OIG-CA-24-022: Emergency Rental Assistance Program (ERA2) – Questioned Cost Finding, State of Michigan
Summary
Memorandum OIG-CA-24-022 of the Department of the Treasury Office of Inspector General, dated August 5, 2024, to Jessica Milano, Chief Program Officer, Office of Capital Access, on the subject Emergency Rental Assistance Program (ERA2) - Questioned Cost Finding, State of Michigan. It states that on August 18, 2021 the OIG received a complaint that alleged an individual submitted fraudulent documentation to receive rental assistance funds, and that on May 12, 2023 it referred the complaint to the State of Michigan. It states that the OIG determined the State of Michigan paid out $11,400 of ERA2 funds in violation of the Use of Funds statute because the funds were paid to an ineligible household. It states that the State of Michigan reimbursed its ERA2 program account for $11,400 with non-Federal funds, and that the OIG makes no recommendation to Treasury management.
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- Oig Ca 24 022 Emergency Rental Assistance Program Era2 Questioned Cost Finding State
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- Oig Ca 24 022 Emergency Rental Assistance Program Era2 Questioned Cost Finding State
Cite this document
“OIG-CA-24-022: Emergency Rental Assistance Program (ERA2) – Questioned Cost Finding, State of Michigan.”
Original at oig.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/oig-ca-24-022-emergency-rental-assistance-program-era2-questioned-cost-finding-state/
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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF
INSPECTOR GENERAL
August 5, 2024
OIG-CA-24-022
MEMORANDUM FOR JESSICA MILANO
CHIEF PROGRAM OFFICER, OFFICE OF CAPITAL ACCESS
FROM: Marla A. Freedman /s/
Executive Advisor, Office of Audit
and
Robert A. Taylor, Jr. /s/
Executive Advisor, Office of Audit
SUBJECT: Emergency Rental Assistance Program (ERA2) - Questioned
Cost Finding, State of Michigan
On August 18, 2021, the Department of the Treasury’s (Treasury) Office of
Inspector General (OIG) received a complaint that alleged an individual submitted
fraudulent documentation to receive rental assistance funds. 1 On May 12, 2023,
OIG referred this complaint to the State of Michigan for its review. Based on the
results of its review, we determined that the State of Michigan paid out $11,400
of ERA2 funds in violation of the Use of Funds statute because the funds were paid
to an ineligible household. In response to a draft of this questioned cost finding, the
State of Michigan reimbursed its ERA2 program account for $11,400 2 with non-
Federal funds. Accordingly, we make no recommendation to Treasury management
in this memorandum.
Background/Legal Authority
Under ERA2 section 3201(d), Use of Funds, an eligible grantee shall only use ERA2
funds to provide financial assistance and housing stability services to eligible
1
During the COVID-19 pandemic, Congress authorized and funded two ERA programs administered
by Treasury to provide rental assistance to eligible households: (1) ERA1 - 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: and (2) ERA2 - Title III, Subtitle B, § 3201 of the American
Rescue Plan Act (Pub. L. No. 117-2), Mar. 11, 2021, and codified as 15 USC § 9058c.
2
The Draft Questioned Cost Finding, dated February 7, 2024, had a questioned cost amount of
$14,150. On March 19, 2024, the Michigan State Housing Development Authority informed us that
the amount the subrecipient paid on the application in question was adjusted to $11,400 in October
2023.
Page 2
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, as defined by Treasury. Such assistance shall be
provided for a period not to exceed 18 months.
ERA2 section 3201(f)(2) defines eligible household as a household of one or more
individuals who are obligated to pay rent on a residential dwelling and that (1) one
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
outbreak; (2) one or more individuals within the household can demonstrate a risk
of experiencing homelessness or housing instability; and (3) the household has a
household income that is not more than 80 percent of the area median income for
the household.
Facts and Analysis
On May 12, 2023, we made an inquiry to the State of Michigan regarding a
complaint (allegation of fraud) that an individual submitted fraudulent documents to
receive rental assistance funds. On May 26, 2023, the State of Michigan provided
an investigative report completed by the Michigan State Housing Development
Authority’s (MSHDA) Office of Audit, Compliance, and Fraud Investigation (ACFI),
in response to our inquiry. Specifically, on May 23, 2023, ACFI initiated an
investigative review based on the information the OIG provided in the referred
complaint. ACFI identified that an individual had submitted two applications to two
subrecipients of the State of Michigan, Application # to Macomb
Community Action Agency and Application # to Wayne Metropolitan
Community Action Agency. For Application # the subrecipient denied the
application because requested supporting documentation for proof of tenant
occupancy and landlord property ownership was not provided. For Application
# ACFI determined that the applicant had submitted a fabricated lease
agreement and false landlord information, including a false social security number,
and a fabricated record of property ownership. Nevertheless, the subrecipient
approved this application, resulting in the individual improperly receiving $11,400
in ERA2 financial assistance.
Based on the information obtained in response to our inquiry, we determined that
the State of Michigan, through its subrecipient Wayne Metropolitan Community
Action Agency, paid out ERA2 funds in violation of the Use of Funds statute
because funds were disbursed to an ineligible household. Accordingly, OIG
Page 3
questioned the cost of $11,400 for the ERA2 financial assistance paid to this
individual. 3
State of Michigan Response
We provided the State of Michigan with an opportunity to respond to a draft of this
questioned cost finding. In its written response dated February 20, 2024, which is
included in the Appendix to this memorandum, MSHDA agreed that the ERA2
financial assistance was most likely provided to an ineligible household due to false
information provided by both the tenant and landlord in the application process.
MSHDA also informed us that they removed this cost from the ERA2 program. 4
OIG Evaluation
MSHDA’s response and action addressed our questioned cost finding. We reviewed
the supporting documentation provided which showed that MSHDA did reimburse
the ERA2 program for the ineligible financial assistance amount with non-Federal
funds. According, we make no recommendation to Treasury management in this
memorandum.
We provided Treasury with an opportunity to review a draft of this memorandum,
but Treasury declined to submit a formal response because there were no
recommendations.
Methodology
We conducted our review of this ERA complaint from October 2022 to August
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
findings and conclusions in this report.
In conducting our review, we followed the OIG’s quality control procedures for
ensuring that the information in this report is accurate and supported. Additionally,
3
The term "questioned cost" means a cost that is questioned by OIG because of (1) an alleged
violation of a provision of a law, regulation, contract, grant, cooperative agreement, or other
agreement or document governing the expenditure of funds; (2) a finding that, at the time of the
audit, the cost is not supported by adequate documentation; or (3) a finding that the expenditure of
funds for the intended purpose is unnecessary or unreasonable. (See 5 USC 405(a)(4))
4
Based on its response to our draft questioned cost finding, we requested additional documentation
showing that MSHDA did reimburse the ERA2 program with non-Federal funds. MSHDA provided
that documentation on April 16, 2024.
Page 4
CIGIE’s Quality Standards for Federal Offices of Inspector General require that our
work adheres to its general standard for integrity and related elements of integrity,
objectivity, confidentiality, independence, and professional judgment, and to its
general standard for receiving and reviewing allegations. We adhered to these
standards in performing our work.
Page 5
Appendix
Grantee Response
Page 6
Distribution
Department of the Treasury
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 Michigan
Michigan State Housing Development Authority
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