Chronology of Selected Events
Regarding
Hamilton, HUD Loan Sales, HUD Loan Sales Qui Tam and Clinton-Gore
Administration
(As of February 13, 2001)
1990-1991
Hamilton is founded.
Prior to incorporation, principals at NHP, Inc. (formerly known
as National Housing Partnership) had asked Catherine Austin Fitts
to form an investment bank to provide NHP with dedicated investment
banking services and advice. NHP abrogates its deal at the day of
closing, after Harvard Endowment, a major stockholder of NHP, announces
with no advance warning that it has decided to change the terms
of the deal such that NHP would receive 20% of Hamilton’s equity.
Fitts decides to proceed without NHP and Harvard. The vision for
Hamilton’s creation is explained in a Fitts memo on "The Dream
Machine." The Dream Machine was envisioned as a relational
database and software tool operation that could revolutionize communities’
access to capital and facilitate a transformation to collaborative
learning organizations and communities.
1992-1993
Hamilton builds numerous
relational databases and tools that bring early success to the new
company. The tools include what Hamilton believed to be the most
extensive database on institutional equity investment in real estate.
Upon reading about Hamilton’s research with the database Alan Greenspan
makes a special request for a briefing to the Federal Reserve Staff
on Hamilton’s findings. Another tool, developed as part of a complete
pricing and simulation model of Battery Park City Authority, was
a simulation of New York real estate valuations for tax purposes.
Hamilton’s work is widely credited with providing the basis for
a recapitalization of the Battery Park City Authority and the first
ratings upgrade of a New York State authority in over 20 years by
Standard & Poor’s.
1993
Al Gore names Jack Quinn
as his Chief of Staff. Clinton nominates Andrew Cuomo as Assistant
Secretary of Community Planning and Development at the United States
Department of Housing. Eric Holder is nominated as DC US Attorney.
Frank Hunger is nominated as Assistant Attorney General, Civil
Division, U.S. Department
of Justice.
30-Sep-93
Hamilton is awarded its
first advisory contract with the United States Department of Housing
and Urban Development and its insurance arm, Federal Housing Administration
("HUD") through a competitive bidding process in response
to an RFP issued by HUD in late 1992.
Oct-93
HUD conducts a "reflector"
sale of performing Single Family Section 221(g)(4) mortgages (that
is, mortgages guaranteed by HUD and subsequently "put back"
to the government by the lender pursuant to statutory provisions
allowing the lenders to put them back) that had a $90 million Unpaid
Principal Balance ("UPB"). The aggregate purchase price
of the loans was over $84 million, equal to 85% of UPB, providing
the government with savings of $1.7 million (calculated as the excess
purchase price over the "value to government"). The winners
of this sale were First Boston, United Mortgage, and Kidder Peabody.
1994
The Digital Telephony
and Communications Privacy Improvement Act of 1994 is
passed.
1994
Robert Rubin becomes
Secretary of Treasury, resigning from Goldman Sachs.
1994
Howard Glaser joins HUD
in 1994 as Deputy Assistant Secretary of Community Planning and
Development. After Andrew Cuomo becomes Secretary in late 1996,
he then serve as Deputy General Counsel. His resume describes his
responsibilities as "acting as the Secretary’s chief legal
advisor on regulations, legislation, and programs."
Feb-94
Operation Safe Home,
a program run by the HUD Office of Inspector General ("OIG)
to "combat violent crime in public and assisted housing," is begun.
As part of this program, the HUD OIG coordinates with various federal,
state and local enforcement task forces. Federal agencies that partner
with HUD include FBI, Drug Enforcement Agency, Bureau of Alcohol,
Tobacco and Firearms,, IRS, Secret Service, US Marshall's Service,
Postal Inspection Service, US Customs Service, Immigration and Naturalization
Service and Department of Justice. The primary performance measures
reported in the HUD OIG Semi-Annual Performance Report to Congress
for this program are the total number of asset forfeitures/seizures,
equity skimming collections and arrests. Subsequent intra agency
efforts such as the "ACE" program sponsored by the Department
of Justice are initiated by US Attorney’s Offices, working with
the DOJ Asset Forfeiture Fund, HUD OIG and HUD Office of General
Counsel. The Operation Safe Home program is unusual in that it moves
the agency auditor into the role of running a program and competing
for program resources. The HUD loan sales program staff receive
complaints from HUD OIG staff about the inclusion in the HUD loan
sales of loans with respect to which the enforcement arms of HUD
are conducting investigations. These complaints underscore the fact
that the HUD-held mortgage portfolio provide enforcement opportunities
for DOJ/US Attorney and HUD OIG and HUD General Counsel, and that
the sale of loans from HUD’s portfolio reduces the opportunities
for enforcement staff to increase their performance measures (i.e.,
number of arrests, seizures and equity skimming collections). HUD
OIG and General Counsel later request that loans be held out of
sale, even though this would cost taxpayers more. The enforcement
position, reported to Catherine Austin Fitts by one of the loan
staff involved, is that their goal is maximization of enforcement
revenues, not maximization of total government revenues.
Mar-94
Issuance of "A Guide
to Equitable Sharing of Federally Forfeited Property for State and
Local Law Enforcement Agencies."
14-Mar-94
Webster Hubbell resigns
from his post at the Justice Department and later pleads guilty
to over-billing at the Rose Law Firm.
26-Mar-94
A series of emails is
exchanged between Hamilton and HUD loan asset sale team members
regarding HUD’s work-out policy for loans that may be subject to
future sale in HUD loan sales. Al Sullivan, the Director of Asset
Management in the Office of Housing, suggests one alternative is
to halt all workouts of loans identified for sale. The policy subsequently
is adopted.
Aug-94
HUD decides to implement
a new loss mitigation program to be known as Special Workout Assistance
Teams or "SWAT" Program. The purpose of the initiative
is to identify troubled multifamily properties with physical and
financial problems that require special attention and expertise
and to bring in a team selected by HUD comprised of legal, accounting,
management and other specialists to solve these problems.
Aug-94
HUD reassigns about $90
million UPB of performing HUD-held multifamily loans to Fannie Mae
with assistance of Hamilton as financial advisor.
1994
Donald Smaltz is named
Independent Counsel to investigate Agriculture Secretary Mike Espy’s
alleged acceptance of gifts from individuals with business before
his Department.
Oct-94
HUD sells over $150 million
in performing multifamily section 221(d)(4) loans with
Hamilton’s assistance
as financial advisor.
Nov-94
George W. Bush is elected
Governor of Texas, defeating Ann Richards with 53% of the vote compared
to her 46%.
Dec-94
The Kerry Company is
awarded the first HUD SWAT contract.
Dec-94
Secretary Rubin leads
effort to put together Mexican bail-out package that saves numerous
US investment houses and investors from losses on their investments
in Mexican bonds during early 1995.
1995
Goldman Sachs agrees
to pay the Maxwell pension funds $253 million in the settlement
of a lawsuit over Goldman’s role in Robert’s Maxwell’s illegal use
of pension fund assets.
1995
An HUD Office of Inspector
General ("OIG") staff member reports to Catherine Fitts
that he was present at a meeting with Community Planning and Development
Assistant Secretary Andrew Cuomo and the HUD Inspector General ("IG")
at which Cuomo reported that he intended to "get rid of Hamilton
and Fitts."
1995
Helen Dunlap (Deputy
Assistant Secretary for Housing and head of the loan sales program)
and Kathy Rock (FHA Comptroller) report to Catherine Fitts that
the HUD IG has personally complained to them about the political
pressure she has been receiving about HUD’s continued use of Hamilton
as financial advisor. The complaints had no apparent relationship
to the quality of Hamilton’s work.
1995
In late 1994/early 1995,
Hamilton agrees to assist NHP in doing a valuation for tax purposes
to assist NHP in dividing the company into two parts, one designed
to perform management functions and one for the purpose of holding
real estate, so that it can take the management company public.
As a condition to Hamilton’s agreement to perform the task, Hamilton
requires that NHP agree that all work must be completed before Hamilton’s
HUD contract requires it to deal in any way with Section 8 assisted
mortgages. The condition is imposed by Hamilton in order to eliminate
the possibility of any conflict of interest in its performance of
the government contract. Hamilton proceeds to build an extensive
software tool that replicates NHP’s portfolio, including all of
NHP’s properties, partnerships, and corporations. The valuation
process teaches Harvard, NHP and Hamilton many things about the
HUD Section 8 portfolio and about the Section 8 program industry
stakeholders that were not known before. The simulation program
that performed this task was made possible by the use of flexible
software tools and detailed relational databases. NHP once again
abrogates its word with Hamilton, insisting that Hamilton provide
additional advisory support past the deadline. During the negotiation,
Rod Heller becomes threatening in his statements before using another
company.
1995
Charles Ruff leaves private
practice as a partner at Covington & Burling to become DC Corporation
Counsel.
Feb-95
HUD finally issues a
request for proposals (referred to in government contracting circles
as an "RFP") for additional financial advisors to advise
FHA on handling the burgeoning portfolio of defaulted HUD-held mortgage
loans. Hamilton had recommended since 1994 that HUD hire additional
financial advisors.
Feb-95
GAO puts HUD on its high-risk
list.
Mar-95
HUD sells over $900 million
UPB in multifamily unsubsidized non-performing loans in HUD's first
public loan sale in recent memory, termed the "Southeast Loan
Sale" because of the location of the underlying properties.
The aggregate purchase price of the loans was over $700 million,
equal to 79.82% of UPB, providing the government with savings of
$437.62 million ("savings" in this case referring to "credit
subsidy" savings, which is calculated by comparison to the
expected yield on this portfolio if it were held by HUD – HUD could
expect a recovery rate of about 35% of UPB if the loans were not
sold). There were 104 bidders and 12 winners in this auction, with
GE Capital being the largest. The recovery rate and success of the
sale astonished HUD, OMB, and the market and was widely attributed
to the financial software innovations in the sale, including the
design book, Internet and Bloomberg accessible low cost, high quality
disclosure and the optimization model that permits buyers to self-stratify
the portfolio. This allows many markets to compete against each
other, driving prices way up on the sale. Harvard Endowment’s Mike
Eisenson complains about the sale to Catherine Austin Fitts before
the bid, saying, "I don’t like this [Hamilton’s use of Bell Labs
optimization technology to auction HUD mortgages] because the only
way we can win is by paying more than our competitors. We prefer
a bid process where we can win by 'gaming' it because we are 'smarter'."
The Southeast sale also introduces the concept of "design books"
in which software development procedures are applied to produce
detailed documentation of all the steps in conducting a loan sale.
The design book process enables staff from numerous HUD offices
and field offices, as well as experts retained by Hamilton, to collaborate
on-line in a final product owned by HUD. The process of creating
design book permits the loan sale team to simulate the loan sale
in a way that resolves tensions and provides documentation for decisions
made. The final design book produced for the Southeast sale is approximately
2,000 pages long. The design book is one of the key steps to building
trust within the team conducting a highly complex transaction in
an organization infamous for not being able to collaborate. It is
one of the reasons that HUD was able to complete a sale that was
not considered feasible by the industry and to execute it nearly
flawlessly, producing astonishing performance in the marketplace
at transactions costs substantially below those incurred by RTC
and other government agencies for comparable transactions. The HUD
loan sale design books are converted to HTML in 1996 and 1997 and
posted on the web. For an example, see http://www.solari.com/gideon/legal/background/DesidnBk/Home.htm.
10-Apr-95
Barron's publishes
an article about the Southeast Loan Sale, "Believe it or Not, HUD
Finally Does Something Right for Taxpayers" by Jim McTague.
24-May-95
David M. Barrett is appointed
Independent Counsel to investigate Henry Cisneros for lying to the
FBI in connection with his appointment as HUD Secretary. It is reported
in the press at a later date that Barrett is providing these services
at $50 per hour.
Summer 1995
Secretary Cisneros proposes
legislation to implement the controversial "mark-to-market"
program into Congress at the instigation of the DAS for Multifamily
Housing, Helen Dunlap, with Hamilton’s support as financial advisor.
The response of the enforcement operations to the notion of on-line
training that decreases default rates and losses on HUD’s portfolio
is typified by the response of one member of the HUD OIG staff:
"Why should we give niggers computers when my kids don’t even have
them yet?"
Summer 1995
Hamilton starts a computer
learning center at Edgewood (a Washington, DC neighborhood) and
begins training for the first class to seed Edgewood Technology
Services in the fall. Fitts uses the early results to persuade HUD
in August to initiate the Neighborhood Networks Program by issuing
an administrative letter to HUD field offices that expands the definition
of "multifamily housing" to include computer learning
centers. (While loan sales improves the recovery rate on defaulted
mortgages, the greatest savings will result from lowering the default
rates that are occurring as a result of homeowners and tenants not
being able to pay their mortgage and rents). This makes many billions
of dollars of housing subsidy eligible to pay for computer learning
centers in privately owned apartment buildings. A highly capable
and innovative team in the Seattle Field Office takes charge of
the program, running the program from the field.
Jun-95
Clinton nominates John
D. Hawke, Jr. as Under Secretary for Domestic Finance at the US
Treasury. Hawke is a former Senior Partner at Arnold & Porter,
where he headed the financial institutions practice and served as
Chairman of the firm from 1987 to 1995. He served as General Counsel
of the Federal Reserve from 1975-78. As Under Secretary, Hawke’s
role is to oversee policy and legislation in the areas of financial
institutions, Treasury securities and pubic debt management, capital
markets, government financial management services, federal lending,
and government-sponsored enterprises.
17-Jun-95
"Blueprint for Reinvention
of HUD," issued by Secretary Henry Cisneros, proposes sweeping changes
in public housing, reform of FHA and consolidation of other programs
into three block grants.
Jul-95
Sally Denton's and Roger
Morris’s story on Mena, Arkansas, drawing from documents in Barry
Seal’s papers, is published in Penthouse after having been
axed by the Washington Post in January, shortly before publication.
A detailed report on Mena had run in The Nation in early
1992.
6-Jul-95
Daniel Pearson is appointed
Independent Counsel to investigate questionable business transactions
by Commerce Secretary Ron Brown.
August - October -
95
The HUD Denver (Rocky
Mountain) Field Office Inspector General's Office team puts together
audit objectives for the upcoming audit of the HUD loan sales program.
18-Aug-95
National Housing Partnership
("NHP"), the second largest HUD property manager and assisted
housing landlord, completes its initial public offering ("IPO")
and then draws on its credit facility. The IPO proceeds are used:
(1) to repay indebtedness from a previous credit facility, (2) to
repay a note to a former institutional shareholder of NHP, (3) to
repay a debt to Demeter Holdings (a Harvard Endowment - affiliated
investment vehicle that owned approximately ---% of NHP stock),
Capricorn (NHP’s second largest stockholder) and Roderick Heller
(Chairman of NHP), (4) the remainder added to NHP working capital.
In consideration of the sale of certain NHP - affiliated "Real
Estate Companies", Demeter, Capricorn and Heller canceled $9.1
million in debt. Effective with the IPO, NHP granted NHP Chairman
Rod Heller non-qualified performance vesting options to purchase
120,000 shares of NHP common stock @ $16 – the options would vest
in 10 years but are subject to accelerated vesting under certain
circumstances, including change in control of NHP. [Source: SEC
EDGAR filings] The Chairman of Capricorn is Pug Winokur, Chairman
of DynCorp, which serves as the lead contractor for DOJ’s Asset
Forfeiture Fund and provides numerous other IT, data and security-related
services at DOJ, HUD and throughout the Federal Government and the
War on Drugs in South America. Winokur is also a member of the board
of Harvard Endowment, the lead investor in NHP. The Center for Public
Integrity reports that Winokur was a $100,000 donor at the Clinton
Inauguration and that Harvard employees are the tenth-largest supporter
of Bill Clinton throughout his career.
Fall 1995
Jack Quinn, Al Gore’s
Chief of Staff and former partner at Arnold & Porter, becomes
White House Counsel. Lloyd Cutler, board member of NHP, whose firm,
Wilmer Cutler & Pickering, handled much of NHP's’ legal work,
had gone over to the White House Counsel’s office after Vince Foster’s
death.
Summer/Fall 1995
The Neighborhood Networks
letter to HUD field offices circulates. Adelson Entertainment makes
a video about ETS (an e.villages data services training site) which
does an excellent job of describing the on-line training and business
incubation idea. Dave Derecola, head of FHA audits in the HUD OIG’s
office, warns Fitts that Greer’s support of the neighborhood networks
concept could cause him serious trouble within HUD OIG. Greer and
Derecola are both recused from auditing the loan sales or Hamilton
as a result of their assistance in helping to design and build the
loan sales program.
Sep-95
HUD holds the National
Performing Sale in which Bankers Trust was the winning bidder for
all but one mortgage at almost 89% of UPB of the loans. Proceeds
of the sale aggregated $254.7 million. The program improvements
incorporated in this sale included the provision of a pre-auction
rating of the portfolio in the form of "comfort letters"
to bidders.
Sep-95
Catherine Austin Fitts,
President of Hamilton Securities, is on sabbatical to attend classes
at MIT in Boston until December of 1995. Hamilton moves into its
new offices over a CVS drugstore on DuPont Circle. The space is
designed to be an open office, with 35 desks that integrate computer
and telephony off of a central server, with swing capacity to 75
seats in kitchen and conference spaces to handle outsourcing and
visitors. The space is quite beautiful but has a lower per employee
cost than for the Washington, DC space occupied by HUD. In 1997,
the space is awarded an advance technology design award by the American
Institute of Architecture.
http://www.e-architect.com/conted/advntech/projcts/proj10.asp
Sep-95
HUD holds the National
Performing Loan Sale and auctions $282.25 million UPB in performing
multifamily loans. The National Performing Sale yielded proceeds
of $250.19 million, equal to 88.64% of UPB and resulting in savings
to the government of $25.63 million. As part of this auction, HUD
obtained comfort letters from rating agencies for these loans, resulting
in a "partial securitization" that increased proceeds over what
would have been otherwise possible. There were 25 bidders and two
winners in this auction.
Sep-95
HUD auctions $26 million
UPB in Title I (home improvement and manufactured housing) loans,
with Hamilton as financial advisor. The Title I Loan Sale yielded
proceeds of $.17 million, equal to 66% of UPB and resulted in savings
to the government of $.08 million.
Sep-95
The Washington Times
publishes an article "Capturing Billions in the Balance Sheet"
by Bill Diefenderfer, the Deputy Director of OMB during the Bush
Administration. Highlights: "In this case [the Southeast auction],
dedicated government servants saved the taxpayers $424 million…
This is not just shuffling paper. In this one transaction, HUD reduced
the federal deficit by more than $400 million."
3-Sep-95
Asset Strategies Group,
a due diligence subcontractor to Hamilton, stopped its work on the
HUD Single Family Loan Sale #1, refusing to continue unless HUD
immediately makes a series of changes in due diligence procedures
for the sale. HUD, upon Hamilton’s advice, decides to proceed with
the sale and, when Asset Strategies refuses to continue work, Hamilton
replaces Asset Strategies with Utendahl Capital. Subsequently, Asset
Strategies’ lawyer, Karen Burstein, writes a letter of complaint
against Hamilton to Andrew Cuomo who, at that time, is Assistant
Secretary for Community Planning and Development (with no role in
the loan sales). This letter of complaint finds its way into the
Ervin complaint filed in Ervin v. Dunlap and the qui tam
case naming Hamilton via Bill Richbourg, one of Hamilton's contract
GTRs.
6-Sep-95
Letter from Karen Burstein,
counsel for Asset Strategies, to Assistant Secretary for Community
Planning and Development Cuomo detailing "significant irregularities
in HUD's Note Sale Program" under the direction of Nicolas Retsinas.
The letter begins "Dear Andrew" and ends "Affectionately,
Karen."
25-Oct-95
HUD holds the Single
Family Loan Sale #1 for $523.23 million UPB in single family loans.
The Single Family Loan Sale #1 yielded proceeds of $392.77 million,
equal to 75.07% of UPB and resulting in savings to the government
of $7.89 million. There were 6 bidders in the auction held on the
originally scheduled date of October 25, as a result of which auction
HUD awarded 10,000 loans to three winners. A reoffering of 3,000
loans from this sale took place on November 6, 1995. The reoffering
was necessitated when the maximum bids received on the original
bid date for this portion of the portfolio fell short of the undisclosed
value of the portfolio to the government, making a sale at the first
maximum bid price undesirable. Soon after HUD’s failure to award
the full portfolio at the initial bid date, BlackRock Capital writes
an excoriating letter of complaint about Hamilton to HUD.
30-Oct-95
Bloomberg Information
Services publishes a story "HUD Earns Unexpected $1.3 Billion from
Sale of Multifamily Mortgage Loans."
Nov-95
Patrick Knowlton testifies
before the Whitewater Grand Jury regarding Vincent Foster’s death.
Nov-95
The Single Family Loan
Sale re-offering takes place – four bidders participated and 3,000
of the originally offered 10,000 loans are awarded to BlackRock
Capital, the winning bidder at a respectable 75% of unpaid principal
balance. In its post-auction review process, Hamilton determined
that two enhancements could increase proceeds in sales of this type:
(1) provision of detailed 36-month payment histories to bidders
and (2) a revision of post-sale servicing requirements. These improvements
were incorporated in subsequent sales.
Nov-95
Housing Affairs Newsletter
reports that the HUD IG is doing an investigation of irregularities
on the HUD loan sale bids.
1-Nov-95
HUD holds the West of
Mississippi Loan Sale auction. HUD offered $622.34 million UPB in
non-performing multifamily loans in the West of Mississippi Sale
with Hamilton as financial advisor. The West of Mississippi Sale
yielded proceeds of $385.2 million, equal to 61.9 % of UPB and resulted
in savings to the government of $107.82 million. There were 73 bidders
and 26 winners in this auction.
4-Nov-95
Prime Minister Rabin
assassinated; Peres succeeds him.
8-Nov-95
Colin Powell announces
he will not seek the Presidency.
Nov-95
The House of Representatives
bans gifts to Members. The ex-White House Travel Office official
is acquitted.
Nov-95
Edgewood Technology Services
(ETS), a subsidiary of e.villages (a Hamilton/Adelson Entertainment
joint venture for the creation of computer learning centers in government-assisted
housing projects that was designed with an ESOP and employee stock
options to employees) begins work on a proprietary Hamilton database
by calling and filing Freedom of Information Act ("FOIA")
requests with all the HUD field offices for information with which
to build a definitive database of the HUD multifamily portfolio.
The database integrates information Hamilton had obtained from other
sources and publicly available data with incomplete, publicly available
information from HUD to produce a much more complete record of ownership
of HUD properties than had heretofore been available. The work on
this database proceeds throughout the next two years. Hamilton also
arranges for ETS to learn how to use GIS (Geographic Information
Systems) software.
29-Nov-95
Legislation regulating
lobbyists becomes law.
Sept- Dec-95
Numerous Members of Congress
resign.
Dec-95
Chris Greer, then Chief
Auditor for HUD’s Office of Inspector General, is named Deputy Assistant
Secretary for the Multifamily Housing Division of HUD, which has
responsibility for the FHA Fund, replacing Helen Dunlap in that
position. Helen Dunlap is moved to the position of Deputy Assistant
Secretary for operations and retains regulatory responsibility for
HUD loan sales. Greer is seen as an adversary by groups in Denver
and Boston who were targeted by HUD for "mod rehab" program
scandals of the early ‘90s and various instances of financial fraud
during the S&L scandals of the 1980’s/Iran Contra period. Before
moving from IG’s Office, Greer reports to Fitts that an IG investigation
of what appear to be Burstein and associated bid rigging allegations
of HUD loan sale bidder collusion on the Single Family Sale #1 concludes
that the charges are unfounded.
Dec-95
Numerous Whitewater events
from December 5th – 25th, 1995; White House releases subpoena notes,
which D’Amato calls a "smoking gun."
6-Dec-95
Clinton vetoes the GOP’s
7 - year budget bill.
6-Dec-95
The House Committee on
Ethics votes unanimously to have an independent counsel investigate
allegations that Gingrich had violated tax laws [relating to campaign
financing through use of his "PAC."
16-Dec-95
A partial government
shut-down begins.
21-Dec-95
Congress passes welfare
reform legislation.
31-Dec-95
Neal R. Pierce, a member
of The Washington Post Writers Group, releases a column entitled,
"Computers in Subsidized Housing: More Important Than Welfare Reform?"
1995-1996
The Clinton Administration
beings its investigation of Nazi gold and assets seized from Holocaust
victims held by Swiss banks.
1996
Late January 1996 HUD
selects four financial advisory contractors in connection with its
FHA portfolio and mortgage loan sales program: Merrill Lynch, Hamilton
Securities, CS First Boston and Cushman & Wakefield. Subsequently,
Ervin and Ernst & Young protest the award and First Boston declines
to serve as financial advisor, purportedly because the remuneration
under the contract is not sufficient. First Boston is replaced by
E&Y. Ervin’s protest is denied.
Early 1996
Oscar Wyatt, Chairman
of Coastal Energy, headquartered in Houston, contacts Secretary
Cisneros and the White House insisting that Hamilton be fired by
HUD. Assistant Secretary Nicholas Retsinas is asked to call Wyatt
to solicit an accounting of his concerns. Retsinas later reports
to the Deputy Assistant Secretary in charge of loan sales that Wyatt’s
objection to Hamilton’s appointment as loan sale advisor is that
Catherine Austin Fitts, the President of Hamilton, is a woman. HUD
and Hamilton later learn that his son, Steve Wyatt, is providing
consulting services to NHP. The Center for Public Integrity reports
that Wyatt was a $100,000 donor for the Clinton inauguration fund.
Jan-96
Hillary Clinton testifies
before the Whitewater grand jury.
Jan-96
The HUD Denver (Rocky
Mountain) field office audit team begins the HUD loan sales audit,
which it completes in September.
6-Jan-96
The Government shutdown
ends after a three-week work stoppage.
9-Jan-96
Clinton vetoes legislation
that would shift welfare to states.
9-Jan-96
The Paula Jones suit
against William Jefferson Clinton is allowed to proceed.
31-Jan-96
Clinton supports a $9
billion loan to Russia.
Jan-Mar 1996
Assistant Secretary Retinas
convenes a series of three industry "portfolio reengineering
forums" in an effort to garner support for the "mark to
market" proposal, which is re-named "portfolio reengineering."
The unintended result of the forums is to coalesce previously separate
interest groups into a united opposition against HUD’s proposed
"mark to market" legislation. Industry opposition focused
on the pending "partially assisted" loan sale being conducted
by HUD with Hamilton as financial advisor. Industry critics perceive
that if the partially assisted sale is successful, opposition to
the "mark to market" proposal will be weakened.
Jan - 96
The HUD Denver (Rocky
Mountain) field office audit team begins the HUD loan sales audit.
The draft report is circulated in the summer and the audit is shut
down in September.
Jan-April 1996
HUD conducts briefings
with a multitude of stakeholding groups to explain the results of
a study conducted by Ernst & Young ("E&Y") on
the "mark to market" portfolio of FHA insured loans on
Section 8 subsidized properties. With strategic communications assistance
from Hamilton, HUD engages in a public relations campaign to gain
support for the proposed "mark to market" program. The
E&Y study’s results indicate that most of the portfolio needs
an average of about $10,000 per unit in rehabilitation and/or can
be supported only by rents in excess of market rates. Some 13% of
the portfolio is deemed unsustainable at market rents, even if the
FHA insured debt is written off. Only 13% of the portfolio properties
can support existing FHA insured debt at market rents and after
needed rehabilitation is undertaken with funds generated by the
project. Industry members led by the National Association of Homebuilders
assert to their congressional representative that E&Y’s methods
are flawed and the results incorrect. E&Y stands firm.
9-Feb-96
Ervin & Associates
files objections to HUD's failure to select the company as a financial
advisor despite its lack of qualifications.
Feb-96
David Schipper’s book
Sell Out on the impeachment of Clinton illuminates efforts
by Henry Cisneros in February 1996 to assist Clinton and Gore with
the use of the INS to increase the number of Democratic voters (through
the expedited grant of citizenship to traditionally Democratic immigrants)
in time for the 1996 elections. Shipper’s book includes a memo from
Cisneros to Clinton-Gore focusing on the Los Angeles area. He also
describes the investigation of political interference at INS by
Gore and Elaine Kamark of Gore’s Office of Government Reengineering
as part of the impeachment. This raises questions in Solari’s mind
regarding whether or not the "TRACS" HUD tenant database
and other HUD databases were involved in the election efforts and
whether that could explain some of the problems that Hamilton had
dealing with the TRACS staff and Lockheed Martin, the major TRACS
contractor.
Spring 1996
A member of the Board
of Directors of Hamilton is told by an acquaintance that the Housing
Affairs Letter had reported that the House HUD Appropriations
Subcommittee had put pressure on the HUD IG to initiate an investigation
of Hamilton and threatened to cut appropriations to the OIG if no
investigation was initiated. Additional reports indicate that large
increases in appropriations for Operation Safe Home are offered
in exchange for the OIG's cooperation.
Mar-96
Ervin files a second
bid protest of HUD contract awards. GAO reports that all told, before
the complaint is resolved, Ervin has filed approximately 37 bid
protests.
Mar-96
GAO announces that DOJ
and Treasury Asset Forfeiture Funds are on the high risk list. DynCorp
serves and lead contractor on the DOJ Asset Forfeiture Fund, having
won a second five year option to their initial $60MM contract in
1993. In this month, DynCorp wins the Justice Office Consolidated
Network, the primary computer system for the DOJ Civil Division.
22-Mar-96
Hearings are held before
the Senate Permanent Subcommittee on Government Affairs.
20-Mar-96
HUD sells $758.43 million
UPB in single family nonperforming mortgage loans in the Single
Family Loan Sale #2. As part of the sale, HUD requests that bidders
for loans on properties located in New Orleans, Washington, DC and
Los Angeles voluntarily answer "place based questionnaires," which
are intended to provide HUD with valuable information about possible
place-based auctions in the future. This includes a copy of the
early prototypes of a Community Wizard "money map" of
homeowner defaults in South-Central LA. The Single Family #2 Sale
yielded proceeds of $633.82 million, equal to 83.57% of UPB and
resulting in savings to the government of $143.6 million. There
were 31 bidders and one winner in this auction.
27-Mar-96
Susan Gaffney, HUD Inspector
General, testifies before the House Committee on Appropriations,
Subcommittee on VA, HUD and Independent Agencies about the "Reinvention
of HUD."
1-Apr-96
The effective date of
NHP’s acquisition of all of the outstanding capital stock of WMF
Holdings Ltd. ("WMF Holdings"), the owner of Washington Mortgage
Investors Group, Ltd., for consideration of approximately $21 million
in the form of $16,800,000 in cash and 210,000 shares of the Company's
unregistered common stock ("NHP Stock"). Washington Mortgage Financial,
according to an 8-K [current report] filed with the SEC, has "had
mortgage servicing contracts aggregating approximately $4.5 billion
as of February 29, 1996, and originated approximately $805 million
in multifamily and other commercial mortgages in 1995."
3-Apr-96
Commerce Secretary Ron
Brown and 32 others died after an Air Force jet carrying a U.S.
trade delegation slammed into a coastal mountain as it approached
the airport at Dubrovnik, Croatia.
10-Apr-96
Ervin & Associates
files another bid protest with HUD.
17-Apr-96
A $30,000 transfer is
made from a Hamilton Securities account at to Catherine Fitts’ personal
checking account at Morgan Guaranty. It is the size of this transfer
and the fact that the account was not recognized by the OIG to be
a Hamilton account upon which the Office of Inspector General later
bases its subpoena duces tecum issued to Morgan Guaranty for Fitts’
account information. Fitts funded Hamilton with $1,000,000 of preferred
stock, which she purchased with her personal funds raised from liquidating
her savings, selling her home and borrowing against her 401K. At
various points when Hamilton income permitted, Hamilton paid Fitts
a below-market dividend on the preferred stock and retired portions
of the preferred stock. At the point of the $30,000 transfer, Fitts
still had approximately $1MM of her savings invested in the firm.
23-Apr-96
Ervin’s counsel sends
a letter to the HUD Deputy General Counsel requesting a meeting
to discuss allegations of corruption, favoritism and misconduct.
On April 26, Ervin threatens litigation.
25-Apr-96
Hamilton is awarded the
Crosscutting Task Order by HUD. Fitts is informed by Assistant Secretary
Retsinas that the White House had ordered him not to award one of
the four new contracts to Hamilton and he has chosen to ignore that
order.
