Larry Mizel and the ADL HUD Fraud
By Jon Swinn
10 Jun, 2019
Saving and Loan – HUD Whistle blower faces federal charges
By Jon Swinn
A major segment of the HUD fraud was centered in the Denver area and committed by a group of closely related people and companies, who had close ties to the Reagan and Bush administrations. Numerous HUD officials left government to work for the Denver group that defrauded the American people of billions of dollars, much of which is hidden away in either offshore financial institutions or in secret locations throughout the United States. Philip Winn was one of the kingpins in the Denver group. He was a former HUD Assistant Secretary who joined the MDC group in Denver and became a key player in the HUD and savings and loan scandals.
Numerous HUD officials left government service and received high paying jobs with an interrelated group in Denver. This group included, among others: MDC Holdings; Richmond Homes; Silverado Bank Savings & Loan; Aurora Bank; M & L Business Machines; Leonard Millman; Larry Mizel; David Mandarich (president of MDC Holdings); Ken Good; Bill Walters; Neil Bush; Silverado’s President Michael Wise; James Metz, major stockholder in Silverado; and dozens of subsidiaries and related companies, limited partnerships, trusts.
It was learned that Leonard Millman, Larry Mizel, and Philip Winn, all members of the ADL, were partners in these schemes, as was Philip Abrams, former HUD under-secretaries.
Federal regulators involved in the HUD scam included HUD Secretary Samuel Pierce, former Assistant Secretary Thomas Demery; Deborah Gore Dean and Lance Wilson, former executive assistants to Pierce. All except Pierce have been indicted. A number of former HUD officials pleaded guilty to various federal crimes. Dean, an executive assistant to the Reagan Administration’s Housing Secretary, was indicted on 13 criminal charges of fraud, perjury, submitting false statements to Congress, and conspiring to steer valuable housing grants to favored developers and consultants.
The network made huge financial contributions to various politicians, including the Reagan-Bush team and the Bill Clinton group. One of the key participants in the fraud, Philip Winn, used part of the money looted from the HUD and savings and loan programs to bribe politicians, especially in the Reagan-Bush presidencies. In return, Winn was appointed U.S. Ambassador to Switzerland and got the protection of the Justice Department through U.S. Attorney Michael Norton, who had secret participation in several of the Denver area real estate projects.
Justice Department officials, with thousands of investigators throughout the United States, knew of the corruption and did very little. What little they did was usually to prosecute either innocent people or those who played a minor role in the massive criminality. Lawyers, developers, banks, members of the Senate and House were the recipients of the money defrauded from HUD. Consultants, for instance, with political connections, reaped huge fees of as much as $400,000 for a few phone calls or visits to HUD officials or phone calls to powerful members of Congress.
Rampant political favoritism and influence peddling were part of the HUD scandal, combined with payment of millions of dollars for improvements that were never made. Former HUD personnel acted in collusion with present HUD officials in the fraudulent activities. One of the schemes was buying HUD properties for no-money-down, placing second loans on them for improvements that were never made, and then defaulting on the loans while receiving the rental income.
In 1982, the HUD inspector general made a report to Congress, reporting that insiders, including former HUD officials, were defrauding HUD of hundreds of millions of dollars, especially in the Section 8, and particularly sections 224D, 223F, and 202 elderly housing. Congress did not act until six years later when media publicity forced it to conduct an investigation. In 1988, Arlen Adams was appointed Special Prosecutor for HUD, and during subsequent investigations confirmed that developers with the aid of present and former HUD officials were receiving Section 8 rehabilitation units, grossly overcharging the government, often billing for work that was never accomplished.
Simultaneously, the group bilking the government was contributing heavily to the Reagan-Bush team. In March 1989, HUD hearings were triggered by exposure of huge financial donations by the Winn Group and Richmond Homes in Denver.
Turning Prosecution over to the Bad Guys
In November 1989, Congress asked U.S. Attorney General Richard Thornburgh to recommend to the Court of Appeals in Washington the appointment of a Special Prosecutor. He stalled until March 1990, when Congressional pressure forced him to act. Thornburgh had already blocked the appointment of a Special Prosecutor into Inslaw, October Surprise, and eventually BCCI and BNL. U.S. Attorney Generals Edwin Meese, Richard Thornburgh, and William Barr knew about each of the criminal activities described within these pages, and either aided and abetted them directly, or indirectly, by blocking investigation and prosecution. A corollary to that would be the Mafia controlling the highest law enforcement agency in this country.
Statute of Limitations
One of the reasons for stalling prosecution was to allow the statute of limitations to expire, protecting the widespread criminality in the Denver area HUD and savings and loan corruption, and in turn protecting the part played by the Justice Department, the CIA, and many federal and White House officials.
In another investigation, a report was issued by the Committee on Government Operations stating, “The Winn Group did not obtain units from HUD on merit alone, but rather from inside favoritism at HUD.”
Key figures in the Denver-based HUD and savings and loan group, Winn and Mizel, contributed heavily to California Congressman’s Tom Lantos’ Congressional race in 1982. (I had repeatedly reported the corruption that I found to Congressman Lantos, and in typical fashion, he verbally addressed the problem while simultaneously protecting it.)
