HOME:Summary Of Events: Chronology


Chronology of Selected Events

Regarding Hamilton, HUD Loan Sales, HUD Loan Sales Qui Tam and Clinton-Gore Administration

(As of February 13, 2001)


Hamilton is founded. Prior to incorporation, principals at NHP, Inc. (formerly known as National Housing Partnership) had asked Catherine Austin Fitts to form an investment bank to provide NHP with dedicated investment banking services and advice. NHP abrogates its deal at the day of closing, after Harvard Endowment, a major stockholder of NHP, announces with no advance warning that it has decided to change the terms of the deal such that NHP would receive 20% of Hamiltonís equity. Fitts decides to proceed without NHP and Harvard. The vision for Hamiltonís creation is explained in a Fitts memo on "The Dream Machine." The Dream Machine was envisioned as a relational database and software tool operation that could revolutionize communitiesí access to capital and facilitate a transformation to collaborative learning organizations and communities.


Hamilton builds numerous relational databases and tools that bring early success to the new company. The tools include what Hamilton believed to be the most extensive database on institutional equity investment in real estate. Upon reading about Hamiltonís research with the database Alan Greenspan makes a special request for a briefing to the Federal Reserve Staff on Hamiltonís findings. Another tool, developed as part of a complete pricing and simulation model of Battery Park City Authority, was a simulation of New York real estate valuations for tax purposes. Hamiltonís work is widely credited with providing the basis for a recapitalization of the Battery Park City Authority and the first ratings upgrade of a New York State authority in over 20 years by Standard & Poorís.


Al Gore names Jack Quinn as his Chief of Staff. Clinton nominates Andrew Cuomo as Assistant Secretary of Community Planning and Development at the United States Department of Housing. Eric Holder is nominated as DC US Attorney. Frank Hunger is nominated as Assistant Attorney General, Civil

Division, U.S. Department of Justice.


Hamilton is awarded its first advisory contract with the United States Department of Housing and Urban Development and its insurance arm, Federal Housing Administration ("HUD") through a competitive bidding process in response to an RFP issued by HUD in late 1992.


HUD conducts a "reflector" sale of performing Single Family Section 221(g)(4) mortgages (that is, mortgages guaranteed by HUD and subsequently "put back" to the government by the lender pursuant to statutory provisions allowing the lenders to put them back) that had a $90 million Unpaid Principal Balance ("UPB"). The aggregate purchase price of the loans was over $84 million, equal to 85% of UPB, providing the government with savings of $1.7 million (calculated as the excess purchase price over the "value to government"). The winners of this sale were First Boston, United Mortgage, and Kidder Peabody.


The Digital Telephony and Communications Privacy Improvement Act of 1994 is



Robert Rubin becomes Secretary of Treasury, resigning from Goldman Sachs.


Howard Glaser joins HUD in 1994 as Deputy Assistant Secretary of Community Planning and Development. After Andrew Cuomo becomes Secretary in late 1996, he then serve as Deputy General Counsel. His resume describes his responsibilities as "acting as the Secretaryís chief legal advisor on regulations, legislation, and programs."


Operation Safe Home, a program run by the HUD Office of Inspector General ("OIG) to "combat violent crime in public and assisted housing," is begun. As part of this program, the HUD OIG coordinates with various federal, state and local enforcement task forces. Federal agencies that partner with HUD include FBI, Drug Enforcement Agency, Bureau of Alcohol, Tobacco and Firearms,, IRS, Secret Service, US Marshall's Service, Postal Inspection Service, US Customs Service, Immigration and Naturalization Service and Department of Justice. The primary performance measures reported in the HUD OIG Semi-Annual Performance Report to Congress for this program are the total number of asset forfeitures/seizures, equity skimming collections and arrests. Subsequent intra agency efforts such as the "ACE" program sponsored by the Department of Justice are initiated by US Attorneyís Offices, working with the DOJ Asset Forfeiture Fund, HUD OIG and HUD Office of General Counsel. The Operation Safe Home program is unusual in that it moves the agency auditor into the role of running a program and competing for program resources. The HUD loan sales program staff receive complaints from HUD OIG staff about the inclusion in the HUD loan sales of loans with respect to which the enforcement arms of HUD are conducting investigations. These complaints underscore the fact that the HUD-held mortgage portfolio provide enforcement opportunities for DOJ/US Attorney and HUD OIG and HUD General Counsel, and that the sale of loans from HUDís portfolio reduces the opportunities for enforcement staff to increase their performance measures (i.e., number of arrests, seizures and equity skimming collections). HUD OIG and General Counsel later request that loans be held out of sale, even though this would cost taxpayers more. The enforcement position, reported to Catherine Austin Fitts by one of the loan staff involved, is that their goal is maximization of enforcement revenues, not maximization of total government revenues.


Issuance of "A Guide to Equitable Sharing of Federally Forfeited Property for State and Local Law Enforcement Agencies."


Webster Hubbell resigns from his post at the Justice Department and later pleads guilty to over-billing at the Rose Law Firm.


A series of emails is exchanged between Hamilton and HUD loan asset sale team members regarding HUDís work-out policy for loans that may be subject to future sale in HUD loan sales. Al Sullivan, the Director of Asset Management in the Office of Housing, suggests one alternative is to halt all workouts of loans identified for sale. The policy subsequently is adopted.


HUD decides to implement a new loss mitigation program to be known as Special Workout Assistance Teams or "SWAT" Program. The purpose of the initiative is to identify troubled multifamily properties with physical and financial problems that require special attention and expertise and to bring in a team selected by HUD comprised of legal, accounting, management and other specialists to solve these problems.


