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January 24, 2010

Jorge Fitz-Gibbon
jfitzgib@lohud.com

MOUNT VERNON — Four years after a federal audit found that Mount Vernon had bilked the
government out of nearly $2 million, no explanation has surfaced for the missing cash.

And no one seems to be asking, even as taxpayers pick up the tab.

The 2006 audit by the Department of Housing and Urban Development prompted the state to turn over
the city's Section 8 housing program to Westchester County, which found that widespread irregularities
and poor record keeping were rampant.

Officials said that as many as half of the city's allotted vouchers for federal housing subsidies were
discontinued — many were found to be fraudulent or simply could not be verified as legitimate.

Yet, while the investigation led to indictments against a former city planning commissioner and her
businessman boyfriend, no charges have ever been filed in connection with the irregularities in the
Section 8 program.

"There should have been or should be some sense of what corrective action should be taken to
strengthen the controls in the City of Mount Vernon," said Westchester County Legislator Lyndon
Williams, a city councilman at the time of the audit. "It's never happened as far as I know."

The City Council launched an inquiry into the Section 8 issues after the HUD audit. But the council
backed off when federal investigators stepped up their scrutiny of Mount Vernon City Hall.

Janice Oh, a spokeswoman for the U.S. Attorney's Office, said the agency's policy is to neither
confirm nor deny the existence of any investigation. But a source familiar with the probe said the
investigation was continuing and active.

However, HUD officials said that, from their agency's perspective, the Section 8 portion of the
investigation was settled when Mount Vernon agreed to repay the missing money — ultimately with city
taxpayer dollars.

"We are satisfied," said HUD spokesman Adam Glantz. "... We are not looking at any individual."

Mount Vernon Mayor Clinton Young, who negotiated the HUD settlement, cited the Section 8
controversy for his decision to appoint a city inspector general.

But no charges, nor explanation, ever emerged from either federal investigators or the city's Inspector
General's Office. Nor do any of the entities involved have an incentive to pursue it: The city no longer
runs the program, the county didn't run it when the money went missing, and HUD is recouping the
money it lost.

"The onus is upon the federal government," Young said Thursday.

Hank Miller, the mayor's deputy chief of staff, spoke in more detail, adding that "it's federal money,
and any onus on federal prosecutions in this matter would be on the federal government."

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"If they feel anything rose to any level of criminal conduct we would certainly encourage and cooperate
with federal investigators," Miller said.

This month, federal prosecutors unsealed a 43-page indictment charging three prominent political
figures in Yonkers with fraud, conspiracy and bribery.

The indictments, handed up in U.S. District Court in White Plains, charged former Democratic
Councilwoman Sandy Annabi with selling her vote on controversial construction projects "for baubles
and trinkets."

Investigators said Annabi accepted bribes from former city GOP Chairman Zehy Jereis — Annabi's
cousin — and politically connected attorney Anthony Mangone to cast the deciding votes on both the
Ridge Hill and Longfellow School development projects.

In Mount Vernon, federal investigators launched a separate probe in October 2005 targeting the city's
Urban Renewal Agency, which oversaw the Section 8 program. Section 8 is a federal program that
offers rent subsidies to qualifying low-income residents.

On Feb. 16, 2006, HUD released an audit that said the agency overbilled the department by more than
$1.7 million in Section 8 subsidies between 2003 and 2004. All told, HUD said later, the city owed the
agency well more than $2 million — a figure disputed by the city.

Citing poor record keeping and gross mismanagement of the Section 8 housing program, the audit
noted that the city billed HUD for unused housing vouchers, failed to recertify tenants, and bumped
some tenants to the top of a waiting list. At one point the city billed HUD for 400 unused housing
vouchers — while more than 1,000 residents were on the waiting list.

The city could not document nearly a dozen transactions for which HUD was billed a total of $479,138,
the audit said.

When Westchester County took over the program at the state's behest, it found that Mount Vernon
was using only about 600 of its 865 alloted vouchers. The records were so unreliable that the county
had to scrap them and begin its own verification of each Section 8 client.

But as many as half of the families listed as participants in the Mount Vernon Section 8 program opted
to drop out rather than go through a new verification process — raising doubts about their validity in
the first place.

Donna Greene, a spokeswoman for County Executive Robert Astorino, said that she could not
comment but that all of the pertinent documents had been turned over to HUD inspectors. She said
Westchester had addressed any irregularities that may have existed in the program.

The Mount Vernon investigation ultimately became a multiagency probe, with HUD, the FBI, the U.S.
Attorney's Office and the Internal Revenue Service seizing more than 8,000 documents.

Federal investigators also looked beyond Section 8, examining the Urban Renewal Agency's books and
contracts. In March 2008, a federal indictment charged former Mount Vernon Planning Commissioner
Constance "Gerri" Post with steering more than $2 million in contracts to local businessman Wayne
Charles, her boyfriend at the time.

Post and Charles were found guilty of conspiracy and fraud charges last year and are awaiting
sentencing.

Investigators delved into other areas as well, including the city's Democratic Party.

Mount Vernon Buildings Commissioner Ralph Tedesco, who stepped down last year, resigned as the
party's longtime treasurer after federal subpoenas sought copies of the financial records.

The Journal News reported in 2008 that Tedesco signed off on a building permit for the fire-damaged

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home of then-Democratic Chairwoman Serapher Conn-Halevi without necessary approvals from city
boards.

Conn-Halevi and her family were also named in subpoenas, including documents relating to payments
to her daughter, Naomi Halevi, as treasurer of her mother's campaign committee.

The Journal News reported earlier that the two paid themselves $20,000 in 2007 from Conn-Halevi's
committee, The Chairwoman's Trust.

Conn-Halevi's son, Nahshon Halevi, worked under Post in the Urban Renewal Agency and was a
witness at her trial. Nahshon Halevi worked briefly as an assistant in the Section 8 program after the
county took it over.

All told, federal scrutiny led to three convictions. In addition to Post and Charles, Albert "Allie Boy"
Tranquillo III, a local garbage hauler, was charged in a separate case.

No word, however, on why $2 million in federal funds remains unaccounted for after four years.

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