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Press Release

Chelsea Landlord and Property Manager Agree to $80,000 Settlement for False Claims Act Violations

For Immediate Release
U.S. Attorney's Office, District of Massachusetts
Landlord and property manager sought illegal side payments from three Section 8 tenants

BOSTON – A Chelsea landlord, 44 Gerrish, LLC, and its property manager, HallKeen Management, Inc., have agreed to pay an $80,000 settlement for submitting false claims to the federal government after receiving illegal water utility payments from three low-income tenants while participating in a federal housing subsidy program.

The Department of Housing and Urban Development (HUD) provides federal funding through the Federal Housing Choice Voucher program, commonly referred to as “Section 8,” to assist low-income individuals in securing safe housing. HUD provides funding through vouchers that are administered by local public housing agencies. HUD pays the housing subsidy, which may cover all or a portion of a tenant’s monthly rent, including certain utilities, directly to the landlord or an agent of the landlord. As a condition for receiving the housing subsidy, the landlord, or an agent of the landlord, contractually agrees not to charge Section 8 tenants rent, including utilities, in excess of the amount set by the public housing agency.

Despite this restriction, from June 2014 to October 2020, the landlord and its property manager demanded and received monthly water utility payments from three Section 8 tenants on various occasions. One of the tenants brought a lawsuit against the defendants under the whistleblower provisions of the False Claims Act. As part of today’s settlement, the defendants admit to demanding and receiving payments for the water utility from three Section 8 tenants in violation of housing assistance payment contracts.                         

“The purpose of the Section 8 program is to help low-income families afford safe housing and keep a roof over their heads, not to afford an illicit windfall to landlords and their agents,” said Acting United States Attorney Nathaniel R. Mendell. “We will continue to hold accountable those who fail to exercise integrity in HUD programs and take advantage of their tenants.”

“This settlement is the latest example of our continued commitment to hold landlords accountable for actions that seek to enrich themselves at the expense of our poorest neighbors,” said Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Region.

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 settlement agreement requires the defendants to pay $80,000 to the United States.

Acting U.S. Attorney Mendell and HUD OIG SAC Scaringi made the announcement today. Assistant U.S. Attorneys Steven Sharobem and Alexandra Brazier of Mendell’s Affirmative Civil Enforcement Unit handled the matter.

Updated November 23, 2021