HUD reassigns about $90 million UPB of performing HUD-held multifamily loans to Fannie Mae with assistance of Hamilton as financial advisor.


Donald Smaltz is named Independent Counsel to investigate Agriculture Secretary Mike Espyís alleged acceptance of gifts from individuals with business before his Department.


HUD sells over $150 million in performing multifamily section 221(d)(4) loans with

Hamiltonís assistance as financial advisor.


George W. Bush is elected Governor of Texas, defeating Ann Richards with 53% of the vote compared to her 46%.


The Kerry Company is awarded the first HUD SWAT contract.


Secretary Rubin leads effort to put together Mexican bail-out package that saves numerous US investment houses and investors from losses on their investments in Mexican bonds during early 1995.


Goldman Sachs agrees to pay the Maxwell pension funds $253 million in the settlement of a lawsuit over Goldmanís role in Robertís Maxwellís illegal use of pension fund assets.


An HUD Office of Inspector General ("OIG") staff member reports to Catherine Fitts that he was present at a meeting with Community Planning and Development Assistant Secretary Andrew Cuomo and the HUD Inspector General ("IG") at which Cuomo reported that he intended to "get rid of Hamilton and Fitts."


Helen Dunlap (Deputy Assistant Secretary for Housing and head of the loan sales program) and Kathy Rock (FHA Comptroller) report to Catherine Fitts that the HUD IG has personally complained to them about the political pressure she has been receiving about HUDís continued use of Hamilton as financial advisor. The complaints had no apparent relationship to the quality of Hamiltonís work.


In late 1994/early 1995, Hamilton agrees to assist NHP in doing a valuation for tax purposes to assist NHP in dividing the company into two parts, one designed to perform management functions and one for the purpose of holding real estate, so that it can take the management company public. As a condition to Hamiltonís agreement to perform the task, Hamilton requires that NHP agree that all work must be completed before Hamiltonís HUD contract requires it to deal in any way with Section 8 assisted mortgages. The condition is imposed by Hamilton in order to eliminate the possibility of any conflict of interest in its performance of the government contract. Hamilton proceeds to build an extensive software tool that replicates NHPís portfolio, including all of NHPís properties, partnerships, and corporations. The valuation process teaches Harvard, NHP and Hamilton many things about the HUD Section 8 portfolio and about the Section 8 program industry stakeholders that were not known before. The simulation program that performed this task was made possible by the use of flexible software tools and detailed relational databases. NHP once again abrogates its word with Hamilton, insisting that Hamilton provide additional advisory support past the deadline. During the negotiation, Rod Heller becomes threatening in his statements before using another company.


Charles Ruff leaves private practice as a partner at Covington & Burling to become DC Corporation Counsel.


HUD finally issues a request for proposals (referred to in government contracting circles as an "RFP") for additional financial advisors to advise FHA on handling the burgeoning portfolio of defaulted HUD-held mortgage loans. Hamilton had recommended since 1994 that HUD hire additional financial advisors.


GAO puts HUD on its high-risk list.


HUD sells over $900 million UPB in multifamily unsubsidized non-performing loans in HUD's first public loan sale in recent memory, termed the "Southeast Loan Sale" because of the location of the underlying properties. The aggregate purchase price of the loans was over $700 million, equal to 79.82% of UPB, providing the government with savings of $437.62 million ("savings" in this case referring to "credit subsidy" savings, which is calculated by comparison to the expected yield on this portfolio if it were held by HUD Ė HUD could expect a recovery rate of about 35% of UPB if the loans were not sold). There were 104 bidders and 12 winners in this auction, with GE Capital being the largest. The recovery rate and success of the sale astonished HUD, OMB, and the market and was widely attributed to the financial software innovations in the sale, including the design book, Internet and Bloomberg accessible low cost, high quality disclosure and the optimization model that permits buyers to self-stratify the portfolio. This allows many markets to compete against each other, driving prices way up on the sale. Harvard Endowmentís Mike Eisenson complains about the sale to Catherine Austin Fitts before the bid, saying, "I donít like this [Hamiltonís use of Bell Labs optimization technology to auction HUD mortgages] because the only way we can win is by paying more than our competitors. We prefer a bid process where we can win by 'gaming' it because we are 'smarter'." The Southeast sale also introduces the concept of "design books" in which software development procedures are applied to produce detailed documentation of all the steps in conducting a loan sale. The design book process enables staff from numerous HUD offices and field offices, as well as experts retained by Hamilton, to collaborate on-line in a final product owned by HUD. The process of creating design book permits the loan sale team to simulate the loan sale in a way that resolves tensions and provides documentation for decisions made. The final design book produced for the Southeast sale is approximately 2,000 pages long. The design book is one of the key steps to building trust within the team conducting a highly complex transaction in an organization infamous for not being able to collaborate. It is one of the reasons that HUD was able to complete a sale that was not considered feasible by the industry and to execute it nearly flawlessly, producing astonishing performance in the marketplace at transactions costs substantially below those incurred by RTC and other government agencies for comparable transactions. The HUD loan sale design books are converted to HTML in 1996 and 1997 and posted on the web. For an example, see


Barron's publishes an article about the Southeast Loan Sale, "Believe it or Not, HUD Finally Does Something Right for Taxpayers" by Jim McTague.


David M. Barrett is appointed Independent Counsel to investigate Henry Cisneros for lying to the FBI in connection with his appointment as HUD Secretary. It is reported in the press at a later date that Barrett is providing these services at $50 per hour.

