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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of California

FOR IMMEDIATE RELEASE
Monday, November 28, 2016

Sacramento Landlord Pays $75,000 to Settle “Section 8” False Claims Act Allegations

SACRAMENTO, Calif. — United States Attorney Phillip A. Talbert announced today the resolution of federal False Claims Act allegations against Leatha Henderson for allegedly submitting false claims in connection with her participation as a landlord in the federal housing subsidy program.

The Housing Choice Voucher Program was enacted to assist low-income families in obtaining decent, safe, sanitary and affordable housing. The United States Department of Housing and Urban Development (HUD) administers the program through annual contribution contracts with local public housing agencies such as the Sacramento Housing & Redevelopment Agency (SHRA). This program is more commonly known as “Section 8.” Regulations implementing the Section 8 program provide that participating low-income tenants pay 30 to 40 percent of their adjusted monthly income toward their rent and utilities, and the federally funded program pays the balance.

Henderson contracted with SHRA in order to participate in the Section 8 program and receive government payments for her Sacramento rental property between June 2007 and May 2013. Under the terms of this Housing Assistance Payment Contract (HAP Contract), the United States paid between 62 and 68 percent of the rental rate stated in the HAP Contract (Federal Share), and the tenant paid the remaining 32 to 38 percent (Tenant Share). The HAP Contract restricted Henderson from charging rent to the tenant in excess of the Tenant Share as designated by SHRA based on the tenant’s income. Today’s settlement resolves allegations that Henderson falsely certified compliance with this rental payment restriction and fraudulently collected rental payments from both the United States and the tenant during the term of the tenancy.

 “Charging in excess of the agreed tenant rate frustrates a primary goal of this important program: to provide affordable housing to low-income families,” said United States Attorney Talbert. “Landlords participating in the Section 8 program will be strictly held to their obligations under the governing regulations.”

“A landlord’s participation in the Section 8 program is voluntary,” said HUD Regional Administrator Jon Gresley. “When they choose to participate, they agree to fulfill certain responsibilities, including charging tenants no more than what they must pay in rent so that their homes remain affordable. HUD will continue upholding this standard, as it safeguards the program’s integrity and secures the public’s trust.”

The allegations resolved by the settlement were first raised in a lawsuit filed against Henderson under the qui tam, or whistleblower, provisions of the False Claims Act by Sondra Madden, the tenant involved in the subject Section 8 tenancy. The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $13,500 of the recovery.

This case was the product of an investigation by HUD’s Office of Inspector General. Assistant United States Attorney Catherine J. Swann handled the case with the assistance of Ji Yoo, an attorney with HUD’s Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Topic(s): 
Financial Fraud
Updated November 28, 2016