Dallas and Its Housing Authority Credit Me With Uncovering Their Housing Scam. I Wish.

Categories: Schutze

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The proper role role of a newspaper columnist is often misunderstood outside the industry.
Not that you asked, but here's what it's like to be me. I'm walking my dogs, Penny and Dorothy, up and down alleys in East Dallas, and I've got my little cell phone ear-bug deal going so I can talk to people and keep my hands free for clean-ups. And this is what I hear in my ear:

"... white scientists, well-known fact, created AIDS, took it to Africa (click, ring); mayor of Dallas, well-known fact, member of Mafia (click, ring); Masonic conspiracy to divert Trinity River, well-known fact (click-ring); Elvis, well-known fact, moved to Dallas after sex change, was elected to City Council ... "

Maybe I ask, "After the sex change operation, what race was she?" But most of the time I just keep walking and cleaning up, because those are my jobs -- talking to people and cleaning up after my dogs.

Do I even check out what people tell me? Of course I check out what they say or you'd be reading here how the mayor is a Martian with a sex-change operation who's trying to divert the Trinity River and give people AIDS. But people do call. And I do listen. All. Day. Long.

So yesterday I'm doing another part of my job, patrolling court documents online while somebody on the ear-bug tells me about the Masons, and I stumble across a very unlikely character in a federal court case. Me. Yours truly. Right in the middle of this incredibly complicated federal lawsuit I'm looking at, it says, "Schutze criticizes Dallas City Hall for potentially submitting false claims to HUD (U.S. Department of Housing and Urban Development)."

Schutze? Schutze who?

I tell the guy on the ear-bug there's a city bus careening right at me and I can't get out of the way so no need to call me back, ever. I pull the plug, and I go back and look at this damn thing carefully. I am reading a brief submitted in March 2012 by lawyers for the Dallas Housing Authority in a lawsuit against the DHA and the city by developers Curtis Lockey and Craig MacKenzie, who claim the city has been defrauding the government for a decade or more by deliberately misspending federal desegregation funds. The suit is a whistle-blower action in which Lockey and MacKenzie are claiming a reward under the federal false claims law. That law basically offers rewards to citizens who report frauds on the federal government.

I should have read this whole docket more closely long ago, but, you know, I've got the ear-bug, and then there are the dogs. Anyway, I look at the most recent filings and see that Lockey and MacKenzie are back in the court of U.S. District Judge Reed O'Connor. I wonder why.

O'Connor dismissed their whistle-blower case a year ago on some kind of grounds I never fully understood at the time, basically saying they weren't really the whistle-blowers so they couldn't claim a reward. I did know their case was tossed out, just wasn't sure how or why.

The big recent event in this entire picture was the release of a scathing four-year federal investigative report at the end of November accusing Dallas City Hall of engaging in massive concerted fraud against HUD. HUD says Dallas took hundreds of millions of dollars in desegregation money and used it to build fancy condos for white people downtown, among other major no-no's.

The report gives direct credit to Lockey and MacKenzie for tipping HUD off to problems at Dallas City Hall. The report demonstrates, however, that federal investigators, going far beyond the allegations brought to them by Lockey and MacKenzie, discovered a broad pattern of cheating to which Lockey and MacKenzie's allegations were only the tip-off.

In other words, this four-year federal investigation gives Lockey and MacKenzie credit for blowing the whistle, so Lockey and MacKenzie are back in O'Connor's court as of this week with a motion asking him to look at the HUD report and reconsider his finding that they were not the whistle-blowers.

I am at my computer looking at the docket. The guy on the ear-bug is talking to me, and I'm saying, "Oh, yes, well, the Masons, yeah, ever since that damn moon shot, well-known facts, yes, sir" and all of a sudden I wonder who the judge thought the original whistle-blower was. So I go back up the list of documents and look at the briefs filed last year by the Dallas Housing Authority and the city.

And there I am! The city and the DHA told O'Connor I was the whistle-blower! They cite a June 10, 2010, article I wrote under the headline, "City Hall had better look over its shoulder because HUD is getting ready to kick some fair-housing butt."

My first thought, when I see that line in the brief is, "Don't tell people I said 'butt'! Not in a federal court document! Goodness gracious."

