The former executive director of the Maywood Housing Authority was recently arrested for allegedly embezzling more than $400,000 in taxpayer money.

But problems at the agency extend well beyond that case—with cronyism, conflicts of interest and poor management afflicting the organization over the past few years and impacting the services provided to financially strained residents of the western suburb, the Better Government Association (BGA) has learned.

Aside from the theft and official misconduct charges filed by the Illinois attorney general’s office in July against Gwendolyn Robinson—who served as the executive director of the Maywood Housing Authority (MHA) until she was forced out in late 2009—the BGA investigation found:

• Bad management practices. The MHA’s policies, record-keeping and financial oversight have been so dismal that the U.S. Department of Housing and Urban Development (HUD) placed the agency on a watch list—and is threatening to effectively dismantle the operation and distribute duties to other groups if dramatic reforms aren’t instituted.
• Improper handling of subsidies. Housing “vouchers” designed to help needy Maywood residents get a break on rent ended up, under questionable circumstances, in the hands of dozens of people living outside the village, according to interviews, and documents obtained from the MHA under the Illinois Freedom of Information Act.
• Alleged conflicts of interest. Two MHA board members left after HUD discovered that their private companies—a construction firm and an insurance agency—had done business with the MHA, according to interviews and a federal report. Those now-former board members deny doing anything wrong.
• Questionable credit card use. The MHA’s credit card was used by staff and board members on a number of “questionable” and “unallowable” purchases, including meals, hotel stays, flowers and other items that officials often did not provide receipts for, HUD records show.
• Cronyism. The seven-member MHA board, though it was reconstituted after Robinson’s ouster and has since passed a series of reforms, still is rife with political and family connections, according to BGA interviews.

Dianne Williams, the MHA’s board chairwoman since this past winter, said her agency has been working hard to correct past mistakes and shed HUD’s “troubled” designation—which prevents the MHA from applying for certain grants and requires HUD to sign off on any expenditures over $1,000. HUD slapped that label on the MHA last year.

Referring to former executive director Robinson, Williams added: “She kind of left the housing authority in shambles and we’re kind of picking up the pieces.”

Indeed, Robinson left the agency in chaos—which was exacerbated by the fact that somebody stripped her office of records once her alleged scam started to unravel, sources told the BGA.

Gwendolyn Robinson was recently arrested for allegedly embezzling more than $400,000 in taxpayer money while executive director of the Maywood Housing Authority. (Courtesy CBS Chicago)

But Robinson also reported to the MHA board, which was supposed to provide strict staff oversight. What’s more, HUD could have done more to keep watch over Robinson’s practices, critics said.

“I don’t want to be critical of HUD, but there were no letters from HUD saying ‘You’re not looking good, you should be doing this,’” said the MHA’s attorney, Robert Whitfield. So “there’s blame to go around….Could everyone have done a better job in hindsight? Yes.”

The MHA manages housing vouchers for more than 400 families, backed by taxpayer money coming from HUD. Unlike the Chicago Housing Authority, the MHA oversees no housing developments, just housing subsidies, which give needy residents a break on rent and utilities. The level of the subsidies depends on household income.

The MHA’s troubles first came to light in 2009 when one or more people tipped off HUD, which opened a two-tier investigation: one criminal in nature, one administrative, sources said. During that time, MHA officials also began to learn of irregularities.

Robinson, who has pleaded not guilty to the criminal charges and couldn’t be reached for comment, was confronted with some of the allegations, according to then-board Chairman Wilbert Tatum. “I told her she needed to…take a sick leave until we get to the bottom of things,” Tatum relayed to the BGA. “She never returned back.”

HUD and the MHA conducted in-depth audits of the operation and found disturbing practices, according to the BGA’s investigation, which involved a review of hundreds of pages of documents and interviews with nearly 30 people.

Although more than 1,000 people are on a waiting list for the vouchers—which are coveted, and limited in number—the MHA was overseeing vouchers for roughly 50 recipients living outside village limits, and therefore outside the “jurisdiction” of the MHA, according to a memo from an MHA consultant. Meanwhile, at least some of those outsiders may have received vouchers ahead of others who had been on the waiting list longer, a source said.

Another finding: Tatum and now-former board member James Estrada were, separately, doing business with the MHA—Tatum through his construction firm and Estrada through the insurance agency that he ran, according to a HUD report.

What’s more, HUD found there wasn’t “a policy in place which addresses conflict of interest,” the report stated.

Tatum and Estrada have since left the agency, and a policy governing potential conflicts has been established.

