WASHINGTON – A federal judge last week reinstated one member of the Harrisburg (Penn.) Housing Authority board and is expected to reinstate a second who were both barred from federal housing contracts because of their actions to help charter a now-failed community development credit union.
The directors were removed from the board and barred from doing business with the federal government earlier this year by the U.S. Department of Housing and Urban Development, which claimed they did not properly disclose the state agency’s $500,000 in funding for Greater Harrisburg Community CU, which failed in 2006.
But in a ruling last week, Judge Reggie Walton said HUD overstepped its authority in citing the two and a third, who relied on staff and managers of the state agency to disclose the funding for the CDCU. The three directors testified they had no reason to believe that the agency’s funding of the credit union was improper.
The federal judge ordered that Leon Feinerman be immediately reinstated and is expected to reinstate the Rev. Earl Harris, as well, The third director cited, Constance Buxton has moved away and resigned her position on the housing board. The Judge granted immediate relief to Feinerman, who was able to demonstrate the ban on federal contracts was hurting his insurance business.
The controversy over the housing agency’s support for the failed CDCU has been festering since 2006, when NCUA shuttered the fledgling credit union after less than five years of operation. Last year, Carl Payne, former director of the housing agency who also ran the credit union, pleaded guilty to illegally steering HUD funds to the credit union project.
Payne was charged with creating and backdating documents to obstruct the Justice Department’s investigation into how more than $500,000 in HUD funds were transferred from the housing authority to the credit union. He was also charged with lying about receiving $134,000 from the housing authority for his work with the credit union.
The CDCU was chartered by the housing agency in 2001 to serve low income residents surrounding Pennsylvania’s capital city. Though its assets grew to as much as $3 million, it never really took off and started losing money in 2005, ending the year $265,000 in the red. NCUA stepped in shortly afterward and shuttered it.