26-Apr-96
Ervin's attorney calls
HUD's Office of General Counsel to request a meeting to discuss
Ervin's grievances and to inform them that Ervin intended to file
suit. (Source for this and other entries re: Ervin & Associates:
Second Amended Complaint in Bivens action).
26-Apr-96
Legislation is passed
creating a one-year "mark to market" demonstration program.
FHA views the legislation as counter to its efforts to pass its
version of mark to market. The legislation requires (1) owner consent
to restructuring of FHA insured notes, (2) owner protection from
adverse tax liabilities due to cancellation of indebtedness by the
creation of cash flow second mortgages, (3) protection of the taxpayers’
and residents’ interests, (4) renewal of section 8 contracts (instead
of replacing the contracts with tenant-based vouchers, as proposed
by HUD), and (5) permission to replace existing project financing
with new FHA insured debt. Hamilton declines to serve as HUD’s financial
advisor in implementing the demonstration.
May-96
HUD sells $11.09 million
UPB in Title X land development loans and $161.85 million UPB in
Title I (home improvement and manufactured housing) loans with Hamilton’s
assistance. The Title X Loan Sale yielded proceeds of $2 million,
equal to 18.03% of UPB and resulted in savings to the government
of $2.64 million. The Title I Loan Sale yielded proceeds of $1.54
million, equal to .95% of UPB and resulted in savings to the government
of $.88 million.
Spring-96
Controversy erupts with
NHP, Gene Ford, Scott Nordheimer and selected members of the multifamily
industry in connection with the proposed negotiated sale of the
Maryland portfolio of multifamily nonperforming mortgage loans in
the HUD portfolio to the Maryland housing finance agency ("HFA").
Objections include complaints regarding the success of the BlackRock/Goldman
team (which had proposed to partner with the Maryland HFA) in marketing
to state HFAs. An explosive meeting occurs on the day of Jim Rouse’s
funeral in Baltimore between Dunlap, the Maryland agency with Fitts
present. Fitts is blamed for a Retsinas decision that the choice
of private partners be subject to disclosure and competitive bidding
process. At a dinner in New Orleans for the National Multihousing
Council, Rod Heller, CEO, insists to Catherine Austin Fitts that
the Section 8 owners are owed a rollover of their HUD Section 8
subsidies on a non-competitive and non-performance basis. The head
of Multihousing Council had earlier asked Fitts to step back in
the leadership so as not be Vice Chairman when Randy Hawthorne,
Boston Financial, was Chairman.
May-96
Ernst & Young releases
its final report on the "mark to market" multifamily mortgage
loan portfolio, which supports FHA’s proposal to mark the portfolio
to market and introduce competition and tenant choice.
May-96
Al Gore’s former administrative
assistant, Peter Knight, becomes Clinton’s campaign manager.
1-May-96
Ervin’s counsel meets
with HUD Deputy General Counsel for Program and Regulations to discuss
contracting corruption and favoritism.
31-May-96
Ervin & Associates
protests the awarding of the Crosscutting Task Order to Hamilton.
Jun-96
Inquiries by Congress
result in the White House disclosing that it has kept substantial
FBI files, including on former Republican government officials.
Jun-96
HUD closes the structured
sale of debt and 90% of the equity in a pool of 158 "partially assisted"
multifamily loans with UPB of $883.63 million with Hamilton as financial
advisor and BlackRock Capital assisting with placement of the offering.
The Partially Assisted Sale yielded proceeds of $645.47 million,
equal to 73.05% of UPB and resulted in savings to the government
of $213.01 million. HUD retained a $60.5 million UPB share of the
equity. There were 7 bidders and two winners (one for the debt portion
and one for the equity portion) in this auction. Similarly structured
"N" series sales by RTC averaged 2 bidders.
5-Jun-96
Ervin files complaint
for preliminary and permanent injunctive relief, declaratory relief
and for money damages against HUD, Helen Dunlap, Henry Cisneros,
SBA, and Philip Lader (253 pages + exhibits), signed by Wayne Travell
of Tucker, Flyer and Lewis (this is referred to as the "Bivens"
action). Ervin continues to inundate HUD with FOIA requests and
incur substantial legal costs to harass HUD and Helen Dunlap, who
is named personally in the suit and forced to seek counsel at her
own expense. Helen Dunlap had day-to-day responsibility for the
HUD loan sales program. The Ervin complaint states the case involves
seven categories of unlawful, unethical and generally outrageous
conduct: (1) contracting corruption and favoritism, (2) racial,
gender and age discrimination, (3) retaliation through breach of
contract, (4) theft of Ervin’s intellectual property, (5) insider
trading, (6) cover-ups and (7) retaliation through defamation, rumor,
innuendo, cancellation of existing work and blackballing.
6-Jun-96
Qui tam filed under seal
[Ervin & Assoc, et al v. Hamilton Sec Group, et al (1:96-CV-1258)
SEALED, United States District Court for the District of Columbia].
Also filed is a certificate of disclosure of corporate affiliations
and financial interests by plaintiff Ervin & Assoc Inc. Allegations
related to insider trading and bid rigging on $4.7 billion of loan
sales won by Goldman Sachs and its bid partners, including BlackRock/PNC.
Hamilton was not informed that it was named as a defendant in the
qui tam action until December of 1997, one year and a half after
the suit was filed, and received no other information, such as the
plaintiff’s identify and the precise allegations, until the case
was unsealed in 2000.
7-Jun-96
Order by Judge Charles
R. Richey directing that the counsel for the parties in the qui
tam lawsuit shall appear before the court on 6/20/00 for a status
conference and that counsel for the plaintiffs shall give notice
to the Chief of the Civil Division, Office of the US Attorney for
DC and effect service of process on the named defendants by 4:00
on 6/14/96.
13-Jun-96
Motion filed by Non-Party
USA in the qui tam lawsuit for reconsideration of the June 7 order
by Judge Richey (Ervin joins).
17-Jun-96
The Washington Post
publishes a front page story on e.villages, a residential community
data servicing business that is a joint venture partnership between
Hamilton and Adelson Entertainment. This data servicing operation
is an out-sourced component of Hamilton’s money mapping and website
database operation designed to promote community database and web
access to software tools (such as "Community Wizard")
that illuminate how money works in communities. Later in the month,
Hamilton is told that the HUD IG, upon reading the Washington
Post article, stated "that’s the last straw" and that
she had "had it" with Hamilton and was going to "get her
[Fitts]."
17-Jul-96
Daniel Hawke of Tucker,
Flyer & Lewis sends a confidential letter to Barbara Van Gelder,
Assistant US Attorney, that starts "Dear Biz." The letter
relates the discovery by Ervin, Hawke’s client, of the existence
of the Karen Burstein letter to Andrew Cuomo.
18-Jun-96
Homeownership totals
66.3 million American households, the largest number ever.
20-Jun-96
A hearing is held in
the qui tam case. An order is issued by Judge Richey granting the
June 13 motion by the Non Party USA in the qui tam lawsuit for more
time and to maintain the seal. Transcripts of the hearing that were
sealed and, therefore, not available to Hamilton until December,
2000, indicate that the hearing was focused on determining whether
Ervin had delivered "substantially all" the evidence supporting
the allegations of the complaint to the Department of Justice. Mark
Nagle, Assistant US Attorney, appeared for the government and Wayne
Travell and Daniel Hawk appeared on behalf of Ervin, the relator.
Travell tells the judge there are several thousands of pages involved,
including an anonymous package apparently sent out from the Office
of General Counsel of HUD. This package, he says supports allegations
in both the qui tam and Bivens cases. [Note: Lucy Du, a former key
employee of Ervin and Associates, was married to Jeff Patton an
attorney employed in enforcement activities the HUD Office of General
Counsel.] The judge makes it clear that he is not interested in
the government being buried in paperwork, and that the relator should
pull out the critical pieces of information and highlight them.
He also emphatically says that he does not intend that this case
will clog the docket for any significant period of time. The next
hearing is scheduled for July 1, at which Judge Richey is to get
an "informed report" of progress.
Jun/Jul-96
The Hamilton project
manager for loan sales and HUD officials meet with the HUD IG Denver
office audit team leader assigned to audit the mortgage loan sales
program and is told that the HUD OIG audit will be highly complimentary
and that all complaints, including any complaints about bid rigging
and insider trading, have been reviewed and found to be unfounded.
Jun/Jul-96
Gene Ford and Conrad
Egan repeatedly approach Gary Squier at HUD in connection with including
in the "mark-to-market" program (for the renegotiation of FHA guaranteed
debt) a Mt. Pleasant (Washington, DC) property that was being considered
for an e.villages site. This action is in direct contradiction of
e.villages' position (because of its connection with Hamilton) that
it will not be involved in HUD mark-to-market projects and the express
promise of Gene Ford (owner of the property) to Hamilton that the
property would not be entered into this program. E-mails to Hamilton
from Squier reporting these approaches result in repeated confrontations
with Gene Ford and Scott Nordheimer, Ford's partner, who lie to
Fitts about their approaches to Squier and take actions that are
contradictory to their assurances to her. Fitts finally decides
that something is intentionally amiss.
Jul-96
A team of reporters from
US News and World Report start working on a story about a
"HUD scandal."
Jul-96
An appropriations deal
for the multifamily industry, led by NHP and New York and Boston
owners and managers and originators, is reached in House of Representatives.
The Boston and New York delegations play an essential role on both
sides of the aisle. Rumors circulate that "negative credit
subsidy" (the Credit Reform Act term for savings to the government)
generated by the HUD loan sales has been "moved" in order
to back a multi-year increase in Congressionally authorized multifamily
insurance. This new insurance authority is designed to give affordable
housing owners lots of time to exit the tax shelters that originally
financed the "mark-to-market" portfolio of Section 8 properties
by refinancing the properties with new HUD mortgage insurance, cashing
out the equity, moving the properties out of the Section 8 program
into the conventional rental market, or selling to the not-for-profit
organizations favored in the recent "mark-to-market" legislation.
With the negative credit subsidy reallocation assured and an agreement
by OMB that Congress may use the high loan sale recovery rate assumptions
derived from loan sales experience in calculating the required appropriations
for new FHA mortgage insurance originations, meaningful portfolio
reengineering is stopped. Various parties report to Hamilton that
the HUD OIG agrees with key congressional representatives to target
the loan sale program and Hamilton in exchange for appropriations
increases for Operation Safe Home, which support increased DOJ-OIG
enforcement and seizure efforts.
Jul-96
Hamilton learns that
US News & World Report is working on a loan sale scandal article
that sounds as though it is targeted at HUD Secretary Cisneros and
Catherine Austin Fitts (who worked for Jack Kemp as Assistant Secretary
of Housing/FHA Commissioner when he was Secretary of HUD). A pre-interview
letter from USNWR reporters to Henry Cisneros refers to the Department
as "scandal tarred." Fitts sends a letter to many friends
and David Gergen, the new Editor of USNWR, accusing USNWR (Ed Pound
and Jim Ito) of drawing conclusions before doing the research and
of conducting a rigged investigation. USNWR agrees to listen to
a Hamilton presentation explaining how
loan sales work. Pound
subsequently resigns and goes to USA Today; Ito goes to the Washington
Post (he subsequently leaves) claiming that Mort Zuckerman improperly
sabotaged the article.
Jul-96
Gary Squier, who is on
loan to HUD from the Los Angeles Housing Authority to lead implementation
of the mark to market "demonstration," requests that Hamilton,
in addition to E&Y, the financial advisor hired for this program,
assist in the implementation. Hamilton had not wished to serve in
this role, encourage HUD to hire other contractors. The following
month, Squier’s request is muted as a result of the investigation
begun in August. By January 1997, not a single loan has been worked
out under the 1996 demonstration program and the 1997 program is
bogged down hopelessly.
Jul-96
At the annual National
Housing Conference dinner held at Union Station in Washington, DC,
Scott Nordheimer, Gene Ford’s partner (Gene Ford being NHP’s partner
and the owner of the HUD assisted housing at which Hamilton’s e.villages
site is located) assures Fitts that the industry efforts to have
Fitts fired through the White House have failed, so now they have
rigged it so that she is going to jail.
Jul-96
HUD requests certain
information be provided by Ervin and Associates to HUD under the
company's Audited Financial Statement Contract. A dispute arises
between Ervin and HUD as to whether the information Ervin has collected
is proprietary or covered under the contract, and Ervin refuses
to provide it unless HUD makes additional payments to Ervin, which
HUD refuses to do.
Jul-96
The second Neighborhood
Networks Conference of the year is held in Seattle. Seattle was
the home of Diana Goodwin-Shavey, the program coordinator for Neighborhood
Networks nationwide. This is one of the few times that a major new
FHA initiative was been developed and run from outside Washington.
Jul-96
Vice President Gore's
National Performance Review Committee announces that the HUD mortgage
sale team has been awarded a Hammer Award for cutting red tape,
empowering employees to improve service to the Department's customers
and lifting the burden of managing and servicing HUD owned mortgages
from Headquarters and field staff.
1-Jul-96
Order by Judge Richey
directing that counsel for the plaintiff in the qui tam lawsuit
and the government shall appear on 8/19/96 for a status conference
and directing the matter remain under seal until further order of
the Court. At the hearing held on this date, attended by AUSA Barbara
Van Gelder and Ervin attorneys Hawke and Travell, Van Gelder says
"Your Honor, the matters that are before this Court are very strong,
perhaps criminal, allegations that there has been collusion, bid
rigging and kickbacks." Her plan is "We will have HUD IG investigators
doing some rapid interviews of unrelated parties who may or may
not have information. So we can determine in this next 60 days…
whether or not [to intervene in the case]." She says there are people
alleged to have "been in the [bid] room who should know." She said
she stopped counting the number to be interviewed at 12. When Van
Gelder suggests that the government may need a stay of the case
pending a criminal investigation, Richey says "If you have to do
that, I don't stay cases. I dismiss them without prejudice with
leave to reopen upon the conclusion of whatever event…"
26-Jul-96
Ervin files a protest
of the SWAT procurement awarded by HUD to Kerry Company with the
General Accounting Office.
28-Jul-96
Congress enacts Welfare
Reform.
29-Jul-96
Publication of "Loans
on the Cheap: Auctions Help HUD Ditch Troubled Mortgages",
in Barron’s.
30-Jul-96
Susan Gaffney, HUD Inspector
General, states in her testimony before the Subcommittee on Human
Resources, and Intergovernmental Relations on Restructuring of HUD’s
Assisted/Insured Multifamily Housing Portfolio, "Several successful
mortgage sales by HUD offer some hope that FHA could complete portfolio
reengineering if it was patterned after the sales program." She
makes no reference in her written testimony to the effects of Welfare
Reform on the HUD portfolio, but she does take the opportunity to
tout the benefits of the HUD OIG Operation Safe Home program, "In
the first two years, 10 criminal convictions and over $37 million
in judgments, settlements and fines involving project owners and
managers have taken place. Another 105 cases are in process involving
$105 million in misused project funds."
Aug-96
Democratic National Convention
is held.
Aug-96
Republican National Convention
is held.
Aug-October 96
Hamilton spends approximately
$350,000 in time and expenses addressing issues raised by a four-reporter
team from US News & World Report. The thrust of the article
is that Cisneros is running the agency in a very corrupt way. Much
of Hamilton’s initial efforts are spent disproving accusations against
Cisneros. The effort than focuses on loan sales. The lead reporter,
Ed Pound, insists that he "has been assured at the highest
level of the HUD IG’s office that Hamilton and Fitts are guilty
of criminal offenses and will be indicted." Deputy Assistant
Secretary Greer writes a powerful letter to Pound after numerous
meetings insisting that Pound’s allegations are not true.
Aug-96
HUD sells $847.2 million
UPB in nonperforming unsubsidized multifamily loans in the North
and Central Loan Sale. The North and Central Sale yielded proceeds
of $847.2 million, equal to 73.38 % of UPB and resulted in savings
to the government of $235 million. There were 82 bidders and 13
winners in this auction.
1-Aug-96
Ervin & Associates
files the First Amended Complaint in the Bivens action. The descriptions
of insider trading allegations are more elaborate and imaginative
than in the first filing.
3-Aug-96
Fitts makes a keynote
speech on money maps and community access to technology at a Neighborhood
Networks conference held in Boston, highlighting Hamilton's partnership
with Adelson Entertainment (an LA-based movie production company
known for documentaries on government abuse) and the "money map"
of LA. The money map shown during her speech focuses on South Central
LA, and she relates that it has been prepared by Edgewood Technology
Services, a Section 8 project-based data servicing company that
performs money mapping services illustrating government investment
and real estate in low income communities. The money map shows the
correlation between HUD defaults and CIA drug dealing in South-
Central LA that came at great loss to homeowners and taxpayers alike.
At the conference the
HUD Neighborhood Networks Program is presented with a Hammer Award.
Aug-96
Meeting between the HUD
staff and Lockheed staff under contract to manage HUD’s TRACS database
system regarding repeated problems experienced by Hamilton and loan
sales team with access to data.
Aug-96
According to a Declaration
of HUD IG Investigator James M. Martin filed in Support of Office
of Inspector General’s petition for Summary Enforcement of Subpoenas
on March 3, 1998, under seal, in August, 1996, shortly after the
OIG investigation began, the Civil Division of the US Attorney’s
Office sought the involvement of the Criminal Division of that Office
in the investigation.
6-Aug-96
Hamilton receives the
first subpoena from the HUD OIG in connection with an investigation
of Hamilton. The HUD OIG later asserts that the investigation was
begun at the request of DOJ in response to John Ervin’s qui tam
(whistleblower) suit naming Hamilton, among others. [Delegation
by DOJ to HUD OIG is statutorily prohibited under the False Claims
Act and the subpoena has illegally circumvented DOJ’s False Claims
Act requirement to disclose the filing of and nature of charges
under a qui tam suit to the target of the suit. Hamilton’s efforts
to argue the illegality of this were lost before Sporkin and a later
appeal.]
16-Aug-96
Motion filed by Non Party
USA in the qui tam lawsuit to extend time to 11/18/96 within which
to make intervention decision and maintain seal on the case.
10-Aug-96
Dole announces that Jack
Kemp will be his Vice Presidential running mate. Jack Kemp had been
Secretary of HUD for the Bush Administration, and had hired and
fired Catherine Austin Fitts as Assistant Secretary of Housing/FHA
Commissioner.
15-Aug-96
Federal defendants in
Bivens case file a Motion to Dismiss.
14-Aug-96
Ervin & Associates
files an action in the US Court of Federal Claims seeking relief
related to certain HUD contracts. Ervin & Assoc., Inc., v.
United States, No.96-504 C (Fed. Cl).
16-Aug-96
DOJ files a Motion for
Extension of Time within which to Make Intervention Decision and
Maintain Seal in the qui tam action by Ervin and Associates against
Hamilton. According to a later filing by the government on November
14, it states that based upon the relator's statement of material
evidence supplied to the government with the qui tam complaint and
the allegations in the related Bivens action, the Inspector General
of HUD opened an investigation and, as a result of that investigation,
a referral of the allegations in the Bivens complaint was made to
the Criminal Division of the US Attorney's Office for DC, which
opened a criminal investigation in the matter. The government says
in this motion that the lifting of the seal in the qui tam action
would hamper, injure and compromise the criminal investigation and
for this reason the US Attorney (Barbara Van Gelder) moves to stay
the intervention period.
18-Aug-96
Gary Webb’s series, upon
which the Dark Alliance book is based, begins in the San
Jose Mercury News, with the Mercury News website providing access
to substantial amounts of underlying documentation. The story appears
at approximately the same time as the Republican National Convention,
where Jack Kemp, Bob Dole's running mate, begins touting his accomplishments
as Secretary of HUD and his ability to attract women and minorities
to the Republican Party. The allegations in the Dark Alliance
series address Iran-Contra drug dealing. Iran Contra allegations
that were submitted to the Starr investigation included various
allegations raised regarding one of the largest drug operations
during Iran Contra, in Mena Arkansas, that include George H. W.
Bush and the Clintons and the Rose Law Firm.
19-Aug-96
Ervin and Associates
files a complaint against HUD in the US District Court in Colorado
seeking declaratory and injunctive relief related to four HUD contracts
that were to be awarded in the near future. Ervin also files a Memorandum
of Points and Authorities in support of the motion for temporary
restraining order and motion for preliminary injunction. Ervin
& Assoc., Inc. v. Cisneros, et al. No. 96-1954 (D. Colo.).
Ervin is represented by Stanley Garnett, Stephen Gurr and Patrick
Carrigan of Brownstein, Hyatt, Farber & Strickland in Denver
and Wayne Travell of Tucker, Flyer and Lewis in Washington. Judge
Walker Miller is assigned to the case. Raymond Larizza, who is under
Frank Hunger at the Department of Justice, represents the defendant.
19-Aug-96
A hearing is held before
Judge Richey, during which he gives the government until November
18 to make a determination whether it will adopt the qui tam case.
"No more extensions except for extraordinary good cause," he says.
In attendance at this hearing are AUSA Barbara Van Gelder, OIG counsel
Judith Hetherton and Ervin counsel Wayne Travell. Van Gelder says
she has brought in Hetherton because she knew the judge would ask
her whether the relator has any objections to giving the government
additional time. Richey says that since Ms. Hetherton was there,
he would grant the request without objection from the plaintiff
(and Travell says he has no objection). Richey says he will expect
to hear from the government "by pleading" at the next hearing.
20-Aug-96
Ervin files a Supplemental
Certificate of Compliance and Information Sheet in the TRO case
in Denver.
22-Aug-96
Hamilton receives a second
subpoena from the HUD OIG shortly after C A Fitts talks to the IG
and asks her whether she plans to "bury" the Denver audit of the
loan sale program. Gaffney said, "how dare you suggest such a thing.
That would be unethical."
22-Aug-96
Ervin files a Motion
to Expedite Discovery in the TRO case against HUD in Denver. HUD
files a motion to dismiss for improper venue before Judge Walker
D. Miller or to transfer for improper venue or convenience before
Judge Miller. HUD also files a brief in opposition to the motion
for TRO.
23-Aug-96
The government files
a motion to substitute original attachments regarding its motion
to dismiss in the TRO case by Ervin. Judge John Kane grants a motion
for Wayne Travell to appear pro hac vice, sets a hearing on the
motion for September 12, grants the motion to expedite discovery
and grants the government’s motion to substitute original attachments.
There appears to have been a hearing on these matters – a 38-page
transcript of proceedings is prepared by Federal Reporting Service.
23-Aug-96
US District Court for
the District of Columbia gives the government approximately 90 additional
days within which to make its election whether to adopt the qui
tam action by Ervin & Associates against Hamilton.
29-Aug-96
The government files
a motion to vacate hearing on preliminary injunction and to stay
discovery pending a ruling on jurisdiction and venue and a certificate
of compliance in the Ervin TRO case in Denver.
Aug/Sept-96
Kansas City Neighborhood
Networks Conference is held.
Sep-96
HUD sells $804.5 million
UPB in single family loans in the Single Family Loan Sale #3. The
Single Family #3 Sale yielded proceeds of $730.2 million, equal
to 90.76 % of UPB and resulted in savings to the government of $164
million. There were 25 bidders and three winners in this auction.
This bid includes the first "place based" bid, a pool
of loans in Albuquerque.
Sep-96
The HFA negotiated sale
of $14.52 million of HUD-held multifamily mortgage loans is closed
with the Missouri Housing Finance Agency. Although the sale price
is nominal, HUD achieves its objectives of providing for rehabilitation
of the projects, retention of important tenant protections that
are required under regulatory agreements, and resident initiatives
programs while divesting itself of liability for future tenant subsidies.
HUD also gains valuable information about how to value loans in
neighborhoods where there are no market–based housing projects.
The values of moving to market based solutions are much more attractive
than were previously assumed. Subsidy for housing is far more expensive
than job training, jobs and market based housing with vouchers.
4-Sept-96
The government files
a motion for protective order re: discovery requests and a certificate
of compliance in the Denver TRO case. Ervin files an opposition
to motion to dismiss for improper venue before Judge Walker D. Miller
and a Declaration of John J. Ervin.
5-Sept-96
Minute order by Judge
John Kane in the Ervin TRO case in Denver granting motion for protective
order re: discovery requests, granting motion to vacate hearing
on preliminary injunction granting motion to stay discovery, setting
hearing on motion to transfer for improper venue or transfer for
convenience, setting hearing for 9/12/96, denying motion to expedite
discovery.
6-Sept-96
Ervin files a reply to
response to motion for TRO in the Denver TRO case. The government
files a motion to dismiss for lack of jurisdiction and a reply to
response to motion to dismiss for improper venue.
11-Sept-96
A Notice of Submission
of Declaration of Kathleen Trygstad by HUD re: disbursements is
filed in the Ervin TRO case against HUD.
12-Sept-96
Judge John Kane denies
the government’s motion to dismiss the Ervin TRO case filed in Denver
for improper venue. Judge Walker Miller grants the motion to transfer
for improper venue and for convenience and transfers the case to
US District Court for DC (Docket No. 96-2164).
19-Sept-96
Ervin files an Emergency
Motion for a hearing on its application for preliminary injunction
and for expedited discover in his TRO case against HUD. Ervin also
files an amended complaint.
20-Sep-96
Ervin's asset management
contract with HUD expires and a one-year renewal option is not exercised.
26-Sept-96
By direction of the Calendar
Committee, the Ervin TRO case against HUD is reassigned from Judge
Lamberth to Judge Bryant. The attorneys representing the government
include Raymond Larizza, Joe Benedict Garcia and Douglas James Hughes.
30-Sep-96
Declaration by Chris
Greer regarding Ervin contracts takes place.
3-Oct-96
A status hearing is scheduled
for October 21 before Judge Bryant in the Ervin TRO case.
7-Oct-96
Ervin files Second Amended
Complaint for Preliminary and Permanent Injunctive Relief, Declaratory
Judgment and Other Relief in Ervin and Associates, Inc. v.Helen
Dunlap, et al. (1:96-CV-001253) in US District Court. Wayne
Travell and Daniel Hawke of Tucker Flyer and Lewis sign as counsel.
The complaint says Ervin has filed over 60 FOIA requests with HUD
during the past two years.
10-Oct-96
Ervin files a Renewed
Motion for expedited discovery in the TRO case against HUD. The
government files a motion to dismiss or in the alternative for summary
judgment.
11-Oct-96
The government files
a response to Ervin’s opposition to motion for expedited discovery
in the Ervin TRO case.
11-Oct-96
Helen Dunlap leaves HUD
to join the Low Income Housing Coalition as its Director.
16-Oct-96
Substitution of counsel
for the federal defendant in the Ervin TRO case; substituting Raymond
Michael Larizza, Douglas and James Hughes for J. Benedict Garcia.
17-Oct-96
Ervin files a memorandum
in opposition to the government’s motion to dismiss or for summary
judgment in the Ervin TRO case against HUD.
17-Oct-96
Hamilton's counsel at
Morrison & Foerster sends letter to US News and World Report
describing conversation with HUD OIG, which told him OIG was conducting
a routine audit and there was no reason to think there was any criminal
investigation.
18-Oct-96
The government files
a motion to quash subpoenas in the Ervin TRO case.
21-Oct-96
Lauch Faircloth, Chairman,
Senate Subcommittee on HUD Oversight and Structure, writes a letter
to Henry Cisneros (then Secretary of Housing) regarding charges
made by Ervin & Associates against HUD.
21-Oct-96
A motion hearing is held
before Judge Bryant in the Ervin TRO case against HUD. Daniel Matthew
Hawke makes an appearance.
22-Oct-96
Judge Bryant issues an
order denying the renewed motion for expedited discovery.
25-Oct-96
Reply by the government
to response to motion to dismiss and to motion for summary judgment
is filed in the Ervin TRO case against HUD. Notice of voluntary
dismissal of case by plaintiff without prejudice pursuant to Rule
41(a)(i) is filed.
28-Oct-96
Federal Register publication
of 24 CFR Part 291 Disposition of HUD-Acquired Single Family Property;
Streamlining Final Rule; SUMMARY: This final rule amends HUD's regulations
for the disposition of HUD-acquired single family property. In an
effort to comply with the President's regulatory reform initiatives,
this rule will streamline these regulations by eliminating provisions
that are redundant or are otherwise unnecessary. This final rule
will make the single family property disposition program regulations
clearer and more concise.
29-Oct-96
Stipulation of dismissal
is entered for the Ervin TRO case. Later, on January 24, 1997, a
transcript of the 10/21/96 hearing is filed. On February 27, 1997
an Administrative Record is filed by the government.
Nov-96
John Deutch attends Town
Hall Meeting in the Watts neighborhood of LA. He meets Mike Ruppert
(see, www.copvcia.com)
and promises a full CIA IG investigation of Gary Webb’s allegations
in the Dark Alliance series in the San Jose Mercury News.
The CIA Inspector General later publishes a two-volume report and
the DOJ Inspector General also publishes a report.
Nov-96
Campaign fundraising
is an issue of concern; soft money donations set substantial new
records; largest "hard" money or direct donors were law
firms (#1 largest to Clinton and #2 largest to Dole); top contributors
included Ernst &Young and Goldman Sachs donating to both Clinton
and Dole.
1-Nov-96
The date that Ervin's
Bivens complaint speculates the company will be forced to lay off
half of its employees if Ervin & Associates is not given HUD
contracts or paid $2.5 million allegedly owed by HUD.
2-Nov-96
Publication of "White
Male Over 40 Sues HUD, and the Department’s Big Loan Sale Is in
Peril", by Jim McTague, in Barron’s.
5-Nov-96
Clinton is re-elected
and the GOP retains its majority in both houses of Congress. Clinton
wins the women’s vote overwhelmingly, with majorities of black,
Hispanic, labor union and young voters. The GOP holds House and
Senate 227-207 and 55-45, respectively. The Democrats win New York,
California, Illinois, Michigan, Ohio and lose Texas and Georgia;
labor spends approximately $35mm in soft money; E&Y, a large
HUD contractor and financial advisor is largest contributor to Clinton
and Dole in 1996 campaign. Goldman Sachs also is large contributor.
11-Nov-96
US News and Word Report
publishes an article "Of Contacts and Confidence" that
reported allegations of irregular contracting practices at HUD involving
Hamilton and aired accusations that Hamilton had steered some of
the HUD note sale business to favored Wall Street firms. In pre-publication
conference, Ed Pound, the principal reporter, tells Hamilton that
the HUD OIG "at the highest level" had assured him that
Hamilton is guilty of criminal acts.
12-Nov-96
Ervin files Plaintiffs’
Opposition to Federal Defendants’ Motion to Dismiss – Hollis, Larizza
and Sitcov of DOJ are listed as counsel for HUD.
13-17-Nov-96
Resignations of Cisneros
(11/21), Leon Paneta, Warren Christopher Perry. Erskin Bowles is
appointed as White House Chief of Staff. The DNC returns $1.4 million
in questionable campaign contributions.
14-Nov-96
Frank Hunger,
Assistant Attorney General, and Barbara Van Gelder, Assistant US
Attorney, move the District Court for the District of Columbia for
an extension of time during which to provide the Court with notice
of its election whether to intervene in the qui tam action by Ervin
& Associates against Hamilton until thirty days after the completion
of an ongoing criminal investigation in the matter and any resulting
criminal proceedings. The motion is unopposed by the relator (Ervin).
14-Nov-96
By letter of this date,
according to later testimony by the HUD Inspector General, Senators
Bond (Chairman of the Subcommittee on VA/HUD Appropriations) and
Faircloth (Chairman of the Subcommittee on HUD Oversight and Structure)
request that the HUD OIG conduct a comprehensive review of HUD’s
use of its contracting authority. In response, a team of 26 auditors
reviewed HUD contracting from 1992 – 1996. While the OIG audit was
under way, HUD contracted with the National Academy of Public Administration
for a review of FHA contracting.
18-Nov-96
The US District Court
for the District of Columbia, Judge Richey, grants the government's
motion to extend time in the qui tam action by Ervin & Associates
against Hamilton seeking a stay until 30 days after the completion
of the criminal investigation and any resulting criminal proceedings
or to notify the Court that it declines to adopt and directs that
the filings shall remain under seal until further order of the Court.
(Sporkin hears the case in the future while Richey is sick and then
the case is reassigned to Sporkin on March 10, 1997 Hamilton has
not been able to obtain transcripts of this hearing either because
the hearing did not occur or because tapes of the hearing are not
available. For this and other dates, Hamilton is trying to ascertain
if tapes are "missing.")
