CHA, City of Chicago seek greater oversight in federal consent decree for Cabrini-Green

Press contacts:
Office of Communications – Chicago Housing Authority
Molly Sullivan: (312)786-3344; msullivan@thecha.org
Matthew Aguilar: (312) 523-7067; maguilar@thecha.org

CHICAGO (July 23, 2020) –  The Chicago Housing Authority (CHA) this week was joined by the City of Chicago in seeking a change to one aspect of the longstanding federal consent decree that governs the redevelopment of Cabrini-Green.

Following an investigation, CHA’s Office of the Inspector General (OIG) found that the leader of the non-profit Cabrini-Green LAC Community Development Corporation (CDC) misspent more than $180,000 in funds to benefit herself, her family, and friends instead of the broader community of Cabrini-Green residents.  

CHA and the City filed a motion in U.S. District court Tuesday asking the court to allow for more oversight of the funds, citing the OIG report that found that the CDC “lacked the accountability, transparency and organizational structure to conduct business as a non-profit organization … to benefit the displaced and current residents of Cabrini-Green as mandated in the consent decree.”

Under the decree that was entered in August 2000, the resident advisory council and the CDC were to receive up to 50% of the developer fees from new development projects. The CHA and its board do not have authority over how the fees are spent.

The OIG report detailed how for four years, between 2015 and 2019, the leader of the CDC used some of the $1.8 million in developer fees it received for a relative’s funeral, groceries, trips and restaurant visits. The report also found that checks were issued for petty cash payments to the leader herself and payments were made to the father of her children, the children and other relatives.

The CDC failed to file the proper tax returns with the Internal Revenue Service, which resulted in the temporary loss of tax-exempt status that put redevelopment projects at risk of losing crucial public funds for the projects, the report found.

“The abuse of this money is an affront to every resident who was supposed to benefit from it and is a clear violation of the intent and spirit of this decree,” said CHA CEO Tracey Scott. “We will not tolerate waste, fraud or abuse at any level and I applaud our OIG for rooting out this corruption. Our decision to seek a change in the consent decree demonstrates our commitment to ensuring that these funds are directed to the residents and their interests are protected.”

“It is disheartening to see that what was intended to benefit residents was abused and the purpose of the consent decree blatantly disregarded,” said CHA Inspector General Elissa Rhee-Lee. “Because of the LAC leader’s failure to adhere to the consent decree, her actions put development projects at risk, and most significantly, hurt former and current residents. I am pleased to see the CHA and City seek changes to the decree so there will be accountability and residents can reap the benefits as intended.”

CHA’s Inspector General will be conferring with prosecutorial authorities to determine if criminal charges would be recommended.

In addition to seeking oversight on the funds, the CHA and the City of Chicago also asked the court to freeze all bank accounts managed by the CDC and that current CDC leadership and officers be replaced, effective immediately. The CHA and City are also seeking restitution of the funds to the CDC for the benefit of Cabrini residents.