Summer 1995

Secretary Cisneros proposes legislation to implement the controversial "mark-to-market" program into Congress at the instigation of the DAS for Multifamily Housing, Helen Dunlap, with Hamiltonís support as financial advisor. The response of the enforcement operations to the notion of on-line training that decreases default rates and losses on HUDís portfolio is typified by the response of one member of the HUD OIG staff: "Why should we give niggers computers when my kids donít even have them yet?"

Summer 1995

Hamilton starts a computer learning center at Edgewood (a Washington, DC neighborhood) and begins training for the first class to seed Edgewood Technology Services in the fall. Fitts uses the early results to persuade HUD in August to initiate the Neighborhood Networks Program by issuing an administrative letter to HUD field offices that expands the definition of "multifamily housing" to include computer learning centers. (While loan sales improves the recovery rate on defaulted mortgages, the greatest savings will result from lowering the default rates that are occurring as a result of homeowners and tenants not being able to pay their mortgage and rents). This makes many billions of dollars of housing subsidy eligible to pay for computer learning centers in privately owned apartment buildings. A highly capable and innovative team in the Seattle Field Office takes charge of the program, running the program from the field.


Clinton nominates John D. Hawke, Jr. as Under Secretary for Domestic Finance at the US Treasury. Hawke is a former Senior Partner at Arnold & Porter, where he headed the financial institutions practice and served as Chairman of the firm from 1987 to 1995. He served as General Counsel of the Federal Reserve from 1975-78. As Under Secretary, Hawkeís role is to oversee policy and legislation in the areas of financial institutions, Treasury securities and pubic debt management, capital markets, government financial management services, federal lending, and government-sponsored enterprises.


"Blueprint for Reinvention of HUD," issued by Secretary Henry Cisneros, proposes sweeping changes in public housing, reform of FHA and consolidation of other programs into three block grants.


Sally Denton's and Roger Morrisís story on Mena, Arkansas, drawing from documents in Barry Sealís papers, is published in Penthouse after having been axed by the Washington Post in January, shortly before publication. A detailed report on Mena had run in The Nation in early 1992.



Daniel Pearson is appointed Independent Counsel to investigate questionable business transactions by Commerce Secretary Ron Brown.

August - October - 95

The HUD Denver (Rocky Mountain) Field Office Inspector General's Office team puts together audit objectives for the upcoming audit of the HUD loan sales program.


National Housing Partnership ("NHP"), the second largest HUD property manager and assisted housing landlord, completes its initial public offering ("IPO") and then draws on its credit facility. The IPO proceeds are used: (1) to repay indebtedness from a previous credit facility, (2) to repay a note to a former institutional shareholder of NHP, (3) to repay a debt to Demeter Holdings (a Harvard Endowment - affiliated investment vehicle that owned approximately ---% of NHP stock), Capricorn (NHPís second largest stockholder) and Roderick Heller (Chairman of NHP), (4) the remainder added to NHP working capital. In consideration of the sale of certain NHP - affiliated "Real Estate Companies", Demeter, Capricorn and Heller canceled $9.1 million in debt. Effective with the IPO, NHP granted NHP Chairman Rod Heller non-qualified performance vesting options to purchase 120,000 shares of NHP common stock @ $16 Ė the options would vest in 10 years but are subject to accelerated vesting under certain circumstances, including change in control of NHP. [Source: SEC EDGAR filings] The Chairman of Capricorn is Pug Winokur, Chairman of DynCorp, which serves as the lead contractor for DOJís Asset Forfeiture Fund and provides numerous other IT, data and security-related services at DOJ, HUD and throughout the Federal Government and the War on Drugs in South America. Winokur is also a member of the board of Harvard Endowment, the lead investor in NHP. The Center for Public Integrity reports that Winokur was a $100,000 donor at the Clinton Inauguration and that Harvard employees are the tenth-largest supporter of Bill Clinton throughout his career.

Fall 1995

Jack Quinn, Al Goreís Chief of Staff and former partner at Arnold & Porter, becomes White House Counsel. Lloyd Cutler, board member of NHP, whose firm, Wilmer Cutler & Pickering, handled much of NHP'sí legal work, had gone over to the White House Counselís office after Vince Fosterís death.

Summer/Fall 1995

The Neighborhood Networks letter to HUD field offices circulates. Adelson Entertainment makes a video about ETS (an e.villages data services training site) which does an excellent job of describing the on-line training and business incubation idea. Dave Derecola, head of FHA audits in the HUD OIGís office, warns Fitts that Greerís support of the neighborhood networks concept could cause him serious trouble within HUD OIG. Greer and Derecola are both recused from auditing the loan sales or Hamilton as a result of their assistance in helping to design and build the loan sales program.


HUD holds the National Performing Sale in which Bankers Trust was the winning bidder for all but one mortgage at almost 89% of UPB of the loans. Proceeds of the sale aggregated $254.7 million. The program improvements incorporated in this sale included the provision of a pre-auction rating of the portfolio in the form of "comfort letters" to bidders.


Catherine Austin Fitts, President of Hamilton Securities, is on sabbatical to attend classes at MIT in Boston until December of 1995. Hamilton moves into its new offices over a CVS drugstore on DuPont Circle. The space is designed to be an open office, with 35 desks that integrate computer and telephony off of a central server, with swing capacity to 75 seats in kitchen and conference spaces to handle outsourcing and visitors. The space is quite beautiful but has a lower per employee cost than for the Washington, DC space occupied by HUD. In 1997, the space is awarded an advance technology design award by the American Institute of Architecture.


HUD holds the National Performing Loan Sale and auctions $282.25 million UPB in performing multifamily loans. The National Performing Sale yielded proceeds of $250.19 million, equal to 88.64% of UPB and resulting in savings to the government of $25.63 million. As part of this auction, HUD obtained comfort letters from rating agencies for these loans, resulting in a "partial securitization" that increased proceeds over what would have been otherwise possible. There were 25 bidders and two winners in this auction.


