OIG-CA-24-020: Emergency Rental Assistance (ERA1) Program Notice of Recoupment – State of Missouri

Summary

Treasury Office of Inspector General OIG-CA-24-020, dated July 29, 2024, Emergency Rental Assistance (ERA1) Program Notice of Recoupment – State of Missouri. The summary states that in June 2023 OIG made an inquiry to the Missouri Housing Development Commission (MHDC), a subrecipient, about an allegation of fraud reported to the OIG Hotline, and determined that MHDC paid out ERA1 funds in the amount of $24,600 in violation of the ERA1 statute because the funds were disbursed to an ineligible household. It states that on April 18, 2024 Treasury's Bureau of the Fiscal Service issued an invoice for $24,600 to the State of Missouri, establishing a debt to the Federal Government. It states that the review ran from June 2023 to April 2024 and that the Notice includes the State's written response and OIG's evaluation.

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Issuer: Inspector general and oversight reports
Document type: Oig Ca 24 020 Emergency Rental Assistance Era1 Program Notice Of Recoupment State Of
Case: Oig Ca 24 020 Emergency Rental Assistance Era1 Program Notice Of Recoupment State Of

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“OIG-CA-24-020: Emergency Rental Assistance (ERA1) Program Notice of Recoupment – State of Missouri.” Original at oig.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/oig-ca-24-020-emergency-rental-assistance-era1-program-notice-of-recoupment-state-of/, SHA-256 67ebcc45678d7a2c48909c9b5ea88ea2efe29a47cbefa6b768222ee9eea83fec.

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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220

OFFICE OF
INSPECTOR GENERAL

OIG-CA-24-020
July 29, 2024

Emergency Rental Assistance (ERA1) Program
Notice of Recoupment – State of Missouri
Summary
The ERA1 statute (Division N, Title V, Subtitle A, § 501, of the Consolidated
Appropriations Act, 2021 (Pub. L. No. 116-260), Dec. 27, 2020, and codified at
15 USC § 9058a) directs the Department of the Treasury (Treasury) to make
allocations and payments to eligible grantees such as States and local
governments, who in-turn, make funding available in the form of rental assistance
to eligible households. The statute also directs the Treasury Office of Inspector
General (OIG) to conduct monitoring and oversight of the receipt, disbursement,
and use of funds made available to grantees. As part of this oversight authority, if
OIG determines that a grantee failed to comply with the use of funds requirements
in the statute, the amount equal to the amount of funds used in violation shall be
booked as a debt of such entity owed to the Federal Government.
The State of Missouri is a recipient of funds under the ERA1 statute. In June 2023,
we made an inquiry to Missouri Housing Development Commission (MHDC), a
subrecipient that administers the ERA program for the State of Missouri, regarding
an allegation of fraud reported by MHDC to the OIG Hotline that an individual
submitted fraudulent applications to receive rental assistance funds. Based on the
information obtained in response to our inquiry, we determined that MHDC paid out
ERA1 funds in the amount of $24,600 in violation of the ERA1 statute because the
funds were disbursed to an ineligible household. On April 18, 2024, Treasury’s
Bureau of the Fiscal Service issued an invoice for $24,600 to the State of Missouri,
establishing a debt to the Federal Government.
The following document is OIG’s Notice of Recoupment (Notice) that established
this debt. The State of Missouri was given an opportunity to provide a written
response to a draft of the Notice and its written response and our evaluation of
that response is also included in the Notice.
We conducted our review of this ERA case from June 2023 to April 2024. We
inquired of the grantee and other relevant parties, reviewed related documentation,
and performed other appropriate procedures. We believe the evidence obtained is
sufficient and appropriate to provide a reasonable basis for our determination in this
Notice.
In conducting our review, we followed the OIG’s system of quality management for
ensuring that the information in this report is accurate. We also followed the
Council of the Inspectors General on Integrity and Efficiency (CIGIE) Quality
Standards for Federal Offices of Inspector General which require that our work
adheres to its general standards for integrity to include objectivity, independence,
professional judgement, and confidentiality as well as its general standard for
receiving and reviewing allegations.
Distribution
Department of the Treasury
Jessica Milano, Chief Program Officer, Office of Capital Access
Gregory Till, Chief Operating Officer, Office of Capital Access
Danielle Christensen, Deputy Chief Program Officer for State & Local
Programs, Office of Capital Access
Michelle Dickerman, Deputy Assistant General Counsel, Office of the General
Counsel
Stephen Milligan, Deputy Assistant General Counsel, Office of the General
Council
Carolyn Appel, Attorney-Advisor, Office of the General Counsel
Blossom Butcher-Sumner, Attorney-Advisor, Office of the General Council
State of Missouri
Missouri Housing Development Commission