22-Nov-96
Hal DeCell, Assistant
Secretary of HUD for Congressional Relations, responds point by
point to Lauch Faircloth’s initial letter saying HUD believes that
Ervin’s charges are baseless complaints of a disgruntled contractor.
The letter also notes that this will "turn the clock back" and adversely
affect a successful loan sale program. HUD assured Senator Faircloth
that it is investigating the matter to see if there is any substance
to Ervin's charges.
22-Nov-96
DOJ awards four indefinite delivery/indefinite quantity contracts
for
Automated Litigation Support Services for services to the DOJ Civil
Division, Antitrust Division, Civil Rights Division and Criminal
Division
with a five year expenditure ceiling of $375MM. The four contractors
are
Aspen Systems Corp, CACI, Inc. Commercial, DynCorp and Rust Federal
Systems, L. C. The Civil Division is designated the lead contractor.
22-Nov-96
Judge Charles Richey
of the US District Court for the District of Columbia grants the
motion of relator Ervin & Associates for a limited lifting of
the seal to permit Ervin to make an ex parte in camera notification
of the pendancy of the qui tam claim to Judge William Bryant of
the same court, who was hearing the Bivens action by Ervin against
the US. The order states that Ervin claims that the federal defendants
in the Bivens action, represented by DOJ, are asserting that Ervin's
claims in that case are "incredible and unsupportable" while
at the same time "their colleagues at DOJ, whose work is being screened
from government counsel in the Bivens action, are investigating
criminal allegations" arising from both the qui tam and Bivens actions.
The order states that it is being issued "to avoid penalizing Ervin
in its case before Judge Bryant as the result of the Court's generosity
to the government in this case, and because the government has failed
to demonstrate in its Response to Relator's Motion how the ex parte
in camera disclosure to Judge Bryant resulting from the limited
lifting of the seal in this case will hamper, injure or otherwise
compromise the government's criminal investigation relating to this
case and to Ervin."
25-Nov-96
Lauch Faircloth, Chairman
of the Senate Subcommittee on HUD Oversight and
Structure, sends a letter
to Henry Cisneros, Secretary of HUD, responding to HUD’s response
to his earlier letter re: the Ervin litigation. He says charges
that Hamilton improperly prepared congressional testimony seem to
have merit and inquires about the Secretary’s progress in his promised
independent investigation of HUD procurement process.
Nov/Dec-96
The leading, minority
candidate for HUD Secretary, the Mayor of Seattle, is dropped from
consideration for the HUD Secretary position as a result of a sudden
HUD OIG "criminal" investigation into a HUD Community
Development Block Grant to Seattle, the charges in which investigation
much later are said to be unsubstantiated. Cuomo is announced as
the new Secretary of HUD after rumors that Alfonse D’Amato informed
the White House that his Banking Committee would confirm no other
nominee. Cuomo is the son of Mario Cuomo, the former Governor of
the State of New York. New York is a critical state in terms of
both votes and campaign fund raising for the Democrats in the 1998
and 2000 presidential election.
Dec-96
Jack Quinn resigns as
White House Counsel and is replaced in 1997 by Charles Ruff, the
DC Corporation Counsel who is a former DC US Attorney, partner of
Covington & Burling, and Iran Contra prosecutor.
Dec-96
HUD sells $873.2 million
UPB in nonperforming multifamily family loans in the Midwest Loan
Sale with Hamilton as crosscutting financial advisor. The Single
Family #2 Sale yielded proceeds of $762.7 million, equal to 87.35
% of UPB and results in savings to the government of $360 million.
There were 62 bidders and 13 winners in this auction.
Dec-96
DOJ creates a Campaign
Finance Task Force.
4-Dec-96
Hamilton reports to HUD
regarding the results of an internal investigation into a discrepancy
between the bidders' information packages and optimization instructions
to Lucent Technologies during three previous loan sales. This anomaly
had been discovered by Hamilton while it was in the process of preparing
for the next loan sale. A number of high level Hamilton employees
and contractors hired for this purpose spend countless hours researching
the problem. Hamilton's report to HUD explains that this discrepancy
has resulted in a potential four tenths of one percent reduction
in gross sale proceeds to HUD. Hamilton assures HUD that it has
taken steps to ensure that this discrepancy will not be repeated.
HUD accepts these assurances and retains Hamilton for another three
loan sales over the next ten months. Hamilton notifies its counsel
and insurer of this development. A later study by the Policy Development
& Research division at HUD is said to concur that the discrepancy
is not statistically significant and falls within industry quality
control standards for accuracy.
19-Dec-96
Status conference in
the qui tam lawsuit before Judge Sporkin. An order is issued by
Judge Richey directing that the US and the relator shall appear
on 3/10/97 and be prepared to discuss the status of the criminal
investigation and when the government will be prepared to intervene
or notify the Court that it declines to do so. At the hearing, attended
by AUSA Barbara Van Gelder and Ervin attorney Wayne Travell, Van
Gelder reports that the investigation is proceeding expeditiously,
with about 12 people working on the case, nine full time, 125 witness
interviewed and the accumulation of over 30,000 documents. When
pushed to estimate when the government will make a decision whether
to adopt the qui tam case, Van Gelder says that as far as the civil
matter is concerned, the government probably will take the case.
She says that based on information derived from sources other than
Ervin, the government is going to have to reorder the case, file
an amended complaint, dependent upon information the criminal investigation
is bringing in. Judge Sporkin gives the government six months to
make its decision.
1997
A tentative date is set
for a likely FHA sale of unsubsidized multifamily mortgages in a
structured financing similar to the controversial Partially Assisted
sale. The planned pool consisted of approximately 66 apartment mortgages
(UPB $244 million) and 20 partially assisted [i.e., Section 8 assisted]
mortgages (UPB $58 million). HUD was shifting its focus to 847 subsidized
mortgages with UPB of about $1.3 billion in its HUD held inventory.
Among the options under consideration was a trust structure incorporating
public-private partnerships involving private investors, government
agencies and not-for profit organizations. Holland & Knight
was hired as legal counsel to advise HUD regarding the trust structure.
Dick Dunnells of Holland & Knight reports to members of the
loan sale team that he has agreed to represent HUD only on the condition
that HUD waive any conflicts of interests in his representation
of clients who are HUD stakeholders. HUD agrees to the waiver.
Jan-97
Clinton and Gore are
sworn in for second term; DNC scandals continue with revelations
of large banks and banking regulators meeting at the White House
in May 1996.
Jan-97
HUD sells $1.31 billion
UPB in single family loans in the Single Family Loan Sale #4 with
Hamilton as crosscutting financial advisor and Merrill Lynch as
financial advisor for the sale. The Single Family #4 Sale yielded
proceeds of $1.03909 billion, equal to 91.87 % of UPB and resulted
in savings to the government of $247.39 million. There were 11 bidders
and three winners in this auction. This sale includes a "place
based" bid.
Jan-97
Catherine Austin Fitts
leads a team to prototype the first integrated version of Community
Wizard, a software tool designed to allow communities access all
public data on resource use in their area, including all federal
data. Throughout 1997, response to the tool is astonishing, from
Congressional staff, to HUD leaders, to the HHS Secretary. Substantial
software tool development has also resulted in numerous tools to
analyze subsidized housing in a place based context, including detailed
pricing tools that combine significant databases on government rules
and regulations with all of Hamilton’s pricing results from the
various loan sales, including HFA negotiations and the Partially
Assisted Trust.
These tools make it possible
to look at the HUD portfolios in entirely new and powerful ways.
Additional tools made during this period illuminate substantial
opportunities for both taxpayers and private investors, including
databases of all federal contracting, budget tools, a HUD G4 tool
and many others. The core part of the Hamilton Dream Machine, centered
on Community Wizard and place based illumination of public and private
investment and resource management, is coming to fruition.
7-Jan-97
Gingrich is reelected
Speaker of the House.
17-Jan-97
The House Ethics Committee
fines Gingrich $300,000 for campaign finance irregularities.
Feb-97
The DNC fundraising scandal
continues. Documents released by NSC show that NSC had warned Gore
about attending Buddhist temple fundraising; DNC agrees to return
$1.57 million.
5-Feb-97
Ervin & Associates
submits a Freedom of Information Act request seeking information
regarding negative credit subsidy calculations for HUD note sales.
6-Feb-97
Ervin & Associates
submits a Freedom of Information Act request seeking information
regarding actual expenditures compared to budgets for the HUD Office
of Community Planning and Development for 1993 - 1996, a period
that corresponds to the incumbency of Andrew Cuomo as Assistant
Secretary for Community Planning and Development. The request states
that Ervin is particularly interested in cost overrun in travel,
systems, consultants or staff.
6-Feb-97
Ervin files Plaintiffs’
Motion for Leave to File Memorandum Regarding Inadequacies in SWAT
Administrative Record Out Of Time in Ervin v Dunlap (96-CV1253)
and Plaintiffs' Memorandum Regarding Inadequacies in the SWAT Administrative
Record. In this memorandum, Ervin’s counsel alleges that the SWAT,
physical inspection and asset management contracts are "intertwined
with HUD’s portfolio re-engineering plan to transfer affordable
housing assets to Wall Street insiders at deep discounts."
This is not true on any account.
13-Feb-97
Federal District Court
Judge Bryant issues a memorandum and order in Ervin v Dunlap.
The court grants the government’s motion to dismiss Ervin’s Fifth
Amendment due process claim and request for relief in the form of
a declaration that the second due diligence contract is void ab
initio for lack of standing. In all other respects the government’s
motion is denied.
13-Feb-97
HUD’s Office of Procurement
and Contracts issues a "Notice of Termination for Default"
to Ervin & Associates for a contract involving annual financial
statement reviews for HUD’s entire multifamily project portfolio.
Notwithstanding this termination, the Technical Evaluation Panel
found that Ervin merited a "reasonably high rating on past
performance even with the default termination" in a June 1,
1998 report in connection with an RFP for due diligence services
in November, 1997. Later, as part of a GAO protest of HUD’s failure
to award Ervin this contract, Ervin asserts that the basis for issuing
the notice is under investigation by the HUD OIG.
17-Feb-97
Ken Starr announces that
he will resign to head Pepperdine Law School; on 21st, he announces
he will stay.
Mar-97
Kathy Rock, FHA Comptroller,
meets with HUD’s Office of General Counsel re: the optimization
error reported by Hamilton. She subsequently documents the meeting
with a memo to Assistant Secretary Retsinas. Later, Helen Dunlap
report to Fitts that Kathy Rock has informed her that Deputy Counsel
Glaser ordered the memo removed from documents provide to the Senate
staff and indicates that the memo is not to be disclosed.
Mar-97
Switzerland agrees to
establish $4.7 billion trust fund to pay Holocaust victims for trading
precious assets with Nazis and concealing stolen Nazi assets.
Mar-97
Catherine Austin Fitts
attends PC Forum.
2-Mar-97
Washington Post
reports Gore raised $40 million with calls made from the White House.
5-Mar-97
HUD Inspector General
Susan Gaffney testifies before the Senate Committee on Governmental
Affairs on High Risk Problems at HUD. She states "Bringing
HUD programs in line with staff capability would undoubtedly require
a narrower, more precise definition of HUD’s mission; and this would
in turn provoke outcries from the many constituencies – both within
and outside the Department – that have formed around HUD programs.
Resolving the inconsistencies between HUD’s avowed commitment to
a place-based orientation and the realities of HUD’s program-based
organization would again require a clearer definition of HUD’s mission,
followed by a major shifting of authorities within the Department."
"The Department does not have efficient, effective and integrated
financial management systems that can be relied upon to provide
timely, accurate and relevant financial information and reports.
" She notes that "progress is being made" in getting
the systems for accounting and budgeting for the project based assistance
program and the similar system for tenant based assistance (HUDCAPS,
TRACS) up and running. She complains about past failure to take
enforcement action against those who misuse the system. She says,
"We cannot assume that the States, localities, non-profits,
and other recipients of federal funding will always act with wisdom
and integrity. We should be dedicated to … resolve to move decisively
against cases of fraud and abuse. In this regard the HUD OIG has
proposed a series of legislative measures that we believe would
significantly strengthen HUD’s enforcement capacity."
6-Mar-97
HUD Inspector General
Susan Gaffney testifies before the House Subcommittee on Human Resources,
Committee on Government Reform and Oversight on HUD’s Mission, Management
and Performance.
10-Mar-97
The qui tam lawsuit is
reassigned to Judge Stanley Sporkin after the death of Judge Richey.
Hamilton has not been able to obtain transcripts of the hearing
scheduled for this date either because the hearing did not occur
or because tapes of the hearing are not available. For this and
other dates, Hamilton is trying to ascertain if tapes are "missing."
11-Mar-97
The Senate voted unanimously
to authorize (S.Res. 39) the Senate Governmental Affairs Committee
to conduct "an investigation of illegal or improper activities in
connection with 1996 Federal election campaigns." A deadline of
December 31,1997, was imposed on the investigation.
14-Mar-97
Order by Judge Sporkin
in the qui tam lawsuit directing that the relator shall appear on
5/20/97 and the US shall be prepared to discuss when it will be
prepared to intervene or notify the Court that it declines to do
so.
17-Mar-97
GAO decision in the matter
of Ervin & Associates related to Ervin’s contention that the
agency (HUD) improperly conducted a limited competition for equity
monitoring services for FHA’s Class B Trust Certificate interests
in the HUD Partially Assisted Sale and improperly failed to solicit
Ervin in a limited competition for equity monitoring services. The
limited solicitation RFP was issued on June 27, 1996 – after the
Partially Assisted Sale. GAO denies the protest. It states, "While
some tasks that Ervin has performed arguably overlap with the responsibilities
of the equity monitor, (e.g., reviewing annual financial statements),
overall, the expertise required to perform the equity monitoring
contract is specialized in nature in that it primarily calls for
extensive analyses of complex financial transactions. The fact that
Ervin employees possessed professional degrees in accounting and
real estate financing does not change the fact that the tasks required
here differ significantly from those Ervin has performed under the
multifamily housing services contracts, which primarily involve
property management (i.e., physical inspections, property disposition,
etc.)." The 12-month contract for $700,000 was awarded to Alschuler,
Melvin and Glasser, LLP. John Ervin represents Ervin and Richard
Marchese of HUD OGC represents HUD.
27-Mar-97
Ervin & Associates
submits a Freedom of Information Act request seeking all emails
sent on HUD's ccMail system since June, 1993 from Helen Dunlap,
C. Austin Fitts, Kathryn Rock and Chris Greer. In Ervin's request,
he notes that he understands that if any messages on HUD's email
system were held for more than 24 hours, they would be included
in nightly back-up tapes.
Apr-97
Hamilton receives letter
from HUD advising that HUD intends to consolidate various advisory
services and will cancel the crosscutting contract upon issuance
of new contract.
Apr-97
Hamilton’s subsidiary,
E2 NetAnalytics, meets with its advisory board at SafeGuard Scientifics
to unveil the Solari model and financing communities with stock
corporations. The response is very positive. One member warns, however,
that it may be too late. He says a decision has been made to move
all capital out of the US and abroad starting in September.
14-Apr-97
A proposal for the appointment
of an Independent Counsel for fundraising is rejected by Attorney
General Reno. Counsel would have investigated whether funds had
been improperly raised for Clinton’s 1996 reelection campaign. Reno
said that the Justice Department probe had not yet found "credible
evidence that high ranking executive branch officials had committed
illegal acts."
14-Apr-97
Clinton nominates Eric
Holder to be Deputy Attorney General. He is confirmed and sworn
in on that day. Wilma Lewis replaces Holder at DC US Attorney. Holder
had worked at DOJ after graduation from law school in the Public
Integrity Unit. Hamilton is later told that Holder was supportive
of Operation Safe Home efforts as part of the manpower and resources
available to the "War on Drugs."
22-Apr-97
Apartment Investment
and Management Company, ("AIMCO") entered into a Stock Purchase
Agreement with Demeter Holdings Corporation, and Capricorn Investors,
L.P pursuant to which AIMCO would acquire 5,619,695 shares of common
stock, par value $.01 per share of NHP Incorporated from Demeter
and 1,310,427 shares of NHP Stock from Capricorn. As a result, Capricorn
and Harvard (and presumably other investors such as Heller and Warburg
Pincus) receive stock in AIMCO, continuing a significant investment
in HUD housing. WMF, Inc. (a successor to Washington Mortgage] is
spun out to the NHP shareholders, who continue their ownership of
the largest issuer of HUD multifamily mortgage banker.
May-97
The initial report issued
by the National Academy of Public Administration on FHA contracting
is issued. As a result, Congress directed HUD to contract with NAPA
to conduct a "top to bottom" redesign of the HUD procurement
system.
20-May-97
A hearing is held in
the qui tam case. During a hearing in the case, (attended by AUSA
Barbara Van Gelder, Daniel Hawke, Bernard Olieniacz, Ervin's in-house
counsel, and Judith Hetherton, counsel for the HUD OIG) in which
the Honorable Stanley Sporkin asked whether the two cases were linked,
Barbara Van Gelder of the U.S. Attorney’s Office stated that "there
is incredible linkage". She explained further that, "In the
matter before Judge Bryant [the Bivens case], what has happened
is the qui tem [sic] statute will not allow you to file against
the government or anybody who is an SES level or above. In the matter
before Judge Bryant, the same parties are now the plaintiffs against
HUD and Ms. Helen Dunlap whom they say have conspired with the defendants
[, Hamilton,] in the qui tem [sic] to prevent them from,
among other things, getting various and sundry contracts from retaliating
against them for being whistleblowers in this matter and in other
matters, and also for just having a general conspiracy to run their
mortgage program." Van Gelder refers to Ervin and his counsel as
"bounty hunters." In scheduling the next hearing, Van Gelder notes
that they must consider "our agents['] summer vacations."
21-May-97
Order by Judge Sporkin
in the qui tam lawsuit extending time to 9/9/97 for the US to intervene
or notify the Court that it declines to do so.
22-May-97
The date of a Real Estate
Acquisition Agreement by and among AIMCO, AIMCO Properties, L.P.,
Demeter Holdings Corporation, Phemus Corporation, Capricorn Investors,
L.P, J. Roderick Heller, III and NHP Partners Two.
23-May-97
Subpoena to AFL-CIO by
Senator Fred Thompson’s Government Affairs Committee. During this
period, Catherine Austin Fitts has dinner with Richard Ravitch,
Chairman of the AFL-CIO Housing Trust, who was lobbying for renewal
of long term government subsidies on a non-competitive basis, and
not interested in on-line tenant access to training. He said, "If
I can get long term government subsidy contracts, what do I care
if people have education or jobs?"
Jun-97
HUD Secretary Andrew
Cuomo announces the HUD 2020 Management Reform Plan, which included
staffing reductions and, according to HUD Inspector General testimony,
"a series of complicated and far reaching organizational and
management process changes in HUD." Among the changes were
the establishment of a centralized Real Estate Recovery Center and
a Troubled Agency Recovery Centers (in Cleveland and Memphis), a
Section 8 Financial Management Center in Kansas City, four Home
Ownership Centers (in Santa Ana, Denver, Philadelphia and Atlanta)
and an Enforcement Center. The reorganization also resulted in the
establishment of new positions for "community builder",
many of which positions were filled through temporary appointments.
By the end of September, 1997 HUD had lost more than 1,000 employees
due to early buyouts, authority for which expired at the end of
the fiscal year. In late 1997 and early 1998, HUD had a "colossal
merit staffing process" that resulted in 1,300 – 1,400 employees
having no position and many others having new positions. Employees
with no assigned positions were forced to apply for new positions
in the "New HUD." HUD 2020 envisioned an eventual staffing
level of 7,500, but Secretary Cuomo froze the level at 9,100 HUD
programs were consolidated and the public and assisted housing portfolios
substantially improved."
3-Jun-97
Apartment Investment
and Management Company ("AIMCO") acquired all of the issued and
outstanding capital stock of NHP Partners, Inc., and the AIMCO Group
acquired all of the outstanding interests in NHP Partners Two Limited
Partnership.
Jul-97
The coup against Gingrich,
alleged to have been led by Bill Paxon, fails. Paxon subsequently
resigns his Republican Leadership Committee chairmanship and announces
he will not run for reelection.
Jul-97
HUD disconnects Hamilton
from the HUD ccMail email system.
Jul-97
The Senate begins campaign
fundraising hearings (Senator Fred Thompson-R, Tennessee presiding).
Of over 100 subpoenas issued by the Government Affairs Committee
and posted on the Internet, not one was issued to Goldman Sachs,
despite the ranking of Goldman partners and employees as one of
the largest donors to both Republican and Democrats.
Jul-97
HUD sells $112.68 million
UPB in health care loans.
30-Jul-97
Subpoenas to 25 fundraising
groups and associations are issued by Senator Thompson’s Committee.
Summer-97
Hamilton launches the
StreetEquity website with a design book for a Solari, a local software
developer/tool maker that facilitates circulation of knowledge that
supports continuous reengineering of resource management within
communities and that permits small business and real estate access
to the stock market in a manner that allows small business and farmers
to compete with corporations on a level playing field based on performance.
Earlier, Hamilton has launched the Hamilton Workshop, providing
access to some of Hamilton’s tools. The concept of the workshop
was based on Leonardo DaVinci’s workshop in Italy during the Renaissance.
DaVinci had wanted to create new kinds of art and sculpture, such
as the large San Marcos horses, and so it required inventing and
building new tools to make such art and sculpture possible. Hamilton’s
premise was that new powerful tools need to be built and made accessible
to create new liquid markets.
Aug-97
Mike Espy is indicted
on 19 counts; he pleads "not guilty."
5-Aug-97
Clinton signs Balanced
Budget Act passed by the House and Senate on July 30 and 31st.
11-Aug-97
Ervin & Associates
submits a Freedom of Information Act request seeking information
on Ernst & Young's GNMA contracting vehicle under which it performed
"Mark to Market" services for FHA.
Aug-97
HUD automates subsidy
application submissions through its TRACS systems managed by Lockheed-Martin.
22-Aug-97
A trial date set for
suit against Clinton by Paula Jones; it is scheduled for May 1998.
Sep-97
Senator Fred Thompson
issues an order to AFL-CIO to produce documents; AFL-CIO organizes
a coalition of those subpoenaed to stop subpoenas.
Sep-97
A grand jury begins an
investigation into GOP dealings with a Hong Kong figure.
Sep-97
HUD sells $1.14 billion
UPB in single family loans in the Single Family Loan Sale #5 .The
Single Family #5 Sale yielded proceeds of $1.03 billion, equal to
89.99% of UPB and resulted in savings to the government of $265.19
million. There were 31 bidders and one winner in this auction. There
was a "place based" bid component in the sale.
3-Sep-97
DOJ begins a preliminary
investigation into whether an independent counsel should investigate
Gore’s campaign-related calls from White House.
3-Sep-97
Hamilton makes its first
convertible preferred investment in a neighborhood stock corporation
(subsequently referred to as the "Solari Model").
10-Sep-97
Status hearing before
Judge Sporkin in the qui tam lawsuit setting a status call for 3/9/98.
AUSA Barbara Van Gelder, Wayne Travell and Daniel Hawke are in attendance,
making numerous statements that are not truthful The hearing focuses
primarily upon Judge Sporkin's questions regarding why the SEC is
not involved in the investigation. Van Gelder notes that even though
the qui tam complaint mentions only 3 or 4 loan sales, she believes
that the government should investigate all 12. Travell explains
the allegations in the qui tam suit thus: "…HUD put together a group,
a pool of these mortgage notes and then provided inside information
to certain Wall Street concerns, and provided false information
publicly with regard to the quality of the notes in the pool." They
describe the sealed bid auction "people were invited to come in
and bid for these notes." Van Gelder says, "Some people got longer
invitations than others." She confirms the judge is correct when
he says, "And then in the invitation to bid some people were told
information they shouldn't have…." Travell represents to the judge:
"And to date we believe that -- the note sales are all but complete
at this point, and it is our information that although these are
generally available, made available to the public for anyone to
bid on, there have only been three successful bidders." In fact,
there were more than three successful bidders in the first loan
sale. By this date there had been 22 HUD loan sales with at least
several dozen different winning bidders or members of bidding pools.
This fact was reported widely in the financial press and in materials
produced to the HUD OIG under the Hamilton subpoenae.
11-Sep-97
Order by Judge Sporkin
extending time to 3/10/98 for intervention or declination to do
so and directing that counsel for the government and the relator
shall be prepared to discuss all aspects of the case at a hearing
on 3/9/98.
17-Sep-97
Ervin & Associates
submits a Freedom of Information Act request seeking information
on a recent dispute between Inspector General Susan Gaffney and
Secretary Cuomo reported in Legal TImes and The Washington
Post, including the complaint filed by George Weidenfeller against
Susan Gaffney, the anonymous letter that Susan Gaffney forwarded
to the President's Counsel on Integrity and Efficiency, Dwight Robinson's
memorandum criticizing Gaffney, including her decision to hire a
public information officer and any findings by the FBI provided
to HUD.
17-Sep-97
Ervin & Associates
submits a Freedom of Information Act request seeking information,
in connection with a complaint letter from Karen Burstein, counsel
for Asset Strategies, on September 6, 1995, on "documentation within
HUD that would identify the 20 firms referred to in Burstein's teaming
partner example" and "documentation identifying Hamilton's teaming
partner relationships within HUD." Ervin stated that "we are exercising
our right as citizens and taxpayers to pinpoint and eliminate 'corrupt
practices at HUD' and to investigate highly suspect actions by Secretary
Cuomo, including his decision to allow Nic Retsinas to remain FHA
Commissioner although the wrongdoing being investigation [sic] occurred
on his watch."
18-Sep-97
Teamster scandal touches
Democratic fundraising scandal.
19-Sep-97
Thompson announces that
the Government Affairs Committee will turn to campaign finance reform;
cover for shutdown.
20-Sep-97
DOJ announces that Reno
has opened a formal inquiry into whether President Clinton had illegally
solicited campaign donations at the White.
1-Oct-97
Beginning of the federal
fiscal 1998 year. HUD produces certified financials for this year.
However, HUD is not able to produce certified financials for the
following year. Efforts to do so require $17 billion of "adjustments"
to the opening balance, signifying potential substantial problems
in fiscal 1998.
Oct-97
NY Times reports
that DOJ is widening the investigation into Democratic Fundraising,
including how the DNC circumvents federal law by transferring at
least $23 million to the state Democratic parties.
Oct-97
NHP received a HUD OIG
subpoena for documents re: "any arrangement whereby NHP provides
compensation to owners of HUD multifamily projects in exchange for
property management."
1997
Hamilton invests substantial
funds in dealing with HUD contract compliance in face of serious
leak campaign implying that Hamilton has engaged in criminal wrongdoing
and assuring that an indictment of Fitts is forthcoming; Hamilton's
market access is destroyed by a combination of Ervin, DOJ, Cuomo
and HUD OIG actions, Hamilton receives additional subpoena and HUD
OIG demands to take possession of all Hamilton documents; E&Y
contracts are also cancelled (after a DNC fundraising scandal involving
E&Y contributions) and subject to recapture by HUD OIG, who
continues to lobby the Senate for scandal hearings on HUD contracting.
1-Oct-97
Federal fiscal 1998 Year
begins; HUD OIG later testifies on March 22, 2000 that opening balances
for FY 1999 indicated $17 billion shown missing and unaccounted
for in fiscal 1998 in connected with new systems and unsupervised
contractor access.
3-Oct-97
Henry Hyde and other
Republicans ask Reno to appoint independent counsel; Reno says "no."
4-Oct-97
White House releases
videos of Clinton with financial supporters in White House.
4-Oct-97
Videotapes to released
to Thompson’s committee by the White House of Clinton with donors.
5-Oct-97
Republicans say tapes
indicate Reno spoke too quickly in her decision not to appoint an
independent counsel.
7-Oct-97
Campaign fundraising
reform bill is thwarted by filibuster; Lott uses provisions limiting
contributions by unions.
7-Oct-97
Vote and filibusters
take place re the McCain-Feingold campaign reform bill; the bill
is killed.
7-Oct-97
According to admissions
in Ervin V. Dunlap, Ervin alleges that Kathy Rock, then FHA
Comptroller, was informed that Tim Ito of USNWR had told Joe McClosky
(who was HUD’s staff member in charge) that BlackRock had received
confidential payment histories prior to BlackRock’s submission of
its bid in the HUD Single Family Note Sale #3. HUD says that, in
fact, Joe McClosky determined the information actually given to
BlackRock by HUD was post-sale information concerning HUD Single
Family Note Sale #2, which would have been available to any purchaser
upon request.
9-Oct-97
Janet Reno says she was
angry at Clinton for not informing her about fundraising tapes;
she rebukes those pushing for independent counsel.
13-Oct-97
An article in The
Washington Times by George Archibald entitled "HUD Halts Contracts
to Major Clinton Donor," reports that the Ernst & Young financial
advisory contract has been cancelled. Besides Hamilton, Ernst &
Young was the financial advisor most familiar with the FHA portfolio
and its problems, and E&Y was the financial advisor in connection
with a controversial project to securitize HUD held mortgages on
HUD assisted Section 8 properties.
13-14-Oct-97
Ervin & Associates
submits Freedom of Information Act requests seeking information
on Ernst & Young contracts with HUD.
14-Oct-97
Hamilton receives letters
from HUD (1) canceling the crosscutting financial advisory contract,
(2) withholding funds owed to Hamilton for work performed and (3)
demanding the return of all HUD portfolio data. Although HUD’s letter
stated that the contract cancellation was "for convenience
of the government," newspaper accounts relate it to loan sale
bid issues Hamilton had reported to HUD in 1996 that had been addressed
by the appropriate HUD staff and dismissed as not material. There
are intimations that Hamilton proprietary software programs like
Community Wizard belong to HUD and that HUD should receive a free
copy. All work, including Community Wizard and community databanks,
comes to a halt as Hamilton prepares to raise working capital through
a private placement memorandum. All HUD efforts to encourage Congress
to pass requirements for place based disclosure stop.
20-Oct-97
An anti-trust suit brought
against Microsoft by DOJ.
20-Oct-97
Ervin & Associates
submits Freedom of Information Act requests seeking information
regarding the $3.88 million optimization error reported by Hamilton
to FHA in December, 1996, the notice canceling Hamilton's contract,
documentation regarding the Department's intent to cancel Hamilton's
contract and documents and work product required under the Federal
Acquisition Regulation to be turned over by Hamilton to HUD upon
the cancellation of its contract and documents actually turned over
by Hamilton.
20-Oct-97
Article in The Washington
Times by George Archibald entitled "Cuomo Dumps Financial Advisor"
reports the cancellation of Hamilton's financial advisory contract.
The article says Cuomo "ordered a fresh top-level review of bid-rigging
charges that have tainted multibillion-dollar federal mortgage sales."
The article says HUD accused Hamilton of covering up erroneous instructions
for a computer model used to select winning bidders. In fact, Hamilton
had reported that error to the Assistant Secretary/FHA Commissioner
and FHA Comptroller in December 1996. Departmental officials are
quoted as saying the review directed by Mr. Cuomo "could run into
the millions of dollars of additional claims." The article also
says an unnamed source confirmed that Nicolas Retsinas, FHA Commissioner,
"was completely on board and concurred with" the decision to terminate
Hamilton's contract. The article also reports that the US Attorney's
Office had requested a stay of legal discovery in the Ervin &
Associates Bivens lawsuit because a criminal probe was being conducted
to track the main allegations of the civil lawsuit. J. Ramsey Johnson,
principal Assistant US Attorney requested the stay and said "the
criminal investigation is ongoing and concerns an extremely complex
set of facts." All HUD information on the issue is sourced from
Hamilton (including calculations of $3.8 million and the description
of the error) and continues to be sourced from Hamilton. It is reported
to Fitts in 2000 that a later HUD PD&R study under Bill Apgar’s
leadership shows the error to not be statistically meaningful. No
mention is made of the fact that the error disadvantaged Goldman
Sachs in one bid.
20-Oct-97
Article in the Washington
Post by Jennifer Rothacker entitled "HUD Fires Financial Advisor."
It says that a news release by the department said that Cuomo's
investigation of Hamilton had concluded that Hamilton "failed to
provide accurate financial advisory services to the mortgage note
sales program" since its contract started in 1992.
