in Houston, Texas
Scathing audit of Port Arthur Housing Authority questions spending and oversight, calls for repayment of millions
Tuesday, Jun 12, 2012, 10:54AM CST
By Steve Miller
American Express

The Port Arthur Housing Authority used an American Express card to donate $1,000 to charity, pay $1,987 for a rental car for a commissioner and ring up nearly $3,000 in goods from, according to a federal audit of the authority.

“Further, the Authority failed to provide receipts for Lowe’s card charges of $1,300 and gasoline card charges of $6,770. Not only were these charges unreasonable, they did not appear to support the Authority’s or its related entities’ missions,” the audit states, adding that nearly $66,000 in travel costs charged to card statements could not be accounted for.

The audit by the Office of Inspector General of the U.S. Department of Housing and Urban Development requests that the authority repay nearly $5 million in unaccounted for expenditures and that the feds take over control of the authority.

The review is the second in two years for the authority. The first audit, done as part of a review of spending of funding from the American Recovery and Reinvestment Act of 2009, found poor fiscal management on a broad level and suggested the government force the authority to return the entire $725,546 to the U.S. Treasury “for the sole purpose of deficit reduction.”

The government recovered $657,906 of that money.

But the new report covering 2009-2010 found serious expenditure violations, including:

  • “Funds appeared to have been used for expenses that benefited the Authority’s commissioners, management, and employees,” particularly with regard to authority-issued credit cards.
  • “The Authority improperly compensated its commissioners with both cash and noncash items. It paid the resident commissioner a monthly stipend of $200 from April through November 2010 in violation of State law. During the audit period, the Authority also provided its commissioners with noncash compensation in the form of mobile phones, wireless aircards, laptop computers, netbook computers, wireless printers, software, and various peripheral devices costing more than $36,000.”
  • “The Authority also paid $1,050 in HUD funds to a local charter school during the audit period. It recorded the expenditures as ‘Other Sundry Expense-Mgmt’ in its general fund. Public records showed the board chairman was on the board of the charter school.”

Vendors were sometimes not paid in a timely fashion, the audit found, with construction invoices almost never paid on time. Three years ago, the tardiness shut down a project overseen by the authority.

In several instances, the authority refused to provide financial records to the investigating agency, including invoices for Hurricane Ike-related costs or supporting payroll information.

When the auditors asked the authority for its contractor data, it was provided with a list of 37 businesses and individuals and said it had nothing more than the payments made, lacking any oversight of contractor performance. The list was also incomplete, the audit said.

“For example, the Authority did not disclose its contracts with its independent auditor, an office supply company, and a plumbing
company, all of which it paid more than $100,000 during the review period.”

In its Disaster Housing Assistance Program after Hurricane Ike, the authority paid its management contractor for six months after the contract expired and paid $44,760 60 “in duplicated salary costs, including bonuses for its … contract.”

The audit recommended that the Departmental Enforcement Center, the ethics and watchdog arm of HUD, act on these findings, with “appropriate administrative action, including possible debarment, against the executive director and commissioners.”

In its response to the original draft audit, the authority accused the auditors of failing to interview the authority’s commissioners before recommending disbarment and that claims of a refusal to turn over records stemmed from the OIG’s “poor record keeping” of records that it did produce and were lost by the investigators.

It also asks that it not be required to repay HUD for unaccounted expenditures, calling the move “drastic in the absence of a
determination that the expenses were improperly incurred.”

The authority also contested any repayment of questioned credit card expenditures. The charitable donation, to CASA of Southeast Texas, a group that provides court-appointed advocates to abused and neglected children, was not made with federal funds, the authority claimed, but through another arm of the group, the Port Arthur Affordable Housing Program.

The Amazon charges were not supported by any information that they were unnecessary, the authority claimed. The rental car was a personal purchase, it admitted, “inadvertently applied to the American Express card by the rental company with whom the Authority has a corporate account.”

The authority claimed that “OIG's baseless assumptions, errors and overreaching should not influence HUD's assessment of the 2011 audit findings in the draft report.”

Board member Ronnie Linden said he had no opinion of the audit or its recommendations and directed calls to Executive Director Seledonio Quesada, who did not return a phone message.

Records show Linden owes Jefferson County $818.99 in back property taxes.

“I don’t know anything about that,” Linden said. “They usually send me a statement if I’m behind.”

Contact Steve Miller at 832-303-9420 or

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Photo of American Express card by flickr user tokyo.natural, used via a Creative Commons license.

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