But when I read on, I get the full drift. The position being taken by the city and DHA is even more ludicrous than I could ever have imagined.

The law says Lockey and MacKenzie are "parasitic relators" of the facts if there were other public disclosures before they made their report. In order to claim a reward under false claims, they have to be the original source of the information that tipped the government off to the fraud.

The city/DHA brief names several sources it suggests should have tipped the feds to the fraud before Lockey and MacKenzie showed up. One argument the city makes is that the city has been cheating on desegregation since the 1990 settlement of a federal lawsuit over housing segregation in the early '90s, so how could Lockey and MacKenzie's claims have been news to anybody? Of course that argument ignores the fact that the city promised to stop cheating then.

The brief also mentions several instances in which writers at the Dallas Observer have reported on housing discrimination over the years. By the way, the HUD investigative report also credits the Observer (not me) with revealing important relevant issues. The brief also mentions articles and editorials in The Dallas Morning News, but not as many.

But then the brief filed by the city and by DHA sort of zeros in on me and says I reported the specific allegations in the Lockey and MacKenzie complaint to HUD before they made their complaint, so therefore they were not the original sources of the information in the complaint. I was.

The brief quotes me at some length. "Schutze states that he is 'trying to figure out whether Dallas City Hall has scammed HUD out of hundreds of millions of dollars over the years by submitting what the law calls "false claims."'"

Trying to figure out. Jeez. Remind me to be less candid.

"He points out that the heart of the controversy is that Dallas has submitted certifications to obtain grant funding. Further, the article discusses the analysis of impediments requirement and insinuates that the defendants have failed to meet that requirement."

They quote me again: "For example, the city has to certify that it has studied all of the things that could stand in the way of the creation of fair and affordable housing and that it has developed strategies for getting past those hurdles."

Wow. How did I know that? I am so impressed with myself! So I'm back in the alley, OK, with my dogs and my pick-up bags, got the ear-bug going, guy's telling me how the Illuminati made Zero Dark Thirty to make people hate the Masons, and what? I just independently out of the blue on my own personal wattage think, "Gosh darn it, I wonder if in its annual certifications to HUD regarding the affirmative furthering of fair housing the city has truly and fully carried out its analysis of impediments in keeping with the spirit and letter of the law?"

Uh, no. I wish. But, no. How this actually works is that once in every 28 hours of buzzing ear-bug insanitude, somebody like Curtis Lockey or Craig MacKenzie comes on the line and says something in my ear that sounds deeply and disturbingly like it may actually have happened on this planet. An alarm bell rings, and a still small voice says, "All hands report to battle stations." I go back to my desk. I pick up the real phone, and we try again.

Of course I checked out what Lockey and MacKenzie told me. It was totally over my head. I couldn't even have written about it without getting people to tell me what the hell it was all about. And every step of the way I was ready for somebody to tell me Lockey and MacKenzie were full of it, none of their claims held water and here was why.

But it went the other way. The more I learned, the more solid their story became. The recent HUD report demonstrates that the same thing happened for the federal gumshoes. The deeper they got into the Lockey and MacKenzie complaint, the more they realized they had to keep going.

In the end, whatever I have written about these guys has been a fairly superficial skimming of the information they took to the government, in part because they were only ever willing to tell me bits and pieces. I never looked down the full bore of it until I read the HUD report.

Here's the thing, and I would appreciate it if you would keep this just between us. Kind of a trade secret in my line of work. We may speak of it only metaphorically. But if you ever saw a circus parade, you know there's always a high-stepping guy with a whistle out front in a tall black hat, and he's tossing a white baton in the air. So you do know that guy is not actually leading the parade, right? He's just the columnist.

Dallas Housing Authority brief in Lockey and MacKenzie qui tam false claims suit by Schutze


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37 comments
hurleypic
hurleypic

Schutze: Read O'Conner's dismissal order. He used your June 10, 2010 article as the "most glaring" public disclosure as his basis in which to dismiss this case.

So the title of this article left someone out, the Judge.

holmantx
holmantx topcommenter

Maybe Dallas could pimp out all the other downtown metros who took the money and get some recovery credits.

