Housing Agency Fights Federal Conflict Charges in Failed CDCU

HARRISBURG, Pa. – The Harrisburg Housing Authority rebutted charges yesterday that its one-time director violated federal rules when he also acted as CEO of the housing agency’s fledgling community development credit union, Greater Harrisburg Community CU, which folded last year. In a public statement, the HHA said the close sponsorship of the CDCU at the direction of then-CEO Carl Payne while Payne served as executive director of the housing agency, did not violate federal conflict of interest statutes, as the U.S. Department of Housing and Urban Development alleges. Payne was indicted earlier this year on federal charges that he illegally funneled $500,000 in HUD funds to the seven-year-old CDCU, which was shuttered in January 2006 by NCUA. Among other things, Payne was charged with lying about $134,000 he was paid from HHA funds for running the credit union. In a letter to HUD yesterday, the housing authority said the $834,000 in provided the CDCU during its brief existence was legal and “clearly benefitted a significant number of public housing residents.” The letter asserted that HUD rules expressly encourage housing authorities to engage in partnerships and business arrangements to provide services, like credit unions, to public housing tenants. The 66-year-old Payne is awaiting trial on the charges in U.S. District Court for the Middle District of Pennsylvania.