Greuel: Housing Authority "Duped" Taxpayers in Spending Scandal

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City Controller Wendy Greuel released a sharply critical audit Monday of the city's low-income housing authority saying taxpayers have been "duped."

"What's clear is that reckless spending and lax travel policies allowed for thousands of dollars to be wasted on lavish meals, there were instances of double dipping and triple dipping, inappropriate reimbursements, and charges for hotel rooms that went unused," Greuel said during a news conference Tuesday.

The audit of the Housing Authority of the City of Los Angeles found deep flaws in the agency's travel policies, Greuel said.

Commissioners and other staff used agency money to pay for the travel of non-staff members and repeatedly spent far above allowed amounts on meals without documenting what was consumed and who was present at the lunches, the audit found.

Employees also "double- dipped,'' paying for expenses with agency purchase cards and later being reimbursed for those same costs., Greuel said.

In addition, Housing Authority employees spent thousands of dollars on work meetings and incentives such as clothes and electronics, Greuel found.

In total, Greuel found the agency spent about $300,000 per year on travel during 2009 and 2010, a 300 percent increase over travel expenses in 2006.

"I believe Los Angeles tax payers were duped by housing authority officials who claim to serve the poor but instead, recklessly spent public money to support their lavish lifestyles," Greuel said.

Councilman Dennis Zine, who is running for City Controller, said it was "frivolous expenditures at the taxpayers' expense."

"This department is facing a $9 million deficit people are getting laid off and maybe if they hadn't frivolously expended dollars, we wouldn't be in this position," Zine said.

The audit showed that illegal actions may have taken place, Zine said, and that some agency employees should be singled out for investigation and terminated. He promised the audit would be expanded into "greater areas of the department."

Housing Authority CEO Rudolf Montiel, who was fired in March, was directly to blame for the abuses, Greuel said. However Mayor Antonio Villaraigosa also shares responsibility since he appointed the commissioners who oversee the agency, she said.

"The mayor's office appoints the commissioners and has oversight over those commissioners, and clearly they needed to be minding the store better,'' Greuel said. "This was an agency that felt no one was watching.''

Villaraigosa did replace four of the seven commissioners after allegations were originally raised earlier this year.

Council members agreed the council should have more authority and oversight of the agency. Council members Jan Perry and Eric Garcetti introduced a motion asking the federal government to change regulations or pass necessary legislation to give the city direct authority over the Housing Authority.

Newly appointed commission chair Mitchell Kamin agreed the city should have more oversight of the agency and called for commissioners to be subject to investigation by the city Ethics Commission.