HUD auctions $26 million UPB in Title I (home improvement and manufactured housing) loans, with Hamilton as financial advisor. The Title I Loan Sale yielded proceeds of $.17 million, equal to 66% of UPB and resulted in savings to the government of $.08 million.


The Washington Times publishes an article "Capturing Billions in the Balance Sheet" by Bill Diefenderfer, the Deputy Director of OMB during the Bush Administration. Highlights: "In this case [the Southeast auction], dedicated government servants saved the taxpayers $424 millionÖ This is not just shuffling paper. In this one transaction, HUD reduced the federal deficit by more than $400 million."


Asset Strategies Group, a due diligence subcontractor to Hamilton, stopped its work on the HUD Single Family Loan Sale #1, refusing to continue unless HUD immediately makes a series of changes in due diligence procedures for the sale. HUD, upon Hamiltonís advice, decides to proceed with the sale and, when Asset Strategies refuses to continue work, Hamilton replaces Asset Strategies with Utendahl Capital. Subsequently, Asset Strategiesí lawyer, Karen Burstein, writes a letter of complaint against Hamilton to Andrew Cuomo who, at that time, is Assistant Secretary for Community Planning and Development (with no role in the loan sales). This letter of complaint finds its way into the Ervin complaint filed in Ervin v. Dunlap and the qui tam case naming Hamilton via Bill Richbourg, one of Hamilton's contract GTRs.


Letter from Karen Burstein, counsel for Asset Strategies, to Assistant Secretary for Community Planning and Development Cuomo detailing "significant irregularities in HUD's Note Sale Program" under the direction of Nicolas Retsinas. The letter begins "Dear Andrew" and ends "Affectionately, Karen."


HUD holds the Single Family Loan Sale #1 for $523.23 million UPB in single family loans. The Single Family Loan Sale #1 yielded proceeds of $392.77 million, equal to 75.07% of UPB and resulting in savings to the government of $7.89 million. There were 6 bidders in the auction held on the originally scheduled date of October 25, as a result of which auction HUD awarded 10,000 loans to three winners. A reoffering of 3,000 loans from this sale took place on November 6, 1995. The reoffering was necessitated when the maximum bids received on the original bid date for this portion of the portfolio fell short of the undisclosed value of the portfolio to the government, making a sale at the first maximum bid price undesirable. Soon after HUDís failure to award the full portfolio at the initial bid date, BlackRock Capital writes an excoriating letter of complaint about Hamilton to HUD.


Bloomberg Information Services publishes a story "HUD Earns Unexpected $1.3 Billion from Sale of Multifamily Mortgage Loans."


Patrick Knowlton testifies before the Whitewater Grand Jury regarding Vincent Fosterís death.


The Single Family Loan Sale re-offering takes place Ė four bidders participated and 3,000 of the originally offered 10,000 loans are awarded to BlackRock Capital, the winning bidder at a respectable 75% of unpaid principal balance. In its post-auction review process, Hamilton determined that two enhancements could increase proceeds in sales of this type: (1) provision of detailed 36-month payment histories to bidders and (2) a revision of post-sale servicing requirements. These improvements were incorporated in subsequent sales.


Housing Affairs Newsletter reports that the HUD IG is doing an investigation of irregularities on the HUD loan sale bids.


HUD holds the West of Mississippi Loan Sale auction. HUD offered $622.34 million UPB in non-performing multifamily loans in the West of Mississippi Sale with Hamilton as financial advisor. The West of Mississippi Sale yielded proceeds of $385.2 million, equal to 61.9 % of UPB and resulted in savings to the government of $107.82 million. There were 73 bidders and 26 winners in this auction.


Prime Minister Rabin assassinated; Peres succeeds him.


Colin Powell announces he will not seek the Presidency.


The House of Representatives bans gifts to Members. The ex-White House Travel Office official is acquitted.


Edgewood Technology Services (ETS), a subsidiary of e.villages (a Hamilton/Adelson Entertainment joint venture for the creation of computer learning centers in government-assisted housing projects that was designed with an ESOP and employee stock options to employees) begins work on a proprietary Hamilton database by calling and filing Freedom of Information Act ("FOIA") requests with all the HUD field offices for information with which to build a definitive database of the HUD multifamily portfolio. The database integrates information Hamilton had obtained from other sources and publicly available data with incomplete, publicly available information from HUD to produce a much more complete record of ownership of HUD properties than had heretofore been available. The work on this database proceeds throughout the next two years. Hamilton also arranges for ETS to learn how to use GIS (Geographic Information Systems) software.


Legislation regulating lobbyists becomes law.

Sept- Dec-95

Numerous Members of Congress resign.


Chris Greer, then Chief Auditor for HUDís Office of Inspector General, is named Deputy Assistant Secretary for the Multifamily Housing Division of HUD, which has responsibility for the FHA Fund, replacing Helen Dunlap in that position. Helen Dunlap is moved to the position of Deputy Assistant Secretary for operations and retains regulatory responsibility for HUD loan sales. Greer is seen as an adversary by groups in Denver and Boston who were targeted by HUD for "mod rehab" program scandals of the early Ď90s and various instances of financial fraud during the S&L scandals of the 1980ís/Iran Contra period. Before moving from IGís Office, Greer reports to Fitts that an IG investigation of what appear to be Burstein and associated bid rigging allegations of HUD loan sale bidder collusion on the Single Family Sale #1 concludes that the charges are unfounded.