21-Oct-97
Article in the Associated
Press by Jennifer Rothacker entitled "Financial Firm Fired after
HUD Discovers $3.8 Million Error."
20-Oct-97
Anonymous telephone call
to Hamilton’s bank warning Hamilton is "about to go under."
20-Oct-97
Article in The Washington
Times by George Archibald entitled "HUD Orders Fired Firm to
Surrender Documents." [This article is undated but refers to Hamilton
laying off about 1/3 of its workforce "this week."] The article
focuses on the aspect of the HUD OIG subpoena requiring that Hamilton
turn over bid documentation and suggested that Hamilton might resist
turning over the materials" because of legal complications in a
criminal probe and the firm's defense in a civil lawsuit charging
corruption," a fired Hamilton employee is reported as saying. Senate
sources reportedly said Jenner & Block's representation of Hamilton
was complicated by the fact that President Clinton had nominated
the wife of a Jenner & Block partner as General Counsel at HUD.
Robert Pincus, President of Franklin National Bank, denies reports
by laid-off employees that Hamilton was closing.
20-Oct-97
In Amended Qui Tam filing
on September 3, 1998, Ervin & Associates provides a list of
evidence provided to the US Attorney’s Office to support the allegations
in the suit. Evidence provided on October 20, 1997 is described
as follows "Copy of HUD termination letter to Hamilton, and
detail of implications of the termination; letter was leaked by
Howard Glaser in return for agreement to not run a story on Ernst
& Young’s political contribution links to HUD contracts."
Howard Glaser was Deputy Counsel at HUD, having moved into this
position from the Community Planning and Development Division where
he worked for Assistant Secretary Cuomo before Cuomo became Secretary.
21-Oct-97
Hamilton lays off most
of its employees.
21-Oct-97
Article in The Washington
Times by George Archibald entitled "HUD Ignored Charges of Bid
Rigging." Here, Andrew Cuomo takes credit for having asked FHA two
years earlier to look into charges that Hamilton illegally gave
inside information to Wall Street bidders. Agency officials are
credited with saying that Cuomo was going to "move against HUD officials
who protected Hamilton and prolonged corruption that embarrassed
him." Cuomo is reported as being angry that his own promised program
to clean up waste, fraud and abuse had been "clouded by a criminal
probe of note-sale corruption that might have been prevented." The
article says counsel for Asset Strategies had charged that BlackRock
had received a "servicing tape" containing payment history of all
HUD-backed mortgages. The article goes on to say that the Department
had issued a brief statement in Nic Retsinas' name "saying Hamilton
was fired because 'at this time it was appropriate to recommend
termination of the contract.' HUD cited 'past performance errors
by Hamilton' among other things." The article says the charges of
bid-rigging were part of an ongoing criminal investigation by HUD's
Inspector General and the US Attorney's Office. A Hamilton employee
is attributed with the statement that the bids were "changed" before
they were fed into the Lucent/Bell Lab computer.
21-Oct-97
Article in the Wall
Street Journal by Carl Johnston and Anita Sharpe entitled "HUD
Fires Contractor after Finding Errors Tied to Program on Mortgages."
The article appears to tie the "firing" by Secretary Cuomo with
his discovery of the loan sale optimization error. [In fact, the
letter terminating Hamilton's contract states that it was terminated
for the convenience of the government, not for cause.] The article
says Cuomo was alerted to mortgage auction irregularities in 1995
while he was an Assistant Secretary [of Community Planning and Development].
[His reference is to a letter from counsel for Asset Strategies,
Inc., a disgruntled subcontractor on a mortgage loan sale whose
recommendations were not adopted. When Asset Strategies refused
to go forward, it was fired.] According to the article, HUD had
filed documents with the court indicating it was exploring the settlement
of the Ervin action against HUD the previous week.
23-Oct-97
Fred Thompson decides
to wind up hearings on campaign fundraising (original schedule called
for a 12/31/99 cutoff date).
23-Oct-97
An article in The
Washington Times by George Archibald entitled "HUD Told Last
Year of Rigged Loan Sales." In this article, the discovery of the
optimization error is attributed to "other contractors." It said
the discovery occurred on October 24, 1996 at a planning meeting
for the sale of additional multifamily loans and attributes this
information to "a former Hamilton employee who asked not to be named."
The employee is quoted as saying that Hamilton didn't tell HUD of
the problem until December 5th, having "sat on" the information
for six weeks. [Hamilton conducted an investigation after finding
the possibility of an error and reported it to HUD as soon as Hamilton
had Lucent reaffirm calculations on all sales and drawn some conclusions
from its research.)
24-Oct-97
The White House declines
to testify at Thompson hearings.
24-Oct-97
The HUD OIG issues third
subpoena to Hamilton requiring, among other things, all documents
related to e.villages, Neighborhood Networks and statements of work
prepared by Hamilton. The subpoena arrives at Hamilton in the afternoon;
a story in The Washington Times morning edition states that
Hamilton has been subpoenaed.
24-Oct-97
Washington Times
article entitled "Legal Doubts Raised over HUD Contracts" by George
Archibald. Archibald reports that a draft HUD IG report questions
the legality of a $20 million financial advisory contract given
by HUD (through GNMA) to Ernst & Young one month after the firm
gave $132,000 to President Clinton's 1996 presidential campaign.
According to the story, documents turned over to the Senate Governmental
Affairs Committee in connection with its program of campaign fundraising
indicated that Dwight Robinson of the Secretary's Office ordered
that the contract be given to E&Y.
27-Oct-97
House Majority Leader
Dick Armey reportedly summonses Nic Retsinas to the Hill for a closed
door meeting with staffs of the House and Senate banking committees
"to get to the bottom of bid-rigging charges."
27-Oct-97
President Clinton signs
into law the Multifamily Assisted Housing Reform and Affordability
Act of 1997 providing for retention of project-based subsidies and
work-out of HUD portfolio or insured mortgages on terms advantageous
to housing finance agencies, nonprofits and owners.
28-Oct-97
Article in The Washington
Post by Judith Havemann entitled "Firing of Outside Financial
Adviser Only Adds to Political Furor for HUD."
28-Oct-97
An 8-page letter from
Judith Hetherton to Jenner & Block (counsel for Hamilton at
that time) demanding certification of compliance with the subpoena
and questioning the completion of document production.
30-Oct-97
An article appears in
The Washington Times by George Archibald entitled "HUD Firm
Dumped for Dubious Campaign Gifts." This article says campaign finance
scandal around Ernst & Young's contributions to the DNC is the
last thing the Secretary wanted, because he was angling for the
No.2 spot with Al Gore on the Democratic ticket in 2000. Cuomo blames
Nic Retsinas for a "rogue operation" to hire E&Y without his
knowledge. National Mortgage News is quoted as reporting
that Retsinas was one of two top contenders for the position of
executive vice president of Mortgage Bankers Association.
31-Oct-97
An article is run in
US News and World Report by Tim Ito entitled "HUD has Second
Thoughts on Loan Advisor." The article refers to a Justice Department
criminal investigation of the HUD loan sale program. The magazine
takes credit for having published an article that was "the first
public hint of trouble with the program."
Nov-97
The HUD OIG receives
special appropriation for Operation Safe Home in the approximate
amount of cancelled contract authority from Hamilton HUD contracts.
4-Nov-97
A two-page letter is
sent from Jenner & Block to HUD OIG Counsel Judith Hetherton
Re: new subpoenas and Hetherton’s October 28 letter Re Hamilton’s
compliance with August, 1996 subpoenas. The letter states Hamilton
is still a going concern. There is discussed more on "back-up
tape dispute" [in which the HUD OIG counsel alleges Hamilton
has destroyed a back-up tape for a particular date in June and Hamilton’s
counsel reports that there is no such tape in existence as far as
Hamilton IT personnel can determine] and OIG’s insinuation that
Hamilton may have revised or tampered with electronic communications
produced under subpoena. It requests a meeting to discuss narrowing
the burdensome requests.
4-Nov-97
The GOP wins big in off-year
elections; Christine Todd Whitman takes NJ, Gilmore takes Virginia,
Gulliani takes NY, with numerous Democratic mayors keeping their
seats in Boston, Cleveland, Detroit, Minneapolis and Pittsburgh
and in and 11/25 runoff in Atlanta.
6-Nov-97
An article appears in
The Wall Street Journal entitled "HUD Halts Program To Auction
Mortgages as It Seeks Adviser." "Hamilton took with it the technical
capacity -- including personnel and access to technology -- to conduct
the auctions." [No advisor was hired for several years.]
12-Nov-97
HUD’s CFO Richard Keevey
testifies before Stephen Horn’s House Subcommittee on Government
Management, Information and Technology, noting that, "we have
a successful asset sales program that has made us the leader in
the federal government in this area." In opening remarks, Horn
refers to "the positive experiences of the Department of Housing
and Urban Development" in selling assets and declares that,
"the excellent returns they have had are eye-opening."
17-Nov-97
Housing industry newsletter
Real Estate Alert reports that an unnamed HUD spokesman has
averred that "Even though Cushman, Merrill and Kenneth Leventhal
are still pre-qualified as HUD financial advisers, the agency now
wants to select a senior advisor to replace Hamilton before proceeding
with sales." Later in the month, HUD announces that the loan
sale program has been halted. HUD withdraws the RFP for crosscutting
financial advisor. Despite termination, the Office of Management
and Budget allows appropriating committees in Congress to assume,
for purposes of determining the budget costs of issuing FHA insurance
for new single and multifamily projects, that HUD has not discontinued
the loan sales for calculating the cost of new mortgage insurance
originations. HUD assumes that it has a high recovery rate for purposes
of issuing new low cost insurance, but in fact uses a low recovery
rate to negotiate workouts and other servicing policies favorable
to the same industries enjoying the low cost financing. This "multiple
personality budgeting" negates the very internal controls legislated
at OMB's request in credit reform legislation in 1991.
25-Nov-97
The Federal District
Court issued an order in the qui tam case (96-1258) lifting the
seal for the limited purpose of advising Hamilton that it was named
as defendant.
Dec-97
House staff report that
HUD’s IG has been lobbying Senator Mack’s staff heavily in an attempt
to convince the Housing Opportunity and Community Development Subcommittee
to hold hearings on the subject of HUD contracts, particularly the
Hamilton crosscutting contract and how much Hamilton has been paid
under the contract. A lobbyist later reports to Fitts that Senate
staffers have been told by the HUD IG that claimed taxpayer savings
of more than $2 billion are false and that the Denver audit was
thrown out due to unprofessional work.
Dec-97
DOJ informs HUD that
the OIG's investigation is unrelated to releasing the Hamilton check
for work performed under its HUD contract. HUD had previously stated
that it could not release the check because of the on-going investigation
involving Hamilton.
1-Dec-97
Hamilton is informed
that the original HUD contract documents have been moved to the
Inspector General's Office from the HUD Contracting Office. Indications
are that a lot of contracting has been moved to a special contracting
office in Denver.
2-Dec-97
Attorney General Reno
announces that she will not request appointment of an independent
counsel to investigate Clinton and Gore for fundraising irregularities.
5-Dec-97
A lawsuit is filed in
Michigan courts against Hamilton and others by a defaulted borrower
whose note was sold to HUD's loan sale program.[Stearns Building
Limited Partnership v. The Hamilton Securities Group, Inc. (1:97-04955),
Michigan Eastern Bankruptcy Court, Judge Ray Reynolds Graves].
10-Dec-97
Jenner & Block writes
a letter to Dick Chapman at DOJ and AUSA Barbara Van Gelder re:
their upcoming meeting regarding the length and conduct of investigation
of Hamilton. The letter says Hamilton will have to go out of business
if it continues much longer. It states that Hamilton produced 27,000
pages of documents and 133 diskettes of information in response
to subpoena between June and August. It complains of leaks to the
press, a fishing expedition, burdensome and duplicative subpoenas,
and illegal withholding of funds.
11-Dec-97
In the morning, Hamilton’s
attorneys (Jenner & Block) send a letter to DOJ expressing concern
re: the length and conduct of the HUD OIG investigation. In the
afternoon, HUD IG issues Hamilton a fourth subpoena, this time requesting
that Franklin National Bank produce all personal financial information
relating to
Catherine Austin Fitts.
12-Dec-97
Hamilton’s attorneys
send a letter to HUD requesting a meeting with Deputy General Counsel
Howard Glaser to discuss Hamilton’s request that HUD cease withholding
payments.
12-Dec-97
Assistant Secretary Hal
DeCell answers Connie Mack's November 14, 1997 letter to HUD. According
to a May 1999 FOIA request by Ervin & Associates, the letter
states that the Department had initiated an independent analysis
of the bid results of the HUD note sales.
13-Dec-97
Henry Cisneros is charged
in a federal indictment on 21 counts with conspiracy, obstruction
of justice and making false statements to the FBI.
18-Dec-97
Hamilton’s attorneys
meet with Assistant US Attorney Barbara Van Gelder. Van Gelder introduces
Tony Alexis as her replacement. She indicates that there is no reason
for linking any investigation of Hamilton with HUD’s withholding
of payments to Hamilton, and agreed to communicate this to HUD.
Alexis also agrees to call HUD OIG counsel Hetherton regarding the
reasonableness of subpoenas.
18-Dec-97
Volume I of the CIA IG
Report is delivered to Senate Select Committee on Intelligence regarding
charges that the CIA supported drugs in South Central LA.
22-Dec-97
Hamilton supplies a certification
by Catherine Austin Fitts re the completion of Hamilton’s response
to the August subpoenas to the HUD OIG.
22-Dec-97
Judith Hetherton sends
a letter to Hamilton’s attorneys defending the OIG against charges
of delaying its investigation, accusing Hamilton of failing to comply
with the HUD IG’s subpoenas and repeating the IG’s requests for
information from Hamilton. Later that day, Judith Hetherton sends
a second letter to Hamilton’s attorneys asking them to provide more
detail on allegations that the HUD IG was leaking information. On
that day, Hamilton’s attorneys send a letter to the HUD General
Counsel requesting a meeting on HUD’s wrongful withholding of $1.5
million in payments to Hamilton.
23-Dec-97
Hamilton files a formal
complaint with Neil Gallagher, Chairperson of the Integrity Committee
of the President's Council on Integrity and Efficiency and the Executive
Council on Integrity and Efficiency ("PCIE"). The complaint is filed
under Executive Order 12933, Section 1(a) for gross unprofessional
conduct by the Inspector General ("IG") of the US Department of
HUD against Hamilton. The complaint gives a detailed account of
the HUD IG's abuse of authority and possibly criminal behavior.
(IC #212).
29-Dec-97
Catherine Austin Fitts
sends letter to HUD Deputy General Counsel Howard Glaser reiterating
DOJ’s statement to Hamilton that DOJ has not (as maintained by Glaser)
informed HUD not to pay Hamilton for amounts owed.
31-Dec-97
GAO writes a letter to
Hamilton posing many (more than 20) questions re: Hamilton’s compliance
with a joint venture agreement with the Department of Labor, which
agreement was allowed to expire without renewal by Hamilton a year
earlier. The GAO letter purports to be in response to "Congressional
inquiry" and is detailed in its references to specific provisions
of the joint venture agreement.
Jan-98
Charlie Trie indicted
by a grand jury in connection with the election fundraising scandal.
Jan-98
Alan Greenspan takes
a walking tour of Maxine Waters’s district in LA.
Jan-98
According to the Wall
Street Journal, the Asian financial crisis has shaken up US
foreign policy in areas from defense cuts by allies to South Korean
funding for a reactor project. Defense Secretary Cohen toured the
region to reassure leaders of US support and discuss revising arms
acquisition plans.
Jan-98
Henry Cisneros’ one-time
mistress pled guilty to criminal charges linked to payments the
former HUD Secretary made to her after they ended their affair.
7-Jan-98
Hamilton files a Freedom
of Information Act ("FOIA") request with Darlene D. Hall, FOIA Officer
of the HUD IG's office, requesting nine categories of information.
FOIA Number: FIIG216055. Hamilton sends a second FOIA request (FI-216692)
to Charlene Anderson, FOIA Coordinator in the Office of the General
Counsel of HUD.
7-Jan-98
Monica Lewinsky denies
the Clinton affair in affidavit filed in Paula Jones suit.
8-Jan-98
Hamilton files a motion
for temporary restraining order. [Hamilton Securities Group,
Inc. et al v. Department of Housing and Urban Development, (1:98-CV-0036),
US District Court, District of Columbia (Judge Stanley Sporkin)].
In an attempt to prevent HUD from holding up the processing of checks
for amounts due under its HUD contract. A settlement agreement re:
HUD OIG disclosure policy is trashed when Abbe Lowell tries to slip
in a provision that would prevent Hamilton from suing HUD later.
Fitts catches it and insists that Hamilton’s case be withdrawn.
9-Jan-98
Hearing before Judge
Sporkin on Hamilton’s motion for a temporary restraining order.
12-Jan-98
Tripp turns over tapes
to Starr.
13-Jan-98
Tripp wired by Starr
for conversation at hotel.
14-Jan-98
Conference call hearing
with Judge Sporkin in the Hamilton TRO case. The motion for temporary
restraining order is denied in an order issued on January 20. On
the call from the Department of Justice and HUD are Robert Hollis
(DOJ), Daniel van Horn (USA), Bryan Saddler (OIG), David Gottesman
(DOJ), Tim Lorenza (DOJ), Rich Brown (DOJ), Harold Wilson (DOJ),
John Opitz (HUD OGC), Ginger Stevens (HUD OGC) and Bart Shapiro
(HUD OGC). The issue before the court has to do with the letter
provided by Hamilton's insurance carrier regarding coverage in the
case of an error or omission. Hamilton maintains that its coverage
provides security for the HUD claim of $3.8 million. The DOJ/USA
refuse to accept this security because the insurance company is
unwilling to waive policy exclusions, the most important of which
is an exclusion for fraud.
15-Jan-98
Wall Street Journal
(byline: Michael Frisby) publishes article "HUD Dismisses Law
Firm Doing Advisory Work" in which it reports HUD has fired
Holland & Knight, "a politically connected law firm that
was doing legal work for HUD while also representing clients battling
the agency." This fact was disclosed to HUD before Holland
& Knight agreed to represent HUD. The article also reports that
HUD had referred the Holland & Knight matter to the Washington
Bar Association and that government officials were considering whether
the firm should be barred from federal contracts. Dick Dunnells,
the partner in charge of the HUD account, is furious at the politically
motivated smear of his firm. No mention is made in the article that
Dunnells is representing Franklin National Bank, Hamilton’s bank,
and is making efforts to get Hamilton paid.
16-Jan-98
A three-judge panel approves
the expansion of Starr’s inquiry to include possible obstruction
of justice in Jones case; Reno approves a broadened mandate; Starr’s
investigators question Monica Lewinsky.
17-Jan-98
Clinton denies having
an affair with Monica Lewinsky in Paula Jones affidavit.
19-Jan-98
National Mortgage
News, Brian Collins, reports that the US District Court rejects
Hamilton’s application for a temporary restraining order. "Hamilton’s
president Fitts told reporters at the hearing that HUD’s suspension
of the note sale program is costing the agency $5 – 10 million a
month."
21-Jan-98
Stories on Monica Lewinsky
proliferate in the general news. The Washington Post "postpones"
its front-page investigative story about Hamilton, which never runs.
24-Jan-98
The AP reports that Janet
Reno has sealed the release of DOJ IG report on Dark Alliance
allegations because the release might "compromise an undercover
investigation expected to last an extended period."
27-Jan-98
The filing of (1) HUD
Defendants’ Motion to Dismiss Complaint and (2) HUD Defendants’
Opposition to Plaintiffs’ Motion for a Preliminary Injunction and
(3) HUD Defendants’ Statement of Points and Authorities in support
of Motion to Dismiss, submitted by Frank Hunger (AUSA), Robert Hollis
(Asst. Dir., Commercial Litigation Branch), Michael Sitcov (A. Dir.
Fed Programs Branch) David Gottesman (Commercial Litigation Branch,
DOJ) for OIG and Raymond Larizza and Richard Brown (Federal Programs
Branch, Civil Division, DOJ) Attorneys for HUD, Retsinas and Cuomo
and Of Counsel: Carole Wilson (AGC, Office of Litigation and Fair
Housing Enforcement). Angelo Aiosa (AGC for Litigation), Barton
Shapiro (Trial Attorney), Virginia Kelly Stephens (Attorney) of
the Office of General Counsel of HUD.
28-Jan-98
Charlie Trie, a friend
of Clinton, indicted for fundraising.
30-Jan-98
The declassified version
of the CIA OIG Report - Volume I is released to the public.
Some time between
Feb and Apr - 98
Ervin & Associates
serves Jenner & Block, Brand, Lowell & Ryan and Rasmus (Hamilton's
auctioneer) with subpoenae. By this time Jenner & Block had
resigned as Hamilton's counsel because the insurance carrier refused
to pay agreed bills, and Hamilton had run out of funds to pay Brand
Lowell, but both firms were forced at their own expense to complete
comprehensive privilege logs listing all documents from their representation
of Hamilton and justifying why such documents were subject to attorney
client privilege. Rasmus was required under its subpoena to produce
customer records showing what Hamilton computer equipment was purchased
by each purchaser -- information Rasmus did not want to disclose
because of its privacy obligations to clients. Also, Hamilton was
required by the Office of Inspector General to turn over creditor
lists and directories of Hamilton's former employees, business associates
and teaming partners as well as contact many vendors to extend subpoena
compliance to their digital records. *
Feb-98
VP Gore announces that
Maxine Waters’ district has been awarded an Empowerment Zone status
by HUD and made eligible for $300 million in federal grants/tax
benefits. HUD Drug Elimination Grants and "War on Drug"
activities increase under Secretary Cuomo.
Feb-98
Senator Lott pulls a
surprise and brings up the campaign finance reform bill well before
the agreed-upon date of March 6.
Feb-98
Bill Paxon announces
that he will not seek reelection.
Feb-98
Attorneys General from
11 states issued new subpoenas in their antitrust probe of Microsoft;
separately, DOJ issued more subpoenas.
Feb-98
NAPA releases its Interim
Report focusing on improvements needed in the FHA Office of Housing
contracting.
Early-98
Assistant US Attorney
Barbara Van Gelder leaves the DC US Attorney’s Office for private
practice at Wiley, Rein & Fielding in Washington. Before leaving,
she informs Hamilton’s attorneys in the presence of her replacement,
Tony Alexis, that DOJ’s investigation has no reason for HUD to withhold
payment of Hamilton’s money, and they will call HUD to communicate
that as well as to ask HUD to not abuse the subpoena process. Subsequent
events as well as documents unsealed in 2000 indicate behavior highly
contradictory to these promises.
Feb-98
Hamilton and HUD OIG
battle regarding possession of documents and subpoena compliance.
HUD intimations of fraud cause Hamilton’s errors and omissions insurance
carrier to decide not to pay Hamilton’s attorneys as the carrier
had agreed. The attorneys resign.
2-Feb-98
The Stearns Building
Limited Partnership (plaintiff) and Hamilton Securities Group (defendant)
stipulated and agreed (1) that the time in which Hamilton may answer
or respond to their complaint could be extended to March 2, 1998,
and (2) that the law firm of Jenner & Block may withdraw its
appearance on behalf of Hamilton in the matter. (In Re: Stearns
Building Limited Partnership v. The Hamilton Securities Group, Inc.
(97-54216-G) US Bankruptcy Court, Eastern District of Michigan Southern
Division.)
5-Feb-98
Jenner & Block letter
to Judith Hetherton stating its resignation on January 29 was as
the result of inability of Hamilton to pay fees. Hetherton accused
Hamilton of choreographing J&B’s withdrawal in order that Brand
Lowell could disavow agreements made by Jenner & Block. Hetherton
later threatens Abbe Lowell with intimations of what they will do
if he files "a frivolous law suit."
9-Feb-98
An order is entered by
Judge Sporkin to postpone a hearing in the TRO case from February
5, 1998 to February 18, 1998 based upon information that parties
are exploring ways to resolve the dispute.
11-Feb-98
Reno recommends the appointment
of an independent counsel to look into Bruce Babbitt’s fundraising
activities.
13-Feb-98
Jenner & Block informs
the HUD OIG that J&B represents Russell Davis, a former board
member and Vice President of Hamilton. The OIG had requested an
interview with Davis but, when told he was represented by counsel,
declined to follow through with the interview.
13-Feb-98
HUD's Office of General
Counsel responds to Hamilton's January 7, 1998 FOIA request (FI-216692).
The letter states that the department will expedite the processing
of Hamilton's request.
17-Feb-98
A Louisiana contractor
files a Motion to Compel Production of Documents [United States
of America v. Streuby L. Drumm, Jr. et al (1:98-MS-0066), in
the US District Court, District of Columbia (Judge Stanley Sporkin)].
The motion asks the court to compel Hamilton to produce documents
to comply with the commands of a subpoena duces tecum issued on
behalf of the US District Court of the District of Columbia, in
connection with an aforementioned proceeding pending in the U.S.
District Court for the Middle District of Louisiana.
18-Feb-98
John Greer deposition
in Ervin v Dunlap et al (4 volumes, 1,125 pages).
18-Feb-98
A motion hearing is held
before Judge Sporkin in the TRO case, dealing with matters other
than the motion to restrain HUD from withholding payments. More
than ten attorneys appear from the government in three separate
representations, confusing the judge. The judge focuses on the prospect
of a Hamilton bankruptcy. Hamilton's counsel indicates that no bankruptcy
filing is currently contemplated. The judge finds that Hamilton's
challenge to the overbroad reach of the OIG's subpoena is not ripe
for decision and that the more appropriate course of action is to
allow the OIG to file a subpoena enforcement action and for Hamilton
to challenge the subpoena issues at that time. A settlement is reached
verbally with the HUD and Department of Justice regarding press
leaks, but counsel for the Inspector General refuses to join in
this settlement. The issue is resolved when Judge Sporkin adds language
to his order acknowledging the IG has represented to the Court its
obligations not to leak. Regarding the approval of any settlement
language by the non-OIG HUD defendants represented by AUSA Gottesman,
Gottesman tells the judge, "The client agency will give its recommendation
to the Department of Justice. The Department of Justice will have
the final say." The judge responds, "Is that right? I always thought
it was the other way around…. No, seriously, I always thought when
I was in an agency that the Department looked to the agency. I never
knew that we looked to the Department [of Justice]. It's the agency's
equities that are involved."
27-Feb-98
Federal Register publication
of Statement of Policy on Disclosure of Mortgage Loan Sales Information;
SUMMARY: This notice sets forth the policy of the Department of
Housing and Urban Development regarding information that will be
provided when responding to Freedom of Information Act requests
for information on the Department's Mortgage Loan Sales Program.
This notice sets forth that policy and its rationale.
28-Feb-98
The as-of date for layoff
of all remaining Hamilton employees.
Mar/Apr-98
HUD OIG signs a memorandum
of understanding with the DEA that provides conditions under which
HUD OIG agents may be authorized to investigate drug related activities
under Title 21, a "non-traditional role for an IG."
3-4-Mar-98
Vernon Jordon testifies
before the Clinton grand jury.
3-Mar-98
Judge Sporkin issues
a court order in the Hamilton TRO action (1) dismissing counts 3
and 4 without prejudice, (2) dismissing counts 5 and 6 "without
prejudice on the basis that Defendant Gaffney has represented to
this court through counsel that she is cognizant of and understands
her and her office’s obligations with respect to the confidentiality
of investigations conducted by the office of the Inspector General
of the US Department of Housing and Urban Development, and that
she and her office have complied and will continue to comply with
these obligations."
3-Mar-98
HUD files Petition for
Summary Enforcement of Subpoenas against Hamilton [Susan Gaffney,
HUD IG v. Hamilton Securites Inc., et al (1:98-MS-0092), in
the US District Court, District of Columbia [Judge Stanley Sporkin]
signed by Wilma Lewis and Daniel Van Horn and with Judith Hetherton
and Brian Saddler listed as Of Counsel. Filed Under Seal. The filing
says "The Hamilton Entities have acknowledged that they maintain
and have possession of records responsive to the subpoenas which
they have failed to provide to the OIG." Also filed is a Memorandum
of Points and Authorities in support of PTE. HUD files Declaration
of James Martin under seal in support of the Office of Inspector
General’s Petition for Summary Enforcement of Subpoenas (with 37
Exhibits). Fitts cashes in her 401(k) and sells her interest in
a family farm to pay for attorneys to appeal to Judge Sporkin for
a Special Master to serve as trustee for Hamilton documents and
digital files.
3-Mar-98
GAO discussed the Departments
of Justice's and Treasury's asset forfeiture programs. GAO noted
that: (1) the asset forfeiture programs present a high risk for
abuse and fraud because of program mismanagement and internal control
weaknesses; (2) the US Marshals Service mismanagement, ineffective
oversight, slow disposition, and poor record keeping of seized property
has resulted in excessive costs and millions of dollars in lost
revenue; (3) the Justice asset forfeiture program lacks closing
procedures to ensure the proper recording of all seized property
in its property management system; (4) the Customs asset forfeiture
program lacks adequate safeguards over seized property and has incomplete
and inaccurate accounting and reporting of seized property; (5)
the agencies have made many improvements to their asset forfeiture
programs; agencies need to additionally enhance their tracking systems
and to develop and implement policies and procedures to ensure proper
accountability for and stewardship over seized property; and (6)
although consolidating the management and disposition of seized
assets could reduce administrative costs and duplicative efforts,
the agencies cite legislative acts and federal reporting requirements
as barriers to developing a joint plan for consolidation.
6-Mar-98
AUSA David Gottesman
of the Civil Division of the Commercial Litigation Branch of DOJ
faxes a letter to Hamilton’s attorney claiming a prior interest
in Hamilton auction proceeds and warning of personal liability of
any company representative under the federal priority statute for
any amounts paid to third parties ahead of HUD. Fitts is concerned
that this will lay basis for seizure of any items at Fraser Court
and begins research on asset forfeiture which eventually leads to
retaining asset forfeiture attorney, David Smith, to help protect
the Fraser Court sale in 1999. Williams & Connolly advises Franklin
National Bank that the federal government could assert a claim ahead
of the first lien creditor.
6-Mar-98
The Federal District
Court issues an order (1) appointing Irving Pollack and Larry Storch
as Co-Special Masters, (2) ordering OIG to pay fees and expenses
of Special Master and all working under his authority who shall
receive compensation at $100 per hour plus actual expenses, including
cost of storing records, (3) ordering Hamilton to immediately deposit
records with Special Master that are responsive to August 6 and
22, 1996 subpoena as modified October 24, 1997, which were not previously
produced, (4) ordering representative(s) of Hamilton with personal
knowledge of matter to submit to court a certification of compliance
or, if not feasible, certifications satisfactory to the Special
Master, (5) ordering Special Master to secure and preserve documents,
(6) ordering Special Master to permit Hamilton access to records
for purpose of winding up affairs and any other legitimate purpose,
(6) ordering Hamilton not to sell, destroy, discard or otherwise
dispose of any computer disc, hard drive or other electronic or
computer data storage device that contains electronic records during
period without prior approval of court and (7) ordering the Special
Master to determine issues and make reports and recommendations
as the court may direct and (8) ordering that only the parties,
the court, the Special Masters, and agents shall have access to
records furnished by Hamilton. Susan Gaffney, HUD IG v. Hamilton
Securites Inc.,
8-Mar-98
Jim McDougal dies in
a Texas jail after agreeing to cooperate with Ken Starr in exchange
for a reduced sentence. Later reports indicate that McDougal’s death
may have prevented an indictment of Hillary Clinton.
8-Mar-98
Special Master Larry
Storch of Storch & Brenner takes possession of Hamilton's offices.
9-Mar-98
Eight FBI agents, representatives
of the Special Master and IG Office, take over Hamilton’s offices.
Carolyn Betts is asked to leave. Elliot Cook stays to negotiate
terms of digital document recovery. All computers are backed up
by the FBI despite the existence of attorney-escrowed back ups.
HUD demands that all computers must be scrubbed of all data before
they can be sold and comes to the office to oversee scrubbing. When
informed that Hamilton has taken the prime server with copies of
all digital files, HUD takes the position that "Hamilton is
not allowed to retain any knowledge" and that Hamilton cannot
take these computers and Hamilton cannot have a copy of any of the
knowledge, but does not follow with legal basis for this position.
The HUD OIG attempts to falsify evidence by tampering with files
in building; the building manager later provides affidavit to Hamilton
attorneys that thwarts attempt.
