OIG-CA-25-009: Emergency Rental Assistance (ERA2) – Questioned Cost Finding, Thurston County, Washington

Summary

A November 13, 2024 memorandum (OIG-CA-25-009) from Marla Freedman and Robert Taylor of the Office of Audit gives a questioned cost finding on Emergency Rental Assistance Program (ERA2) payments by Thurston County, Washington. It states that the county paid a total of $341,994.05 in ERA2 funds to 17 ineligible households, based on 17 cases of suspected and confirmed fraud that a county internal auditor reported. The memorandum recommends that the Office of Capital Access disallow the costs and direct the county to reimburse its ERA2 program from non-Federal funds. It states that Thurston County did not dispute the determinations and that Treasury agreed with the recommendation.

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Issuer: Inspector general and oversight reports
Document type: Oig Ca 25 009 Emergency Rental Assistance Program Era2 Questioned Cost Finding Thurs
Case: Oig Ca 25 009 Emergency Rental Assistance Program Era2 Questioned Cost Finding Thurs

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“OIG-CA-25-009: Emergency Rental Assistance (ERA2) – Questioned Cost Finding, Thurston County, Washington.” Original at oig.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/oig-ca-25-009-emergency-rental-assistance-program-era2-questioned-cost-finding-thurs/, SHA-256 731c8213c30c976e3514990f1fcf00f072b5d8e16a61fd94f0c5d1272b60961d.

Full text

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

OFFICE OF
INSPECTOR GENERAL

November 13, 2024

OIG-CA-25-009
MEMORANDUM FOR JESSICA MILANO
CHIEF PROGRAM OFFICER, OFFICE OF CAPITAL ACCESS

From: Marla Freedman /s/
Executive Advisor, Office of Audit
and
Robert Taylor /s/
Executive Advisor, Office of Audit

Subject: Emergency Rental Assistance Program (ERA2) – Questioned
Cost Finding, Thurston County, Washington

During the coronavirus pandemic, Congress authorized and funded two Emergency
Rental Assistance (ERA) programs administered by the Department of the Treasury
(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), December 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), March 11, 2021, and codified as 15 USC § 9058c.
In August 2023, a Thurston County internal auditor informed the Treasury Office of
Inspector General (OIG) of 17 cases of suspected and confirmed fraudulent 1 ERA2
financial assistance payments made by Thurston County, Washington. After
assessing the results of the Thurston County internal auditor’s review, we
determined that Thurston County paid a total of $341,994.05 in ERA2 funds to 17
ineligible households in violation of the Use of Funds statute. Accordingly, we
question those costs.

1
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.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
In response to a draft of this questioned cost finding, Thurston County did not
dispute our determinations and had no additional documentation to provide
regarding the 17 subject cases that resulted in ineligible payments. See
Appendix 1. We are recommending that Treasury’s Office of Capital Access
disallow these costs and direct Thurston County to reimburse its ERA2 program
$341,994.05 from non-Federal funds. We also provided Treasury with an
opportunity to review a draft of this memorandum. In its written response,
Treasury agreed with our recommendation. See Appendix 2.
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
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 coronavirus
pandemic; (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 August 18, 2023, we received a bulk report 2 from a Thurston County internal
auditor of 17 cases of suspected and confirmed fraudulent ERA2 financial
assistance payments made by Thurston County, Washington. We agreed with the
Thurston County internal auditor’s conclusions on the 17 cases as follows:
1. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston

