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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Majestic Management, LLC, located in St. Louis, MO. Our objective was to determine whether Majestic Management charged only the appropriate fees in managing the projects, properly procured goods and services, and disbursed project funds only for eligible and supported expenses.

Majestic Management improperly charged fees to its projects, did not properly procure goods and services, and spent project funds for ineligible and unsupported expenditures. As a result, it deprived its projects of at least $242,275 in funds needed to pay for essential items, and HUD and property owners had no assurance that the projects benefited from the $975,931 paid without adequate support.

We recommend that HUD require Majestic Management to (1) support or reimburse the appropriate projects more than $975,931 for the unsupported disbursements and improper procurements; (2) reimburse the appropriate projects their portion of $242,275 for work not completed, overbilled, or ineligible; (3) be monitored by HUD to ensure that employees understand and correctly apply procurement requirements, (4) update its management agreements to properly disclose its identity-of-interest companies to HUD and property owners; and (5) implement adequate controls to ensure that payments are adequately supported, goods and services are properly procured, and only authorized fees are collected.