9-Mar-98
Hamilton files suit against
HUD in Court of Federal Claims in an effort to recover amounts withheld
for services rendered under its HUD contract. Claude Goddard represents
Hamilton in this action. [Hamilton Securities Advisory Services,
Inc. v. The United States (98-CV-169), US District Court, United
States Court of Federal Claims, Judge Marion Blank Horn] Separately,
Michael McManus and Ken Ryan are retained by Lexington Insurance
Company to represent Hamilton in connection with matters potentially
covered by Hamilton’s errors and omissions insurance policy.
9-Mar-98
Representatives of the
HUD OIG and FBI appear at Hamilton's offices to look at documents
and copy information from computers, pursuant to Judge Sporkin's
court order. Susan Gaffney, HUD IG v. Hamilton Securities Inc.,
et al (1:98-MS-0092)
9-Mar-98
Status hearing in the
qui tam lawsuit before Judge Sporkin setting further status call
for 7/10/98. Order by Judge Sporkin extending time to 7/10/98 for
US to intervene or decline to do so. At the hearing, AUSA Anthony
Alexis and Daniel Hawke make appearances. Barbara Van Gelder had
left government service to take a position as partner at the Washington
law firm of Wiley, Rein and Fielding. Alexis says the government
needs at least another 120 days to determine whether it will adopt
the case. He Alexis tells the judge that the government has had
to move to enforce the Hamilton subpoena and because of that "we
haven't seen any of those documents that allow us to conduct an
evaluation."
10-Mar-98
Ervin & Associates
faxes a letter to Andrew Cuomo stating that "with the elimination
of Kathy Rock as FHA Comptroller, HUD has finally cleansed itself
of all of the senior officials who were involved in the contracting
and note sale corruption and favoritism that has infected your agency
for too long." The "senior bad actors," that have
been "purged" he says, include Dwight Robinson, Nelson
Diaz, Nicolas Retsinas, Monica Sussman, Helen Dunlap, Stephanie
Smith, Sarah Rosen, and Chris Greer. He complains that, unfortunately,
the contracting officers who ignored their responsibilities by looking
the other way are still active participants in HUD’s retaliation
against him and his company. He warns that "the extent of that
coverup and retaliation by HUD will soon be made public."
10-Mar-98
At a 10:30 a.m. hearing
before Judge Sporkin, the judge issued an order permitting Hamilton's
auction to proceed that day, subject to the requirement that information
will be copied from computers before they are sold. The auction
is held.
Mid Mar-98
Rasmus (the auctioneer
of Hamilton's furniture and equipment) was served a subpoena requiring
detailed information about the identities of purchasers of Hamilton's
assets and the assets purchased. The auctioneer subsequently "lost"
all records of the sale and was unable to provide a full accounting
to Hamilton. No final accounting of the proceeds of the auction
was ever received by Hamilton, either from the auctioneer or Hamilton's
first lien creditor, which received the proceeds.
Mid Mar-98
Catherine Austin Fitts'
elderly uncle was served a subpoena for financial documents relating
to her sale of her interest in a family farm in New Hampshire and
looking for evidence that Fitts used it to entertain government
officials. Fitts's uncle first received a telephone call from FBI
agents in Washington stating that the OIG wanted documentation for
Fitts' sale of her interest in the farm to him. He agreed to send
the requested documents. Then, a few days later at about 6:30 pm,
four agents from Boston appeared at his door in Portsmouth, N.H.
to serve a subpoena for the information he had agreed to send to
Washington.
13-Mar-98
Hamilton's General counsel
faxed copies of 3/6 and 3/13 Sporkin orders and DOJ letter to David
Frulla, Chris Lord (a Hill HUD committee staffer) and Mark Cohen
(outside counsel for Lexington Insurance Company).
15-Mar-98
Kathleen Wiley appears
on 60 Minutes.
16-Mar-98
Surprise Congressional
hearings on Volume I of CIA Inspector General’s Report on CIA- Contra
Drug Trafficking are focused on the Dark Alliance allegations
published by Gary Webb in the San Jose Mercury News (with
extensive documentation provided for reading and download on the
Mercury News’s website) that the CIA was complicit in introducing
crack cocaine into LA through its dealings with Iran-Contra related
drug traffickers and use of known drug lords as "assets." The
Memorandum of Understanding between DOJ and CIA entered into between
1982 and 1994 is disclosed that relieved the CIA of responsibility
to report trafficking and money laundering by CIA proprietaries
and agents to deal drugs. This Memorandum was developed in the same
period that that additional legal changes permitted significant
increases of intelligence agency outsourcing of sensitive national
security functions to private government contractors.
Coincidentally or not,
Hamilton’s offices had been seized and held for approximately one-
two weeks prior to the hearing. Government-led efforts to back up
computer tapes in Hamilton’s offices (in which Hamilton personnel
are not permitted to participate) resulted in the destruction of
many of Hamilton’s software tools and databases. This included removing
from the World Wide Web, a money map of South-Central LA showing
patterns of homeowner defaults/taxpayer losses in areas targeted
by CIA drug dealing. This occurred after HUD’s Office of General
Counsel and Contracting Office insisted that Hamilton cleanse its
systems of all HUD data, including publicly available data, and
return it all to HUD. A HUD OIG investigator stated in mid-March
that Hamilton had no right to keep a copy of the information on
its own computers but refused to explain his reasons or legal basis
for this statement. Included among the tools destroyed was Community
Wizard, comprehensive GIS program for mapping of federal expenditures
by census block. This program, combined with extensive Hamilton
databases on real estate, investment, financing and resources by
neighborhood could have produced detailed maps of the flow of federal
funds, including HUD funds, into and out of LA during 1980s in South-Central
LA and other areas that were the focus of the Dark Alliance
allegations.
20-Mar-98
Meeting of attorneys
assigned by Lexington at the offices of Jackson & Campbell (the
team later moves to the larger Philadelphia firm of Drinker, Biddle
& Reath). Hamilton's insurance company does a complete turnaround
and provides a full team of attorneys to address Michigan, Louisiana,
petition to enforce subpoena and court of claims legal actions and
to help with all document production matters. The first concern
is the complete control and mastery of all documents and protection
from HUD. Hamilton spends all day with the new legal team, including
local counsel retained to assist in Louisiana and Michigan cases,
and insurance company counsel flown in from Boston. It appears that
the originally selected law firm (which was willing to assume the
case at $100 per hour) was replaced by new counsel.
20-Mar-98
Ervin & Associates
submits six Freedom of Information Act requests seeking large amounts
of information regarding the HUD loan sales.
22-Mar-98
Solari, Inc., a successor
to Hamilton Securities, starts full time operation at Fraser Court
23-Mar-98
GAO decision in the matter
of Ervin & Associates where Ervin protests that the agency failed
to mail a copy of a solicitation despite its request to be placed
on the source list. GAO denies the protest, finding that HUD’s procedures
should have resulted in Ervin receiving a copy of the RFP and that
Ervin failed to avail itself of every reasonable opportunity to
obtain the solicitation. John Ervin represented Ervin and Richard
Marchese of HUD OGC represented HUD.
23-Mar-98
GAO decision sustaining
Ervin & Associates protest of the award of an accounting services
task order to Gardiner, Kamya & Associates. The RFP was issued
2/17/95. GAO finds that the task order is beyond the scope of the
contract and that HUD should have conducted a competition for the
acquisition.
23-Mar-98
At PC Forum, Fitts sits
next to Goldman Sachs’s chief of staff and finds out that Goldman
is addressing "unexpected events," and may have to cancel
its IPO for unexplained reasons. Shortly thereafter, Goldman announces
that is planned initial public offering is postponed.
23-Mar-98
First Report of Co-Special
Masters Irving Pollack and Laurence Storch concluding, among other
things, that computers at Hamilton’s office could be released. Susan
Gaffney, HUD IG v. Hamilton Securities Inc., et al (1:98-MS-0092)
26-Mar-98
Ervin & Associates
submits six Freedom of Information Act requests seeking of information
regarding the initiative to privatize the single family real estate
owned disposition process, Kerry Company and its involvement in
the "Beekman" project, task orders awarded for services related
to Portfolio Reengineering or Mark to Market initiatives, the final
report issued by the National Academy of Public Administration due
on March 1, 1998 and contracts for the production of the report.
26-Mar-98
Judge Sporkin issues
an order in the Gaffney Petition to Enforce case directing that
all documents filed under seal remain under seal with the exception
of the Court’s March 6 order. In the same case, Gaffney files a
motion for TRO and preliminary injunction and a petition for summary
enforcement of administrative subpoenas, a declaration and 37 exhibits.
31-Mar-98
Ervin & Associates
submits a Freedom of Information Act request seeking information
regarding Harvard University John F. Kennedy School of Government
contracts to train participants in the "Community Builders Fellowship"
program and involvement of former Assistant Secretary and FHA Commissioner
Nicolas Retsinas in the training program.
Mar-98
Goldman Sachs announces
its planned initial public offering is postponed.
Mar-98
Date of the closing/as
of pricing date for the Franklin/BBT merger. (Hamilton’s Bank)
Mar-98
Newt Gingrich sabotages
campaign reform in the House.
1-Apr-98
HUD Inspector General
Susan Gaffney testifies before the House Subcommittee on Housing
and Community Opportunity (chaired by Congressman Rick Lazio) on
Single Family Housing and the Federal Housing Administration. She
explains that the Management 2020 plan assumes that management of
the huge single family portfolio will be assumed by contractors,
and that HUD does not have the resources to oversee such contracts.
She states, "A basic assumption of the plan is that the private
sector can purchase HUD’s pipeline of foreclosures and dispose of
properties quicker and cheaper. We are concerned that if privatization
plans don’t work as intended, HUD’s options are limited." She
states that HUD is seeking bids on management of the REO (real estate
owned) portfolio and hopes to sell 50,000 properties annually to
bidders and to share the savings with HUD. She notes that historically,
HUD has expended about 17% of market value in disposing of such
properties, while private market disposition costs range between
12% and 18% of market value. "We hope this solicitation is
successful, as there won’t be HUD staff available to return to the
old way of doing business."
1-Apr-98
Paula Jones suit thrown
out.
3-Apr-98
Lee Radek, Chief of the
Public Integrity Section, Criminal Division sends a letter to Thomas
J. Picard, Chairman, Integrity Committee, President’s Council on
Integrity and Efficiency c/o FBI stating his reasons why Susan Gaffney’s
conduct of the Hamilton investigation does not warrant a criminal
investigation, as requested by a Hamilton’s filing with PCIE. Hamilton
FOIAs the letter in the FBI files in 2000. All the reasons given
for Radek’s position are redacted.
10-Apr-98
Hamilton files a response
in opposition to Gaffney’s petition for summary judgment and for
summary enforcement of administrative subpoenas.
20-Apr-98
Gaffney files a motion
(consent) to extend time to April 27 to file a reply memorandum
in the PTE case. Judge Sporkin grants special master report and
Special Master’s request for reimbursement of $33,660 for 336 hours
of work and approves $2,000 in special master expenses
21-Apr-98
Susan Gaffney testifies
before the House Subcommittee on Government Management, Information
and Technology (chaired by Congressman Horn) regarding the Inspector
General Act of 1978. She mentions that the HUD OIG has committed
50% of investigative resources to violent crime (drugs) and mentions
her wish for statutory law enforcement powers (she currently has
it under two year rolling blanket deputation from the US Marshals)
and has requested statutory authority for asset forfeiture.
21-Apr-98
Hamilton files an exception
to the recommendation of the Special Masters in the PTE case filed
by Susan Gaffney.
22-Apr-98
The Hamilton "building
manager" affidavit is signed. This affidavit was provided by
a property manager to document an incident he witnessed during the
period that office was seized and personnel from Hamilton not allowed
in building to observe. According to the affidavit, HUD IG Counsel
Hetherton’s investigators had taken trash and emptied it into empty
bins, and then Ms. Hetherton took pictures of the now full bin.
Following the incident, Hetherton sent a letter to Hamilton’s attorneys
alleging that Hamilton was throwing out financial records subject
to subpoena.
22-Apr-98
Ervin & Associates
files Plaintiff’s First Request for Admissions (252 items).
22-Apr-98
Ervin issues subpoena
to Hamilton for documents.
25-Apr-98
Hillary Clinton testifies
on Whitewater; Webb Hubbell is indicted.
27-Apr-98
Second Special Master’s
Report is filed with the Court in the PTE case.
28-Apr-98
GAO decision in the matter
of Ervin & Associates stating that GAO will not consider the
allegation that HUD’s use of Section 8(a) program to meet its needs
for various types of services is unconstitutional. The solicitations
at issue were issued on November 21, 1997 for due diligence services
for HUD’s Housing Programs and comprehensive services for the Assistant
Secretary for Housing/FHA Commissioner. John Ervin represents Ervin
and Shari Weaver and Michael Farley of HUD OGC represent HUD. GAO
denies the protests.
28-Apr-98
Gaffney files a reply
to Hamilton’s opposition to the petition for summary enforcement
of administrative subpoenas in the PTE case. She also files a response
to Hamilton’s exception to the Special Master’s recommendation.
30-Apr-98
GAO decision in the matter
of the Ervin & Associates protest of the award of task orders
for (1) operations analysis of HUD’s Office of Housing and (2) management
studies and budget formulation for HUD’s portfolio reengineering
program on the basis that the task orders are beyond the scope of
the management studies contracts. The original solicitation was
issued July 12, 1995. Ervin was found to be technically unqualified
for the contract. The seven firms awarded the contract were Booz,
Allen & Hamilton, Ernst & Young, Abacus Technology, Anderson
Consulting, Maria Elena Torano Associates, Soza & Company and
Price Waterhouse. GAO denies the protests.
30-Apr-98
Judge Sporkin issues
an order directing that Hamilton designate each particular document
for which a claim of A/C privilege is made; for electronic records
they may designate for future review by the Special Masters; specific
tapes or disks that concern A/C communications; directing that government
personnel shall not disclose Hamilton’s proprietary information
to non-government personnel in the PTE case.
May-98
The Clinton Administration
issues a report re Nazi wealth preservation by the Swiss.
May-98
Janet Reno asks for an
Independent Counsel to investigate the Secretary of Labor, Alexis
Herman.
1-May-98
CIA Inspector General,
Frederick P. Hitz resigns from the CIA and joins Princeton University
in a chair endowed by Goldman Sachs & Co: the John L. Weinberg/Goldman
Sachs and Company Visiting Professor; Director of the Project on
International Intelligence.
4-May-98
Thomas J. Pickard, Chairman
of the President’s Council on Integrity and Efficiency, advises
Hamilton that (1) it has completed its review of Hamilton’s PCIE
complaint (2) it referred the complaint to the public integrity
section of the DOJ for a determination whether the allegations,
if proven, would constitute violations of federal criminal law that
would be considered prosecutable, (3) the DOJ advised that the complaint
did not provide sufficient information to warrant a criminal investigation
and (4) the PCIE would take no further action concerning the matter
and, thus, the file is in a closed status.
4-May-98
Susan McDougal is indicted
again.
.
6-May-98
David Jay Gottesman files
a notice of attorney appearance for the USA in the Hamilton Court
of Claims case against HUD and files a motion to extend time to
respond to the complaint to June 12, 1998. An order to this effect
is granted the next day.
12-May-98
Judge Sporkin dismisses
the Temporary Restraining Order case in the matter of Hamilton
Securities Group, Inc et al v. US Department of HUD, et al. (1:98-CV-0036).
(See 3/3/98 Entry)
12-May-98
Hamilton files exceptions
to the Second Special Master Report with the court in the PTE action.
15-May-98
Gifts to the DNC are
tied to the Chinese government, according to a NY Times article
about Johnny Chung; articles on waiver for Schwartz of Loral and
Chinese contributions for the rest of May.
26-May-98
Initial Certification
of Compliance by Catherine Austin Fitts filed pursuant to March
6, 1998 order in Case 98-92 (filed under seal).
27-May-98
Hamilton files a response
to Judge Sporkin’s order that gives details about the Special Master’s
duties an compensation and providing that only the parties, the
Court and the Special Master and their agents shall have access
to the records held by the Special Master.
Jun-98
Dark Alliance,
by Gary Webb, is published by St. Martin’s Press.
2-Jun-98
HUD Inspector Susan Gaffney
testifies before the Senate Subcommittee on Housing Opportunity
and Community Development (Chaired by Senator Mack) concerning the
FHA Financial Statement Audit Report on Internal Controls and HUD
2020 Management Reforms. She testifies about FHA oversight and "recent
plans to revise various FHA operational methods." She reports
that the biggest change in staffing has been the reduction in single
family staffing from a level of 2,700 in 1994 to a projected level
of 759 by the end of 1999. She says the downsizing reflects single
family note sales and assumes the use of rapidly developing technology
and increasing reliance on private sector contracting to take over
functions previously performed by HUD staff. She reports that all
single family loss mitigation activities will be consolidated in
the Oklahoma City office. She states that pending the operation
of the Real Estate Assessment Center, HUD’s Office of Housing has
no mechanism to review financial statements or conduct inspections.
She says that a recent audit of the Section 203K program found that
1/3 of the borrower data on the CHUMS system to be incorrect. She
reported that a huge effort was under way at HUD to "scrub
data." Hamilton played an integral role in the "scrubbing"
of data for the Office of Housing.
3-Jun-98
Judge Sporkin orders
the payment of $10,000 fees and expenses to the Special Master in
the PTE case.
5-Jun-98
HUD Inspector General
Susan Gaffney testifies before the House Subcommittee on Human Resources,
Committee on Government Reform and Oversight (chaired by Congressman
Shays) on HUD Contracting: Vulnerabilities Management and Proposed
Solutions and the September 30, 1997 report titled "HUD Contracting."
Among other things, the IG testifies that "In the information
technology area, HUD’s reliance on contractors is virtually total"
… and "information technology contracts represent the highest
dollar amount of contracting in HUD." She says she estimates
that HUD contracting in the areas of single family property disposition,
physical inspections of multifamily and public housing and Section
8 contract administration could easily exceed $1 billion per year.
5-Jun-98
Housing Affairs Letter
reports that Secretary Cuomo and the OIG agree that HUD is taking
major steps to prevent irregularities, possible bid-rigging and
other abuses in procurement and contracting. Gaffney and new HUD
procurement officer Stephen Carberry, in testimony before House
Government Reform and Oversight Committee, outline efforts by the
Department to eliminate deficiencies that led to ongoing DOJ criminal
investigation of questionable procurement and contracting practices.
In another article in the same issue, Gaffney is quoted as saying
she wouldn’t buy FHA stock if the agency were publicly traded on
Wall Street. Congressman Mack then questions why KPMG gave FHA an
unqualified opinion on its financial statements in 1997. A KPMG
spokesman comments that the 1998 financial statements may not get
a clean opinion unless FHA complies with the Federal Credit Reform
Act of 1990.
5-Jun-98
Pursuant to a congressional
request, GAO discussed the Department of the Treasury's implementation
of the administrative offset provision of the Debt Collection Improvement
Act (DCIA) of 1996, focusing on: (1) the status of referrals by
agencies of delinquent nontax debts to Treasury for administrative
offset; (2) actions Treasury has taken and plans to take to include
all eligible federal payments in the administrative offset program;
and (3) actions Treasury has taken, or plans to take, to consolidate
the administrative, tax refund, and federal salary offset programs.
10-Jun-98
Judge Sporkin orders
the Special Masters to execute a lease for storage space and that
the government shall pay rent therefore in the PTE case.
12-Jun-98
The Government files
a Motion to Dismiss for lack of subject matter jurisdiction in the
Court of Claims case filed by Hamilton.
17-Jun-98
Deposition of Dolores
Ammons-Barnett (four Volumes, 1069 pages).
20-Jun-98
The HUD IG testifies
before the Senate Subcommittee on Housing Opportunity and Community
Development, chaired by Connie Mack, regarding the FHA Financial
Statement Audit Report on Internal Controls and HUD 2020 Management
Reforms. KPMG Peat Marwick had performed the audit of FHA for the
1997 FY. She reports that as the result of previous audits by her
office, a new Chief Procurement Officer had been hired and major
contracting reforms were anticipated. She also reported that the
National Academy of Public Administration had recently begun a detailed
review of the HUD procurement system. HUD had only recently hired
a Chief Information Officer in accordance with the requirements
of 1996 legislation, and his authority and responsibility and placement
within the organization had not yet been articulated.
22-Jun-98
Judge Sporkin orders
that $9,800 in expenses be paid to the Special Master in the PTE
case. Two days later the judge issues an order responding to the
Co-Special Masters.
25-Jun-98
Susan McDougal is freed
from prison.
25-Jun-98
Hamilton files a response
to the motion to dismiss the Court of Claims case.
26-Jun-98
Hamilton’s filing in
the Court of Claims seeking amounts owed by HUD. Claude Goddard
represents Hamilton.
Jul-98
The Webster Hubbell tax
indictment is thrown out.
Jul-98
There is so much harassment
activity around Fraser court that Fitts becomes seriously concerned
that an attempt will be made to seize the remaining Hamilton server
by means of an illegal break-in or federal asset forfeiture set
up. The server is moved to Hamilton’s law firm for safekeeping.
Jul-98
Joe Head, President of
Hamilton's bank, Franklin National Bank, told Hamilton's accountants,
Arthur Anderson, incorrectly, that Hamilton owed the bank more than
the amount of the Federal income tax refund as reflected in the
return that Arthur Andersen was preparing. In response to these
assurances, Arthur Andersen agreed to cause AA to receive the refund
directly and turn over the entire refund to the bank. In connection
with the auctioneer's and bank’s refusal to give Hamilton final
accountings and the bank's admission that it had given confidential
information on Hamilton to Tucker, Flyer & Lewis, a large client
of the bank, questions continue about the relationship between the
bank, its merger with BBT and possible efforts to undertake a seizure
of Goldman's assets.
Jul/Aug-98
Hamilton’s bank exhibits
strange behavior, provides inside information to hostile attorneys
harmful to the bank’s and Hamilton interests, lies to auditors about
what is owed, refuses to provide a loan accounting statement to
Hamilton and tries to grab tax refund money not owed to it. The
bank then hires two experienced workout partners from Arnold &
Porter. The bank officer later informs Fitts that he had told the
bank chairman that this would not scare Fitts as "Arnold &
Porter partners would not scare her----people show up at her house
with guns and stuff." In late October, a loan workout proceeds
after the bank’s chairman investigates unexplained actions by the
bank President. The bank continues to this day to refuse to provide
Hamilton with an accounting.
Jul-98
Federal Defendant’s Answers
to Plaintiffs’ First Set of Interrogatories is filed in the Bivens
action. In this set of interrogatories, HUD admits that a series
of attorneys in the Office of General Counsel, as well as two outside
attorneys (Dick Dunnells and an attorney from Hunton & Williams)
were notified of the existence of the optimization error and consulted
regarding it by Kathy Rock during January – March, 1997. Undated,
but apparently filed at about the same time, is Federal Defendants’
Answers to Plaintiffs’ First Set of Requests for Admissions, which
is filed by Ruth Harvey and Raymond Larizza under the signature
name of Frank W. Hunger, Assistant Attorney General.
7-Jul-98
The HUD OIG issued a
subpoena duces tecum to Citibank NA for access to Catherine Austin
Fitts' personal financial records.
10-Jul-98
Status hearing in the
qui tam lawsuit setting a further status call for 11/16/98. The
transcripts for the hearing indicate that AUSA Anthony Alexis, Daniel
Hawke, Bernard Olieniacz and Judith Hetherton attended the hearing.
Tony Alexis tells Judge Sporkin, "Ms Heatherton from HUD is, along
with Dan van Horn, and it's like pulling teeth, even with the special
masters, in helping to try to get all the documents, and my understanding
is they don't even have the documents to even begin the review.
So HUD hasn't even begun the review of the documents." Hetherton
points out that they do have some documents, and then they tell
the judge that what they don’t have is the electronic documents.
In fact, Hamilton turned over all electronic documents it believed
were responsive to the original subpoena in 1996. Alexis also reveals
that Goldman Sachs is about to go public. He says, "We are
at a critical phase in terms of actually interviewing people. I
don’t want to have the government’s infomatter [sic] on this
matter at this particular time, because one of the defendants, Goldman
Sachs, is about to go public. You know, the last thing we want to
do is have some kind of negative impact on the stock."
10-Jul-98
The government files
a response to Hamilton’s opposition to Motion to Dismiss in the
Court of Claims case.
14-Jul-98
Judge Sporkin issues
an order for the payment of $16,600 in expenses to the Special Master
in the PTE case.
16-Jul-98
Clinton nominates John
D. Hawke, Jr., currently Under Secretary for Domestic Finance, as
Comptroller of the Currency. Hawke is a former Senior Partner at
Arnold & Porter, where he headed the financial institutions
practice and served as Chairman of the firm from 1987 to 1995. He
served as General Counsel of the Federal Reserve from 1975-78.
7-29-Jul-98
Wrangling takes place
on the Monica Lewinsky case; secret service agents are called to
testify; claims of attorney-client privilege are challenged.
13-Jul-98
International Monetary
Fund announces it will provide $12.5 billion in loans to Russia;
during July and August, an average of $3.7 billion per day is deposited
from Russia into Bank of New York correspondent banks.
13-Jul-98
The HUD OIG issued a
subpoena duces tecum to Morgan Guaranty for access to Catherine
Fitts' personal financial records. Fitts did not receive notice
from the government about the subpoena until September of 1998.
21-Jul-98
Fitts files a motion
for order pursuant to customer challenge provisions of the Right
to Financial Privacy Act of 1978 in response to the HUD OIG subpoena
of her personal Citibank NA financial records. [C. Austin Fitts
v. US Department of HUD (1:98-MS-00262), US District Court,
District of Columbia, Judge Stanley Sporkin]
31-Jul-98
Deposition of Bill Richbourg
by Ervin’s counsel in Ervin v Dunlap et al – four volumes (945 pages
of transcript) + 85 exhibits.
When the Qui Tam is unsealed
in May 2000, Hamilton learns that Ervin alleges that Richbourg is
the basis for allegations re insider trading. In his deposition
for the Bivens case in July 1998, Richbourg says he knows of no
wrongdoing on the loan sale. Memos provided by Ervin in 2000 regarding
his basis for claiming that Cargill and First Financial of Waco/J-Hawk
were the basis of bid rigging allegations combined with affidavit
provided by Cargill to Hamilton combined with Richbourg’s deposition,
indicate that DOJ had ample reasons to know in 1996 that Ervin’s
allegations were unfounded.
Aug-98
Goldman Sachs partners
vote approval for the Goldman IPO; AIG agreed to buy Sunamerica.
6-Aug-98
House Government Reform
and Oversight Committee recommended that Attorney General Reno be
held in contempt of court in connection with fundraising hearings.
12-Aug-98
Swiss banks agree to
compensate Holocaust victims with $1.25 billion.
17-Aug-98
Clinton testifies, admitting
to "inappropriate behavior."
25-Aug-98
Judge Sporkin orders
$10,800 in expenses be paid to the Special Master in the PTE case.
26-Aug-98
A preliminary inquiry
into Gore’s role in fundraising is begun by DOJ.
Aug/Sept-98
Long Term Capital Management
suffers significant trading losses trigged in part by Russian economic
situation; with Goldman in the lead of a rescue package, the company
struggles to deal with a complete write down of equity reported
to be in the amount of $4.7 billion.
Sep-98
Catherine Austin Fitts
contacts UniCor, the DOJ proprietary company that markets prison
labor to federal agencies. Fitts speaks to the head of the data
servicing division, which is implementing a plan almost exactly
like Edgewood Technology Services, including training in the area
of Geographic Information Systems products. He says his business
is growing like gangbusters. The parallels between the UniCor business
plan and Edgewood Technologies are so strong that Fitts wonders
if Ford and Nordheimer have given the data servicing business plan
to DOJ after Fitts declined to promote the plan to DOJ with them.
They had taken the position that the federal government would not
want data servicing businesses in residential neighborhoods, just
in prisons. The DOJ website also indicates that that DOJ is marketing
place based software to local police.
Sep-98
Goldman Sachs said it
would shelve its plan to go public.
Aug-Sep-98
The IRS sends its refund
check directly to Hamilton. As a result of a number of factors---including
the bank’s refusal to provide an accounting; its misrepresentations
to Hamilton’s accounting firm about what is owed regarding IRS funds
that the accounting firm intended to turn over to the bank; and
its disclosure of inside information to Tucker, Flyer (Ervin’s counsel)---
Hamilton does not pay the bank.
Sep-98
Democratic fundraiser,
Mark Jimenez, a Miami businessman, was indicted on 17 counts of
illegal contributions to the 1996 Clinton-Gore campaign and other
races.
2-Sep-98
Hamilton’s attorneys
inform the Court in the PTE case that they have changed their address
to Drinker, Biddle & Reath.
3-Sept-98
Ervin & Associates
amends the Qui Tam filing to add allegations developed since the
case was filed in June 1996. Transcripts unsealed in 2001 from the
qui tam hearings reveal that DOJ developed the filing with information
produced in government investigations after the original filing,
which—along with the Bivens case---DOJ indicates was they also developed
in partnership with Ervin and his attorneys.
8-Sep-98
Reno begins a 90-day
preliminary investigation into Clinton fundraising related to soft
money contributions.
8-Sept-98
Reno announces that she
has decided against seeking an independent counsel following a previously
undisclosed preliminary investigation of Housing and Urban Development
Secretary Andrew M. Cuomo. Cuomo's former business partners in a
Florida thrift institution had accused him of conspiring to influence
federal regulators in an effort to drive them out of business, allegations
that Reno rejected. In court documents, Reno said she had "determined
that there were no reasonable grounds to believe that further investigation
was warranted and that, therefore, no independent counsel need be
appointed."
Not only did Reno exonerate
Cuomo, she decided that the Justice Department would represent him
and two other federal officials, including Nic Retsinas, in a lawsuit
filed the previous month by the owners of Oceanmark Bank. They claim
that Cuomo and his fellow investors conspired to seize control of
the troubled $60 million thrift, and that Cuomo enlisted two allies
at the Treasury Department's Office of Thrift Supervision to help
them. (One of these officials was Nic Retsinas, the FHA Commissioner
at HUD who also served as Acting Head of OTS).
8-Sep-98
Third report of the Co-special
Masters is filed in the PTE case.
9-Sep-98
Starr presents his case
for the impeachment of Clinton.
15-Sep-98
Primary season nears
an end; Anthony Williams wins the DC Democratic mayoral primary.
18-Sep-98
Judge Sporkin orders
the payment of $7,800 in expenses to the Special Master in the PTE
case.
21-Sep-98
Fitts files a motion
for a protective order pursuant to customer challenge provisions
of the Right to Financial Privacy Act of 1978 in response to the
HUD OIG subpoena of her personal Morgan Guaranty financial records.
[C. Austin Fitts v. US Department of HUD (1:98-MS-00347),
US District Court, District of Columbia, Judge Stanley Sporkin]
21-Sep-98
Hamilton files a motion
for leave to conduct discovery and a motion to unseal the record
in the PTE case
24-Sep-98
The HUD OIG files its
status report in Susan Gaffney, HUD IG v. Hamilton Securities
Inc., et al (1:98-MS-0092)
25-Sep-98
A motion hearing is held
with Judge Stanley Sporkin in C. Austin Fitts v. US Department
of HUD, (Misc. No. 98-262) to determine if the government has
the right to access Fitts' personal Citibank bank records. Nothing
substantive is accomplished during the hearing because Judge Sporkin
denies receiving necessary filings needed to rule from the Defendants
{the government} even though his [Sporkin’s] law clerk acknowledge
that the filings were received and Hamiltons attorneys have a receipt
for delivery.
25-Sep-98
Susan Gaffney files a
response to Hamilton’s motion to unseal, a status report and a response
in opposition to motion for leave to conduct discovery (with 7 exhibits)
in the PTE case.
30-Sep-98
Filing of Joint Statement
of Petitioner and Respondent Concerning Pending Issues Awaiting
Resolution by the Court. (Misc. No. 98-92., the PTE case)
1998
Hamilton is told that
Jim Martin, lead HUD IG auditor assigned to the investigation has
moved over to join the HUD enforcement center.
1-Oct-98
Beginning of federal
fiscal 1999 year. HUD is not able to produce certified financial
statements for this year, making $59 billion of adjustments in the
effort to do so.
