Resident Omitted Self-Employment Income at Recertification

Facts: As a participant in the voucher program, a resident attended a recertification meeting in November 2010. In her recertification application, she stated that she didn’t receive income from self-employment, and listed Social Security payments as the sole source of income for herself and her five children. She signed the application under a provision that stated: (1) “false statements or information are punishable under federal law and are grounds for termination of housing assistance;” and (2) the information provided “was accurate and complete” to the best of her knowledge and belief.

The PHA later discovered that she had failed to disclose self-employment income and requested that she supply relevant tax records for 2009, 2010, and 2011. She complied, and based on this tax information, the PHA determined that it had over-subsidized her rent due to her failure to disclose self-employment income. The PHA sent the resident an “Intent to Terminate” letter in January 2013.

At a hearing, the resident testified that she “made all efforts to submit all documents that [were] needed” at her recertification meetings. But she admitted that she had a hair styling business for “a couple of years” and that she continued to have this business in 2012, but that she again didn’t report this income on her 2012 recertification application.

The hearing officer upheld the PHA’s proposed voucher termination. The hearing officer found the PHA had shown that when completing recertification applications in 2010 and 2012, the resident had omitted income from her self-employment and made false statements that she had no self-employment income, thereby violating the family obligations of the voucher program. The hearing officer concluded that by making false statements and omitting substantial facts relating to her income, she had committed fraud.

The resident asked the court to review the hearing officer’s decision. The resident argued that the PHA failed to prove the subsidy overpayment was $5,632, when it was, in fact, only $4,785. Because the overpayment was actually less than $5,000, she argued that she was entitled to enter into a repayment agreement with the PHA instead of having her voucher terminated.

Ruling: An Illinois appeals court confirmed the housing authority’s decision to terminate the resident’s subsidy.

Reasoning: The court concluded that there was no error in the hearing officer’s conclusion that the resident had committed fraud. She never corrected the misinformation as to her income provided in the 2010 recertification application and committed the same misconduct as to her 2012 recertification application. Again, she never sought to correct the income information in that later application. Her deceptive conduct resulted in an overpayment of rent subsidies. And the evidence presented at the hearing meets the controlling definition of fraud as set forth in the PHA’s administrative plan.

Even assuming the over-subsidy calculation was incorrect only as to the amount, the hearing officer’s decision to terminate the resident’s participation in the voucher program wasn’t based on the amount of the over-subsidy, but on the findings that the resident had violated the family obligations by her misrepresentations and omissions, and those violations amounted to fraud.

• Jenkins v. Chicago Housing Authority, August 2014