A recent case of rent fraud in New York City has shed light on the U.S. Department of Housing and Urban Development’s (HUD) decade-long resistance to fighting fraud and its failure to properly track rental assistance funds. Paul Fishbein, a convicted fraudster, managed to deceive local housing agencies and steal $1.8 million in government rent subsidies meant for lower-income, disabled, and elderly residents. While Fishbein was brought to justice by city investigators and federal prosecutors, HUD was conspicuously absent from the celebration.
HUD’s inability to track rental assistance money that ends up in the wrong places, either due to error or fraud, has been a longstanding issue. The agency is required to estimate improper payments and post the results, but it has consistently failed to do so. HUD blames various snafus, both human and technological, for its failures and claims that it can only start properly keeping tabs on the money by 2027, dependent on funding.
The lack of accountability at HUD spans multiple administrations, including those of Barack Obama, Donald Trump, and Joe Biden. While it can be challenging to track taxpayer money once it is disbursed, HUD’s failure to do so is a convenient scapegoat. The agency’s rental assistance programs constitute a significant portion of its annual budget, with a combined fiscal budget of $49.5 billion for 2025. Undetected criminality within these programs can result in taxpayer losses in the millions.
HUD’s Office of Inspector General has repeatedly urged the agency to improve its fraud detection over the past decade. However, HUD has failed to report improper-payment estimates for seven consecutive years and has been found non-compliant with improper-payment laws for 11 years in a row. Without changes, the agency’s funds and reputation are at risk, according to the inspector general.
The complexity of HUD’s rental assistance programs, which flow through numerous local housing authorities and landlords, contributes to the difficulty in tracking funds. However, this complexity should not excuse HUD’s lack of oversight. Other federal spending programs, such as the Supplemental Nutrition Assistance Program and Temporary Assistance to Needy Families, have also failed to estimate improper payments, citing coordination issues with state and local agencies.
In fiscal 2023, improper payments across the entire government amounted to $236 billion, according to the Government Accountability Office. However, this number is likely an underestimate, as many departments failed to report their figures. Since 2003, cumulative estimates of improper payments by executive branch agencies have reached $2.7 trillion, equivalent to approximately 10% of America’s Gross Domestic Product.
HUD claims to have oversight and monitoring in place to ensure the integrity of its rental-assistance programs. The agency spokesperson stated that local housing agencies are responsible for determining tenant eligibility and assistance amounts, with HUD providing oversight. However, the lack of proper tracking and reporting raises concerns about the effectiveness of these measures.
HUD’s inspector general has been active in investigating and prosecuting cases of fraud within the rental industry. While some of these cases may seem small in comparison to systemic issues, they highlight the prevalence of fraud within the sector. For example, the arrest of 70 former and current New York City Housing Authority employees for bribery and solicitation of bribery exposed pay-for-play schemes that resulted in $2 million being pocketed over a decade.
To address the issue of fraud, HUD needs to invest in upgrading its technology systems and implementing artificial intelligence for fraud detection. However, this requires additional funding. The Biden administration’s proposed budget for HUD includes a slight increase, but it may not be enough to tackle the problem effectively.