1-Oct-98
Joe Head of Franklin
National Bank returns Hamilton’s calls and is referred to Hamilton’s
outside counsel.
1-Oct-98
Federal Fiscal Year 1999
begins; in March 22, 2000 testimony, the HUD OIG refuses to certify
the HUD financials saying that $17 billion of adjustments were required
for the opening balance from FY 1998 and $59 billion of adjustments
were required for FY 1999.
1-Oct-98
HUD files a notice of
filing in camera material in 98-MS-347 (one of the Right to Privacy
cases brought by Catherine Fitts). Fitts and HUD file a joint statement
concerning pending issues awaiting resolution by the court.
1-Oct-98
Joint Statement is filed
by Gaffney and Hamilton and Fitts concerning pending issues awaiting
resolution by the Court in the PTE case.
6-Oct-98
Fitts files a response
(oppositions) to in camera material in the right to Privacy case
98-MS-347.
8-Oct-98
One hour after Henry
Hyde’s Committee votes to move forward with impeachment hearings,
CIA IG Fred Hitz's report is quietly released/posted on the CIA
website confirming long-standing allegations of cocaine trafficking
by Nicaraguan Contra forces. Reagan-Bush Adminstration's protection
of these drug operations and tracking drug trafficking and the money
laundering directly to Reagan's National Security Council, overseen
by Oliver North.
8-Oct-98
Hamilton files Respondents’
Reply to Petitioner’s Opposition to Motion for Leave to Conduct
Discovery in C. Austin Fitts v. US Department of HUD (Misc.
No. 98-262) in the US District Court for the District of Columbia.
9-Oct-98
Judge Sporkin grants
motion to unseal the record and issues an order establishing a filing
schedule for various motion responses and replies in the PTE case.
Hamilton files a reply to Gaffney’s response to motion for leave
to conduct discovery.
10-Oct-98
Judge Sporkin orders
partial record unsealed in Gaffney v THSG and HSAS, Misc.
No. 98-92. (the PTE Case)
13-Oct-98
Hamilton files Hamilton
Securities’ Response Concerning the Protection of Proprietary Information
in Misc. No. 98-92 (the PTE Case) , in the US District Court for
DC., Filed under seal.
13-Oct-98
GAO decision in the matter
of Ervin & Associates where Ervin alleged that the agency (HUD)
improperly evaluated Ervin’s proposal for due diligence services
in connection with a November, 1997 RFP to facilitate the sale or
restructuring of HUD-held or insured single family and multifamily
and Title I home improvement and manufactured housing loans. GAO
found that the proposal was properly excluded from the competitive
range as not having a reasonable chance of being selected for award
in view of the agency’s receipt of significantly higher-rated, lower-cost
proposals. Ervin’s total proposed cost for sample task orders was
40-62% higher than the total estimated costs proposed by several
firms whose proposals were rated technically superior. Specifically,
the Technical Evaluation Panel found that Ervin did not have demonstrated
experience in performing due diligence on transactions with various
listed criteria, including representation of both buyers and sellers,
including private and public entities; real estate or real estate
based assets similar to those being offered; transactions substantially
equivalent in structure to those contemplated under the contract
(i.e., whole loan sales, securitized transactions, "N-series"
debt-equity transactions, single asset auctions, negotiated transactions);
transactions substantially equivalent in assets to those contemplated
under the contract (i.e., transactions with multiple, complex, nonperforming,
subperforming, and/or performing residential, single and multifamily
and commercial assets); and varying levels of rent subsidies and/or
with substantial low and moderate income residents. Ervin represented
himself, and Virginia Kelly Stephens of HUD OGC represented HUD.
Stephens also represents HUD in connection with Hamilton’s lawsuit
against HUD in the Court of Claims.
14-Oct-98
Hamilton files Hamilton
Securities’ Supplemental Opposition to the Petition for Summary
Enforcement, Responding to Issues Raised in OIG 9/24 Status Report
and Reiterating its Request for Leave to Conduct Discovery.
15-Oct-98
Clinton and Congress
agree on a federal budget.
6-Oct-98
Hamilton files its HUD
contract wind-up claim.
16-Oct-98
HUD files Federal Defendants’
Answers to Plaintiffs’ First Set of Requests for Admissions in Bivens
case.
16-Oct-98
Gaffney files a Motion
(consent) to extend time to file her reply concerning the protection
of proprietary information in the PTE case. Another motion to extend
time is filed on October 20.
16-Oct-98
Ervin files Plaintiffs’
Second Request for Admissions (412 items, 23 exhibits) in Ervin
v. Dunlap et al case.
16-Oct-98
Tucker, Flyer & Lewis,
Ervin & Associates’ counsel, responds to DBR’s request to specify
documents believed to be responsive to Ervin’s April 22, 1998 subpoena
to Hamilton, but not previously produced to Jenner & Block.
18-Oct-98
Hamilton files Hamilton
Securities’ Supplemental Opposition To The Petition for Summary
Enforcement addressing issues regarding (1) electronic records and
financial records, (2) OIG has no basis for insisting on additional
electronic records because it has not reviewed the records already
available to it, and (3) Hamilton’s privilege claims. Misc No. 98-0092
19-Oct-98
HUD files a reply to
Fitts’
opposition to the filing in camera in the Right to Privacy case.
21-Oct-98
Gaffney files a reply
to petition concerning the protection of proprietary information
in the PTE action.
28-Oct-98
Gaffney files a motion
to extend time to November 4 to reply to remaining aspects of Hamilton’s
September 25 status report in the PTE case. Judge Sporkin grants
the order on October 30.
4-Nov-98
Gaffney files a motion
to extend time to October 12 to reply to the remaining aspects of
the PTE status report. Judge Sporkin grants the motion on November
12.
5-6-Nov-98
Congressional elections
take place; the weekend before the elections, HUD’s Operation Safe
Home does two high media exposure drug sweep swats in Boston and
San Francisco. Many innocent people complain.
7-Nov-98
Schumer defeats D’Amato
in New York; Anthony Williams is elected Mayor of DC.
12-Nov-98
Declarations of Richard
Holmes and Jack Rogers filed in Support of Inspector General’s Petition
for Summary Enforcement of Subpoenas, Defending OIG’s Actions Described
in Raul Luddert’s Affidavit. Misc 98-92 (filed under seal). Gaffney
files a reply to the petition for summary enforcement of administrative
subpoenas.
13-Nov-98
Hamilton Counsel attends
a meeting at Department of Justice.
14-Nov-98
Connie Mack, Chairman
of the Subcommittee on Housing Opportunity and Community Development,
sends HUD a letter consisting of over 16 pages and requesting information
regarding HUD note sales bid analyses.
16-Nov-98
Judge Sporkin orders
the payment of $1,280 in expenses to the Special Master in the PTE
case.
19-Nov-98
Status hearing in the
qui tam case before Judge Sporkin. Tony Alexis, Dan Hawke and Wayne
Travell are in attendance. Dan Hawke, counsel for Ervin, makes a
number of misrepresentations to the court, with no correction by
anyone else present. Among the misrepresentations are:
- Hawke represents that
HUD had no knowledge that BlackRock was a subcontractor to Hamilton.
He says "HUD knew that they [BlackRock] were buying. What
HUD didn’t know was is that Blackrock was acting as a subcontractor
to Hamilton. And they were working out of Hamilton’s offices while
the auctions were being planned that Blackrock --." The fact is
that over a period of many months, HUD attended regularly held
meetings also attended by BlackRock and that both HUD and its
outside counsel, Dewey Ballantine, knew that BlackRock was a subcontractor
and in fact HUD consented to it. BlackRock advised HUD on a multifamily
transaction that it did not bid on. It bid only on single family
transactions. It maintained offices separate from Hamilton in
Washington.
(2) Hawke represents,
"In that [WOM] auction, the winner was Goldman Sachs walked
away [sic] with $164 million in mortgages that they should
not have won. Hamilton knew it, and C. Austin Fitz [sic}, the
president, submitted an affidavit to you in which she said she
didn’t know or that Hamilton Securities did not know of the
error until a year after, in fact, they really did." The
fact is that the only two people Hamilton later could determine
knew about the error did not disclose it to anyone else on the
board of directors or to Fitts. Also, Hawke failed to tell the
judge that the second optimization error resulted in Goldman
Sachs LOSING a great deal more than $164 million in mortgages.
- Hawke indicates that
they have reason to believe there are emails between Blackrock
and Hamilton implicating them in a conspiracy and that these are
the very documents that DOJ has been unable to obtain from the
Special Master. Hawk continues, "Blackrock didn’t have a
contract with HUD. It’s only relationship with HUD was as a bidder
in the auctions. So the reason why the electronic files that the
special master is reviewing and all the documents that the special
master is looking at, we believe there is a treasure trove of
… [conspiratorial] communications."
An indication of what
"they are after" in the investigation is hinted at in
Hawke’s response to Sporkin’s question "Has someone gone back
to them, Goldman, to get the money [i.e., the $164 million from
the WOM sale they got in error] back?" Hawke says, "Well,
that’s what the qui tem [sic] action is for is to basically, --
is to – we believe that there were false claims presented in the
bid documents, and we believe that this was – the reason why no
one has gone back is because that was part of the scheme, that the
people who were involved with Hamilton and on behalf of HUD were
involved with covering that up."
25-Nov-98
Status hearing in the
PTE case is scheduled for this date (this appears to have been postponed
to December 3, even thought the record does not show a postponement).
1-Dec-98
Hamilton files a supplemental
memorandum in opposition to the petition for summary enforcement
of administrative subpoenas.
3-Dec-98
Status hearing before
Judge Sporkin in the PTE case.
4-Dec-98
In the matter of case
Misc. No. 98-262, C. Austin Fitts v. The United States Department
of HUD, Judge Sporkin's Order (1) denies Movant's opposition
to Respondent's filing of pleadings in camera; (2) denies the Movant's
request that Fitts be furnished with a copy of the Respondent's
in camera filings; and (3) denies Fitts’ Motion for Order pursuant
to customer challenge provisions of the Right to Financial Privacy
Act of 1978.
5-Dec-98
In the matter of case
Misc. No. 98-347, C. Austin Fitts v. The United States Department
of HUD, Judge Sporkin's Order (1) denies Movant's opposition
to Respondent's filing of pleadings in camera; (2) denies the Movant's
request that Fitts be furnished with a copy of the Respondent's
in camera filings; and (3) denies Fitts Motion for Order pursuant
to customer challenge provisions of the Right to Financial Privacy
Act of 1978.
9-Dec-98
Hamilton files a motion
to quash subpoena or for a protective order in the PTE case.
17-Dec-98
GAO decision in the matter
of Ervin & Associates where Ervin protests the exclusion of
its proposal from the competitive range under an RFP issued by HUD
for property inspection services in connection with HUD-held mortgages,
properties for which HUD acts as the Section 8 contract administrator
and properties owned by public housing agencies. GAO denies the
protest. Ervin represented himself. Bruce Kasson of HUD OGC represented
HUD.
18-Dec-98
Judge Sporkin issues
an order that the parties will split expenses of having the special
masters review assertions of privilege and non-responsiveness and
that the government shall pay for other work performed by the special
master; the 4/29/98 order is vacated.
21-Dec-98
Stearns Building Limited
Partnership v. The Hamilton Securities Group, Inc. (1:97-04955),
US Bankruptcy Court of Michigan was settled by Goldman Sachs and
the suit was dropped. Judge Graves dismissed the complaint filed
by Stearns against Hamilton with prejudice, but without costs.
23-Dec-98
Gaffney files a motion
to strike Hamilton’s motion to quash subpoena in the PTE case.
Jan-99
From The Wilderness
breaks the story of the October 8, 1998 CIA Inspector General impeachment
ploy.
Jan-99
American Spectator
runs an article on Andrew Cuomo’s past involvement with financial
fraud, including the role of Arco, now HUD’s largest multifamily
servicer.
5-Jan-99
District Court Judge
Sporkin's Order in the matter of Gaffney v. Hamilton 1:98-MS-0092,
(1) grants Gaffney's motion to strike, (2) grants Gaffney's motion
for protective order, (3) and strikes Hamilton's motion to quash
subpoena or in the alternative motion for protective order.
6-Jan-99
Hamilton files a response
to Gaffney's motion to strike the motion to quash subpoena and motion
for protective order in the PTE case.
13-Jan-98
Judge Sporkin orders
the payment of $5,800 in expenses to the special master in the PTE
case.
28-Jan-99
Ervin & Associates
submits a Freedom of Information Act request seeking information
regarding Ernst & Young contracts through GSA for work under
the HUD Mark to Market program.
29-Jan-99
A hearing is held in
the qui tam action before Judge Sporkin. Anthony Alexis, Judith
Hetherton, Daniel Hawke and Wayne Travell are in attendance. Alexis
requests a continuation of the seal for 90 days. Hawke agrees but
says he wants a conference in 60 days. The next hearing is scheduled
for March 29.
9-Feb-99
Federal Register publication
of 24 CFR Part 291 Disposition of HUD-Acquired Single Family Property;
Final Rule; SUMMARY: On May 29, 1998, HUD published for public comment
a proposed rule that would amend HUD's regulations for the disposition
of HUD- acquired single family properties.
18-Feb-99
Hamilton appeals District
Court Judge Sporkin's January 5, 1999 order striking Hamilton's
motion to quash subpoena or in the alternative motion for protective
order. [Susan Gaffney, HUD IG v. The Hamilton Securities Group,
D.C. District Court of Appeals, 99-5046.] On March 22, R. Craig
Lawrence, Daniel Van Horn and Wilma Lewis enter an appearance with
the court in this matter.
27-Feb-99
U.S. District Court Judge
Warren Urbom finds former Franklin S&L manager Lawrence E. King
guilty of numerous crimes committed against Paul A. Bonacci. Bonacci’s
story has been described by John Decamp in his book "The
Franklin Cover U", including an appendix regarding William
Colby’s advice to DeCamp regarding DeCamp’s efforts to investigate
the use of pedophilia rings during Iran Contra to manipulate and
blackmail high level business and government leaders.
Mar-99
GAO affirms that HUD
remains on the "High Risk" agency list. HUD gets its "first
ever" clean audit opinion.
Mar-99
AEW is selected as Financial
Advisor for the Permanent Mark-to-Market
Program of the Office of Multifamily Housing Assistance Restructuring
(OMHAR). The Mark-to-Market program was created under Congressional
mandate to ensure the preservation of affordable housing; reform
the operation and improve the efficiency of federal rental housing
assistance programs; address the problems of financially and physically
troubled properties; and encourage owners to restructure loans while
limiting the cost to the government of the pertinent housing and
mortgage insurance programs. Over the course of the next several
years, OMHAR is expected to oversee activities related to the restructuring
of as many as 4,000 loans with principal balances of about $6.0
billion. AEW is also one of the largest shareholders in AIMCO, the
largest HUD landlord who will be the beneficiary of the policies
developed. As of the end of the year 2000, AEW owned 2.5 million
shares of AIMCO valued at $124.3 million.
12-Mar-99
The HUD Office of Inspector
General issues the first unqualified opinion regarding the financial
statements for the 1998 federal fiscal year. The audit was performed
by KPMG LLP.
15-Mar-99
Rosemary Lyons and Olivia
Woods file a Complaint for Damages, Injunctive Relief, and Declaratory
Relief against the Central Intelligence Agency, United States Department
of Justice, Estate of William Casey, Robert Gates, John Deutch,
George Tenet, Estate of William French Smith (former US Attorney
General), Edwin Meese, Richard Thornburgh, and Janet Reno for selling
or facilitating the sale of drugs in several Los Angeles communities.
23-Mar-99
HUD Inspector General
Susan Gaffney testifies before the Senate Subcommittee on Housing
and Transportation (chaired by Senator Allard) on Management and
Performance Issues Facing HUD and Nancy Cooper, District Inspector
General for the Southeast/Caribbean District testifies before the
House Government Reform Committee (chaired by Congressman Burton)
on Preliminary Results of the Audit of HUD’s Property Management
and Disposition Activities.
24-Mar-99
Judge Sporkin orders
the payment of $13,000 expenses to the special master in the PTE
case.
26-Mar-99
The General Accounting
Office reported to Attorney General Janet Reno that the Department
of Justice's Asset Forfeiture program has been designated a high-risk
area by the Comptroller General because it has been characterized
by mismanagement and internal control weaknesses. "Over the
years, we have reported on the existence of major operational problems
relating to the management and disposition of seized and forfeited
property that resulted in unnecessary losses to the government.
"
29-Mar-99
Ervin & Associates
submits a Freedom of Information Act request seeking comprehensive,
project by project information regarding HUD Mark to Market restructurings
and related databases.
29-Mar-99
A status hearing is held
before Judge Sporkin in the qui tam case. Anthony Alexis, Wayne
Travell, Dan Hawke and Judith Hetherton attend the hearing. Alexis
reports on the status of the investigation, "In terms of who we
actually want to interview, we’ve approached some people, but we’ve
come up against the proverbial stone wall, and there is no way that
at this particular time I can evaluate until we a) have some documents
and –" The judge asks what kind of a stone wall and Alexis
says, "They’re not going to talk, based on advice of counsel,
and we can’t give them immunity, because we may be giving the wrong
person immunity. And if I sit them down for a civil –" Alexis
says he doesn’t want to put someone in a deposition and have the
person invoke the fifth amendment. It appears that by "they" Alexis
is referring to Kathryn Rock, former HUD Comptroller, who had retained
counsel. Alexis asks for an additional 60 days. They schedule a
hearing the second day after Memorial Day.
29-Mar-99
HUD awards seven companies
a total of 16 contracts to handle most aspects of its property disposition
program across the country with respect to approximately two-thirds
of HUD's total inventory at the time. The contracts are to handle
foreclosed homes/single family properties as a result of growing
inventories from increased volumes and cancellation of loan sales.
Now, with no loan sales, government asset purchasers buy real estate,
not mortgages, and the mortgage files are not assigned. HUD estimated
that it would spend $927 million over a 5-year period for these
contracts.
5-Apr-99
Claude Goddard files
a notice of change of address with the Court of Claims when he joins
the law firm of Wickwire, Gavin.
5 Apr-99
Gaffney files a motion
for summary affirmance in the appeal of the PTE case.
16-Apr-99
Judge Sporkin issues
an order allowing the Special Masters to allow Hamilton to take
possession of Item 209 of the Special Master’s Inventory.
21-Apr-99
Hamilton’s attorney,
Michael McManus of Drinker Biddle & Reath, requests that the
PCIE reopen the file on Hamilton’s request that HUD IG Susan Gaffney
be investigated for conduct of the investigation. Letters are also
sent to Senator Fred Thompson, Chair of Senate Government Affairs
Committee, and Senator Dan Burton, Chair of House Government Reform
Committee. These letters contain detail regarding HUD’s destruction
of the Denver audit and persecution of the auditor who concluded
that allegations against Hamilton were unfounded. Copies are provided
to DOJ and GAO.
27-Apr-99
Judge Marian Blank Horn
denies the government’s motion to dismiss the Court of Claims Case
for lack of subject matter jurisdiction in a published decision.
27-Apr-99
Hamilton files an opposition
to Gaffney’s motion for summary affirmance and moves for a summary
reversal in the PTE appeal case.
April/May 1999 (Est)
Frank Hunger,
Al Gore’s brother-in-law, leaves the Department of Justice for private
practice. Hunger had been head of the Civil Division and was the
lead attorney on numerous of DOJ filings in connection with the
Ervin qui tam lawsuit.
5-May-99
Judge Marian Blank Horn
orders a joint status report deadline of 5/24/99 in the Court of
Claims case.
5-May-99
The sale of Fraser Court,
Catherine Austin Fitts’ home in Washington, is consummated, ending
a period of prolonged physical harassment and surveillance.
5-May-99
Gaffney files a reply
to Hamilton’s response to motion for summary affirmance and an opposition
to the motion for summary reversal in the PTE appeal case.
7-May-99
In the matter of Hamilton
Securities Advisory Services, Inc. v. The United States (98-CV-169)(the
Court of Claims case), the government files a motion to extend time
to respond to the complaint until May 27. This order is granted
on May 10. The government files an answer to and Counterclaim to
Hamilton's complaint alleging that Hamilton owes the government
for its losses.
7-May-99
Hamilton files a motion
to seal attachment B to Hamilton’s exception to recommendation of
the special masters regarding certain privileged documents. Hamilton
also files an exception to the recommendation of the special masters
regarding certain privileged documents in the PTE case.
May 12, 1999
Robert Rubin resigns
as Secretary of the Treasury. Soon thereafter he joins the board
of directors of LISC, a New York based national not-for-profit organization
active in the affordable housing area. Thereafter, he joins Citicorp,
where he heads the Executive Committee. (A key congressional staffer
informs Fitts during this period that they will not consider private
equity investment in communities. They want to see only equity investment
controlled by LISC and Enterprise).
12- May-99
Hamilton files a motion
to extend time to file a joint status report until June 9 in the
Court of Claims case. The judge grants the order and extends the
deadline to June 9.
17-May-99
Hamilton files a reply
to the response to the motion for summary reversal in the PTE action
appeal.
20-May-99
Hamilton files a Motion
to Unseal Qui Tam in Federal District Court for the District of
Columbia (United States ex. rel. vs. The Hamilton Securities,
Group, Inc. and Hamilton Securities Advisory Services, et al.
1:96-CV-1258 Sealed).
20-May-99
Mike McManus (Hamilton's
counsel) has a meeting with Dick Chapman, an Assistant US Attorney
in the Criminal Division in Washington, DC, in which McManus is
told that (1) DOJ has declined to prosecute Hamilton on the criminal
side and (2) a meeting with AUSA Tony Alexis will take place in
two weeks to report whether the civil investigation will be dropped.
In a subsequent meeting with Alexis, Mike is told that, so far,
none of the civil charges raised by Ervin have panned out, but it
is difficult to drop the investigation, given that other parties
are targets, too. Mike reports that Dan Burton replied to the DBR
letter by saying that the HUD OIG is authorized to conduct the investigation
of Hamilton.
21-May-98
Gaffney files a response
in opposition to the recommendation of the Special Master regarding
certain privileged documents.
25-May-99
Hamilton is informed
that Ervin seeks extension of the statute of limitations in connection
with certain allegations in the Bivens lawsuit and has threatened
to file suit against Rock, Chris Greer and others if the extension
is not granted. By the second week in June, Hamilton is informed
that Ervin has filed suit against him. Other named defendants include
Annette Hancock, Hamilton’s HUD Contract Officer and Kathy Rock.
25-May-99
The House Select Committee
on Intelligence holds a closed door hearing, purportedly on the
subject of the CIA and drugs in LA. Maxine Waters, the Congressional
member representing LA, is barred from the hearing. It turns out
that the hearing was, in fact, a hearing on Volume II of the report
of Inspector General Bromwich, which both houses of Congress had
promised would be public. Volume II purportedly includes disclosure
about the infamous "Memorandum of Understanding" or "MOU"
between the Department of Justice and the CIA in which Justice provided
assurances that agents of the CIA were not bound by obligations
of other federal employees to disclose evidence of illegality. The
hearing comes right after the delivery of the May issue of the From
the Wilderness newsletter, which includes an article by Catherine
Fitts accompanied by the HUD money map of South Central LA that
was used to illustrate the 1996 Boston Neighborhood Networks speech
that Fitts had made.
26-May-99
Recommendation of the
Special Masters is filed in the PTE case.
27-May-99
The government files
its answer to Hamilton’s complaint in the Court of Claims case and
makes a counterclaim against Hamilton.
27-May-99
Judge Sporkin orders
the payment of $13,200 to the Special Master in the PTE case.
28-May-99
Ervin files a complaint
and jury demand in US District Court. The named defendants are Chris
Greer, (represented by Richard Henry Gordin of Tighe, Patton &
Babbin); Kathryn Rock (represented by Robert Powel Trout of Trout
& Richards and Mary Hampton Mason of the Department of Justice
Torts Branch, Civil Division); Annette Hancock (represented by Mary
Hampton Mason and Paul Lawrence Knight); A. Delores Ammons-Barnett
(represented by Richard Henry Gordin and Mary Hampton Mason); George
Chabot (represented by Mary Hampton Mason and Paul Lawrence Knight);
Lawrence Gnessin (represented by Richard Henry Gordin and Mary Hampton
Mason); and unknown agents. Summonses are issued to the defendants.
30-May-99
Catherine Austin Fitts
writes a letter to Maxine Waters. No response was ever received.
1-Jun-99
Hamilton's counsel receives
a letter from Thomas J. Pickard, Chairman of the President’s Counsel
on Integrity and Efficiency ("PCIE") that Hamilton's complaint
about the HUD IG has been reopened. (IC #212)
2-Jun-99
Qui tam hearing before
Judge Sporkin. The transcripts of the hearing reflect the following
exchange: "Mr. Travell: Our allegations are that Hamilton
was in cooperation with the Wall Street merchant banks… and was
able to tip them with inside information which allowed huge blocks
of these mortgage notes to be sold at a fraction of their value.
… In several cases, the real winner was not awarded the contract,
and we know it because Hamilton’s admitted that much. They actually
awarded the contract to one of their favorite merchant banks, and
not to the real winner. The Court: Was there a quid pro quo?
Mr. Travell: We believe there is, Your Honor. The Court:
You don’t know where it’s at, though? Mr. Travell: Well,
that’s one of the things I think the investigation is trying to
crack. The Court: Well, I don’t even think they have touched
the surface on that, though. That’s the problem. Mr. Travell:
Your Honor, I have to defer to Mr. Alexis on that aspect of it."
The next hearing is scheduled for September 8. Hamilton has been
unable to obtain transcripts of this hearing or any subsequent hearings
that may have been held because the tapes of the hearings are unavailable.
Hamilton is trying to ascertain what hearings occurred and whether
the tapes are "missing."
4-Jun-99
Hamilton files suit alleging
tortuous interference with business relations and abuse of process
in DC Superior Court against John Ervin and Ervin & Associates.
[The Hamilton Securities Group, Inc v. Ervin and Associates,
et al, 1:99-CA-003864, Superior Court of the District of Columbia,
Judge Susan R. Winfield.]
4-Jun-99
The President’s Counsel
on Integrity and Efficiency reopens the Hamilton Gaffney complaint
file.
4-Jun-99
Judge Sporkin orders
payment of $3,000 of Special Master expenses in the PTE case.
9-Jun-99
Hamilton and HUD file
a Joint Status Report in the Court of Claims in which HUD maintains
that it needs at least a ten-month discovery period, which would
mean no trial date would be set until at least April 9, 2000. Hamilton
Securities Advisory Services, Inc. v. The United States, 98-CV-169
11-Jun-99
Ervin & Associates
files a response to Hamilton's motion to unseal the qui tam file
and the USA moves to extend time to 5/1/00 in which to file a supplemental
pleading. Hamilton learns of these after the file is unsealed in
April-May 2000.
14-Jun-99
AUSA Tony Alexis files
opposition to Hamilton’s Motion to Unseal Qui Tam and responds to
Hamilton's opposition to the AG's request for further extensions
of time. The filing contains many mischaracterizations and misprepresentations
apparently generated by Judith Hetherton, counsel for the OIG. Ms
Heatherton is a former Assistant US Attorney, with experience working
for the Iran-Contra special prosecutor and Charles Russ, former
DC US Attorney, DC Corporation Counsel, and currently White House
Counsel.
15-Jun-99
Hamilton files a Reply
to HUD’s Counterclaim in the Court of Claims. The Hamilton Securities
Group, Inc. v. The United States of America, 98-169.
15-Jun-99
GAO reports that loan
sales were positive for communities.
16-Jun-99
Hamilton files a Freedom
of Information ("FOIA") complaint with the affidavit of former field
auditor for HUD OIG who reviewed the loan sales for misconduct and
found none. [The Hamilton Securities Group, Inc v. US Department
of Housing and Urban Development, 1:99-CV-1563, US District
Court, District of Columbia, Judge Stanley Sporkin.] Stacy Ludwig
of the US Attorney’s office is listed as counsel for the government.
16-Jun-99
Hearing before Stanley
Sporkin on Holland & Knight attorney-client privilege issues.
17-Jun-99
Motion hearing is held
in the PTE case. Hamilton files a supplemental memorandum regarding
privileged documents.
18-Jun-99
Kathy Rock, Delores Ammons-Barnett,
and Lar Gnessin file motion to extend time to August 20 to answer
the complaint in the Ervin case ("Bivens #2"). Judge Bryant
grants the order on June 24.
21-Jun-99
The press reports the
filing of motions to suppress mistress tapes in Henry Cisneros’s
Case. A trial is scheduled for September.
21-Jun-99
The filing of Hamilton’s
response to Tony Alexis’s Opposition To Unsealing Of Qui Tam Case.
United States ex. rel. vs. The Hamilton Securities, Group, Inc.
and Hamilton Securities Advisory Services, et al. (1:96-CV-1258)
SEALED
24-Jun-99
Judge Horn issues an
order setting Notice of Compliance deadline to 8/3/99 for the parties
to file a joint stipulation of facts and issues of law and sets
a status conference for 8/10/99/
25-Jun-99
Ervin files a Notice
of Removal to Federal court in the DC Superior Court case Hamilton
Securities Group, Inc. v. Ervin and Associates, et al, 1:99-CA-003864.
Hamilton's lawsuit against Ervin is moved into US District Court
of the District of Columbia (Judge Stanley Sporkin).
25-Jun-99
Gaffney files a reply
to Hamilton’s response to memorandum re: privileged documents in
the PTE case.
30-Jun-99
The "Independent
Counsel Law" sunsets without re-authorization.
30-Jun-99
Hamilton files a Motion
to Remand in an attempt to return its lawsuit against Ervin to DC
Superior Court, where it was originally filed. [Hamilton Securities
Group v. Ervin and Associates, et al, 1:99-CV-1698, US District
Court, District of Columbia, Judge Stanley Sporkin.
1-Jul-99
The government files
a motion in the Court of Claims to reschedule the status conference.
On July 6, Judge Horn grants the motion and resets the status conference
for 8/17/99.
2-Jul-99
Hamilton's counsel receives
a letter from Bryan Saddler, Associate Counsel of the HUD IG, requesting
that the affidavit of the HUD Rocky Mountain audit leader be withdrawn
on the basis that it was not authorized by the IG in accordance
with applicable regulations. Case law provides, in fact, for an
exception in the case of a lawsuit against the Government.
2-Jul-99
A per curiam order is
filed granting the government’s motion for summary affirmance in
the PTE appeal case. Judges Williams, Randolph and Tatel.
13-Jul-99
Ervin files a motion
to extend time to July 23 to file a response to Hamilton’s motion
to remand in its case against Ervin.
13-Jul-99
George Chabot files a
motion to extent time to answer in Bivens #2 case. Judge Bryant
grants the motion on July 20.
19-July-99
GAO report confirms $2.2
billion of savings on loan sales program prior to its cancellation
in October 1997. In a later meeting with Judy England Joseph, head
of the group auditing HUD at GAO, she communicates that the calculations
of savings to taxpayers were, if anything, understated. This finding
disproves the HUD IG position that the HUD/OMB calculation of savings
of $2.2 billion was false.
19-Jul-99
HUD files a motion to
extend time to 8/2/99 to answer the FOIA complaint, which is granted.
20-Jul-99
Judge Sporkin issues
an order granting motion to seal attachment B to Respondents’ Exception
to Recommendation of the Special Masters re: privileged documents.
23-Jul-99
Ervin requests leave
to file Opposition to Hamilton's Motion to Remand and for Attorneys’
Fees ex parte and under seal. Hamilton Securities Group v. Ervin
and Associates, et al, 1:99-CV-1698.
23-Jul-99
Ervin files an opposition
to Hamilton's Motion to Remand, with portions redacted from Hamilton's
copy because it contains "sealed, non-public information relating
to the sealed matter" in the qui tam suit. Hamilton Securities
Group v. Ervin and Associates, et al, 1:99-CV-1698
24-Jul-99
The date of the Declaration
of Kathryn M. Rock.
27-Jul-99
Judge Sporkin grants
Ervin’s motion for leave to file opposition under seal in the Hamilton
case against Ervin.
28-Jul-99
The Government in the
Court of Claims case files a motion for leave to file a first amended
counterclaim.
28-Jul-99
Ervin files a motion
to extend time to file a response to the complaint in the Hamilton
action against Ervin. On the 30th, Hamilton opposes this
motion.
