ANDERSON, Ind. — A letter received by Anderson city officials from the U.S. Department of Housing and Urban Development said corrective actions taken to resolve a conflict of interest has brought the city back into compliance and kept it eligible for federal funds.
The issue involves the termination of three city employees who oversaw HUD programs.
The letter was received Thursday and signed by John Dorgan, director of the Indianapolis HUD office. It stated that the three former employees did not publicly disclose their conflicts of interest and they failed to request and secure exemptions to the federal prohibition on conflicts of interest.
Lacking exceptions from HUD, the prohibited conflicts of interest remained active and put the city in a condition of noncompliance with the possible withholding of federal funds in the amount equal to the federal participation in projects that were not compliant, Dorgan wrote.
“The city self-reported the noncompliance, addressed the circumstances through internal administrative action, and prevented recurrence by implementing new internal controls,” Dorgan wrote.
The letter said that based on the city’s action, the finding of noncompliance was resolved and no further sanctions will be enforced by HUD.
The three employees Kim Townsend, Debra King and Beth McKenzie were terminated by the administration of Mayor Kevin Smith. The employees were let go when it was learned that family members were placed in HUD-subsidized housing. Townsend is fighting to collect unemployment benefits and to be returned to her job.
Attorney Montague Oliver, representing Townsend, said he wasn’t aware of the HUD letter on Thursday.
“It doesn’t change our position,” he said.
Oliver said Townsend disclosed the conflict of interest to her two superiors, Linda Dawson and King. He said an investigation was performed in 2011 by the administration of former Mayor Kris Ockomon.
“The conflict was disclosed to the Ockomon administration,” he said. “This is a travesty of justice.”