Just survey each downtown as to their mix of affordable housing to total housing matched against the total amount of federal housing monies taken.  There should be a Disparate Impact common denominator to compare with.

RTGolden1
RTGolden1 topcommenter

Such disillusionment!  Who knew your day consisted of such drudgery and mundane tasks?  I liked it better when I thought YOU were part of the masons and that's how you got all of your inside information.

leftocenter
leftocenter

From the linked qui tam:

Even if the Relators supplied the information to Schutze for his article, this article still constitutes a public disclosure. The Fifth Circuit recognizes that disclosure by the relator, prior to filing a suit, still constitutes a public disclosure.

Sounds like they are screwed because they took their info to Schutze first -- at least that's the argument.

How how shocking (gasp) this is largely about who does and does not get a reward.  It would be nice if the focus was on the corruption instead. 

Does the DHA have to pay the reward?  Is that why they've made the "it was already public information" argument?  Kinda like -- yeah, we were doing it, but it was nothing new...

MikeWestEast
MikeWestEast

Isn't this one of those situations that absolutely everybody knew the score?  Did not HUD ever stop by one of the buildings with a huge HUD sign outside during construction, check out the granite counter tops and wonder where the poor people will go?  I hope HUD does some internal follow up in this cases and starts demoting people and maybe firing the former senior managers.


One thing that City Hall does, a symptom of incompetent management, is to not look at an old situation with fresh eyes and identify issues.  Everything there is, it worked before, do not touch it.  It is why the worst possible choice for any opening in senior management is someone already there.

Guesty
Guesty

A couple things worth noting about this:


1) The issue in the False Claims Act case brought by Lockey and MacKenzie is not whether the City committed fraud, it's whether Lockey and MacKenzie get a cut of the recovery.  It's very technical, but the short hand is that you don't get a cut for telling the authorities about a fraud if the authorities were already aware of it or if the information was public.  HUD can or could have sought a recovery on its own behalf, which would not be precluded if Lockey and MacKenzie are unsuccessful.


2)  Lockey and MacKenzie were free to tell the judge that they were your sources for your story back in 2012.  I don't know if they did or what the judge would have done with that information, but given that they already lost on this issue, I'm not sure what the HUD report does to help them.  

ozonelarryb
ozonelarryb

Just shows that all but about 50 bucks of City Attorney's budget is going for naught. Retards. But sooooo Dallas. Do the crime, and think they can spin their way out of it.

holmantx
holmantx topcommenter

May need to employ the "everybody does it" defense.  Every downtown big city has taken the money and built white islands with it.  Look at downtown Detroit, for instance. Most central core areas are a lot farther along than we are with their New Urbanist hip conversions. I suspect not one city could pass the the unconscious racism charge when Disparate Impact is the measure.  Why?  Because It's gobs of free money and up until this point it came without strings, other than a warehouse of paperwork compliance nobody reads.  And that's the one thing local bureaucracies are good at that.  Shuffling paper at high speed.

I doubt a selective enforcement defense will work but if the City is going to be bullheaded, I suppose it's worth a try.  

I would prefer we just morph into surrender monkeys.  

golfer4life
golfer4life

 "The city/DHA brief names several sources it suggests should have tipped the feds to the fraud before Lockey and MacKenzie showed up. One argument the city makes is that the city has been cheating on desegregation since the 1990 settlement of a federal lawsuit over housing segregation in the early '90s, so how could Lockey and MacKenzie's claims have been news to anybody? Of course that argument ignores the fact that the city promised to stop cheating then."


So your telling me, that a case that was settled over two decades ago, that did little to-nothing, to desegregate Dallas, was used to immunize Dallas from its current fraud against the US? I am not a lawyer, but that seems like a complete bastardization of the applicable law. I wont even comment on the Schutze article that was used............ 

holmantx
holmantx topcommenter


So what is the best way for the City to Chieu Hoi and extricate the taxpayer with the least amount of pain?

disclaimer: no reward offered or implied for any answers given or accepted.  Taxpayer reserves the right of eminent domain regarding any statements made resulting in savings of public funds or special assessments not made.  Any attaboys issued cannot be construed to have monetary or marketable value to the individual, workplace or employer entity.