30-Jul-99
HUD files a motion to
extend time to 8/12/99 to file its answer in the FOIA complaint,
which is granted on 8/27/99.
2-Aug-99
Hamilton files Plaintiffs’
Opposition To Defendants’ Motion For Leave to File Opposition Brief
ex parte and under seal in the Federal District Court for the District
of Columbia. Hamilton Securities Group v. Ervin and Associates,
et al, 1:99-CV-1698
3-Aug-99
Hamilton alerts the PCIE
of the latest activities of the HUD IG. The letter states that Hamilton
filed a FOIA suit (The Hamilton Securities Group, Inc v. US Department
of Housing and Urban Development, 1:99-CV-1563 ) against HUD
to gain access to a favorable audit conducted on Hamilton by the
Denver Audit Office of Inspector General for HUD. In addition to
the complaint, Hamilton filed an affidavit of the lead auditor on
the audit team. July 1, 1999, Hamilton received a letter from Bryan
Saddler, Associate Counsel to the Inspector General, claiming that
Lead Auditor's affidavit was unauthorized and therefore must be
withdrawn. Hamilton's Counsel believes Mr. Saddler knew the position
advanced by the OIG in his letter is legally wrong, and further
that he must have known that prior to writing his letter. The Hamilton
letter to the PCIE further expresses concern about interference
with the Lead Auditor. (IC # 212)
3-Aug-99
Hamilton and the government
file a joint motion to extend time to file the joint stipulation
of facts and joint statement of issues of law and joint status report
until August 10. Judge Horn grants the motion on August 6.
6-Aug-99
Hamilton's attorneys
in its civil suit against HUD in the Court of Claims have a six-hour
meeting with David Gottesman regarding the joint admissions statement
requested by Judge Horne. Among other things, the Government's attorney
refuses to admit the loan sale credit subsidy calculations. Hamilton
Securities Group v. The United States of America, 1:98-CV-169,
US Court of Federal Claims
10-Aug-99
A Joint Stipulation of
Facts, Joint Statement regarding Issues of Law and Joint Status
Report are filed by Hamilton and the government in the court of
claims case. The government also files a Statement of Facts.
12-Aug-99
Daniel M. Hawke files
a notice of withdrawal of appearance for Ervin & Associates
in the qui tam lawsuit.
Aug-99
Charles Ruff resigns as White House Counsel and returns to private
practice at Covington & Burling.
12-Aug-99
Daniel M. Hawke files
a notice of withdrawal from the Hamilton case against Ervin. Ervin
files a surreply to Hamilton’s motion for remanding for further
proceedings and to collect attorney’s fees against Ervin.
12-Aug-99
The government files
a motion for leave to a portion of a memorandum of points and authorities
in support of its motion to dismiss/for summary judgment under seal
in the FOIA lawsuit. The motion is granted on 8/27. At that time
Judge Sporkin also orders that the declaration of R. Joseph Haban
shall be filed in camera.
16-Aug-99
Legal Times reports
that Abbe Lowell will join Manatt, Phelps in September. Charles
Manatt is the leader of the DNC. Since representing Hamilton in
its Motion for a TRO against HUD, Lowell has acted as counsel for
the House minority in connection with the impeachment of President
Clinton.
16-Aug-99
Hamilton’s FBI file,
received on a FOIA request in 2000, includes a document dated August
16, 1999 entitled "(Redacted) C. Austin Fitts AntiTrust Fraud
Against the Government" that concludes "Interviews of
BlackRock’s corporate officers, as well as those individuals who
worked on the sub-contract between Hamilton and Blackrock and those
directly involved in the note sales were completed. None of these
interviews substantiated any of Ervin’s allegations. Likewise, interviews
of employees, partners and owners of Goldman Sachs & Company,
Ocwen, Wilshire, National Security and others involved in the HUD
note sales failed to uncover any concerns, suspicions, or evidence
of collusion being involved in the sales. Even losing bidders did
not attribute their lack of success to collusion, or other bidders
having inside information. Interviews of HUD personnel involved
in the note sales, as well as interviews of former Hamilton employees
and sub-contractors were negative. All of the information obtained
during the course of this investigation was presented to Assistant
US Attorney Richard Chapman, United States Attorney’s Office, District
of Columbia and to Senior Trial Attorney Hays Gorey, Antitrust Division,
DOJ for a prosecutive opinion. Both AUSA Chapman and Senior Trial
Attorney declined prosecution in this matter."
17-Aug-99
Joint Status Conference
before Judge Horne in Court of Claims to hear arguments from parties
re: whether Hamilton should be permitted to file a motion for summary
judgment. The Government opposes this motion. Susan Gaffney,
HUD IG v. Hamilton Securities Group, Inc., 1:98:-MS-0092. The
judge returns Hamilton’s response to the government’s motion for
leave to file an amended counterclaim due to a technical rule-of-court
problem and it is refilled. The judge sets a joint status report
deadline for 9/3/99 and a status conference for 9/7/99.
18-Aug-99
The Government files
an amended counterclaim in the court of claims case.
20-Aug-99
Hamilton files a motion
(consent) to extend time to 9/7/99 to respond to the defendant’s
pending motions.
23-Aug-99
A Mandate is issued in
District Court of Appeals. A rehearing has to be rescheduled for
1:98-MS-0092 in District Court before a decision can be issued in
this case.
25-Aug-99
A certified copy of the
order filed in the USCA dated July 2, 1999 on appeal, affirming
the judgment of the USDC is entered.
30-Aug-99
Judge Sporkin orders
the payment of $4,500 in expenses to the Special Masters in the
PTE case.
31-Aug-99
Judge Horn directs the
Clerk’s Office to return Plaintiff’s separate statement of facts
for resubmission. The statement of facts is refiled on September
2.
3-Sep-99
Judith Hetherton, counsel
to the HUD OIG, takes early retirement. Hetherton was the attorney
responsible for efforts to pressure the Denver audit team and to
falsify evidence during the seizure of Hamilton’s offices. She was
a former Assistant US Attorney who had experience working for Charles
Ruff (former DC US Attorney, Iran Contra special prosecutor and
DC Corporation Counsel), in 1999 the White House Counsel. Bryan
Saddler, Deputy General Counsel to the HUD OIG, assumes her duties
with respect to the qui tam case.
3-Sep-99
Ervin & Associates
files an Amended Complaint in the qui tam lawsuit. Williams Adley
and Ocwen appear to have been added as defendants, since they are
not listed on the original 6/6/96 filing. Included as an exhibit
to the amendment is a 15-page Summary of Evidence provided to the
US Attorney's Office and the HUD Inspector General under the Continuing
Disclosure Obligations of 31 USC 3730(B)(2).
In addition to materials
provided by Hamilton and other contractors to HUD under their contracts
and publicly available information and press reports, Ervin lists
as evidence transcripts of anonymous telephone calls, the 1995 Asset
Strategies letter to Andrew Cuomo, an anonymous written message
from the HUD Connecticut State office on Helen Dunlap's ongoing
interference with HUD's contracting process, handwritten notes of
meetings and phone conversations with Bill Richbourg (who had, by
this date, stated in a deposition that he had no direct knowledge
of wrongdoing), "printouts from Ervin's intelligence system," a
letter describing anonymous phone message regarding Helen Dunlap's
anti-male animus, a transcript of anonymous phone message regarding
Hamilton's Democratic Party connections and $800,000 per month crosscutter
fee; a letter describing anonymous phone call alleging two instances
of forced subcontracting along with transcript of anonymous message,
a letter describing information received from Toni Moss regarding
bids being "rigged" for Blackrock, letter disclosing allegations
heard with regard to provision of EDS servicing tape to BlackRock,
relationships between Kathy Rock, BlackRock and Hamilton as well
as Hamilton's failure to make competitive range in the Financial
Advisor 2 procurement, letter allegng that Tim Ito (a reporter at
US News and World Report) has stated that Hamilton did not make
the initial competitive range in the FA #2 contract, correspondence
between USNWR and Hamilton received anonymously; letter alleging
that Ervin has been informed by Tim Ito that Ron Hughes is leaving
Williams, Adley, letter disclosing Tim Ito's inquiries into whether
BlackRock may have links to organized crime or money-laundering,
letter endorsing Judge Sporkin's suggestion to use SEC fraud investigators
instead of an outside consultant, letter received from Tim Ito regarding
BlackRock's sale of loans to Goldman immediately after the SF #2
sale and BlackRock's and Berkeley Federal's submission of "complimentary"
bids in the North Central sale indicating "collusion", letter alleging
GE Capital had access to the workings of the optimization model
before others, and a host of other "evidence."
An interesting item is
disclosure of a "copy of HUD termination letter to Hamilton, and
detail of implications of the termination; letter was leaked by
Howard Glaser in return for agreement not to run a story on Ernst
& Young's political contribution links to HUD contracts." Also
interesting is "letter passing on information received from Carl
Johnston (a reporter) regarding Nic Retsinas' testimony to Congress
that confidential information had been provided to one of the bidders
in the sale." Also disclosed is "letter detailing Hamilton Securities'
(Austin Fitts) efforts to undermine the IG investigation … Government
should seek a stay in Hamilton's litigation."
7-Sep-99
Henry Cisneros pleads
guilty to a misdemeanor and is fined $20,000 for lying to the FBI
about how much he paid his former mistress after a four- year investigation
by Independent Prosecutor David Barrett costing taxpayers an estimated
$10 million.
7-Sep-99
Hamilton files an answer
to the government’s amended counterclaim in the Court of Claims
case and a status conference is held. The judge thereafter issues
an order directing plaintiff to respond to interrogatories by 9/21,
defendant to file a status report by 1/7/00, parties to file simultaneous
briefs by 10/1/99, parties to file reply briefs by 10/15/99 and
scheduling a status conference for January 12, 2000.
7-Sep-99
Hamilton files a motion
(consent) to extend time to 9/17 to respond to defendant’s motion
to dismiss/for summary judgment and defendant’s motion for leave
to file in camera in the FOIA case. Judge Sporkin grants an order
to this affect on September 9.
9-Sep-99
Order by Judge Sporkin
in the qui tam lawsuit extending time to 11/8/99 for the US to intervene
in the qui tam lawsuit or notify the Court that it declines and
granting the ex parte application of the US and the seal is partially
lifted for the limited purpose of allowing the US to disclose to
Goldman Sachs and BlackRock Capital Finance LP the substance of
the allegations of the qui tam complaint, including the fact that
the US is investigating those allegations.
13-Sep-99
A Catherine Austin Fitts
interview with Tony Alexis and members of HUD OIG staff indicate
that there is no evidence of an understanding of loan sales, basic
of facts of issues, or effort to learn these on the part of OIG
personnel. For example, they admit they have not read any Loan Sale
Design books provided by Hamilton to HUD setting forth the procedures
followed on the loan sales. The interview reveals that the investigation
lacks any forethought or factual examination. It appears that turnover
on the investigation team has been high. Hamilton’s attorneys prepare
a follow up letter to DOJ to educate them on basic facts regarding
the auctions about which they appeared to be unaware.
16-Sep-99
Hamilton files a response
in opposition to the government’s motion to dismiss and for summary
judgment in the FOIA case.
17-Sep-99
A status hearing is held
in the qui tam case before Judge Sporkin. Tony Alexis and Wayne
Travell attend the hearing. Alexis says "and in the meantime
I’m making the private bar very happy. Goldman Sachs is represented
by Paul Weiss and Blackrock is represented by Scad & Arps [sic]
in New York." He says they have meetings to discuss the allegations
with them. Alexis says since the last hearing "we filed an
amended complaint which we did as a matter of right. No answer has
been filed. What we did in our amended complaint is we attempted
to garner all of the information that we’ve obtained over the past
three years which is consistent with the allegations we made in
the original complaint. Tony says they are going to be interviewing
purchasers and he needs another extension. The judge asks what progress
they are making. Tony says "yes, Your Honor. I believe we’re
at the end’ I mean, I think that with the note sale people, it’s
fish or cut bait time, and I should know something probably in the
next three to four weeks where we’re going to go one way or the
other." They agree to a status hearing on November 8, 1999.
Hamilton has been able to obtain no additional transcripts because
the hearing tapes are not available for hearings after this date.
21-Sep-99
Hamilton files Plaintiff’s
Answers to Defendant’s First Set of Interrogatories. Hamilton
Securities Group v. The United States of America, 1:98-CV-169,
US Court of Federal Claims.
1-Oct-99
GAO decision awarding
Ervin protest costs in connection with a finding that the task order
(issued in February 1995) Ervin protested improperly exceeded the
contractor’s scope of work. GAO recommended that HUD terminate the
task order and conduct a competitive acquisition. Ervin claimed
costs in excess of $13,000, assuming an hourly rate for Ervin of
$340 per hour (for 15 hours of work) and an hourly rate for Bernard
Oleniacz of $155 (for 51 hours of work). Ervin used a 300% overhead
factor, which GAO found to be unreasonable. He countered that Ervin’s
actual overhead rate is 2,124%, which, if applied to the hourly
rates listed in the claim, would result in an increase of almost
$60,000 in claimed costs. GAO awarded Ervin only $1,448.19.
1-Oct-99
Beginning of federal
fiscal year 2000.
1-Oct-99
Hamilton and HUD file
briefs re: motion in limine on the issue of applicability of Inspection
of Services Clause and Economic Loss Rule in Court of Claims. HUD’s
brief is signed by Robert M. Hollis, Asst Dir., and David Gottesman,
Attorney, Commercial Litigation Branch, Civil Division, US Department
of Justice under the authority of David W. Ogden, Acting Assistant
Attorney General and David M. Cohen, Director. Virginia Kelly Ackerman
is listed as of Counsel for HUD. Hamilton Securities Group v.
The United States of America, 1:98-CV-169, US Court of Federal
Claims.
8-Oct-99
Goldman Sachs discloses
in its 10-Q filed with the SEC that it has been named in Hamilton’s
qui tam suit in connection with the purchase of $4.7 billion of
HUD mortgage loans.
12-Oct-99
The government files
a motion (unopposed) to extend time to October 14 to file a reply
memorandum in the FOIA case.
14-Oct-99
In the FOIA case, the
government files a reply in support of motion for leave to file
a portion of memorandum of points and authorities in support of
motion to dismiss/for summary judgment under seal. The government
also files a reply in support of motion to dismiss and for summary
judgment, with affidavits (2) and exhibits. The government also
files a motion for leave to file a small portion of its reply in
support of its motion to dismiss/for summary judgment and opposition
to Hamilton’s request for discovery in camera. Judge Sporkin issues
an order granting the extension of time on October 19.
15-Oct-99
In the FOIA suit, Hamilton
and the government file responses to the briefs submitted on 10/1.
22-Oct-99
In the FOIA suit, Hamilton
files a motion (consent) to extend time to October 29 to respond
to the request for discovery.
24-Oct-99
Judge Sporkin orders
the payment of $3,200 to the Special Masters in the PTE case.
25-Oct-99
In the FOIA suit, Hamilton
files a response (oppositions) to motion for leave to file in camera.
On October 28, Judge Sporkin grants the additional time requested.
28-Oct-99
Status hearing in the
Federal District Court in the Hamilton case against Ervin.
29-Oct-99
Hamilton files a motion
(consent) to extend time to November 5 to respond to the government’s
opposition to its request for discovery in the FOIA suit. Judge
Sporkin grants the extension on November 2.
3-Nov-99
Kathryn Kuhl-Inclan,
HUD Assistant Inspector General for Audit, testifies before the
House Subcommittee on Criminal Justice, Drug Policy and Human Resources
regarding marketing and management contracts for real estate owned
activities (single family) and procurement audit. She testified
that the property disposition portfolio at HUD had increased 71%
(to 42,300 properties) between the end of the 1996 fiscal year and
February 1999. By September 30. 1999 the inventory had grown to
51,516 properties. She reported that the build-up in properties
was largely due to the inability of the contractor hired to service
40% of the portfolio, Intown Properties, to handle the work. Its
contract had been terminated and the properties it serviced were
awarded to the six remaining "M&M" contractors. She
stated that the procurement of this work (which amounted to approximately
$927 million over 5 years) was conducted without carrying out the
cost comparisons required by OMB to determine whether the contracting-out
was warranted. No such procurement would have been required had
the loan sales program continued.
5-Nov-99
Hamilton files a reply
to the government’s response to the motion for leave to file in
camera in the FOIA suit.
8-Nov-99 Status conference
at court hearing on qui tam on the scheduled for this date. Hamilton
has not been able to ascertain in the hearing was cancelled or the
tape of the hearing is not available, or "missing".
11-Nov-99
A Joint motion is filed
by Hamilton and the government for a protective order in the Court
of Claims case, which is granted on the 17th.
12-Nov-99
Ervin & Associates
submits a Freedom of Information Act request seeking information
regarding a HUD contract with Federal Asset Advisory Company to
compile a questionnaire requesting feedback on HUD note sales. According
to the FOIA request, the questionnaire is being conducted before
proceeding with HUD note sales under Section 601 of the Department
of Veterans Affairs and Housing and Urban Development and Independent
Agencies Act of 1999, which provides FHA with flexibility to choose
the most cost-effective methods of paying insurance claims and disposing
of acquired notes or properties under the FHA single family programs.
Ervin applauds HUD's effort to "solicit feedback before proceeding
with another ill conceived and possibly corrupt asset sales effort,
particularly one that appears to be being patterned after the highly
suspect multifamily partially structured transaction."
24-Nov-99
Judge Sporkin issues
a memorandum opinion in the Hamilton v. Ervin case and an order
denying Hamilton’s motion to remand and for attorneys' fees.
2-Dec-99
A motion hearing in the
FOIA case is scheduled for this date.
3-Dec-99
Judge Sporkin issues
an order regarding the production and use of documents in other
proceedings.
6-Dec-99
Hamilton is informed
that AUSA Tony Alexis, who has been intimating to Hamilton’s counsel
for the past several months that he anticipates the government may
not adopt the qui tam, has taken a regular "rotation"
of assignments and dropped from the qui tam. AUSA Rudolph Contreras
assumes Alexis’ role. Hamilton’s expectations that the qui tam will
be unsealed by Thanksgiving are not realized.
6-Dec-99
Hamilton receives a request
for admissions from David Gottesman.
10-Dec-99
Lexington Insurance requests
a copy of the "Manhattan" file.
Week of 13-Dec-99
Hamilton files a request
under the Freedom of Information Act seeking Hamilton’s file related
to the complaint filed with the President’s Council on Integrity
and Efficiency.
16-Dec-99
A scheduled hearing with
Judge Sporkin on the FOIA appeal is postponed until January.
17-Dec-99
Some time this past week
Hamilton filed a FOIA request with the Department of Justice for
the Hamilton PCIE file.
22-Dec-99
Standard & Poor’s
puts the U.S. financial system on its watch list of 20 countries
that are vulnerable to a credit bust. Bill Greider, now reporting
for The Nation, says, "Aside from the stock market,
the credit-rating agency observes the rapid rise in domestic debt
and in non-performing loans at commercial banks." The U.S.
is now a debtor nation to the tune of 18 percent of the gross domestic
product. (Source: http://www.star-telegram.com/columnist/ivins2.htm)
31-Dec-99
The government files
a motion to extend time to respond to Hamilton’s discovery request.
Hamilton responds on January 5th [opposing the extension].
On January 13, the judge grants the government’s motion to extend
time.
7-Jan-99
Hamilton and the government
file a joint status report in the Court of Claims case.
12-Jan-99
A "settlement conference"
is held in the Court of Claims case.
14-Jan-00
Judge Sporkin abruptly
retires with no prior public notice.
17-Jan-00
Former CIA head Stansfield
Turner's plane crashes on a trip in Latin America, killing his wife
and seriously injuring him.
18-Jan-00
The U.S. Department of
Justice acknowledges that key CIA testimony connected with the 1983
conviction of Ed Wilson for weapons smuggling was perjured. That
conviction involved 40,000 pounds of C-4 plastic > explosives,
sent in 1977 to Libya’s Moammar Qadaffy. It occurred at a time when
the Theodore Shackley was running CIA covert operations and a newly
appointed Stansfield Turner was reportedly trying to reign in agency
covert operations. Now, as seven of the well known members in the
American legal/court system grapple with potential perjury charges,
we see the death of a retired CIA Executive [the Comptroller] on
January 12th, the retirement from the Federal Bench of former CIA
General Counsel Stanley Sporkin on Jan 15th and the near fatal air
crash involving Stansfield Turner on the 16th.
2-Feb-00
Bryan Saddler, Acting
Counsel to the Inspector General, informs Hamilton's counsel, Drinker
Biddle & Reath, that the IG cannot take final actions until
a judge is assigned to replace Judge Stanley Sporkin. Sporkin has
retired with no advance notice, resulting in a delay of many months
in reassigning his cases.
8-Feb-00
Bryan Saddler sends a
letter to Special Master Lawrence Storch informing him that HUD
has entered into a contract with a company that will capture and
copy data from Hamilton's back-up tapes pursuant to Judge Sporkin's
December 18, 1998 order.
14-Feb-00
Hamilton's counsel, Drinker
Biddle & Reath, is informed by Special Master Lawrence Storch
of the letter from Bryan Saddler to Lawrence Storch stating that
HUD plans to begin to capture and copy data from Hamilton's back-up
tapes. The correspondence indicates that a copy was sent to Drinker
Biddle & Reath.
However, the firm never
received a copy.
17-Feb-00
The HUD Inspector General
testifies before the House Budget Committee, chaired by John Kasich,
regarding Perspectives on Waste, Fraud and Abuse in Government.
25-Feb-00
Hamilton hears from Rudolph
Contreras that DOJ expects that a new judge will be assigned to
replace Judge Sporkin on the qui tam case on the following Monday.
25-Feb-00
Judge Horn rules in the
Court of Claims case on the Motion in Limine that the government
may proceed on its breach of contract claim. Hamilton is not greatly
troubled by this ruling because it is confident the judge has made
an error on the facts. Hamilton expects to be able to prevail on
appeal based upon the reasoning in the opinion. Soon after this
development the government realizes (1) the error in the judge's
understanding of the facts (i.e., she bases her ruling on the assumption
that the alleged damages are "consequential" as argued by the government,
and they are not and (2) that the government has taken a different
position on the issue of recoverability of consequential damages
in the Yankee Atomic Power case, which is expected to be argued
on appeal in the Court of Claims on May 3. The government files
a brief requesting that the judge reissue her decision on alternative
grounds.
28-Feb-00
Solari discovers an article
in The Washington Times by George Archibald entitled "Justice
Unable to Find Bids Worth $5.2 Billion." The article refers to the
"criminal" investigation of Hamilton many times, even though the
so called "criminal investigation" has been dropped by the Department
of Justice and FBI findings are strongly in Hamilton’s favor. The
article is filled with libelous material and inaccuracies, but the
largest infraction of the Times is that it failed to contact
Hamilton for comment. This is the last among many articles written
by Archibald about Hamilton where he has failed to contact Hamilton
for comment despite Hamilton's repeated complaints to the Times
and has published numerous statements that are not true or are purposefully
misleading. For example, Ervin’s counsel is quoted in this article
as suggesting there has been virtually no oversight of the loan
sales by HUD, a charge that has no basis in fact. The "missing
bids" referred to in the article are bid cards requested by
Ervin in a FOIA request to HUD, which HUD denied, saying it did
not have the cards. In all probability, some of the cards may have
been included among the volumious documents produced to the government
by Hamilton in response to the OIG subpoena or may still be in the
possession of one or more of HUD’s other financial advisors. In
any case, no one at any time contacted Hamilton to ask where the
cards might have been stored.
28-Feb-00
Qui tam lawsuit is reassigned
to Judge Louis F. Oberdorfer.
29-Feb-00
Hamilton's counsel sends
a letter to the Editor of the Washington Times, Wesley Pruden,
demanding a meeting to discuss the ongoing inaccuracies, failure
to verify alleged facts with Hamilton and libelous charges that
Hamilton "admitted" to "bid rigging " in its coverage of Hamilton.
Later, Hamilton's counsel receives a letter from the Times’s attorney
proposing language for a retraction.
29-Feb-00
Gerri Salzman calls to
cancel a planned dinner with Fitts, Betts and Dick Dunnells because
of the Washington Times article that appeared on February 28 about
Hamilton and HUD. The dinner is never rescheduled.
Mar-00
Solari launches its website
with most Hamilton legal history linked to most legal documents
with chronology of legal events, lists of all audits, investigations,
and inquiries as well as all suspicious events related to physical
harassment and surveillance. Notices of the launching of the website,
with links to the site, are e-mailed to approximately 200 individuals
affected by or interested in the case. Traffic to the site over
the year includes visits from HUD, four separate servers at DOJ,
Lockheed Martin, DynCorp, the Executive Office of the President,
several US Government military groups, O’Melveny & Myers, the
primary law firm representing the Gore campaign, and numerous other
government and government contractor entities.
Mar-00
GAO issues a report entitled
"Single-Family Housing: Stronger Measures Needed to Encourage
Better Performance by Management and Marketing Contractors."
The subject of the report is approximately $927 million in contracts
for the management of approximately 2/3 of HUD’s inventory of properties.
GAO reports that, since the contracts became effective in April
1999, 6 of the
7 contractors had had
significant problems with carrying out their responsibilities, particularly
in regard to securing and properly maintaining the properties assigned
to them (for example, Intown Management Group, which had 7 of the
16 contracts involving about 40 percent of the properties, had problems
with meeting almost all of HUD's performance requirements. After
trying unsuccessfully to secure better performance from InTown,
HUD terminated all seven of the firm's contracts and selected three
replacement contractors from among the remaining firms to absorb
most of Intown's workload. However, two of
the three contractors
that HUD selected were already having performance
problems under their
existing contracts. The report states HUD staff have limited contractor
incentives or tools available -- short of terminating contracts
-- to enforce contractors' compliance and improve performance. HUD's
inventory of acquired single-family properties at the end of fiscal
year 1999 was 32 percent higher than it was a year earlier and over
100 percent higher than it was at the end of FY 1996. HUD's new
management and marketing contractors increased the total number
of properties sold from the inventory during FY 1999, and the
total number of properties
in the inventory had begun to decline; however, the contractors
had made relatively little progress disposing of older properties
--properties in the inventory 6 months or longer. In fact, as of
February 2000, about 20,000 of HUD's properties were in the inventory
6 months or longer--up from 13,000 properties in April 1999, the
first month of the contracts.
9-Mar-00
Order by Judge Oberdorfer
in the qui tam lawsuit directing that a status conference and a
hearing on defendant's motion to unseal the file are scheduled for
4/18/00.
14-Mar-00
HUD responds to Hamilton's
December 13, 1999 FOIA request for copies of FOIA requests and related
correspondence by Ervin & Associates. The FOIA requests are
voluminous (166 separate FOIA numbers are assigned) and date back
to February 1996. Copies of these requests and correspondence between
Ervin and HUD regarding these requests number about 300 pages. One
single request, which is not atypical, asks for copies of Form HUD-720
Justification for the Use of Advisory and Assistance Services, for
23 named contracts. Another request asks for copies of "all status
reports submitted by Hamilton Securities under the [DU100C000018161]
contract." Another request quotes a Wall Street Journal article
about two hosts for Democratic fundraising events who subsequently
were selected for a major lending role in a $200 million HUD program
to make federally assisted housing more efficient. Ervin requests:"
all documents pertaining to the decision to enter into this agreement;
the actual written arrangement itself and the federal notice outlining
the loan program which mentions Energy Capital and Mr. Seigel by
name; and any HUD documentation regarding the arrangement subsequent
to the Wall Street Journal, including any press releases
or termination of agreement, that occurred." Another request, dated
March 27, 1997, asks for copies of all electronic mail messages
sent from Helen Dunlap, C. Austin Fitts (Hamilton Securities), Kathy
Rock and Chris Greer since June 1993.
15-Mar-00
Judge Horn in the matter
of Hamilton Securities v. The United States of America (98-169,
Court of Federal Claims) issued an order allowing the government
to pursue Count I of its First Amended Counterclaim for consequential
damages. The court also schedules a status conference for April
5, 2000.
17-Mar-00
DynCorp announces that
it has been awarded a 10-year contract by HUD OIG. DynCorp already
has a HUD OIG contract announced in 1999 and is subcontractor to
Lockheed on the HUD network and prime contractor on DOJ Asset Forfeiture
Fund, DOJ Automation Office Network as well as DOJ Litigation Support
and Case Management Contracts. The largest outside investor in DynCorp
is Capricorn, which is a major investor in the largest HUD multifamily
mortgage insurance company, WMF, and appears to continue to hold
a significant investment in AIMCO, the largest HUD property manager
and landlord. The head of Capricorn, Herbert S. Winokur, who also
served as the Chairman of DynCorp, is a board member of Enron, listed
by Bob Rubin as one of the 44 companies he has significant contact
with while at Goldman Sachs. Winokur is on the board of Harvard
Endowment, as was Rubin before he resigned to become Secretary of
Treasury. During the years of the Clinton Administration, the Harvard
Endowment increases in value from $5 billion to $19 billion.
22-Mar-00
HUD OIG, Susan Gaffney,
testifies before Stephen Horn’s Committee on Government Reform,
Subcommittee on Government Management, Information and Technology
on the Status of Financial Management at HUD and regarding her refusal
to certify HUD’s financial statements for 1999 as required by law.
She describes missing money in FY 1998 and FY 1999 of $17 billion
and $59 billion, respectively, along with failure in the installation
of new IT systems (HUDCAPS) and unsupervised access to accounting
systems and information by HUD contractors. She reports that as
a result of the methods used to convert from the "old"
to the "new" system, in which standard industry procedures
for preservation of an audit trail were not followed, there is no
audit trail on which to base an audit certification. She reports
that some 240 manual entries were required in order to reconcile
HUD’s accounts with Treasury.
28-Mar-00
In response to Judge
Horn's March 15, 2000 order, Hamilton files a Motion for Reconsideration
moving the court to reconsider its Order. Hamilton also files a
Motion to Certify for Interlocutory Appeal and to Stay further proceedings
moving the Court to amend its Order dated March 15, 2000, to include
the finding prescribed by 28 U.S.C. Section 1292(d)(2), certifying
the Order and the following controlling question of law for interlocutory
appeal: "Whether the inspection of Services Clause provides the
exclusive remedy when the services do not conform to contract requirements
and the defects cannot be corrected by re-performance?" The motion
also moves the Court to stay further proceedings, including discovery,
pending the conclusion of any interlocutory appeal. Hamilton
Securities v. The United States of America (98-169, Court of
Federal Claims).
3-Apr-00
Government Executive
Magazine reports on government efforts to meet financial statement
requirements. HUD is the only agency whose grade drops; HUD is dropped
from "D" to "F."
5-Apr-00
A status hearing is held
in the Court of Claims case. Separately, Rudolph Contreras reports
that he is meeting with his "superiors" regarding the qui tam lawsuit.
17-Apr-00
Assistant U.S. Attorney
Rudolph Contreras reports to Hamilton's counsel that the government
has elected not to adopt the Ervin & Associates qui tam case
filed on June 6, 1996 and files a notice of declination with the
U.S. District Court for the District of Columbia, Judge Oberdorfer
presiding.
18-Apr-00
Judge Oberdorfer holds
a combined hearing to unseal the qui tam case with Hamilton and
to determine the status of the hearing from the government and Ervin.
Ervin's counsel strenuously object to Hamilton's presence at the
status hearing. Neil Getnick introduces himself to the court for
the first time as co-counsel for Ervin.
21-Apr-00
Judge Oberdorfer, who
has replaced retired Judge Stanley Sporkin with respect to the Ervin
& Associates qui tam action naming Hamilton and Goldman Sachs,
among others, holds the first hearing with defendant Hamilton actively
present in the case although not yet served. Judge Oberdorfer issues
an order unsealing the qui tam complaint and grants Ervin's consent
motion for admission pro hac vice of Neil V. Getnick of the law
firm of Getnick & Getnick in New York City. The complaint names
as sources for the complaint, among others, William Richbourg of
the FHA Comptroller's Office at HUD (who, in a deposition dated
July 28, 1998, admitted he knew of no wrongdoing on Hamilton's part
in connection with the HUD loan sales), Terry DeWitt, President
of J-Hawke Corporation of Waco, Texas, Jeff Parker of Cargill, a
bidding partner of Goldman Sachs in the HUD Single Family Loan Sale
# 1 and an independent bidder in the HUD Single Family Loan Sale
#2, and Michael Nathans of Penn Capital, a subcontractor to the
Cushman & Wakefield/Price Waterhouse financial advisory team
serving HUD in other (later) loan sales and a "business associate"
of Mr. Parker, Mr. DeWitt and Ervin. Because neither Ervin's counsel
nor AUSA Rudolf Contreras informed the judge during the status hearing
that an amended complaint existed, the judge, who was new to the
case, did not include the amended complaint in his unsealing order.27
& 28-Apr-00
Ervin files a motion
to alter the briefing schedule for the qui tam lawsuit and Hamilton
opposes the motion.