2
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. 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.
County internal auditor spoke with the property manager, who stated that
the tenant on the application did not live at the property and the landlord
identified on the application was not known to the property manager. The
ERA2 rental arrears financial assistance paid out by Thurston County for this
application totaled $36,000.
2. For application # , the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor sent a survey to the property owner of record for
tenant information. The property owner returned the survey stating that they
did not have any tenants and the property had been their place of residence
since 1990. The ERA2 rental arrears financial assistance paid out by
Thurston County for this application totaled $33,750.
3. For application # the property address on the
application was not valid. To substantiate the Thurston County internal
auditor’s conclusion, we performed an address search and viewed the
property map on the Thurston County Office of the Assessor’s website. We
found no evidence that the property address on the application existed. The
ERA2 rental arrears financial assistance paid out by Thurston County for this
application totaled $28,500.
4. For application # the property address on the
application was not valid. To substantiate the Thurston County internal
auditor’s conclusion, we performed an address search and viewed the
property map on the Thurston County Office of the Assessor’s website. We
found no evidence that the property address on the application existed. The
ERA2 rental arrears financial assistance paid out by Thurston County for this
application totaled $27,930.
5. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the current property owner on
November 14, 2022, who stated that he agreed to purchase the property in
October 2021 and had lived at the property since November 2021. The
county auditor was unable to contact the previous owners; however, neither
the application nor the supporting documentation referenced the previous
owners as landlords to the tenant. Rental assistance was provided for this
application from November 2020 through January 2022. The ERA2 rental
arrears financial assistance paid out by Thurston County for this application
totaled $27,375.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
6. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property owner on September 13,
2022, who stated that he did not have any renters and lived at the property.
The ERA2 rental arrears financial assistance paid out by Thurston County for
this application totaled $27,000.
7. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property manager on August 17,
2022, the property manager stated that the tenant listed in the application
did rent from him. The property manager also provided the lease he had on
file for this tenant. The Thurston County internal auditor determined that,
among other things, the lease agreement submitted with the application was
fraudulent in that it had the wrong landlord information. The ERA2 rental
arrears financial assistance paid out by Thurston County for this application
totaled $22,261.55.
8. For application # the landlord identified on the
application was different from the property owner identified in 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 did not rent any portion of her home. The ERA2 rental
arrears financial assistance paid out by Thurston County for this application
totaled $21,000.
9. For application # the landlord identified on the
application was different from the property owner identified in 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 he lived at this address and did not rent it out. He also did
not know the tenant on the application. The ERA2 rental arrears financial
assistance paid out by Thurston County for this application totaled $16,450.
10. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property owner on September 9,
2022, who stated that he only rented to his stepdaughter, who was not the
person listed as the tenant on the application, and she did not apply for
rental assistance. The ERA2 rental arrears financial assistance paid out by
Thurston County for this application totaled $15,894.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
11. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property owner on September 20,
2022, who stated that his daughter lived in the property but did not pay
rent. The ERA2 rental arrears financial assistance paid out by Thurston
County for this application totaled $15,000.
12. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property owner on August 25, 2022,
who stated that while he had tenants at this property, the current tenants
were up to date on rent, and he was not aware of any rental assistance paid
for the address. Furthermore, he did not authorize any third-party to collect
rent on his behalf. The ERA2 rental arrears financial assistance paid out by
Thurston County for this application totaled $13,900.
13. For application # the landlord identified on the
application was different from the property owner identified in 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 the landlord identified on the application was actually his
tenant. Furthermore, he stated that she was not past due on rent and did not
work as she was receiving supplemental security income. Lastly, the
property owner did not authorize anyone else to receive rent on his behalf.
The ERA2 rental arrears financial assistance paid out by Thurston County for
this application totaled $12,750.
14. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The Thurston
County internal auditor spoke with the property owner on August 30, 2022,
who stated that the landlord identified on the application was actually the
tenant at the property. In support of this statement, the property owner
provided the executed lease between him and the tenant (the purported
landlord). In addition, the rental assistance application listed a third party, not
connected to the property in any way, as the tenant, and eligibility was
based on that third party’s information, not the actual tenant. The ERA2
rental arrears financial assistance paid out by Thurston County for this
application totaled $12,000.
15. For application # the landlord identified on the
application was different from the property owner identified in Thurston