Numerous Whitewater events from December 5th Ė 25th, 1995; White House releases subpoena notes, which DíAmato calls a "smoking gun."


Clinton vetoes the GOPís 7 - year budget bill.


The House Committee on Ethics votes unanimously to have an independent counsel investigate allegations that Gingrich had violated tax laws [relating to campaign financing through use of his "PAC."


A partial government shut-down begins.


Congress passes welfare reform legislation.


Neal R. Pierce, a member of The Washington Post Writers Group, releases a column entitled, "Computers in Subsidized Housing: More Important Than Welfare Reform?"


The Clinton Administration beings its investigation of Nazi gold and assets seized from Holocaust victims held by Swiss banks.


Late January 1996 HUD selects four financial advisory contractors in connection with its FHA portfolio and mortgage loan sales program: Merrill Lynch, Hamilton Securities, CS First Boston and Cushman & Wakefield. Subsequently, Ervin and Ernst & Young protest the award and First Boston declines to serve as financial advisor, purportedly because the remuneration under the contract is not sufficient. First Boston is replaced by E&Y. Ervinís protest is denied.

Early 1996

Oscar Wyatt, Chairman of Coastal Energy, headquartered in Houston, contacts Secretary Cisneros and the White House insisting that Hamilton be fired by HUD. Assistant Secretary Nicholas Retsinas is asked to call Wyatt to solicit an accounting of his concerns. Retsinas later reports to the Deputy Assistant Secretary in charge of loan sales that Wyattís objection to Hamiltonís appointment as loan sale advisor is that Catherine Austin Fitts, the President of Hamilton, is a woman. HUD and Hamilton later learn that his son, Steve Wyatt, is providing consulting services to NHP. The Center for Public Integrity reports that Wyatt was a $100,000 donor for the Clinton inauguration fund.


Hillary Clinton testifies before the Whitewater grand jury.


The HUD Denver (Rocky Mountain) field office audit team begins the HUD loan sales audit, which it completes in September.


The Government shutdown ends after a three-week work stoppage.


Clinton vetoes legislation that would shift welfare to states.


The Paula Jones suit against William Jefferson Clinton is allowed to proceed.


Clinton supports a $9 billion loan to Russia.

Jan-Mar 1996

Assistant Secretary Retinas convenes a series of three industry "portfolio reengineering forums" in an effort to garner support for the "mark to market" proposal, which is re-named "portfolio reengineering." The unintended result of the forums is to coalesce previously separate interest groups into a united opposition against HUDís proposed "mark to market" legislation. Industry opposition focused on the pending "partially assisted" loan sale being conducted by HUD with Hamilton as financial advisor. Industry critics perceive that if the partially assisted sale is successful, opposition to the "mark to market" proposal will be weakened.

Jan - 96

The HUD Denver (Rocky Mountain) field office audit team begins the HUD loan sales audit. The draft report is circulated in the summer and the audit is shut down in September.

Jan-April 1996

HUD conducts briefings with a multitude of stakeholding groups to explain the results of a study conducted by Ernst & Young ("E&Y") on the "mark to market" portfolio of FHA insured loans on Section 8 subsidized properties. With strategic communications assistance from Hamilton, HUD engages in a public relations campaign to gain support for the proposed "mark to market" program. The E&Y studyís results indicate that most of the portfolio needs an average of about $10,000 per unit in rehabilitation and/or can be supported only by rents in excess of market rates. Some 13% of the portfolio is deemed unsustainable at market rents, even if the FHA insured debt is written off. Only 13% of the portfolio properties can support existing FHA insured debt at market rents and after needed rehabilitation is undertaken with funds generated by the project. Industry members led by the National Association of Homebuilders assert to their congressional representative that E&Yís methods are flawed and the results incorrect. E&Y stands firm.


Ervin & Associates files objections to HUD's failure to select the company as a financial advisor despite its lack of qualifications.


David Schipperís book Sell Out on the impeachment of Clinton illuminates efforts by Henry Cisneros in February 1996 to assist Clinton and Gore with the use of the INS to increase the number of Democratic voters (through the expedited grant of citizenship to traditionally Democratic immigrants) in time for the 1996 elections. Shipperís book includes a memo from Cisneros to Clinton-Gore focusing on the Los Angeles area. He also describes the investigation of political interference at INS by Gore and Elaine Kamark of Goreís Office of Government Reengineering as part of the impeachment. This raises questions in Solariís mind regarding whether or not the "TRACS" HUD tenant database and other HUD databases were involved in the election efforts and whether that could explain some of the problems that Hamilton had dealing with the TRACS staff and Lockheed Martin, the major TRACS contractor.

Spring 1996

A member of the Board of Directors of Hamilton is told by an acquaintance that the Housing Affairs Letter had reported that the House HUD Appropriations Subcommittee had put pressure on the HUD IG to initiate an investigation of Hamilton and threatened to cut appropriations to the OIG if no investigation was initiated. Additional reports indicate that large increases in appropriations for Operation Safe Home are offered in exchange for the OIG's cooperation.


Ervin files a second bid protest of HUD contract awards. GAO reports that all told, before the complaint is resolved, Ervin has filed approximately 37 bid protests.


GAO announces that DOJ and Treasury Asset Forfeiture Funds are on the high risk list. DynCorp serves and lead contractor on the DOJ Asset Forfeiture Fund, having won a second five year option to their initial $60MM contract in 1993. In this month, DynCorp wins the Justice Office Consolidated Network, the primary computer system for the DOJ Civil Division.



Hearings are held before the Senate Permanent Subcommittee on Government Affairs.


