner Brian Montgomery." Lee, 60, who makes $172,000 a year and has received $44,280 in performance awards from HUD since 2005, declined to comment when reached at her office in Fresno, Calif.

Dating back 12 years, Lee's expenses for travel, relocations, details, and per diems total at least $428,000, HUD records show. Investigators examined her expenses for the detail period -- from June 2005 to November 2007. They found that she charged HUD more than $60,000 for lodging; $18,000 for car rental; and more than $5,000 for taxis, parking, and gasoline. Lee was also paid more than $37,000 in per diem allowances.

Separately, investigators found that for part of the time that Lee resided in a government-reimbursed rental apartment in Washington, she rented out a condo she owns in the same building to a subordinate for $2,400 a month. The subordinate told investigators that the arrangement was not linked to her job at HUD. Lee told investigators that she charged her aide the "fair market rate," and HUD ethics lawyers concluded that Lee had not violated ethical standards.