ONE BUILDER/DEVELOPER HAS BEEN arrested, and more arrests are likely, in an ongoing investigation of what appears to have been widespread corruption in the Miami-Dade Housing Agency (MDHA).

Oscar Rivero was charged in late August with committing grand theft and an organized scheme to defraud, both first-degree felonies. The charges stem from allegations that he embezzled nearly $750,000 in public money meant to be used to build affordable housing for the poor. If convicted, Rivero could face nearly two years in state prison.

The arrest is just part of the fallout from a blistering series of articles published in July by The Miami Herald, which reported that the MDHA had pledged more than $87 million in local and federal funds for 72 affordable-housing projects, for a total of more than 8,300 new homes. Between 2003 and 2005, about 40 percent of the projects were canceled and others were delayed, sometimes for years, the newspaper reported. Only 14 projects have been finished, and even among those some developers sold the homes to real estate investors instead of to the poor residents for whom the houses were intended.

HIGH AND DRY: Over five years, the Miami-Dade Housing Agency funded 17 affordable housing  projects through its nonprofit development company, the MDHA Development Corp., according  to the Miami Herald's investigative series, “House of  Lies.” Ward Towers, a 100-unit complex for the elderly, is the only  one that has been completed, after months of delays and botched construction. Construction  manager Alberto Perdigon is shown here with the complex's unfinished  pool.
HIGH AND DRY: Over five years, the Miami-Dade Housing Agency funded 17 affordable housing projects through its nonprofit development company, the MDHA Development Corp., according to the Miami Herald's investigative series, “House of Lies.” Ward Towers, a 100-unit complex for the elderly, is the only one that has been completed, after months of delays and botched construction. Construction manager Alberto Perdigon is shown here with the complex's unfinished pool.

At virtually the same time, the Miami-Dade grand jury issued its own scathing report, “House of Cards: Built on Mismanagement and Cronyism,” calling the agency an “utter and complete disaster.”

Since the series of Herald articles appeared, seven county officials have been fired, including the MDHA's former director. In addition, investigations have been launched by several agencies, including HUD, which had provided the MDHA with a $35 million grant in 1999.

HUD assistant secretary Orlando Cabrera, who heads up the department's Office of Public and Indian Housing, says his office is working jointly with HUD's inspector general to investigate both the “civil and criminal side[s]” of the situation, including sending a team of forensic analysts to Miami to see whether HUD funding had been properly spent.

“We agreed to go in and look at everything from soup to nuts,” Cabrera says.

Early in that investigation, HUD analysts uncovered a misuse of approximately $900,000, which was overpaid for contractor administrative fees. When the final report is completed, HUD will probably require the MDHA to return the misappropriated funds to HUD “or refer [the case] to the United States attorney [covering South Florida] for investigation,” Cabrera says. “There may be criminal charges.”

On the other side of the country, HUD has also been investigating the affordable-housing program in Ventura, Calif., where allegations include that people who failed to meet income requirements bought below-market houses, that the homeowners live outside the county or even the state, and that some units are being illegally rented out.

“We are certainly contemplating filing charges,” says Ventura city attorney Robert Boehm, who notes that the city is fighting a lawsuit filed by several homeowners who claim they were never told about the restrictions and want to be exempted from them.

The investigation has been spurred in part by the efforts of a local Realtor, Ellyn Dembowski, who had been looking for homes for teachers she represented. As she tried to find available properties among the city's affordable-housing stock, “people started telling me stories,” she says. “They'd say, ‘See those houses over there? They're owned by doctors who made a deal with the developer when they were first built.'”

Dembowski says she was thrilled to learn about HUD's investigation, as well as one by the local district attorney.

“I'm glad something's going on with it,” she says. “If it's this bad in Ventura, it's got to be happening in other places, too.”

Learn more about markets featured in this article: Miami, FL, Oxnard, CA.