HUD sells $758.43 million UPB in single family nonperforming mortgage loans in the Single Family Loan Sale #2. As part of the sale, HUD requests that bidders for loans on properties located in New Orleans, Washington, DC and Los Angeles voluntarily answer "place based questionnaires," which are intended to provide HUD with valuable information about possible place-based auctions in the future. This includes a copy of the early prototypes of a Community Wizard "money map" of homeowner defaults in South-Central LA. The Single Family #2 Sale yielded proceeds of $633.82 million, equal to 83.57% of UPB and resulting in savings to the government of $143.6 million. There were 31 bidders and one winner in this auction.


Susan Gaffney, HUD Inspector General, testifies before the House Committee on Appropriations, Subcommittee on VA, HUD and Independent Agencies about the "Reinvention of HUD."


The effective date of NHPís acquisition of all of the outstanding capital stock of WMF Holdings Ltd. ("WMF Holdings"), the owner of Washington Mortgage Investors Group, Ltd., for consideration of approximately $21 million in the form of $16,800,000 in cash and 210,000 shares of the Company's unregistered common stock ("NHP Stock"). Washington Mortgage Financial, according to an 8-K [current report] filed with the SEC, has "had mortgage servicing contracts aggregating approximately $4.5 billion as of February 29, 1996, and originated approximately $805 million in multifamily and other commercial mortgages in 1995."


Commerce Secretary Ron Brown and 32 others died after an Air Force jet carrying a U.S. trade delegation slammed into a coastal mountain as it approached the airport at Dubrovnik, Croatia.


Ervin & Associates files another bid protest with HUD.


A $30,000 transfer is made from a Hamilton Securities account at to Catherine Fittsí personal checking account at Morgan Guaranty. It is the size of this transfer and the fact that the account was not recognized by the OIG to be a Hamilton account upon which the Office of Inspector General later bases its subpoena duces tecum issued to Morgan Guaranty for Fittsí account information. Fitts funded Hamilton with $1,000,000 of preferred stock, which she purchased with her personal funds raised from liquidating her savings, selling her home and borrowing against her 401K. At various points when Hamilton income permitted, Hamilton paid Fitts a below-market dividend on the preferred stock and retired portions of the preferred stock. At the point of the $30,000 transfer, Fitts still had approximately $1MM of her savings invested in the firm.


Ervinís counsel sends a letter to the HUD Deputy General Counsel requesting a meeting to discuss allegations of corruption, favoritism and misconduct. On April 26, Ervin threatens litigation.


Hamilton is awarded the Crosscutting Task Order by HUD. Fitts is informed by Assistant Secretary Retsinas that the White House had ordered him not to award one of the four new contracts to Hamilton and he has chosen to ignore that order.


Ervin's attorney calls HUD's Office of General Counsel to request a meeting to discuss Ervin's grievances and to inform them that Ervin intended to file suit. (Source for this and other entries re: Ervin & Associates: Second Amended Complaint in Bivens action).


Legislation is passed creating a one-year "mark to market" demonstration program. FHA views the legislation as counter to its efforts to pass its version of mark to market. The legislation requires (1) owner consent to restructuring of FHA insured notes, (2) owner protection from adverse tax liabilities due to cancellation of indebtedness by the creation of cash flow second mortgages, (3) protection of the taxpayersí and residentsí interests, (4) renewal of section 8 contracts (instead of replacing the contracts with tenant-based vouchers, as proposed by HUD), and (5) permission to replace existing project financing with new FHA insured debt. Hamilton declines to serve as HUDís financial advisor in implementing the demonstration.


HUD sells $11.09 million UPB in Title X land development loans and $161.85 million UPB in Title I (home improvement and manufactured housing) loans with Hamiltonís assistance. The Title X Loan Sale yielded proceeds of $2 million, equal to 18.03% of UPB and resulted in savings to the government of $2.64 million. The Title I Loan Sale yielded proceeds of $1.54 million, equal to .95% of UPB and resulted in savings to the government of $.88 million.


Controversy erupts with NHP, Gene Ford, Scott Nordheimer and selected members of the multifamily industry in connection with the proposed negotiated sale of the Maryland portfolio of multifamily nonperforming mortgage loans in the HUD portfolio to the Maryland housing finance agency ("HFA"). Objections include complaints regarding the success of the BlackRock/Goldman team (which had proposed to partner with the Maryland HFA) in marketing to state HFAs. An explosive meeting occurs on the day of Jim Rouseís funeral in Baltimore between Dunlap, the Maryland agency with Fitts present. Fitts is blamed for a Retsinas decision that the choice of private partners be subject to disclosure and competitive bidding process. At a dinner in New Orleans for the National Multihousing Council, Rod Heller, CEO, insists to Catherine Austin Fitts that the Section 8 owners are owed a rollover of their HUD Section 8 subsidies on a non-competitive and non-performance basis. The head of Multihousing Council had earlier asked Fitts to step back in the leadership so as not be Vice Chairman when Randy Hawthorne, Boston Financial, was Chairman.



Ernst & Young releases its final report on the "mark to market" multifamily mortgage loan portfolio, which supports FHAís proposal to mark the portfolio to market and introduce competition and tenant choice.


Al Goreís former administrative assistant, Peter Knight, becomes Clintonís campaign manager.


Ervinís counsel meets with HUD Deputy General Counsel for Program and Regulations to discuss contracting corruption and favoritism.


Ervin & Associates protests the awarding of the Crosscutting Task Order to Hamilton.


Inquiries by Congress result in the White House disclosing that it has kept substantial FBI files, including on former Republican government officials.


