Washington — A federal program that allows police officers and teachers to buy half-priced homes in troubled neighborhoods is plagued by widespread fraud and lax oversight, government investigators say.
So far, nine police officers have been convicted of defrauding the Department of Housing and Urban Development and 72 more are under investigation, they said.
The biggest problem is that participants buy a discounted home through the Officer Next Door/Teacher Next Door program and agree to live there for three years, but rent, sell or leave it vacant before then, investigators said in a report obtained by The Associated Press.
"Our interim results indicate that a high proportion of homebuyers abused and defrauded the OND/TND program," the HUD inspector general's office reported. Taxpayer money was not at risk in the alleged fraud, the agency contends.
For instance, former Fort Worth, Tex., officer David Auther pleaded guilty last year to a federal felony. He bought a half-priced house for $58,000 and rented it out for the final two years of his three-year term, according to prosecutors.
Spot checks of 29 officers who bought homes in the Miami area found seven who broke the rules, the report said. Four were renting the homes, one had sold and two had left them vacant.
HUD now estimates that one in four participants has misused the program, the report said. Since the program was created in 1997 to help blighted neighborhoods, 4,732 police officers and 805 teachers have bought half-priced homes.
The program "appears to be at high risk for noncompliance and abuse by homebuyers," auditor Nancy Cooper wrote in the preliminary report last month.
Department spokesman Lemar Wooley said HUD officials have not decided what action to take. "We are reviewing the program to make sure whatever improvements are needed are made," Wooley said.
Taxpayers did not lose any money because the program is run by the Federal Housing Administration, which is self-supporting, Wooley said.
Cooper noted the government does not have a way to ensure that officers in the program are living in their homes, and has not enforced a requirement that participants pay the full home price if they break the rules.
She wrote that HUD officials in Atlanta identified 12 cases of possible fraud but did not notify HUD investigators.
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