Owner of Maryland Computer Software Company Sentenced for Defrauding Housing Authorities Across the Country

February 21, 2012

Baltimore, Maryland - U.S. District Judge Benson E. Legg sentenced Jack G. Stout, age 65, of Joppa, Maryland, today to 9 months in prison, followed by six months of home detention as part of two years of supervised release, for wire fraud in connection with a scheme in which he illegally transferred funds from public housing authorities in Baltimore and in other states, into his personal bank account and the account of a friend. Judge Legg also ordered that Stout pay restitution of $30,584, the same amount he was also ordered to forfeit.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kenneth R. Taylor, Jr. of the Housing and Urban Development Office of Inspector General - Office of Investigations.

According to Stout’s plea agreement, he was president and owner of Modern Software Technology, Inc., which developed and maintained a program called Public Housing Authority Software (PHAS), that helped public housing authorities organize payroll, personnel and tenant accounting information. Stout was able to login to a housing authority’s software in order to provide custom programming, software training, system support and consulting services. Over 50 public housing authorities across the nation used the PHAS program, including the Housing Authority of Baltimore.

Beginning in February 2010, Stout used the PHAS program of housing authorities to unlawfully divert housing authority funds into his personal bank account in Maryland, and into the bank account of a friend in Florida. Stout concealed the thefts by accessing the PHAS program and replacing the banking information of individuals and businesses, who at one time had been legitimate housing authority customers, with his own banking information, or that of his friend. Stout then made transfers under those customers’ names, but into his or his friend’s personal bank account.

From February 2 to December 2, 2010, Stout transferred approximately $25,542 from the Shreveport Housing Authority in Louisiana into his and his friend’s personal account, and used the stolen funds to pay off his debts. In addition, from September 2, 2010 to January 3, 2011, Stout transferred about $5,042 from various housing authorities across the nation into his friend’s bank account. Other victim entities included the Baltimore Housing Authority; the Housing Authority of Alexandria, Virginia; the Housing Authority of Rochester, New York; and the Housing Authority of Montgomery County, Pennsylvania.

As a result of the scheme, between February 2010 and January 2011, Stout stole at least $30,584, from the housing authorities.

Recently, in an unrelated case, two defendants pleaded guilty to conspiring to commit bank fraud in connection with a scheme to fraudulently obtain approximately $1.4 million from a Baltimore Housing Authority bank account in the course of just a few months. William Allen Darden, age 44, and Keith Eugene Daughtry, age 50, both of Washington, D.C., entered their guilty pleas on February 16 and 8, 2012.

United States Attorney Rod J. Rosenstein commended HUD-OIG, Office of Investigations for its work in the investigation and thanked Assistant United States Attorney Sujit Raman, who prosecuted the case.

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