Thursday, June 11, 2009
Defunct Housing Authority Indicted
By Mike Gallagher
Journal Staff Writer
Two separate state grand juries in Albuquerque have been hearing evidence involving the now-defunct Region III Housing Authority, and at least one of the panels has returned a sealed indictment.
One grand jury heard evidence Friday and apparently will continue to hear testimony in the coming weeks. It is looking into the default on $5 million in bonds the housing authority sold to the State Investment Council. The grand jury session last week ran late, and several witnesses have not yet testified.
A second panel met Monday and, according to people familiar with the case, returned an indictment that was sealed to prevent publicity that could affect the work of the other grand jury.
The panel that returned a sealed indictment has been investigating a $300,000 loan the housing authority made to its then-executive director, Vincent "Smiley" Gallegos. The grand jury also has been looking into the roles of other board employees and contract employees in the transaction.
The investigations followed a series of audits and studies that also found questionable expenses and policies at the housing authority include buying booze and paying board members for meetings that didn't occur.
Both investigations are being run by the state Attorney General's Office, which began investigating the low-income housing agency in 2006 when the housing authority defaulted on the $5 million bond issue.
There are two grand jury investigations because some of the allegations involve different people.
AG spokeswoman Lynn Southard had no comment.
In 2003 and 2004, State Investment Council bought $5 million in bonds issued by the authority to finance its mission to buy and renovate homes that are sold to low-income buyers.
Money from home sales was used by the housing authority to pay operational expenses including $875,000 that went to Gallegos as salary, retirement benefits and a loan.
The bonds defaulted, and the State Investment Council estimated losses to taxpayers at around $4 million.
Public investigations found, among other things:
In sales of 40 properties, the money received from buyers wasn't used to pay off the bonds. The authority withdrew bond money to purchase five properties it already owned. The authority withdrew $880,000 to purchase 16 properties but paid only $280,000 for them.
A series of reports by the Journal's Thomas J. Cole also found that the housing authority allowed a state judge and an aide to House Speaker Ben Lujan, D-Santa Fe, to live rent free in authority homes.
Housing authority employees and a member of the board of directors purchased homes through the program even though they did not qualify.
The State Investment Council is seeking to recover its losses in a civil suit. That case alleges money was misspent and false information provided to the council.
The Region III Housing Authority was created for Bernalillo, Sandoval, Valencia and Torrance counties, but the agency has operated in other counties.