HUD Director in Puerto Rico Indicted and Arrested for Wire Fraud, Theft of Government Property and False Statements

Feb 25, 2010, 15:56 ET from U.S. Department of Justice

SAN JUAN, Puerto Rico, Feb. 25 /PRNewswire-USNewswire/ -- Yesterday, a federal Grand Jury in the District of Puerto Rico returned a forty-count indictment, charging Michael A. Colon, Director of Housing and Urban Development (HUD), Field Office in San Juan, PR, with wire fraud, theft of government property, false statements and one forfeiture allegation, announced U.S. Attorney for the District of Puerto Rico, Rosa Emilia Rodriguez-Velez. Since on or about December 2008 and continuing through February 2010, the defendant devised a scheme and artifice to defraud and obtain money by means of false and fraudulent pretenses and representations. Colon certified that he had worked 80 hours per pay-period on certain time sheets, even though he knew that he had not worked the full 80 hours during those pay-periods. In fact, the defendant knew that he had taken unauthorized personal leave during those pay periods.

Michael A. Colon was employed by the U.S. Department of Housing and Urban Development as its Director of the San Juan, Puerto Rico Field Office since March 24, 2002. As the Field Office Director, the defendant was the principal management official for HUD in San Juan and reported directly to the HUD Regional Director. The defendant's duties included coordination of HUD outreach activities and program delivery to HUD customers and communities throughout the jurisdiction. The defendant was responsible for ensuring the proper function of his Field Office's program development and management. Acting in this capacity, the defendant supervised 79 employees in the Caribbean field, which included employees from the U.S. Virgin Islands.

Defendant devised a scheme to defraud HUD by claiming to have worked hours which he did not. The defendant claimed to have been working, when in truth and in fact, he was doing non-work related errands, including, among other things, shopping at Sam's Club, Costco Wholesale Corporation and Ralph's Food Warehouse to purchase groceries, which he then unloaded at a restaurant called Cafe de la Plaza Cafeteria, located in the residential gated community known as Palmas del Mar. Public records indicate that the defendant's daughter has owned the Cafe de la Plaza Cafeteria since December 10, 2009 and that the defendant has owned the property where the Cafe de la Plaza Cafeteria sits since September 26, 1984.

"The defendant took advantage of his managerial position in the Department of Housing and Urban Development and stole directly from the government of the United States," said United States Attorney Rosa Emilia Rodriguez-Velez. "The vast majority of Federal employees are hard working members of our community, but those who betray the trust and use their position for personal gain should know that they will be investigated and prosecuted to the full extent of the law."

"At such a critical time for a Department with programs that are vital to the well being of so many in our nation, it is all the more important that those entrusted to public service are completely dedicated to those in need," said Kenneth M. Donohue, Inspector General of the Department of Housing and Urban Development. "The people of Puerto Rico deserve devoted, honest and efficient service and, in this case, have been let down by someone who was supposed to be committed to their best interests."

If convicted, the defendant faces a maximum term of imprisonment of up to 20 years, fines of up to $250,000, or both.

Anyone with information about HUD employee misconduct or waste, fraud and abuse involving HUD funds or programs by government officials, contractors or grantees may file a confidential report by calling HUD-OIG's local number at (787) 766-5868.

This case was investigated by the U.S. Department of Housing-Office of Inspector General, with the assistance of the Department of Homeland Security-Office of Inspector General and Puerto Rico Police Department agents assigned to the Public Housing Fraud Task Force. The case is being prosecuted by Assistant United States Attorney Marshal D. Morgan.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

SOURCE U.S. Department of Justice