Oxtail
Oxtail

Nice pic of The Pride of Oklahoma. OU's marching band. Boomer!

hurleypic
hurleypic

Even more "ludicrous" is the fact the entire article you wrote Schutze, is entirely about Lockey & Mackenzie, which makes Dallas' use of it all the more nonsensical.

sos0
sos0

These are the kind of defenses you raise when your guilty as hell, and you pray the Judge helps you out. 

JimSX
JimSX topcommenter

@hurleypic 

I believe I did have the judge in the title as the story was filed originally by me. A certain ... ahem, editing process seems to have removed him.

JimSX
JimSX topcommenter

@casiepierce 

I'm not sure, but lately I find myself thinking up all kinds of reasons why people I know do not deserve loans.

JimSX
JimSX topcommenter

@Guesty 

Well, watch me get the law wrong on this, but my understanding is that the test is whether Lockey and MacKenzie were the original sources of the information that produced the HUD investigation. The fact that I and others sort of wrote about stuff that was sort of generally in this general area doesn't get to it. HUD has said very emphatically that it was inspired by and depended on Lockey and MacKenzie's disclosures. You are right that they lost on this issue in the trial court. They are in the appeals court now. From what I can figure from the docket, they have gone back to the trial court and asked for an "indicative" opinion, which I think just means the judge says, "Had I known then what I know now, my ruling would have been ... whatever." I don't get what that does to the appeal. Given that the top amount mentioned in court filings that Lockey and MacKenzie could claim is over a billion dollars, and given that HUD seems to have bestowed a huge wet kiss on their case, does anyone but me think it's odd that the city's only daily newspaper has given this story such short shrift?    

golfer4life
golfer4life

@Guesty 


So based on your theory, "authorities" knew of the fraud for almost 30 years (since Walker) and never did anything about it. Now, these guys are "precluded" from taking Dallas to task for fraud over the past decade? Once again, seems like a bastardization of the intent of the applicable law.  

ScottsMerkin
ScottsMerkin topcommenter

@Montemalone my thought exactly, or at least the Observer, Im sure they could use an influx of cash

PatrickWilliams
PatrickWilliams moderator

@JimSX@hurleypicJim's right. He did. The headline he wrote was "Judge You Do Me the Honor, Too Much Honor". I changed it under the notion that a headline should give readers some ... ahem, notion of what the story is about. It's one of those old-time newspaper rules, like the one that says "don't hack off the last guy to have his hands on your copy."

Guesty
Guesty

@JimSX @Guesty Jim, I think we are in agreement.  What I find confusing is that if they were the sources of your article, they had the opportunity to tell the district court in 2012 that they were the common original sources of your article and the HUD investigation.  If they didn't tell the district court that in 2012, they won't be able to raise it now.

Guesty
Guesty

@golfer4life @Guesty If HUD knew before the whistle-blowers came to them and didn't do anything about it, then yes, the whistle-blowers don't get to sue on HUD's behalf and collect 30% for themselves.  I'm not saying that's a good thing, just that it's the law.

Guesty
Guesty

@golfer4life @Guesty @JimSX In that case, what's the news?  Apparently all of this was hashed out in 2012.  I'm the news consumer here, not the reporter.  I shouldn't have to get on PACER get the filings to find out that everything Jim wrote here was raised in 2012 and to find the district court's opinion explaining why it did not believe that these guys were the original sources.  

hurleypic
hurleypic

There is a "circulation" of currency thru out the entire world.

jobe3
jobe3

The US treasury gets at least 70% of the recovery, so Susie taxpayer benefits big, which is why these QuiTam lawsuits are so valuable to the USA.

golfer4life
golfer4life

@Guesty 


Wrong, HUD has laws to follow as well. But nice try...........

Guesty
Guesty

@golfer4life @Guesty HUD is the federal government.  If HUD knows what's what, then the federal government hasn't been defrauded.      

golfer4life
golfer4life

@Guesty @golfer4life 


Your interpretation doesn't work. Clearly, based on the happenings of this case, HUD didnt know until they were informed by these guys. Furthermore, if your interpretation were correct, Dallas and HUD could conspire to commit fraud against the US treasury for the next 100 years and nobody could do anything about it, even if they had black and white proof. This cannot be the intent of congress! 

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