HUD closes the structured sale of debt and 90% of the equity in a pool of 158 "partially assisted" multifamily loans with UPB of $883.63 million with Hamilton as financial advisor and BlackRock Capital assisting with placement of the offering. The Partially Assisted Sale yielded proceeds of $645.47 million, equal to 73.05% of UPB and resulted in savings to the government of $213.01 million. HUD retained a $60.5 million UPB share of the equity. There were 7 bidders and two winners (one for the debt portion and one for the equity portion) in this auction. Similarly structured "N" series sales by RTC averaged 2 bidders.


Ervin files complaint for preliminary and permanent injunctive relief, declaratory relief and for money damages against HUD, Helen Dunlap, Henry Cisneros, SBA, and Philip Lader (253 pages + exhibits), signed by Wayne Travell of Tucker, Flyer and Lewis (this is referred to as the "Bivens" action). Ervin continues to inundate HUD with FOIA requests and incur substantial legal costs to harass HUD and Helen Dunlap, who is named personally in the suit and forced to seek counsel at her own expense. Helen Dunlap had day-to-day responsibility for the HUD loan sales program. The Ervin complaint states the case involves seven categories of unlawful, unethical and generally outrageous conduct: (1) contracting corruption and favoritism, (2) racial, gender and age discrimination, (3) retaliation through breach of contract, (4) theft of Ervinís intellectual property, (5) insider trading, (6) cover-ups and (7) retaliation through defamation, rumor, innuendo, cancellation of existing work and blackballing.


Qui tam filed under seal [Ervin & Assoc, et al v. Hamilton Sec Group, et al (1:96-CV-1258) SEALED, United States District Court for the District of Columbia]. Also filed is a certificate of disclosure of corporate affiliations and financial interests by plaintiff Ervin & Assoc Inc. Allegations related to insider trading and bid rigging on $4.7 billion of loan sales won by Goldman Sachs and its bid partners, including BlackRock/PNC. Hamilton was not informed that it was named as a defendant in the qui tam action until December of 1997, one year and a half after the suit was filed, and received no other information, such as the plaintiffís identify and the precise allegations, until the case was unsealed in 2000.


Order by Judge Charles R. Richey directing that the counsel for the parties in the qui tam lawsuit shall appear before the court on 6/20/00 for a status conference and that counsel for the plaintiffs shall give notice to the Chief of the Civil Division, Office of the US Attorney for DC and effect service of process on the named defendants by 4:00 on 6/14/96.


Motion filed by Non-Party USA in the qui tam lawsuit for reconsideration of the June 7 order by Judge Richey (Ervin joins).


The Washington Post publishes a front page story on e.villages, a residential community data servicing business that is a joint venture partnership between Hamilton and Adelson Entertainment. This data servicing operation is an out-sourced component of Hamiltonís money mapping and website database operation designed to promote community database and web access to software tools (such as "Community Wizard") that illuminate how money works in communities. Later in the month, Hamilton is told that the HUD IG, upon reading the Washington Post article, stated "thatís the last straw" and that she had "had it" with Hamilton and was going to "get her [Fitts]."


Daniel Hawke of Tucker, Flyer & Lewis sends a confidential letter to Barbara Van Gelder, Assistant US Attorney, that starts "Dear Biz." The letter relates the discovery by Ervin, Hawkeís client, of the existence of the Karen Burstein letter to Andrew Cuomo.


Homeownership totals 66.3 million American households, the largest number ever.


A hearing is held in the qui tam case. An order is issued by Judge Richey granting the June 13 motion by the Non Party USA in the qui tam lawsuit for more time and to maintain the seal. Transcripts of the hearing that were sealed and, therefore, not available to Hamilton until December, 2000, indicate that the hearing was focused on determining whether Ervin had delivered "substantially all" the evidence supporting the allegations of the complaint to the Department of Justice. Mark Nagle, Assistant US Attorney, appeared for the government and Wayne Travell and Daniel Hawk appeared on behalf of Ervin, the relator. Travell tells the judge there are several thousands of pages involved, including an anonymous package apparently sent out from the Office of General Counsel of HUD. This package, he says supports allegations in both the qui tam and Bivens cases. [Note: Lucy Du, a former key employee of Ervin and Associates, was married to Jeff Patton an attorney employed in enforcement activities the HUD Office of General Counsel.] The judge makes it clear that he is not interested in the government being buried in paperwork, and that the relator should pull out the critical pieces of information and highlight them. He also emphatically says that he does not intend that this case will clog the docket for any significant period of time. The next hearing is scheduled for July 1, at which Judge Richey is to get an "informed report" of progress.


The Hamilton project manager for loan sales and HUD officials meet with the HUD IG Denver office audit team leader assigned to audit the mortgage loan sales program and is told that the HUD OIG audit will be highly complimentary and that all complaints, including any complaints about bid rigging and insider trading, have been reviewed and found to be unfounded.


Gene Ford and Conrad Egan repeatedly approach Gary Squier at HUD in connection with including in the "mark-to-market" program (for the renegotiation of FHA guaranteed debt) a Mt. Pleasant (Washington, DC) property that was being considered for an e.villages site. This action is in direct contradiction of e.villages' position (because of its connection with Hamilton) that it will not be involved in HUD mark-to-market projects and the express promise of Gene Ford (owner of the property) to Hamilton that the property would not be entered into this program. E-mails to Hamilton from Squier reporting these approaches result in repeated confrontations with Gene Ford and Scott Nordheimer, Ford's partner, who lie to Fitts about their approaches to Squier and take actions that are contradictory to their assurances to her. Fitts finally decides that something is intentionally amiss.


A team of reporters from US News and World Report start working on a story about a "HUD scandal."