May-00
Press sources report
a rift between Lee Radek's Public Integrity Section at the Department
of Justice and the FBI, which had recommended appointing a special
prosecutor to investigate campaign fundraising irregularities. The
Department of Justice had declined to make the appointment of a
special prosecutor in October of 1998, immediately after which announcement
Goldman Sachs announced that the postponement of the initial public
offering of its stock had been lifted. In Senate testimony on May
24, 2000, Radek denied witness reports that he had stated there
had been intense pressure on Janet Reno not to appoint the special
prosecutor that threatened her reappointment as Attorney General.
Carolyn Betts, Solari’s in-house counsel, writes a letter to Dan
Burton, Chairman of the committee that held hearings on this matter,
pointing out Radek’s and the FBI’s connection with the Hamilton
case and asking for his help. Burton never responds.
1-May-00
Judge Oberdorfer orders
that relator file its supplemental opposition to Hamilton's motion
to unseal by May 5, the supplemental reply by Hamilton is due 5/15/00,
the motion hearing is continued from 5/15 to 5/23/00 and directing
that any and all amended complaints and the USA's declination to
intervene in this matter be unsealed. USA files a motion to extend
time to 5/1/00 in which to file a supplemental pleading.
2-May-00
Non Party USA in the
qui tam lawsuit files a statement re the pending motion to unseal
the file. Rudolph Contreras calls to say that the government is
not opposing the unsealing of the qui tam documents.
2-May-00
Hamilton hears rumors
that HUD is preparing to settle the Bivens #1 action, apparently
not including claims against current HUD employees.
3-May-00
Hamilton issues a press
release stating that the HUD loan sale qui tam has been unsealed
after four years and HUD has declined to adopt the case. A copy
of the qui tam complaint is posted on the Internet. Subsequently,
Cargill’s counsel and Jeff Parker, listed as sources for the allegations
in the complaint, contact Hamilton’s counsel to deny that Parker
is a source for Ervin’s allegations.
.
5-May-00
Hamilton received documents
from a previous FOIA request for all documents in Hamilton’s FBI
file. The file contained a report 1999 report from the FBI noting
that none of the interviews it conducted substantiated any allegations
of bid rigging and insider trading in connection with the loan sales.
10-May-00
Harvard Endowment and
Capricorn sell WMF, the largest HUD Multifamily mortgage broker,
to Prudential.
12-May-00
Hamilton personally delivers
letters to Annette Hancock, Hamilton’s HUD contracting officer,
seeking to convert certain accounts receivable from HUD (viz, termination
settlement claims in connection with the termination for convenience
of the Crosscutting Contract and certain withholds and other amounts
to close out a previous contract) dating back as far as 1994, to
claims under the Federal Acquisition Regulation. When she delivers
the letters to Hancock, Carolyn Betts comments that HUD is about
to settle with John Ervin, who caused a huge mess for HUD, when
it won’t pay Hamilton the amount owed under its contract.
15-May-00
Judge Oberdorfer holds
a hearing on Hamilton's motion to unseal the full qui tam file.
16-May-00
Hamilton discovers that
the qui tam files that have been unsealed recently have been mislabeled,
which accounts for the slowness of production pursuant to court
order.
22-May-00
Judge Marion Blank Horn,
the presiding judge of Hamilton's suit against the government in
Federal Court of Claims, announced in a conference call with Hamilton’s
attorneys and HUD's attorneys that she was recusing herself from
the case and vacating all opinions and orders issued by her to date
over the past two years. The judge's explanation for her abrupt
recusal was that her husband had had business dealings with Lucent
Technologies, whom she believed was a potential witness in the case.
She admits to Hamilton’s counsel that the purported potential conflict
of interest arose after one of her orders had been issued, but she
nevertheless vacated the order, leaving Hamilton to start all over
with a new judge.
22-May-00
Judge Gladys Kessler
orders a status hearing for 5/23/00 in the qui tam lawsuit.
23-May-00
Order by Judge Oberdorfer
that all papers in this case be unsealed, that transcripts of any
hearings on file under seal be partially unsealed and made available
to the US for the purpose of reviewing and that the US shall notify
the court in writing of its position re the unsealing of the hearing
transcripts within 10 days of obtaining the transcripts and that
Hamilton shall have 10 days to reply to the US position re unsealing
of the hearing transcripts.
26-May-99
Hamilton's attorneys
call Neil Getnick re: starting the Ervin depositions in Hamilton's
suit against Ervin. They also file a withdrawal of Hamilton's objection
to Federal jurisdiction in the case.
12-Jun-00
Judge Oberdorfer unseals
the entire qui tam case file with the exception of the hearing transcripts.
The order is necessary because the filing desk has failed to release
all documents to Hamilton as the result of the judge's second order,
maintaining that the order is ambiguous.
21-Jun-00
The House votes on the
HUD appropriations bill.
22-June-00
Fitts, Fitts’ family
members and Solari employees send letters to Congress re: HUD’s
refusal to pay outstanding debts to Hamilton. Staff of various members
of Congress report throughout the summer and fall that HUD has not
or will not respond. A staff member of a Democratic congressman
reports that she has "never seen anything like this."
Several staff members and interested parties report that HUD has
indicated that it is stalling until after the November election
and that the key HUD issue is Hamilton’s lawsuit against Ervin and
Cuomo’s personal liability.
26-Jun-00
Ervin & Associates,
relator in the qui tam lawsuit against Hamilton Securities Group,
files a motion for additional time within which to make a determination
whether to continue the case following the election by the Department
of Justice not to adopt the case, stating as its justification the
fact that the HUD Office of Inspector General is conducting discovery
as part of an ongoing investigation.
27-Jun-00
Hamilton receives a call
from the HUD FOIA office regarding the request for the PD&R
report. The FOIA office reports that the Office of PD&R reports
that it has no copy of any such report, and the FOIA officer states
that she is forwarding a copy of the request to John Kennedy in
the HUD Office of General Counsel (who heads the enforcement division),
Hamilton's new contracting officer.
28-Jun-00
National Mortgage
News reports that Apartment Investment and Management Co. (AIMCO)
of Denver has entered into definitive agreements to acquire from
Oxford Realty Financial Group the interests held by officers and
directors in the Oxford entities that own and control the Oxford
Properties, for $301 million. Oxford, a former employer of both
Ervin and William Richbourg, is located in Bethesda, Maryland, as
are Ervin & Associates and Lockheed Martin.
28-Jun-00
Ervin files a Motion
to Dismiss or in the Alternative, for Summary Judgment in the Hamilton
Action against Ervin. He relies primarily upon the argument that
statements made as part of litigation are not actionable in cases
of this type. Representing Ervin are both Wayne Travell of the Venable
law firm and Aaron Handleman and Craig Brodsky of Eccleston &
Wolf.
29-Jun-00
Associated Press reports
on the recent Senate Government Affairs Committee hearings re the
growing defaulted mortgage loan portfolio at HUD. The growing inventory
has resulted from the discontinuation of the loan sales program.
HUD subsequently announces that it will resume loan sales using
personnel on loan from FDIC. Following the first such loan sale,
William Apgar, Assistant Secretary of Housing, touts the sale using
taxpayer savings figures that include the credit subsidies generated
by the sales conducted when Hamilton was HUD’s financial advisor.
6-Jul-00
The HUD Inspector General
issues a "Seven Day Letter" to Secretary Cuomo regarding
the "HUD’s failure to stop flagrant waste, fraud and abuse"
in the Puerto Rico Public Housing Authority.
10-Jul-00
Neil Getnick files a
notice of withdrawal of appearance with the DC Federal District
Court. He later files an "instanter" motion >
for withdrawal of appearance. According to Black’s Law Dictionary
> "instanter" means "instantly, at once"
as in "the defendant was ordered to > file its motion instanter."
Attorneys have stated that an instanter motion would be filed in
order to have the effective date relate back to a previous date,
indicating that Getnick was anxious to have it on record that he
had withdrawn from the case before certain actions were taken by
his client.
11-Jul-00
A telephone
status conference is held Judge Bush in the Court of Claims case.
14-Jul-00
A status
conference is held in the Petition to Enforce Subpoena case brought
by Susan Gaffney against Hamilton.
15-Jul-00
Goldman Sachs Group,
Inc. files an S-3 registration statement with the Securities and
Exchange Commission for the offer of 46,000 shares of additional
common stock with a proposed maximum offering price of $4 billion.
19-Jul-00
A status hearing with
Judge Oberdorfer is cancelled and rescheduled for a later date.
10-Aug-99
Judge Urbina, Motions
Judge in the Federal District Court for the District of Columbia,
denies Ervin's motion for additional time to determine whether to
continue the qui tam suit without the government. This means that
Ervin is forced to decide whether to serve a complaint on Hamilton,
Goldman, BlackRock, Ocwen, and Williams Adley by the day that is
120 days from April 17, 2000 -- August 15, 2000.
14-Aug-00
The government
filed with the court in the qui tam case a statement regarding Ervin’s
notice of dismissal.
14-Aug-00
Carolyn
Betts leaves a message with Annette Hancock, Hamilton's contracting
officer, to call her regarding any additional documentation required
to process Hamilton's claims for amounts owed under a contract termination
settlement of the Hamilton crosscutting contract and amounts owed
to Hamilton previously under an earlier contract. The call is never
returned.
Aug-00
Ervin serves the amended
Qui Tam complaint, in the form it was filed a year earlier with
the court on Hamilton and Williams Adley, a minority due diligence
contractor for the HUD loan sales. Previously, Ervin’s new Qui Tam
counsel admitted to the case by the court in April, 2000, who is
a partner with a New York-based boutique, apparently high-profile,
law firm specializing in this type of case withdraws from the case
in a "noisy withdrawal." He then files a notice of withdrawal
effective retroactively with the US District Court in DC, even though
Wayne Travell had previously filed a notice of his withdrawal several
weeks earlier. This action may indicate he wants to make sure that
he is not associated with the complaint served on Hamilton and Williams
Adley or to be a part of what Ervin is doing at that time.
15-Aug-00
Hamilton
sends a letter to Marylea Byrd of the HUD Office of General Counsel
regarding the Department's failure to respond to Hamilton's FOIA
request for the "PD&R Report" within the time provided by law.
Summer-00
Hamilton’s attorneys
file FOIA requests with HUD and then Hamilton’s attorney in the
Court of Claims action against HUD requests from David Gottesman
at the US Attorney’s Office in DC a copy of the HUD PD&R report
that is alleged to have concluded that the $3.8 million optimization
error was not statistically significant and is not a basis for withholding
money from Hamilton. HUD at first refuses to make PD&R’s materials
available, based on a claim of exemption for intra-agency documents
not discoverable except in an action by an agency against another
agency. On administrative appeal, HUD modifies its exemption claim
stating that the materials are subject to a litigation privilege.
Gottesman also refuses to provide the report to Hamilton’s attorney
pursuant to the discovery request, referring to the FOIA request
denial, and in any event states that the only documents responsive
to the request consist of third party contractor studies performed
for HUD during 1999. Given that the study or report by PD&R
would have been created during 1998 when William Apgar served as
Assistant Secretary of PD&R, this effectively denies the existence
of the requested documents. Fitts’ Congressman, Congressman Ed Bryant,
of the Tennessee’s 7th District then requests copies
of the same, as does Congressman Bob Clements of the Tennessee 5th
District, and John Sununu of the New Hampshire 1st District.
No responses are forthcoming as of 12-31-00 to these and other congressional
requests.
7-Aug-00
Hamilton mails seven
FOIA requests to HUD and the Department of Justice, including a
request for Dyncorp contracts and subcontracts with HUD and the
HUD Office of Inspector General.
30-Aug-00
Hamilton files a Supplemental
Brief on issues raised by the new judge in the Court of Claims case.
31-Aug-00
Carolyn
Betts leaves a message with Annette Hancock, Hamilton's contracting
officer, in the Office of Procurement Contracts at HUD regarding
failure to receive any response from the contracting office regarding
documentation of amounts owed to Hamilton that was provided to HUD
previously. The call is never returned.
Sept-00
Hamilton is told that
Kathryn Kuhl-Inclan, Assistant Inspector General for Audit at the
HUD OIG has left or taken early retirement.
2-Sept-00
The Associated Press
reports that the FBI is investigating the HUD OIG in Boston, Fort
Worth and DC after Internet gambling and pornography have been found
on OIG staff computers and that several senior staff members of
the HUD OIG has been suspended.
13-Sep-00
Carolyn Betts delivers
a letter to the Chief Procurement Office at HUD questioning why
the HUD contracting office has not responded to Hamilton correspondence
providing requested documentation for amounts owed by HUD that are
not subject to litigation. No response is received.
15-Sep-00
Hamilton discovers that
the Yankee Atomic Power case has been decided. This is the case
in which the government took the position opposite from the position
it took in Hamilton's Court of Claims case on the issue of the availability
of consequential damages under a government contract. The position
the DOJ took in Hamilton's case put at risk damages in the Yankee
Atomic Power case amounting to billions of dollars.
22-Sep-00
HUD conducts the first
loan sale since the cancellation of Hamilton's contract in 1997.
Salomon Brothers Realty Corporation was the sole winning bidder
of the portfolio of single family loans. FHA Commissioner Apgar
brags, " "FHA's mortgage sales have produced over $2.25 billion
dollars in budget profits since 1994. These funds continue our housing
and neighborhood initiatives and help reduce the deficit. The sales
also reduce the burden on HUD administrative personnel, allowing
them to concentrate on expanding homeownership and protecting the
health of our $400 billion mortgage insurance portfolio." According
to the HUD website, "Three private sector firms assisted HUD in
this sales effort -- Myerberg & Company, L.P., a New York based
investment banking firm, was the Transaction Specialist responsible
for the marketing and sale of the portfolio. Gardiner, Kamya &
Associates, P.C., a management consulting and certified public accounting
firm located in Washington, D.C. provided Due Diligence service.
Federal Asset Advisory Company, LLC., Program Financial Advisor,
a joint venture real estate investment banking firm with offices
in New York and New Jersey provided program oversight."
25-Sep-00
Hamilton files a Memorandum
of Points and Authorities in Support of Its Motion to Dismiss or,
in the Alternative, for Summary Judgment in the qui tam case.
26-Sep-00
Associated Press reports
that DOJ has adopted a qui tam case against Harvard University and
four associates for $120 million on Tuesday, claiming that Harvard
staffers benefited personally from a U.S.-backed program to help
post-Cold War Russia make the transition to capitalism. No mention
is made in the Harvard Endowment’s investments in Russian bonds
during the period or Secretary Rubin’s prior role on the board of
Harvard Management [Endowment].
30-Sept-00
The end of the federal
fiscal year. The HUD OIG is required to issue a semiannual report
to congress as of this date. As of December 31, 2000, no Semi-Annual
Report to Congress had been posted on the Inspector General’s website.
1-Oct-00
Beginning of federal
fiscal year 2001.
Sept-00
A visit to the website
of the Hamilton project manager, now providing financial advisory
services independently, shows Annette Hancock in the HUD contracting
office as a reference and provides her e-mail for anyone who would
like to obtain a reference. This means that HUD’s contracting office
is openly recommending the project manager who lead Hamilton’s role
in the loan sales at the time that HUD has accused Hamilton of "gross
negligence."
3-Oct-00
The HUD FOIA office refuses
to release DynCorp contracts to Solari under a Freedom of Information
request file on August 7, 2000 due to "prime" contractor
[presumably, Lockheed Martin] refusal to respond to FOIA office
requests for copies of its subcontracts with Dyncorp. Regarding
the HUD OIG direct contracts with Dyncorp, the FOIA officer of the
OIG denies that it has documents satisfying a request for RFPs,
RFP responses and contracts with Dyncorp notwithstanding information
on the Dyncorp web page indicating such contracts exist. By telephone,
the FOIA officer denies stating the contracts do not exist and indicates
that the OIG contracts must be held in the HUD Contracting Office.
HUD Office of Procurement Contracts personnel later deny having
possession of any contracts between Dyncorp and the OIG.
5-Oct-00
From the Wilderness publishes article on Promis software, with allegation
re DynCorp role in HUD’s inability to produce certified financial
statements and adjustment to the books of $59 billion for fiscal
1999.
12-Oct-00
The Senate passes the
2001 FY HUD appropriations bill.
13-Oct-00
A Stipulation of Dismissal
in connection with HUD’s settlement of the Bivens case is filed
in US District Court. Reportedly, HUD has agreed to pay Ervin several
million million in partial settlement of the civil litigation against
HUD and current and former employees. Excluded from the settlement,
reportedly, are certain intellectual property issues involving Ervin’s
HUD financial statement database. It appears negotiations have been
under way for a long time. The stipulation of dismissal is signed
on October 6 by Wayne Travell (representing Ervin), on October 11
by Raymond Larizza of the Federal Programs Branch of DOJ (representing
HUD, Cuomo and Owens), and Terry O’Donnell (representing Helen Dunlap),
on October 12 by Ruth Harvey of the Commercial Litigation Branch
if the Civil Division of the Department of Justice (representing
HUD, Andrew Cuomo in his official capacity, Cheryl Owens in her
official capacity as Acting DAS for Operations within the Housing
Division)
13-Oct-00
An Insight Magazine
article by Kelly O’Meara on HUD’s failure to certify its 1999 financial
statements as required by law is posted on the Internet: "Why
Is $59 Billion Missing from HUD?" Although HUD attributes the
missing money to the faulty installation of a new computer system,
HUD does not disclose the contractors involved and there appears
to be no effort to recoup losses from these contractors.
13-Oct-00
Hamilton delivers to
the HUD contracting office the releases requested by HUD for the
processing of Hamilton's claims for contract termination payments
and amounts withheld under and other amounts due under an earlier
HUD contract.
19-Oct-00
Associated Press reports
that HUD IG, Susan Gaffney files a sexual harassment complaint against
Andrew Cuomo and other HUD officials.
20-Oct-00
Kathleen McGuan of Reed
Smith LLP files on behalf of Williams Adley in the qui tam lawsuit
Defendant Williams, Adley & Company’s Motion to Dismiss the
First Amended Complaint and an accompanying memorandum of law.
26-Oct-00
Relator Ervin & Associates
files Plaintiff/Relator’s Response to Defendant Hamilton’s Motion
to Dismiss or, In the Alternative, for Summary Judgment in the US
District Court for the District of Columbia in the qui tam lawsuit.
An exhibit to the filing is a Declaration of John Ervin dated October
24, 2000 in which Ervin reveals that a major source for the qui
tam lawsuit was a report by Michael Nathans of PCI, a contractor
to Ervin & Associates, dated June 21, 1996, relating that Terry
DeWitt of J-Hawke told him that Jeff Parker at Cargill told him
that Hamilton received the Single Family Loan Sale #1 bids, Hamilton
called the Goldman bidding group to encourage them to raise their
offer by $.02 to $.74, but did not tell Goldman why, only if they
raised their offer, they would be the winning bidder. On December
21, Hamilton files a response, together with an affidavit from Jeff
Parker denying the truth of the allegation and stating that he had
told Ervin as much in April or May, 2000, before Ervin served the
qui tam complaint on Hamilton.
Nov-00
AIMCO announces a agreement
with HUD for expedited processing of its mark to market restructurings.
One of its largest investors, AEW, is serving as financial advisor
to HUD-s market-to-market program.
Nov-00
Denver local news reports
that Phil Winn, former HUD official and ambassador to Switzerland,
is under investigation.
5-Nov-00
Rocky Mountain News
reports an FBI raid on the HUD field office in Denver.
5-Nov-00
CBS 60 Minutes
reports on a Florida insurance fraud scheme mentioning Andrew and
Mario Cuomo and New York Mob and includes on-camera interviews with
the FBI on the ongoing criminal investigation.
13-Nov-00
Hearing before Judge
Oberdorfer in the Hamilton v Ervin lawsuit on the subject of Hamilton's
motion to remand to Superior Court and Ervin’s motion to consolidate
the Hamilton lawsuit against Ervin with the qui tam lawsuit. Ultimately,
the judge consolidates the case against Ervin with the qui tam lawsuit.
21-Nov-00
Clinton pardons Phil
Winn, former HUD Assistant Secretary of Housing-Federal Housing
Commissioner for involvement in HUD related Iran-Contra fraud.
25-Nov-00
Fox series on "missing
money" mentions HUD adjustments of $59 billion.
Dec-00
Fitts receives a tip
that alleges that Gore’s staff and brother-in-law were key players
in the targeting of Hamilton — specifically, Quinn, Fabiani, Lehane
and Hunger. Fabiani and Lehane both attended Harvard Law School,
as did Howard Glaser, Cuomo’s counsel. Fabiani is reported in campaign
coverage to be a former Deputy Mayor of LA. A review of legal documents
indicates that Hunger appears to have been the lead attorney in
the DOJ Civil Division until his resignation from DOJ in the spring
of 1999. The Washington Post in November 2000 has suggested on a
possible Gore transition that Hunger is a likely candidate for Attorney
General, describing him as Gore’s "closest confidant."
This raises the possibility that Hunger, Cuomo and Gaffney were
cognizant that their efforts to destroy Hamilton and to falsify
evidence and smear the firm would have led to a major fundraising
scandal regarding Goldman and PNC at the same time that the Presidential
impeachment process was under way. Qui Tam transcripts unsealed
this month add to the growing evidence that all parties understand
that the allegations were not true.
12-Dec-00
National Mortgage
News reports that HUD’s Office of Multifamily Housing Assistance
Restructuring has struck a deal with AIMCO, a large apartment real
estate investment trust in Denver, to expedite the restructuring
of its properties receiving federal rental subsidies.
15-Dec-00
Hamilton receives a FOIA
response from an Assistant General Counsel in the FOIA division
in reply to an August 7, 2000 request
21-Dec-00
Hamilton files its reply
to the Motion to Dismiss the Hamilton lawsuit against Ervin in the
US District Court for DC (Judge Oberdorfer), including an affidavit
by Catherine Fitts providing the Hamilton side of the story and
an affidavit, declared under penalty of perjury, by Jeff Parker
of Cargill, Inc., an alleged source for key Ervin allegations of
insider trading. The affidavit states, "During that period in 1995,
I spoke with Terry DeWitt at J-Hawk regularly, I have no recollection
of stating that Hamilton Securities encouraged the Goldman/BlackRock/Cargill
bidding group to raise its offer to $0.74, or any other figure,
to win the bid. …. Approximately six months ago (around April or
May 2000), John Ervin contacted me by telephone…. He asked me to
confirm the statement that I allegedly made to Terry DeWitt, and
I told him that I had not recollection of that comment. …. I have
no knowledge that anyone at Hamilton provided information to the
Goldman/BlackRock/Cargill bidding group or to anyone else during
the single-family No. 1 loan sale".
3-Jan-01
Hamilton receives a call
from the HUD contract manager for the Lockheed contracts. She reports
that, in response to Hamilton's FOIA request for a copy of subcontracts
with Dyncorp under Lockheed's prime contract with HUD, she had requested
a copy from the prime contractor. The prime contractor would not
provide a copy to HUD. She also stated that she had no knowledge
of a Dyncorp contract with the HUD OIG or where copies of OIG contracts
are held. She reported, however, that the HUD OIG probably used
a contracting vehicle with another agency, given the "relationship"
between HUD and the HUD OIG. She said that a contract manager at
HUD for a GSA master contract with a HUD task order would ordinarily
have a copy of the master contract, since HUD issues the task order
thereunder.
4-Jan-01
DAVID SHUSTER, FOX NEWS:
Senior staff working for Attorney General Janet Reno have threatened
to fire an independent counsel investigating a possible cover-up
at the Justice Department, Fox News has learned. Independent
Counsel Dave Barrett led the investigation of former Clinton housing
secretary Henry Cisneros, who admitted lying to the FBI. According
to
sources, for the last 10 months Barrett has been presenting his
grand jury
with new evidence alleging that officials at the Justice Department
improperly tried to influence actions by the Internal Revenue Service.
Barrett was warned by senior Justice Department officials to halt
his
investigation . . . During his investigation, Barrett uncovered
evidence of
possible tax fraud by Cisneros. But Justice Department officials,
along with
the IRS, said that aspect of the Cisneros record was beyond the
independent
counsel's jurisdiction. After looking at the evidence themselves,
the
Justice Department and IRS both refused to pursue the matter.
According to well-placed sources, last year a top lawyer within
the IRS
alleged that senior Justice Department officials were attempting
to protect
Cisneros.
4-Jan-01
The scheduled bid date
for the HUD multifamily and health care note sale, which originally
had been scheduled to go up for bid in November, 2000. Members of
the loan sales team include Secured Capital as Multifamily Transaction
Specialist (Financial Advisor) and Williams, Adley as Due Diligence
Contractor. As of January 26, no posting on the HUD website announced
the completion of the bid offering. The sales brochure indicates
that potential bidders may review the Asset Review Files by appointment
at a computer network system located at a Washington, DC due diligence
facility scheduled to open on October 25 or may purchase the files
on CD. Bidders were permitted to bid on any combination of loans.
The sales brochure anticipated that the size of the portfolio to
be offered was $800 million UPB.
Unknown Date to be
determined
In the government’s Memorandum
of Points and Authorities in Support of Defendant’s Motion to Dismiss
and for Summary Judgment in the FOIA appeal case, filed in camera,
the following statement is made, redacted in the original version
provided to Hamilton: "Subsequently, on June 6, 1996, pursuant
to 31 USC 3729 et seq. a qui tam complaint, which is referenced
above, was filed under seal in this Court. About a month later,
the Civil Division of the United States Attorney’s Office for the
District of Columbia contacted the HUD OIG and requested the OIG’s
assistance in investigating the allegations in the qui tam action.
Thereafter, the OIG commenced an investigation." This is interesting
in light of the representation in an August 16, 1996 filing in the
qui tam action, where the government states that based upon the
relator's statement of material evidence supplied to the government
with the qui tam complaint and the allegations in the related Bivens
action, the Inspector General of HUD opened an investigation and,
as a result of that investigation, a referral of the allegations
in the Bivens complaint was made to the Criminal Division of the
US Attorney's Office for DC, which opened a criminal investigation
in the matter.
8-Jan-01
Hamilton files a Supplemental
Memorandum in support of Its Motion to Dismiss or, in the alternative,
for Summary Judgment, which incorporates information obtained from
the transcripts of the qui tam hearings, which have just been unsealed
and transcribed.
8-Jan-00
Hamilton receives a call
from the HUD FOIA office reporting that it finally has located the
HUD/Dyncorp contract requested in an August FOIA request.
12-Jan-01
Ervin files a response
to Hamilton's supplemental memorandum in the qui tam lawsuit.
17-Jan-01
HUD Secretary Designate
Mel Martinez testifies before Congress.
17-Jan-01
HUD issues a press release
headlined "Success of HUD Management Reforms Confirmed by GAO --
Department Removed from High Risk List" It says "The General Accounting
Office (GAO) has taken the Department of Housing and Urban Development
off its "high risk" list as a result of significant management reforms
set in place under Secretary Andrew Cuomo’s leadership." In fact,
GAO removed the Community Planning and Development Office from its
high risk list but affirmed the high risk status of HUD's Single
Family Mortgage Insurance and Rental Housing Assistance Program
---approximately 75% of HUD’s financial responsibilities. The release
also highlights the Department's achievements while Andrew Cuomo
served as Secretary, including "The HUD Office of Inspector General
issued the first clean audit of HUD’s financial statements in the
Department’s history in March 1999. This means that for the first
time, the Department’s financial statements are in complete compliance
with all applicable federal requirements." It does not mention that
HUD failed to produce audited financial statements for the 1999
fiscal year as required by law and that the Inspector General had
testified before a Congressional Committee that $59 billion was
unaccounted for during 1999. It quotes Congressman Jim Leach (IA),
former Chair, House Banking Committee, "Some years ago there was
a movement among some to abolish the Department of Housing and Urban
Development. Led by Secretary Cuomo and supporters in Congress,
that initiative was turned back. Most importantly, HUD now is considered
an agency that’s on its feet, doing well, and doing wonderful public
service for people in the housing and urban development arena."
19-Jan-01
Outgoing President Clinton
issues a series of pardons that include Marc Rich and Henry Cisneros.
19-Jan-01
David Kass, HUD Deputy
Assistant Secretary for Congressional and Intergovernmental Affairs,
sends a nearly identical letter of response to inquiries from Senator
Robb's office on behalf of two Solari employees. Regarding the Court
of Claims case, he states, "The parties have raised several complex
legal issues that bear on their entitlement to recovery and the
scope of damages recoverable. Until the rights and liabilities of
the parties are adjudicated by the court, final disposition of any
monies withheld (and any additional moneys owed by Hamilton to the
Government) would be premature. Moreover, the Government's decision
not to participate in the Ervin litigation does not resolve the
issues pending before the Court of Federal Claims since these are
unrelated to the Ervin allegations." No explanation is given as
to why the Office of Procurement Contracts purported to deny Hamilton
the right to convert certain contract receivables to a claim, explaining
that HUD and Hamilton had not reached an "impasse" regarding these
amounts. The conversion of receivables to a claim is required before
Hamilton can sue for such amounts or is entitled to interest on
such amounts under the Federal Acquisition Regulation.
David Kass also sends
a letter to Congressman Clement’s office that says that PD&R
never did a study of the $3.8 million optimization error. This is
not a truthful statement.
20-Jan-01
George W. Bush is inaugurated.
Jan-01
The Washington Post reports
that Cuomo has announced his race for New York Governor and that
the announcement was moved from the home of the ex-wife of Marc
Rich to a Kenneth Cole store due to the controversy around Marc
Rich’s pardon. Cuomo is expected to run against Carl McCall, NY
State Comptroller, in the Democratic primary.
31-Jan-01
Hearing in front of Judge
Oberdorfer in the US District Court for DC on the Hamilton and Williams,
Adley motions to dismiss qui tam lawsuit and Ervin's motion to dismiss
the Hamilton v. Ervin lawsuit.
1-Feb-01
Susan Gaffney, HUD IG,
issues a memo to all OIG employees entitled, "Final Disciplinary
Actions for 2000" documenting wrongdoing by the HUD OIG staff.
This document sets forth the charges made in connection with 20
reprimands, six suspensions and four "removals." The infractions
by OIG personnel include making false statements, misuse of appropriated
funds, altering prices, misuse of government monies and funds, use
of government computers to access internet pornography and unauthorized
contracting and violation of federal procurement regulations.
5-Feb-01
In accordance with Judge
Oberdorfer’s request at the January 31 hearing, Ervin’s counsel
submit to the court a "Timeline of Karen Burstein Letter"
and a "Chris Greer Timeline." The judge rules before Hamilton
has an opportunity to dispute certain inaccuracies in and omissions
from the timelines.
9-Feb-01
Judge Oberdorfer issues
rulings (1) denying Ervin’s motion to dismiss Hamilton’s case against
it and (2) denying Hamilton’s and Williams Adley’s motions to dismiss
the qui tam lawsuit. In the latter order, the judge includes a footnote
"Discovery may lead to evidence of pre-filing law enforcement
actions and public disclosure not now on the record." According
to the order, Ervin's allegations that Hamilton "provided false
invoices to the government to support exaggerated cost estimates"
on their face allege an adequate level of specificity in order to
justify not dismissing the claims. However, nowhere in the order
does the judge mention Ervin's allegations of bid-rigging and insider
trading. With respect to Hamilton's suit against Ervin, the judge
states that, "Hamilton may be able to prove that Ervin's wrongful
actions did cause HUD's cancellation [of Hamilton's contract]."
And "If Hamilton proves that John Ervin acted with malice or improper
purpose outside the scope of his employment, he may be liable personally
in tort."
9-Feb-01
Kelly O’Meara’s story
"Cuomo Leaves HUD in a Shambles" in Insight Magazine
is released on the magazine’s website. Among other things, the
article reports that Cuomo had engaged in "mendacity"
in stating that HUD’s high risk rating by GAO had been dropped.