ii
DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220

OFFICE OF
INSPECTOR GENERAL

Notice of Recoupment
Emergency Rental Assistance
Division N, Title V, Subtitle A, § 501 of the Consolidated Appropriations Act, 2021
(Pub. L. No. 116-260), Dec. 27, 2020, and codified at 15 USC § 9058a. (ERA1)

December 5, 2023
Grantee: State of Missouri
Point of Contact: Shawn McCauley
Shawn.McCauley@oa.mo.gov
(573) 526-4200
Mailing Address: 301 W High Street, Room 570, Jefferson City, Missouri 65101
Federal Award Identification Numbers: ERA0300, ERA0449
Proposed Recoupment Amount: $24,600.00
Background/Legal Authority
Under ERA1 section 501(c), Use of Funds, an eligible grantee shall only use ERA1
funds to provide financial assistance and housing stability services to eligible
households. The financial assistance includes: the payment of rent; rent arrears;
utilities and home energy costs; utilities and home energy costs arrears; and other
expenses related to housing incurred due, directly or indirectly, to the COVID-19
outbreak, as defined by the Department of the Treasury (Treasury). Such
assistance shall be provided for a period not to exceed 12 months except that
grantees may provide assistance for an additional 3 months to ensure housing
stability (subject to availability of funds). ERA1 allows for up to 3 months (with
exceptions) for prospective rent payments within the 12/15 month total assistance
limitation.
ERA1 section 501(k)(3) defines eligible household as a household of 1 or more
individuals who are obligated to pay rent on a residential dwelling and that (1) 1 or
more individuals within the household has qualified for unemployment benefits or
experienced a reduction in household income, incurred significant costs, or
experienced other financial hardship due, directly or indirectly, to the COVID-19

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
outbreak, which the applicant shall attest in writing; (2) 1 or more individuals
within the household can demonstrate a risk of experiencing homelessness or
housing instability, which may include a past due utility or rent notice or eviction
notice; unsafe or unhealthy living conditions; or any other evidence of such risk, as
determined by the eligible grantee involved; and (3) the household has a household
income that is not more than 80 percent of the area median income for the
household. The grantee must also ensure that, to the extent feasible, any rental
assistance provided to an eligible household is not duplicative of any other federally
funded rental assistance provided to such household.
Pursuant to its authorities, Treasury established the last day of availability for ERA1
funds as December 29, 2022.
ERA1 section 501(i), Inspector General Oversight; Recoupment, directed that the
Treasury Office of Inspector General (OIG) conduct monitoring and oversight of the
receipt, disbursement, and use of funds made available under the Act. As part of
this authority, if OIG determines that a grantee failed to comply with the use of
funds requirements in the Act (section 501(c)), the amount equal to the amount of
funds used in violation shall be booked as a debt of such entity owed to the Federal
Government.
Facts and Analysis
On June 6, 2023, we made an inquiry to Missouri Housing Development
Commission (MHDC), a subrecipient that administers the ERA program for the
State of Missouri (Grantee), regarding a complaint (allegation of fraud) reported by
an MHDC representative to the OIG Hotline that an individual submitted fraudulent
applications to receive rental assistance funds. In its June 20, 2023, response to
our inquiry, MHDC reported that the individual identified in the complaint had
submitted two applications posing as a landlord. In the first application (No. ),
MHDC detected, among other things, that the address for which assistance was
requested was not valid, and that the address where the landlord purported to
reside also was not valid. In the second application (No. ), MHDC found that
the landlord, in the application, did not own the property for which assistance was
sought. MHDC determined that there was a likelihood of fraud and the individual
was banned from future participation in MHDC’s ERA program. However, for these
two applications, MHDC had already paid out from ERA1 funds a total of $24,600
($16,800 and $7,800, respectively) for rent and rent arrears.
Based on the information obtained in response to our inquiry, we determined that
MHDC paid out ERA1 funds in violation of the Use of Funds statute because the
funds were disbursed to an ineligible household. That is, there was no established
obligation by the tenants to pay rent for the two properties for which assistance

