Owner of Maryland Computer Software Company Pleads Guilty to Defrauding Housing Authorities Across the Country

October 27, 2011

Baltimore, Maryland - Jack G. Stout, age 65, of Joppa, Maryland, pleaded guilty today to wire fraud, in connection with a scheme in which he transferred funds from various public Housing Authorities to his personal bank account and the account of a friend.

The guilty plea 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. (Modern Software), which developed and maintained a program called Public Housing Authority Software (PHAS), that helped public housing authorities organize payroll and personnel information, tenant accounting information, and related tasks. Stout maintained the ability to login to each housing authority’s software platform in order to provide custom programming, software training, system support, and consulting services. In most cases, Stout was the only person, or one among very few persons, who knew how to use, access, and maintain this platform. Over fifty public housing authorities across the nation used the PHAS program, including the Housing Authority of Baltimore.

Beginning in February 2010, Stout accessed the PHAS program of various 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 fraudulent nature of these transfers by accessing the PHAS program and replacing the banking information of individuals and businesses who at one time had been legitimate housing authority clients and customers with his own banking information, or that of his friend, then effecting transfers under those individuals’ and businesses’ names, but into his personal bank account or the bank account of his friend.

According to the plea agreement, between February 2, 2010 and December 2, 2010, Stout transferred approximately $25,542, in stolen funds from the Shreveport Housing Authority into his personal account and used the stolen funds to pay off his debts and obligations. He also transferred some of these stolen funds into his friend’s personal bank accounts. In addition, from September 2, 2010 to January 3, 2011, Stout transferred about $5,042, in stolen funds from various housing authorities across the nation, directly into his friend’s bank account The 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 victim Housing Authorities.

Stout faces a maximum penalty of 20 years in prison and a $250,000 fine. U.S. District Judge Benson E. Legg, has scheduled sentencing for February 21, 2012, at noon.

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

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