Former Executive Director of Gallup Housing Authority and Accomplice Sentenced to Federal Prison for Convictions on Fraud and Theft Charges
ALBUQUERQUE – The former Executive Director of the Gallup Housing Authority and an accomplice were sentenced this morning to federal prison for their convictions arising out of a scheme to defraud the United States and the U.S. Department of Housing and Urban Development (HUD) of more than $100,000.00.
Danny Garcia, 39, formerly of Gallup, N.M., and now residing in Snowflake, Ariz., was sentenced to 20 months in prison followed by three years of supervised release. His co-defendant, Michael Virruso, 62, of Gallup, N.M., was sentenced to 18 months in prison followed by three years of supervised release. Garcia also was ordered to pay $105,000.00 in restitution, including $75,000.00 that must be paid jointly by Garcia and Virruso.
The sentences were announced by U.S. Attorney Damon P. Martinez, Phyllis Robinson, Special Agent in Charge of Region 6, HUD Office of Inspector General, and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.
Garcia and Virruso were indicted in Aug. 2013, on one count of conspiracy and eight counts of making false claims against the United States. Garcia also was charged with three counts of theft from programs receiving federal funds. According to the indictment, between June 2010 and Oct. 2012, Garcia and Virruso engaged in a scheme to steal federal funds provided by HUD to the Gallup Housing Authority (GHA). HUD is a federal agency whose core mission is to make quality, affordable housing accessible to all Americans. HUD oversees and funds programs designed to provide affordable housing for low-income Americans. One such program, the Capital Fund Program (CFP), provides grants to public housing agencies for the purpose of making improvements to public housing developments. GHA is a public housing agency that receives approximately $400,000.00 in CFP grants each year and Garcia was the Executive Director of GHA at the time of the offenses charged in the indictment.
As Executive Director of GHA, Garcia was responsible for selecting contractors to carry out GHA projects, reviewing and approving invoices payable by GHA, and requesting HUD funds to pay for GHA projects. According to the indictment, in summer 2010, Garcia awarded a contract to remove and replace sidewalks in a GHA housing development to a construction company that employed Virruso and appointed Virruso to act as safety inspector. While working on the project, Virruso submitted invoices to GHA for work performed by the company and for which the company received payment. Garcia used GHA funds to pay Virruso’s invoices and then obtained reimbursement from HUD’s CFP. Virruso and Garcia then formed a company together, MCL Construction. Virruso submitted a fraudulent invoice from MCL to Garcia, who approved the invoice for payment from HUD funds, and both men collected a share of the proceeds. Virruso fraudulently received more than $75,000.00 through this scheme. In addition, Garcia embezzled more than $15,000.00 of HUD funds by misusing a GHA debit card.
On July 8, 2014, both men entered guilty pleas to Counts 1 and 9 of the indictment charging them with conspiracy to commit false claims against the United States and false claims against the United States. Garcia also pleaded guilty to Count 10 of the indictment charging him with theft from a program receiving federal funds. In their respective plea agreements, Garcia and Virruso each admitted participating in the unlawful scheme described in the indictment. Garcia also admitted embezzling GHA funds by making personal purchases exceeding $5,000.00 per year using a debit card linked to a GHA bank account.
“The sentencing today of Danny Garcia and Michael Virruso should send a strong message to anyone who serves in a position of public trust that abuses for the purpose of personal enrichment will be vigorously investigated to ensure they are brought to justice and debarred from future participation in government programs,” said Phyllis G. Robinson, Special Agent in Charge, Office of Inspector General, U.S. Department of Housing and Urban Development.
U.S. Attorney Damon P. Martinez commended Region 6, HUD Office of Inspector General and the Albuquerque Division of the FBI, who investigated the case, and Assistant U.S. Attorney Jeremy Peña, who prosecuted the case.