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
County’s assessor records at the time of the application. The Thurston
County internal auditor sent a survey to the property owner of record for
tenant information. The property owner returned the survey indicating that
this was a single-family home, there were no tenants, and he lived in the
property with his family. The ERA2 rental arrears financial assistance paid
out by Thurston County for this application totaled $11,983.50.
16. For application # the landlord identified on the
application was different from the property owner identified in Thurston
County’s assessor records at the time of the application. The application
requested rental assistance for the periods January 2021 through March
2021 and June 2021 through November 2021, and the assistance paid
covered these periods. According to the assessor records, the property was
purchased in June 2021 and later sold in June 2022. The Thurston County
internal auditor spoke with this former property owner on September 19,
2022, who stated that when he purchased the property, there was a tenant
living there, but he never had a lease agreement with her, and she did not
pay rent during his ownership. 3 The ERA2 rental arrears financial assistance
paid out by Thurston County for this application totaled $11,800.
17. For application # the property address on the
application was not valid. To substantiate the Thurston County internal
auditor’s conclusion, we performed an address search and viewed the
property map on the Thurston County Office of the Assessor’s website. We
found no evidence that the property address on the application existed. The
ERA2 rental arrears financial assistance paid out by Thurston County for this
application totaled $8,400.

3
The Thurston County auditor did not speak with the property owner at the time of the application.
However, this previous owner was not shown on the application as the landlord; instead, the tenant
was shown as the landlord and someone else was shown as the tenant.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
These 17 cases are summarized as follows:

Thurston County Ineligible ERA2 Financial
Case Application No. Assistance Payments
1 $36,000.00
2 33,750.00
3 28,500.00
4 27,930.00
5 27,375.00
6 27,000.00
7 22,261.55
8 21,000.00
9 16,450.00
10 15,894.00
11 15,000.00
12 13,900.00
13 12,750.00
14 12,000.00
15 11,983.50
16 11,800.00
17 8,400.00
Total $341,994.05

Based on the information provided, we determined that Thurston County’s ERA2
program paid out ERA2 funds in violation of the Use of Funds statute because the
funds were disbursed to ineligible households. Accordingly, OIG questioned the
cost of $341,994.05 for the ERA2 financial assistance paid for these 17 cases.
Thurston County, Washington’s Response
We provided Thurston County an opportunity to respond to a draft of this
questioned cost finding. Its written response, dated June 4, 2024, is included in
Appendix 1 to this memorandum.
In that response, Thurston County confirmed that it discovered 17 instances of
suspected fraud which resulted in ineligible payments and reported these to
Treasury. 4 Thurston County’s response is summarized below.
• The 17 subject cases were processed in accordance with state and
federal guidance. The suspected fraud was discovered after the fact
through subrecipient monitoring and expanded testing the County
conducted that identified persons involved in the application process
misrepresented themselves on applications for assistance.

