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Wednesday, June 13, 2012

The United States of America ex rel. Fredrick Newell vs. City of Saint Paul, Minnesota [Case No. 09-CV-1177] federal False Claims Act lawsuit

Scheduled for a motion to dismiss hearing this Friday (6-15-12) at 9 a.m. in Federal District Court in downtown St. Paul, 316 North Robert Street, Courtroom 7C before The Honorable Donovan Frank.
More information here


Blogger Bob said...

Mr. Newell is a St. Paul minority businessman. Newell’s federal fraud case was unsealed earlier this year after being under seal since May 2009 in US Federal Court.

Two law firms in Mpls represent Newell – Thomas DeVincke of Malkerson Gunn Martin LLP and former US Attorney Thomas Heffelfinger and two other attorneys at Best & Flanagan. The City is represented by four attorneys from Fredrikson & Bryon of Mpls including former US Attorney David Lillehaug.

In 2008 Newell challenged numerous City Section 3 HUD funding violations through a HUD Complaint.

In 2009, HUD determined that the City had repeatedly violated Section 3 HUD funding requirements.

In May 2009, Newell then filed a fraud claim in federal court under seal alleging that the United States had been defrauded by the City during 2003-2009 to the tune of $60M. Newell’s lawsuit is really a federal government fraud claim against the City. The False Claims Act allows a citizen to bring the lawsuit on behalf of the feds and allows the federal government a period of time to decide if it wants to prosecute the fraud claim or allow the citizen to carry the feds water.

Here, after almost three years of delay the feds finally decided in early February of this year to not pursue the City with the resources of the federal government through the US Attorney’s office. Newell is now pursuing the feds claim by himself.

The False Claims Act provides that if the fraud is proven (remember HUD determined the City had in fact violated Section 3), then treble damages apply – so the exposure is $180M to the City in this lawsuit! Plus fines of $5,000-$10,000 for every signature between the City and HUD over the six year period for additional exposure of $5M-$10M in fines to the Feds.
I am attaching documents for your review. Notice the date of the feds’ Notice of Election to Decline to Intervene – 2/9/2012 – just so happens that the very next day (2/10/2012) the City suddenly, unexpectedly and surprisingly dismissed its US Supreme Court appeal - document here
We can now all see the poker chip the City played – City agreed to dismiss the US Supreme Court appeal that threatened the administration’s BIG STICK of “Disparate Impact” claims against banks and insurance companies in return for the feds agreement to not pursue the false claims act against the City. I’d say that was a pretty good deal – for certain powerful Democrats - and a raw deal for the rest of us including those victimized by the failure of local governments to follow the law.

8:02 PM  
Anonymous Anonymous said...

f---ed again by the City of Big Crooks

1:09 PM  
Anonymous Anonymous said...

Bob, do you understand what Section 3 is?

As I said Section 3 is where the City is required when using HUD monies to employ a significant number of low income citizens as a result the use of HUD monies.

There is no "fraud" even if everything was true in the suit. What there would be would be a failure to either properly identify the income brackets of people employed using HUD monies or a failure to actually find new jobs for the required number of people in the low income range.

There is no issues about what the money was spent on or if those weren't projects that were qualifed to use HUD dollars the issue is who got hired on those jobs.

As you noted the City and HUD reached an agreement in 2009 how they were going to improve their efforts in meeting section 3 requirements. I am guessing that is why they took their name off of this case. It is about exactly the same thing (and time period) that they have resolved.

It would be helpful when you scream about a law suit if you were clear about what the issue is.


Chuck Repke

9:32 AM  
Anonymous Anonymous said...

Get a life Repke

8:51 PM  
Anonymous Anonymous said...

repke a home owner has to use a contractor to get his home out of cat2 or 3 how does that work to employ low income people

9:22 PM  
Anonymous Anonymous said...

Ya know Chuck.....whatever the city does (and it does plenty that is wrong) you are right there to spin some BS to make it all OK and it is not OK. I don't know who's worse you or the city.

12:43 AM  
Anonymous Anonymous said...

Look if the City hired a Canadian to head up DSI, Bob's headline would be "Aliens take over housing inspections," and the story would read... "a known alien that many believe came from Mars has taken over the housing inspections office..."

My point is that the story here should at least say what a section 3 law suit is. And, it is what I said it is, that HUD requires that there be jobs created when HUD monies are spent and that a lot of those jobs go to low income residents and that you prove it.

That's all.


Chuck Repke

9:46 AM  
Blogger Bob said...

I just about fell off my chair laughing Chuck.

11:24 PM  
Anonymous sec 3 said...

Of coarse I know what sec 3 is Chuck. I posted the "link" above in another topic. Here it is again, Chucks request.


12:38 AM  

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