We assisted the U.S. Attorney’s Office for the Eastern District of Kentucky in the investigation of NDC Real Estate Management, Inc. (NDC). The investigation began due to a qui tam filing in the U.S. District Court for the Eastern District of Kentucky. The False Claims Act allows private persons to file suit for violations of the False Claims Act on behalf of the Government. A suit filed by an individual on behalf of the Government is known as a qui tam action, and the person bringing the action is referred to as a “relator.” The relator alleged that NDC falsified or modified records and documents to maximize the amount of rental subsidies, known as Section 8 housing assistance payments (HAP), received by the project owners of two properties located in Richmond, KY.
The U.S. Department of Housing and Urban Development (HUD) distributes federal funds through its Section 8 program to assist qualified individuals in obtaining housing. The Section 8 program provides rental subsidies in the form of housing assistance payments to multifamily rental property owners, and is administered on HUD’s behalf by local public housing agencies. The Kentucky Housing Corporation administers the program for Kentucky. The housing corporation processed the subject project owners’ requests for assistance payments that NDC had submitted on the project owners’ behalf, and that NCD had remitted to the project owners. Between January 2007 and December 2012, the housing corporation made assistance payments for the Richmond properties of more than $4 million. Based, in part, on our investigation of the project owners’ requests for assistance payments and the supporting documentation, the U.S. Attorney’s Office contended that the Unites States had civil claims against NDC under the False Claims Act. These civil claims arose from NDC’s alleged falsification or wrongful modification of the project owners’ requests for assistance payment forms and the supporting documentation in an attempt to maximize the amount of assistance payments for the Richmond properties. On August 4, 2014, NDC agreed to settle and to pay HUD $750,000 to avoid the delay, uncertainty, inconvenience, and expense of litigation. The parties also agreed that the settlement did not constitute an admission of any liability or fault on the part of either NDC or the project owners, or others as named.