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Ex-L.A. Housing Authority executives are ordered to repay $528,000
Jury finds former directors liable for mismanaging federal funds and improperly steering millions of dollars in contracts to a friend without holding a bidding process.
By Victoria Kim
The Los Angeles Times
November 5, 2008
A Los Angeles jury Tuesday found former city Housing Authority executives liable for mismanaging federal funds designated to help the poor get housing and jobs.
The panel concluded at the end of a five-week trial that former Assistant Executive Director Lucille Loyce and then-Executive Director Donald Smith should pay the agency $528,000 for mismanaging taxpayer money and lying to the agency's board about it.
Neither Loyce nor Smith has been criminally prosecuted.
The agency sued the pair in 2006, alleging among other things that Loyce had wrongfully steered millions of dollars to her friend Dwayne Williams for "consulting" work. At the time, agency officials said the suit was filed to compel Loyce to pay back some of the public's money.
Williams, who was also sued, was dismissed from the case by a judge last year. An appeals court overturned that finding last week, clearing the way for the authority to sue Williams in state court.
"Justice has prevailed," said Rudolf Montiel, who became the head of the city's housing authority in 2004 after Smith was forced to resign and Loyce was fired following a federal audit. "We did something to protect the poorest of the poor."
Montiel added that the agency planned to file a civil action against Williams to recover millions that officials believe he received in illegal contracts.
"There's a whole lot of money that was improperly paid to Mr. Williams that could have gone to low-income housing in Los Angeles," Charles Slyngstad, an attorney for the Housing Authority, said after the verdict was read.
Attorneys for Loyce and Smith denied any misconduct, and in trial told jurors that Loyce had hired Williams to help minority businesses get contracts with the city. They portrayed Loyce as a self-made woman who was discriminated against because she was the only black woman in the agency's top leadership.
"To say this was some kind of scam to get around the board was worse than ridiculous," Samuel Wells, Loyce's attorney, told jurors. Loyce cried in the audience, sniffling and blotting her eyes.
Loyce countersued the department, alleging discrimination and whistle-blower retaliation. The jury rejected those claims, Slyngstad said.
In the initial lawsuit, the agency's attorneys alleged that Loyce and Smith had awarded millions of dollars in contracts to Williams' company without an open bidding process. Loyce and Williams had previously worked together for years in Milwaukee. Loyce was forced out of the housing authority there on suspicions that she was improperly providing funds to Williams, according to the lawsuit.
"One contract led to another, then another, then another," Slyngstad told jurors during the trial, saying Loyce and Smith acted to "permit and help Dwayne Williams to defraud the Housing Authority."
No criminal charges have been brought against Williams.
Times staff writer Jessica Garrison contributed to this report.
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