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
payments were made. Accordingly, these funds are required to be returned to the
Federal Government.
Grantee Response
We provided the State of Missouri an opportunity to respond to our Notice of
Proposed Recoupment. On October 20, 2023, the State of Missouri provided
MHDC’s written response regarding the payments of financial assistance for the
two applications in question. MHDC’s written response is included in the Appendix
to this Notice. 1 In its response, MHDC provided comments related to its ERA
policies and procedures and the two subject applications for ERA1 financial
assistance. In addition, MHDC asserted that it is inappropriate for Treasury OIG to
seek recoupment and requested that Treasury OIG withdraw this Notice. MHDC’s
response is summarized below.
• MHDC’s policies and procedures for the review and approval of emergency
rental assistance applications for eligible households under ERA1 have, at all
times, conformed to statutory requirements and all additional guidance set
forth by Treasury. MHDC requires an executed written lease, with limited
exceptions. In the absence of a lease, MHDC may permit alternative forms of
proof. Additionally, MHDC collects information to verify all income and/or
hardship information required under ERA1 section 501(k)(3), including self-
attestations. In this case, the two subject applications contained all the
information required under the statute and with Treasury guidance to
determine the applicant was an eligible household, including bank
statements, supporting financial and hardship information, self-attestations,
and signed current leases that identify the unit where the applicant resides
and establish the rental payment amount.

• In the first application (identified by MHDC as No. ), made on May 29,
2021, the applicant included all required information, including a current
executed lease. After review, MHDC had no cause to deny the application as
it was an eligible household according to ERA1 requirements supported by
the documentation provided to MHDC by the applicant and MHDC
appropriately granted the request for ERA funds, in the amount of $7,800,
which was paid on July 6, 2021. Treasury OIG identifies the issue with the
first application as being that the address for assistance that was requested
was not valid and that the address where the landlord purported to live was
not valid. Upon further inquiry, the addresses of the property subject to the
lease and residence of the landlord both do exist within the City of St. Louis,

1
The exhibits supporting MHDC’s written response are not included as part of this Notice due to
the volume of information provided. These exhibits were considered as part of our evaluation of
MDHC’s response.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
just located in specific municipal subdivisions within the greater St. Louis
area that the applications could have inadvertently referenced in error.

• On July 12, 2021, a second application was submitted (identified by MHDC
as No. ), which also included all required information, including a
current lease. After review, MHDC had no cause to deny the application as it
was an eligible household according to ERA1 requirements supported by the
documentation provided to MHDC by the applicant and MHDC appropriately
granted the request for ERA1 funds, in the amount of $16,800, which was
paid on August 10, 2021. Treasury OIG identifies the issue with the second
application as being that the landlord applicant did not actually own the
property ERA1 funds were requested to support. The suspicion that the
landlord applicant is not the owner of the property was only discovered
subsequent to the application being made and after MHDC correctly
determined the application to be an eligible household at the time of
application fully supported by an executed lease and all other required
information.

• At the time the applications were received and evaluated to determine
eligibility, there were no suspicious facts known that would have given rise
to a denial of ERA1 funds under the statutory rules and Treasury guidance.
Upon additional limited investigation, MHDC determined that the two subject
applications were suspicious and suspended the applicant from any further
use of MHDC’s ERA program. MHDC is not able to determine for certainty
whether any particular applicant has engaged in fraudulent behavior in
submitting applications or documentation. MHDC’s role in administering
ERA1 funds is to determine whether the applicant is an eligible household at
the time application is made, has provided supporting documentation in
accordance with ERA1 section 501(c) and section 501(k)(3), as well as
Treasury guidance, and to authorize the payment of funds to the applicant if
the applicant has provided all of the required materials supporting a good
faith determination of eligibility.

