Emergency Rental Assistance (ERA1) Program Notice of Recoupment — State of Washington (OIG-CA-24-024)

Summary

Department of the Treasury Office of Inspector General document OIG-CA-24-024, dated August 14, 2024, Emergency Rental Assistance (ERA1) Program Notice of Recoupment – State of Washington. The summary states that OIG received a report from a Thurston County internal auditor of 10 cases of suspected and confirmed fraudulent ERA1 payments, agreed with the conclusions on 9 of the 10 cases, and determined that the State of Washington, through its subrecipient, paid out ERA1 funds totaling $151,685.49 in violation of the ERA1 statute because the funds were disbursed to ineligible households. It states that on July 16, 2024 Treasury's Bureau of the Fiscal Service issued an invoice for $151,685.49 establishing a debt, and that the attached Notice of Recoupment is dated July 9, 2024.

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Issuer: Inspector general and oversight reports
Document type: Oig Ca 24 024 Emergency Rental Assistance Era1 Program Notice Of Recoupment State Of
Case: Oig Ca 24 024 Emergency Rental Assistance Era1 Program Notice Of Recoupment State Of

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“Emergency Rental Assistance (ERA1) Program Notice of Recoupment — State of Washington (OIG-CA-24-024).” Original at oig.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/oig-ca-24-024-emergency-rental-assistance-era1-program-notice-of-recoupment-state-of/, SHA-256 831dfb41766cb045ab811bd993779d1f5f4c4bd91fe66f427dec6661d4380b64.

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

OFFICE OF
INSPECTOR GENERAL

OIG-CA-24-024
August 14, 2024

Emergency Rental Assistance (ERA1) Program
Notice of Recoupment – State of Washington
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 Washington is a recipient of funds under the ERA1 statute. In August
2023, we received a report from a Thurston County internal auditor of 10 cases of
suspected and confirmed fraudulent ERA1 financial assistance payments made by
Thurston County Public Health and Social Services, a subrecipient of the State of
Washington. We agreed with the Thurston County internal auditor’s conclusions on
9 of the 10 cases. Based on the information provided, we determined that the
State of Washington, through its subrecipient, Thurston County Public Health and
Social Services’ ERA1 program, paid out ERA1 funds totaling $151,685.49 in
violation of the ERA1 statute because the funds were disbursed to ineligible
households. On July 16, 2024, Treasury’s Bureau of the Fiscal Service issued an
invoice for $151,685.49 to the State of Washington establishing a debt to the
Federal Government.
The following document is OIG’s Notice of Recoupment (Notice) that established
this debt. The State of Washington 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 November 2023 to July 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 judgment, 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
Counsel
Carolyn Appel, Attorney-Advisor, Office of the General Counsel
Blossom Butcher-Sumner, Attorney-Advisor, Office of the General Counsel
State of Washington

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)

July 9, 2024
Grantee: State of Washington
Points of Contact: Kathryn Dodge, Program Manager
Kathryn.Dodge@commerce.wa.gov

Jean Denslow, Managing Director – Accounting Services
Jean.Denslow@commerce.wa.gov
(360) 725-2739

Mailing Address: PO Box 42525, Olympia, WA 98504 or
1011 Plum Street, Olympia, WA 98504
Federal Award Identification Number: ERA0023
Recoupment Amount: $151,685.49
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.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
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
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 August 18, 2023, we received a bulk report 1 from a Thurston County internal
auditor of 10 cases of suspected and confirmed fraudulent ERA1 financial
assistance payments made by Thurston County Public Health and Social Services, a

1
For this Notice, Treasury OIG defines a “bulk report” as a report of multiple suspected or
confirmed fraudulent ERA financial assistance payments made by a grantee or subrecipient; the bulk
report may come directly from the grantee, subrecipient, or from the Treasury OIG Office of
Investigations (OI). There could also be instances where, upon review of individually reported
complaints, Treasury OIG determines there to be a “common source” of reporting (e.g., from a
grantee or subrecipient) and decides, for purposes of efficiency, to work all the “common source”
suspected or confirmed fraudulent ERA financial assistance payments as a bulk report.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
subrecipient of the State of Washington. 2 We agreed with the Thurston County
internal auditor’s conclusions on 9 of the 10 cases as follows: 3
1. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor sent a
survey to the property owner on record for tenant information. The property
owner returned the survey confirming that she owned the property, and
stating that she did not have any renters and was not aware of any rental
assistance. The rental arrears financial assistance paid out of Thurston
County Public Health and Social Services’ ERA1 program for this application
totaled $26,400.

2. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor spoke with
the property owner on August 15, 2022, who stated that she lived in the
home with her family, and she did not rent it out. The rental arrears financial
assistance paid out of Thurston County Public Health and Social Services’
ERA1 program for this application totaled $21,000.

3. For application # the Thurston County internal auditor
spoke with the property owner on October 13, 2022, who stated that he
purchased the home in January 2021, and he did not rent it out at the time
of application. In addition, the property owner stated that the email and
payment address associated with his name on the application were not
known to him. The rental arrears financial assistance paid out of Thurston
County Public Health and Social Services’ ERA1 program for this application
totaled $18,450.

4. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor sent a
survey to the property owner on record for tenant information. The property
owner’s estate executor responded to the survey on September 28, 2022,

2
Pursuant to 2 CFR § 200.113, Mandatory disclosures, under the Uniform Administrative
Requirements, Cost Principles, and Audit Requirements, grantees must disclose, in a timely manner,
in writing to the Federal awarding agency all violations of Federal criminal law involving fraud
potentially affecting the Federal award.
3
While the Thurston County internal auditor identified 10 cases to be suspected of fraud, we
agreed with his determination on 9 of them. Due to insufficient evidence, we were unable to
reasonably conclude that an improper payment occurred for 1 case.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
stating that the property was vacant and had not been rented since 2018.
The rental arrears financial assistance paid out of Thurston County Public
Health and Social Services’ ERA1 program for this application totaled
$18,000.

5. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor spoke with
the property owner on August 17, 2022, who stated that he had tenants in
this property, but none of them matched the tenant information on the
application. Also, the landlord did not authorize any third-party to accept rent
on his behalf. The rental arrears financial assistance paid out of Thurston
County Public Health and Social Services’ ERA1 program for this application
totaled $18,000.

6. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor spoke with
the property owner on September 21, 2022, who stated that the landlord on
the application was a former tenant who moved out a year prior. The
property owner did not authorize a third-party to accept rent on his behalf
and the applicant on the application was not a current tenant. The rental
arrears financial assistance paid out of Thurston County Public Health and
Social Services’ ERA1 program for this application totaled $15,400.

7. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor spoke with
the property manager on November 28, 2022, who stated that the landlord
on the application was actually the property tenant. The rental arrears
financial assistance paid out of Thurston County Public Health and Social
Services’ ERA1 program for this application totaled $13,500.

8. For application # the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor sent a
survey to the property owner on record for tenant information. The property
owner responded to the survey stating that there were no renters, and the
property was vacant land. The rental arrears financial assistance paid out of
Thurston County Public Health and Social Services’ ERA1 program for this
application totaled $10,935.49.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
9. For application # , the landlord on the application was
different from the property owner on Thurston County’s assessor records at
the time of the application. The Thurston County internal auditor spoke with
the property owner on November 7, 2022, who stated that the landlord on
the application was a former tenant. The rental arrears financial assistance
paid out of Thurston County Public Health and Social Services’ ERA1
program for this application totaled $10,000.
These nine cases are summarized as follows:
Thurston County Public Ineligible ERA1
Health and Social Services Financial Assistance
Case Application No. Payments
1 $26,400.00
2 21,000.00
3 18,450.00
4 18,000.00
5 18,000.00
6 15,400.00
7 13,500.00
8 10,935.49
9 10,000.00
Total $151,685.49

Based on the information provided, we determined that the State of Washington,
through its subrecipient, Thurston County Public Health and Social Services’ ERA1
program, paid out ERA1 funds totaling $151,685.49 in violation of the Use of
Funds statute because the funds were disbursed to ineligible households.
Accordingly, these funds are required to be returned to the Federal Government.

Grantee Response

We provided the State of Washington an opportunity to respond to our Notice of
Proposed Recoupment. On June 5, 2024, the State of Washington provided its
written response, which is included in the Appendix of this Notice, regarding the
payments of financial assistance for the nine applications in question.

In its response, the State of Washington provided comments related to the
disbursement of ERA1 funds through its subrecipient, Thurston County. The State
of Washington stated that (1) its subrecipients used self-attestations as a tool to
assist in expedient delivery of services during the health crises as Treasury’s
program guidance allowed self-attestation to confirm eligibility; and (2) the State
had to comply with spending deadlines to ensure all federal funds available to
Washington State residents were utilized. Furthermore, the State did not fully

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
deploy its subrecipient monitoring process until after spending deadlines were met,
due to the urgent need of timely assistance.

The State of Washington also stated that it did not dispute Thurston County’s
findings or the actions it took regarding the findings. The State’s planned resolution
for the ERA1 recoupment amount of $151,685.49 is to seek recovery of the funds
directly from its subrecipient, Thurston County, and provide it to Treasury.

OIG Evaluation

We considered the State of Washington’s response in finalizing this notice.

The State of Washington did not provide any additional evidence to demonstrate
that the financial assistance provided for the subject applications were eligible
households. As the grantee, the State of Washington is responsible for ensuring the
eligible use of ERA1 funds. Accordingly, it is also responsible for returning the
ineligible ERA1 assistance payments of $151,685.49 to the Federal Government;
this debt is not contingent on any recovery of funds from its subrecipient.

The State of Washington’s statement that Treasury’s program guidance allowed
self-attestation to confirm eligibility is not contextually accurate. Among other
things, Treasury’s guidance states:

When housing stability services represent the only ERA1 assistance a
household will receive (i.e., no payments using ERA1 funds will be
made either to the household, to the landlord, or to a utility provider),
grantees are encouraged to rely on a household’s self-attestations for
purposes of confirming eligibility…

In all cases, grantees must document their policies and procedures for
determining a household’s eligibility to include policies and procedures
for determining the prioritization of households in compliance with the
statute and maintain records of their determinations. Grantees must
also have controls in place to ensure compliance with their policies
and procedures and prevent fraud. Grantees must specify in their
policies and procedures under what circumstances they will accept
written attestations from the applicant without further documentation
to determine any aspect of eligibility or the amount of assistance, and

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
in such cases, grantees must have in place reasonable validation or
fraud-prevention procedures to prevent abuse. 4

4
A full discussion of Treasury’s ERA guidance on self-attestation is found in its ERA Frequently
Asked Questions (FAQs), Question 1, available at FAQs | U.S. Department of the Treasury
(https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-
governments/emergency-rental-assistance-program/faqs).

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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