Part of Taxpayer Liabilities
Congressional staff investigators discovered thousands of apartments were obtained by the group for rehabilitation, costing the American taxpayer over $100,000 each, when the cost for comparable privately financed units would be approximately $20,000. Congressional investigators discovered that U.S. Attorney Michael Norton owned five large apartment complexes with the Winn Group being investigated.
It was discovered that former FBI Special Agent in charge, Bob Pence, who retired in 1992, had been receiving bribes, along with U.S. Attorney Michael Norton and the head of the Internal Revenue Service’s CID unit. Some of these bribes were laundered through M&L Business Machine Company in Denver.
Standard Congressional Cover-Up
When the scandal exposed California Congressman Tony Coelho and Texas Congressman Jim Wright, they took early retirement, defusing the pending investigations. The media and the public did not address the huge losses inflicted upon the American taxpayer. Instead, after key Congressmen such as Wright of Texas and Coelho of California were forced to retire so as to discontinue further investigation, their constituents showed little concern about the criminality and huge financial losses to be paid by taxpayers. Their concern was the loss of a powerful Congressman who produced pork barrel benefits for their constituents. Little was said of the huge multi-billion dollar debt inflicted upon the public. If it had been left to the constituents of Congressmen Jim Wright or Coelho, the enormous financial losses would be ignored as long as the voters received benefits from their corrupt Congressmen.
California Representative Tom Lantos (D-Cal.) led a Congressional investigation into the HUD matter, calling it
- Influence peddling of the tawdriest kind. The scandal at HUD is one of the most complex national scandals that we have seen in decades. There is a degree of mismanagement, fraud, abuse, waste, influence peddling that we have just barely begun to touch.
- Representative Charles Schumer, a subcommittee member, said: “Like picking up a large stone only to discover that bugs and slime have grown in the darkness. This investigation has exposed the corruption which flourished unchecked under Secretary Pierce’s HUD.”
In addition to causing Wright and Coelho to resign (with liberal retirement benefits), Congress tried to stonewall an investigation into HUD by blocking confirmation of HUD appointees expressing intent to expose the HUD scandal. After Jack Kemp took over HUD and stated his intent to prosecute those involved, Congress blocked confirmation of Kemp’s management team. When the Department of Justice started an investigation into HUD, members of Congress then investigated the Justice Department, threatening to cut back its funding. The Justice Department investigation stopped.
Referring to Congressman Wright’s blocking of an investigation into HUD corruption, a Wall Street Journal editorial (April 17, 1989) stated:
- What is most disturbing…is the obvious pattern of so many violations extending over so many years….the brazenness is amazing. Obviously, Mr. Wright felt assured there was no prospect that he ever would be called to account for his actions….When Congress is so powerful it can intimidate the Justice Department from another Abscam case, who should be surprised at corruption?
Shades of the Savings and Loan Debacle
Investigations showed that House speaker Jim Wright obstructed investigation of the HUD corruption while accepting $145,000 in unreported gifts. The House Committee investigating Wright’s dealings with the HUD scandal quickly dropped the investigation after some House members reminded them that an investigation would implicate many other members of Congress. After pressuring Jim Wright to resign on the relatively minor charge of ethics violations, the media attention to the HUD scandal ended. The guilty parties went free; the missing billions of dollars of looted money was never found; and the stage was set for more looting of the American taxpayer.
Justice Department Stonewalling
In typical fashion, after congressional members asked the politically appointed U.S. Attorney General to investigate their allegations, Thornburgh accused them of introducing partisan politics into the HUD investigations. Representative Chuck Schumer of New York replied at a news conference:
- There’s ample evidence of wrongdoing at HUD, but there’s stonewalling at the top. And the only way to get to the bottom of the mess at HUD is through the appointment of an independent counsel. Instead of attacking us, the Attorney General should be focusing on making sure that high-ranking officials at HUD don’t get away with breaking the law.
- Representative Schumer characterized the Attorney General’s objections as a “political response.” A more correct characterization would probably be felony cover-up, obstruction of justice, and misprision of felony.
Another time-honored way that Congress (and the Justice Department) stonewalls sensitive investigations is to withhold funding needed to conduct the investigation. Congress threatens to withhold funding from the Justice Department to dissuade Justice officials from investigating their members. Justice Department officials stonewalled the investigation of Chapter 11 judicial corruption, as it stonewalled every scandal I can think of for the last 50 years. It was also done to halt further FBI investigations of Congressional wrongdoings in Abscam. As the FBI’s continuing investigations into the conduct of Congressmen became too threatening, members of Congress responded by dragging Justice Department officials in for gruelling oversight hearings. It became clear to Justice Department officials that the budget for the Justice Department was in danger if the probes into Congressional wrongdoings did not cease.
Congress Finally Conducted an “Investigation” that whitewashed the scandal allowing the key figures to escape justice despite a House committee concluding that the Department of Housing and Urban Development was “enveloped by influence-peddling, favoritism, abuse, greed, fraud, embezzlement and theft.”
Stew Webb US Federal Whistle blower Grand Jury Demand against Larry Mizel the Denver group
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