Federal auditors are examining the Los Angeles Housing Authority’s books because residents allege job-training programs are rife with fraud and mismanagement of funds.

Six leaders of Resident Advisory Councils at three different housing projects accuse the Authority of misusing thousands of dollars over a six-year period.

The Authority’s lawyer, Martha Shen-Urquidez, said the allegations are without merit and blamed power-hungry resident leaders for bringing on the audit by the U.S. Department of Housing and Urban Development (HUD). Residents, with the help of their lawyer, Lenton Aikins, have filed suits alleging that assistant director Lucille Loyce improperly gave contracts to consultant Dwayne Williams to help start businesses run and managed by residents. The lawsuits allege that Williams double-billed and used phony contractors.

Last November, U.S. District Court Judge Ronald Lew dismissed the federal court case, calling it poorly worded, and ordered Aikins to pay $9,471 to cover his opponents’ legal fees. The ruling has been appealed. A separate lawsuit in superior court has not been resolved.

In the superior-court case, leaders of the residents’ council claim Loyce strongly recommended or hired Williams to teach tenants how to form small businesses, but that Williams simply did not do the job. Williams has been a consultant at nine public-housing projects, including Jordan Downs, Pueblo, Estrada Courts, William Mead, San Fernando Gardens, Hacienda, Aliso Village and Independent Square.

Neither Williams nor Loyce would be interviewed for this article, but Shen-Urquidez denied that either defrauded the housing agency. Quite the contrary, she said, describing Williams as a respectable church pastor and one of the few consultants willing to work for low wages in government housing projects. “You can understand why nobody wants to come to Jordan Downs. They have a reputation down there; people are afraid to go. Which is why Mr. Williams keeps quitting, and the Housing Authority begs him to help out to finish some bookkeeping,” Shen-Urquidez says. “We can’t find anybody else who is willing to do it at something less than $400 an hour. He’s been really successful in getting these developments money. Obviously too successful.”

Details of HUD’s audit have not been released, and HUD district inspector general Mimi Lee would say little about the case. If auditors find sufficient evidence of a problem, a full investigation would be conducted.

David Ochoa, a former council president at Aliso Village, tells a different story in the lawsuit and interviews. He claims that Williams failed to provide required job training when he and other residents sought to use a $915,000 HUD grant to form a moving company that would employ residents. An immigrant from Mexico, he moved into public housing after a 1986 earthquake destroyed the apartment complex where he lived.

In 1995, Ochoa was elected president by Aliso Village’s residents and soon applied for the grant.

Upon Loyce’s recommendations, Williams was paid $25,000 to teach the residents how to start and run the business, Ochoa says. “But he never taught us anything.

He said he tried to dismiss Williams, but was told by Loyce that he could not fire him. Instead, Loyce ordered him to keep Williams as a permanent consultant and pay him $125 per hour.

For 14 months, under Williams’ guidance, the Aliso Village moving company relocated hundreds of residents into newer units during a major rebuilding program. In 2000, the firm moved residents of William Mead Homes during a toxic cleanup of the Lincoln Heights project.

According to the lawsuit, Ochoa grew wary of Williams when Billy Childs, a Resident Advisory Council administrator at Jordan Downs, told him that he suspected Williams of double-billing for about $5,000 worth of hours. The lawsuit’s exhibits include copies of Williams’ bills for the same days and hours on 12 occasions from August to December 1999.

Shen-Urquidez denies Ochoa’s allegations and calls him a disgruntled, former Housing Authority employee. “Every development has a person who is very vocal who wants absolute control over the company and the finances, and they just can’t have it,” Shen-Urquidez says. As for the double billing, it was an honest mistake that occurred only on three checks, Shen-Urquidez says, when work done at one time was credited to a different set of hours.

Sandra Obando, a resident of San Fernando Gardens, alleges a similar scenario, after Loyce recommended Williams as a consultant for a newly formed security-guard company.

The problems between resident leaders and the Housing Authority intensified in the wake of a lawsuit filed by Margaret Gardenhire, a Jordan Downs manager cited by Loyce in 1996 as “Employee of the Year.”

According to Gardenhire, she caught Williams delaying moves six times, ensuring that he would get paid for more hours. She told Loyce, her immediate boss, and suffered retaliation, she says. Believing that Loyce would fire her, Gardenhire sued her and the Housing Authority in 1997 under whistle-blower protection laws. Two years later, a jury ruled in her favor and awarded her $1.3 million.

Gardenhire’s case caught the attention of then-commissioner Diane Middleton, who in early 1998 resigned from the Housing Authority’s governing board, citing misuse of funds, rampant overspending and retaliation against residents who dared to voice concerns. The lack of a City Council oversight is partly responsible for these problems, she says.

Congresswoman Juanita Millender-McDonald also raised concerns about possible misspending in a letter to the commission in November 1997. Housing Authority Director Don Smith insists that expenditures are closely monitored.

Shen-Urquidez dismisses the Gardenhire case as a fluke and that the real problems stem from power struggles and jealousies among resident leaders.

“It’s a very scary situation where what you are trying to do is help people who are not as privileged, who don’t have the education, the amenities in life, and you are trying to help them become independent and self-sufficient,” she says. “And at the same time, once they become a little bit stronger and they want to become independent and self-sufficient, it’s almost like the teenager who is trying to get out of the house when they are not ready to.”

The challengers to the status quo at the Housing Authority say Shen-Urquidez’s comments are typical of the condescending way it treats residents. “This is truly a sad thing,” Ochoa says. “The poorest in the city have what little they get taken away from them. It’s just terrible.”

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