A Los Angeles city agency was so badly run that it could not account for $70 million in federal funds meant to help poor people get housing and jobs, including money that was steered to a friend of a top executive for bogus work, according to a lawsuit filed by the city.
The civil lawsuit, filed earlier this week in Los Angeles Superior Court against the former director of the Los Angeles Housing Authority and his chief deputy, paints a picture of a department run amok -- without apparent oversight from city leaders.
Among the allegations:
* Lucille Loyce, the former assistant executive director of the Housing Authority, wrongly steered millions of dollars to a longtime friend, Dwayne Williams, for "consulting" on job training and other services at housing projects in South Los Angeles.
* Williams insisted that employees undergo expensive dental work at agency expense, then he and Loyce blackmailed them into keeping quiet about other misconduct.
* Donald Smith, the former executive director of the agency, may have misappropriated $60 million to $70 million in federal funds meant for poor families in the Section 8 rent subsidy program. The lawsuit does not accuse Smith of stealing the money but says that it was "moved into other accounts," and then some of it "disappeared." It was later recovered.
"What went on was incredible ... quintessential public corruption is what it is," said Rudolf Montiel, who became executive director of the agency in 2004 after Smith was forced to resign and Loyce was fired. Their departures occurred before a federal audit last year found millions of dollars steered into no-bid contracts with Loyce's friend Williams, who is also named in the suit.
Federal officials, however, did not file criminal charges against Smith or Loyce. The U.S. attorney's office declined to comment.
Montiel said city officials filed the suit to compel Loyce and Smith to "pay back some of the people's money." He also said he hoped that through the litigation enough evidence of criminal wrongdoing would be uncovered to prosecute Loyce and Smith. The suit is being handled by private attorneys and paid for with Housing Authority funds.
Smith could not be reached for comment. City officials said they had no way to reach him, as did several housing advocates.