However, Estrada told the BGA he takes issue with HUD’s characterization that he might have done something improper. All he did, he said, was help the MHA get worker compensation coverage, for which he received a $58 commission. He said he was involved only because the MHA needed a policy quickly.

MHA board and staff members also were criticized by HUD for their credit-card spending.

The MHA’s credit card ultimately was canceled by the MHA, but a HUD review found dozens of questionable and prohibited expenses in 2009, from airline tickets and meals to hotel stays. One such lodging charge involved a $462.65 bill at a Lombard hotel—located roughly 20 minutes from Maywood.

Tatum defended his tenure on the board, saying members were “totally unaware of the things Gwen Robinson was doing”—including, authorities said, allegedly funneling public money to private buildings she owned or otherwise controlled.

Tatum also said that, while he did do business with the MHA while on the agency’s board, he was the one who brought that issue to HUD’s attention. Tatum said he asked the agency for clarification on whether there was a conflict of interest, then was criticized for those business dealings.

Asked whether he thought the current board is an improvement over his operation, Tatum said that if conflicts of interest existed before, “they still exist there now.”

For instance, he mentioned the current chairwoman, Williams. She’s not only a sister-in-law of the official who appointed her to the MHA board, Maywood Mayor Henderson Yarbrough, she’s the daughter-in-law of former Mayor Donald Williams Sr., who confirmed to the BGA that he has a “financial interest” in two local buildings with voucher-holding tenants. (Dianne Williams said her father-in-law’s file is in the process of being transferred to another agency to avoid any conflict of interest.)

Meanwhile, MHA board member Donna Flowers, another Yarbrough appointee, is the mother-in-law to Maywood Trustee Dominique Flowers and the wife of a village employee, Donna Flowers confirmed.

MHA board member Terrance Jones, appointed in late 2010, was involved in a recent election challenge to knock Yarbrough’s critics off the ballot. Both he and Yarbrough, however, denied that the appointment—which comes with no salary—was a political payback.

One thing that Jones acknowledged, though, was that the MHA remains in danger of a HUD-imposed takeover, despite an array of reforms instituted at the MHA over the past year or more that focused on ethics, training and greater financial controls.

“That’s a real possibility for any troubled housing authority,” Jones said.

Steven Meiss, who runs HUD’s Illinois public housing office, said he’s getting impatient with the pace of reforms at the MHA, and if more changes aren’t enacted soon—including the hiring of a permanent executive director who can right the ship—he might push to fold operations into another public housing agency.

“Essentially we’re giving them a distinct period of time to resolve these issues,” Meiss said, adding that period would be a year at most. “If they do not, we’re going to find alternative ways of operating the housing authority. These issues have gone on too long.”

One option is to have the Cook County Housing Authority start administering vouchers for Maywood residents, officials said. After all, the county already handles vouchers for numerous towns that don’t have their own housing organizations.

There are more than 100 public housing agencies in Illinois, and just a handful in Cook County. The MHA is the only one in the Chicago region currently on HUD’s watch list, and Meiss called it “the most seriously troubled housing authority in our portfolio.”

The MHA owns its office building, and employs a full-time staff of five. The outgoing interim executive director, Daisy Black, is paid $60,000 a year, according to records obtained under the Illinois Freedom of Information Act.

In the end, those likely to suffer the most from this whole mess are the financially strapped residents of Maywood, officials said.

The money that Robinson allegedly stole would have gone toward more vouchers – which are increasingly important because the economy and home foreclosures are hitting Maywood hard, officials said. (As of August, there were more than 200 buildings in foreclosure in Maywood, according to figures from the village government.)

What’s more, under her leadership, some tenants were getting bigger breaks on rent than they were entitled to, meaning available money was needlessly sapped away, documents show.

And with the MHA on the watch list, it’s unable to apply for certain grants from the federal government that could benefit the village, although the agency still is able to distribute vouchers in Maywood, officials said.

This all comes against a backdrop of declining federal funding for vouchers. In the current fiscal year, HUD awarded the MHA $3.6 million for housing subsidies; in the prior year it was $4 million, according to HUD.

The Illinois attorney general’s office would not comment on its probe—which is being conducted in conjunction with HUD’s inspector general’s office—beyond what was in the public record. But, several sources indicated their investigation remains active.

This story was reported and written by Robert Herguth, the BGA’s Editor of Investigations, and Patrick Rehkamp, a Senior Investigator at the BGA. To contact them, email rherguth@bettergov.org or prehkamp@bettergov.org or call (312) 821-9030.

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