4
The exhibits supporting Thurston County’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 Thurston County’s response.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
• Thurston County had no additional documentation to provide regarding
the 17 cases. The County’s internal auditor reported these instances of
suspected fraud to law enforcement; however, no funds have been
returned to the County to date.
• Thurston County operated under the guidance provided by Treasury,
which prioritized prompt delivery of assistance to those in need. While
the County recognizes the importance of proper controls, fraud
prevention was difficult with ERA1/ERA2 considering the measures put
in place to expedite the disbursement of funds. The balance between
expediency and thoroughness in verifying applications was made
particularly difficult due to the allowance of self-attestation and the
lowering of certain barriers for applicants. Thurston County also
encountered challenges in implementing an emergency low-barrier
program, which included verification of documentation and
communication with both clients and landlords, many of whom had
limited access to technology.
• Thurston County implemented the ERA program, in accordance with
Treasury guidelines, through a local non-profit agency. The County
terminated its contract with the non-profit agency after receiving an
insufficient reply to a request that the agency strengthen its internal
controls.
• Thurston County requested understanding and leniency in recovery given
the extraordinary challenges faced in the administration of the program
and the proactive steps the County took to identify fraud and address
gaps that were identified. Thurston County also asked that OIG consider
that the County contributed $372,806 in locally generated revenue to
supplement rent assistance programs in 2021 that were implemented in
broad alignment with ERA1 and ERA2 policies. The County continues to
use state and local resources to operate rental assistance programs.
OIG Evaluation
We considered Thurston County’s written response in finalizing this memorandum.
We acknowledge that Thurston County encountered challenges in implementing its
ERA program and its request for leniency in the recovery of funds based on those
challenges. We also acknowledge the County’s efforts in using local and state
resources to operate its rental assistance programs. However, in its response,
Thurston County neither disputed our determinations nor provided any additional
evidence to demonstrate that the Federal financial assistance provided for the 17
cases were to eligible households as defined in ERA2.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
In its response, Thurston County stated: “The balance between expediency and
thoroughness in verifying applications … was made particularly difficult due to the
allowance of self-attestation.” However, in this case, that statement is not
contextually accurate. Specifically, regarding guidance on when self-attestation is
encouraged to be relied upon, Treasury 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 in such cases, grantees must have in place
reasonable validation or fraud-prevention procedures to prevent abuse.
Recommendation
We recommend that Treasury’s Office of Capital Access disallow the questioned
cost amount of $341,994.05 and instruct Thurston County to refund that amount
to its ERA2 program from non-Federal funds.
Treasury’s Response
We provided Treasury with an opportunity to review a draft of this memorandum
on September 30, 2024. In its written response, Treasury management agreed that
any improper use of ERA2 funds should be reimbursed, and that Thurston County
should refund the questioned costs in the amount of $341,994.05 to its ERA2
program using non-Federal funds. Treasury’s written response is included as
Appendix 2 of this memorandum. Treasury management will need to record an
estimated completion date for taking action on this recommendation in the Joint
Audit Management Enterprise System (JAMES). See Appendix 3, Schedule of
Monetary Benefits, for more details regarding “questioned cost.”

Methodology
We conducted our review of these ERA cases from December 2023 to November
2024. We inquired of the grantee and other relevant parties, reviewed related

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
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 Questioned Cost Finding.
In conducting our review, we followed the OIG’s system of quality management for
ensuring that the information in this Questioned Cost Finding is accurate. We also
followed the Council of the Inspectors General on Integrity and Efficiency 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.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix 1

Grantee Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix 1

Grantee Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix 2

Treasury Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix 2

Treasury Response

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
Appendix 3

Schedule of Monetary Benefits
According to the Code of Federal Regulations, a “questioned cost” is a cost that is
questioned by the auditor because of a finding:
(a) which resulted from a violation or possible violation of a statute, regulation,
or the terms and conditions of a Federal award, including for funds used to
match Federal funds;
(b) where the costs, at the time of the review, are not supported by adequate
documentation; or
(c) where the costs incurred appear unreasonable and do not reflect the actions
a prudent person would take in the circumstances.
Questioned costs will be recorded in Treasury’s Joint Audit Management Enterprise
System (JAMES). The amount will also be included in the OIG Semiannual Report
to Congress. It is Treasury management’s responsibility to report to Congress on
the status of the agreed to recommendations with monetary benefits in accordance
with 5 USC § 405:
Recommendation Questioned Costs
Recommendation No. 1 $341,994.05
The questioned costs represent ERA2 amounts provided by Treasury under the
American Rescue Plan Act of 2021 that were paid by Thurston County to ineligible
households in violation of ERA2 section 3201(d), Use of Funds.

This Notice may contain information protected under the Privacy Act, 5 USC 552a.
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 Counsel
Carolyn Appel, Attorney-Advisor, Office of the General Counsel
Blossom Butcher-Sumner, Attorney-Advisor, Office of the General
Counsel
Thurston County
Senior Program Manager
Thurston County Board of County Commissioners
County Manager

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

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