• Treasury’s guidance to grantees since the inception of ERA has been to
quickly administer emergency rental assistance to eligible households but to
not impose undue documentation burdens upon recipients given the scope of
the need. MHDC faithfully observes Treasury’s preference for lease
documentation of residency, income and hardship documentation, and self-
attestation. It is inconsistent with statute and Treasury’s guidance to
attempt to recoup funds from the Grantee (essentially punishing MHDC) for
reporting suspicious behavior related to a particular ERA applicant discovered
subsequent to the legitimate determination of eligibility and good faith

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
payment of ERA funds authorized in full compliance with all applicable rules.
Treasury OIG seeking recoupment in this matter and under these
circumstances is inappropriate and MHDC requests that Treasury OIG
withdraw this Notice.
OIG Evaluation
We considered MHDC’s written response in finalizing this notice. Of note, in its
response MHDC mistakenly associated Application No. to the issue of invalid
tenant and landlord addresses. This issue relates to Application No. Further,
MHDC mistakenly associated Application No. to the issue of the landlord not
being the property owner. This issue relates to Application No. For our
evaluation, we presumed that MHDC intended to associate each issue with the
appropriate application in its response.
For Application No. MHDC did not provide sufficient evidence to support
that it was an eligible household. In its response, MHDC claims it had no cause to
deny this application as it was an eligible household according to ERA1
requirements. Along with its response, MHDC provided screenshots of Google
Maps searches that are intended to support its determination that the
properties/addresses in the application are valid, including the property located at
8540 Place, University City, MO. However, MHDC’s assertion that this
property/address is valid and exists within the City of St. Louis is misleading. One
of MHDC’s screenshots shows an arbitrary pin on a map without any physical
property or address number. See Figure 1 below. In our search of the St. Louis
County Assessor’s Office records, we found each house at and around the Google
Maps pin that MHDC provided in its response with the corresponding property
address around the pin. However, that address, 8540 Place, does not
exist by way of picture (see Figure 2) or property record (see Figures 3 and 4).
Furthermore, an internal MHDC post-payment review of this application reached the
same conclusion in a report dated September 8, 2021. As such, we conclude that
this was not an eligible household.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Figure 1. Google Maps Screenshot for 8540 Place Provided by MHDC

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Figures 2, 3, and 4. St. Louis County Assessor’s Records for the Property Address
of 8540 Place, Retrieved by Treasury OIG

Figure 2. Street View at the Site of the Pin in Figure 1 Shows No Property
Located at 8540 Place (No Even Numbered Addresses Facing that
Area of Place)

Figure 3. St. Louis County Assessor’s Look-up/Search for the Property Address in
Question

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Figure 4. St. Louis County Assessor’s Search Results for the Property Address
in Question

For Application No. MHDC did not provide sufficient evidence to support
that it was an eligible household. In its response, MHDC claims it had no cause to
deny this application as it was an eligible household according to ERA1
requirements. In its written response, MHDC acknowledged that the landlord listed
in Application No. was not the owner of the property located at
. Additionally, using a simple search of St. Louis
County Assessor’s Records, we confirmed that the applicant’s name does not
match the name of the owner of the property in question, nor has it matched the
name of the owner (going back at least to 2017). See Figure 5. As such, we
conclude that this was not an eligible household.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Figure 5. St. Louis County Assessor’s Records Showing Ownership of the Property
Located at , Retrieved by Treasury OIG

Finally, MHDC’s assertion that it is inconsistent with statute and Treasury’s
guidance to attempt to recoup funds from the Grantee for reporting suspicious
behavior discovered subsequent to the determination of eligibility and good faith
payment of ERA funds is misguided. Under ERA1 section 501(i), if a Grantee failed
to comply with the Use of Funds requirements in the Act which requires that funds
are only to be used to provide financial assistance and housing stability services to
eligible households, the amount equal to the amount of funds used in violation shall
be booked as a debt owed to the Federal Government. In accordance with the
statute, this recoupment is valid because MHDC did not comply with the Use of
Funds requirements when it provided financial assistance to ineligible households
for the two subject applications.
Based on our evaluation of MHDC’s response to OIG’s Notice of Proposed
Recoupment, MHDC has not provided sufficient evidence to demonstrate that the
financial assistance provided for the subject applications were for eligible
households. Accordingly, these funds are required to be returned to the Federal
Government.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix

Grantee Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix

Grantee Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix

Grantee Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.

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