An appropriations deal for the multifamily industry, led by NHP and New York and Boston owners and managers and originators, is reached in House of Representatives. The Boston and New York delegations play an essential role on both sides of the aisle. Rumors circulate that "negative credit subsidy" (the Credit Reform Act term for savings to the government) generated by the HUD loan sales has been "moved" in order to back a multi-year increase in Congressionally authorized multifamily insurance. This new insurance authority is designed to give affordable housing owners lots of time to exit the tax shelters that originally financed the "mark-to-market" portfolio of Section 8 properties by refinancing the properties with new HUD mortgage insurance, cashing out the equity, moving the properties out of the Section 8 program into the conventional rental market, or selling to the not-for-profit organizations favored in the recent "mark-to-market" legislation. With the negative credit subsidy reallocation assured and an agreement by OMB that Congress may use the high loan sale recovery rate assumptions derived from loan sales experience in calculating the required appropriations for new FHA mortgage insurance originations, meaningful portfolio reengineering is stopped. Various parties report to Hamilton that the HUD OIG agrees with key congressional representatives to target the loan sale program and Hamilton in exchange for appropriations increases for Operation Safe Home, which support increased DOJ-OIG enforcement and seizure efforts.


Hamilton learns that US News & World Report is working on a loan sale scandal article that sounds as though it is targeted at HUD Secretary Cisneros and Catherine Austin Fitts (who worked for Jack Kemp as Assistant Secretary of Housing/FHA Commissioner when he was Secretary of HUD). A pre-interview letter from USNWR reporters to Henry Cisneros refers to the Department as "scandal tarred." Fitts sends a letter to many friends and David Gergen, the new Editor of USNWR, accusing USNWR (Ed Pound and Jim Ito) of drawing conclusions before doing the research and of conducting a rigged investigation. USNWR agrees to listen to a Hamilton presentation explaining how

loan sales work. Pound subsequently resigns and goes to USA Today; Ito goes to the Washington Post (he subsequently leaves) claiming that Mort Zuckerman improperly sabotaged the article.


Gary Squier, who is on loan to HUD from the Los Angeles Housing Authority to lead implementation of the mark to market "demonstration," requests that Hamilton, in addition to E&Y, the financial advisor hired for this program, assist in the implementation. Hamilton had not wished to serve in this role, encourage HUD to hire other contractors. The following month, Squierís request is muted as a result of the investigation begun in August. By January 1997, not a single loan has been worked out under the 1996 demonstration program and the 1997 program is bogged down hopelessly.


At the annual National Housing Conference dinner held at Union Station in Washington, DC, Scott Nordheimer, Gene Fordís partner (Gene Ford being NHPís partner and the owner of the HUD assisted housing at which Hamiltonís e.villages site is located) assures Fitts that the industry efforts to have Fitts fired through the White House have failed, so now they have rigged it so that she is going to jail.


HUD requests certain information be provided by Ervin and Associates to HUD under the company's Audited Financial Statement Contract. A dispute arises between Ervin and HUD as to whether the information Ervin has collected is proprietary or covered under the contract, and Ervin refuses to provide it unless HUD makes additional payments to Ervin, which HUD refuses to do.


The second Neighborhood Networks Conference of the year is held in Seattle. Seattle was the home of Diana Goodwin-Shavey, the program coordinator for Neighborhood Networks nationwide. This is one of the few times that a major new FHA initiative was been developed and run from outside Washington.


Vice President Gore's National Performance Review Committee announces that the HUD mortgage sale team has been awarded a Hammer Award for cutting red tape, empowering employees to improve service to the Department's customers and lifting the burden of managing and servicing HUD owned mortgages from Headquarters and field staff.


Order by Judge Richey directing that counsel for the plaintiff in the qui tam lawsuit and the government shall appear on 8/19/96 for a status conference and directing the matter remain under seal until further order of the Court. At the hearing held on this date, attended by AUSA Barbara Van Gelder and Ervin attorneys Hawke and Travell, Van Gelder says "Your Honor, the matters that are before this Court are very strong, perhaps criminal, allegations that there has been collusion, bid rigging and kickbacks." Her plan is "We will have HUD IG investigators doing some rapid interviews of unrelated parties who may or may not have information. So we can determine in this next 60 daysÖ whether or not [to intervene in the case]." She says there are people alleged to have "been in the [bid] room who should know." She said she stopped counting the number to be interviewed at 12. When Van Gelder suggests that the government may need a stay of the case pending a criminal investigation, Richey says "If you have to do that, I don't stay cases. I dismiss them without prejudice with leave to reopen upon the conclusion of whatever eventÖ"


Ervin files a protest of the SWAT procurement awarded by HUD to Kerry Company with the General Accounting Office.


Congress enacts Welfare Reform.


Publication of "Loans on the Cheap: Auctions Help HUD Ditch Troubled Mortgages", in Barronís.


Susan Gaffney, HUD Inspector General, states in her testimony before the Subcommittee on Human Resources, and Intergovernmental Relations on Restructuring of HUDís Assisted/Insured Multifamily Housing Portfolio, "Several successful mortgage sales by HUD offer some hope that FHA could complete portfolio reengineering if it was patterned after the sales program." She makes no reference in her written testimony to the effects of Welfare Reform on the HUD portfolio, but she does take the opportunity to tout the benefits of the HUD OIG Operation Safe Home program, "In the first two years, 10 criminal convictions and over $37 million in judgments, settlements and fines involving project owners and managers have taken place. Another 105 cases are in process involving $105 million in misused project funds."


Democratic National Convention is held.


Republican National Convention is held.

Aug-October 96

Hamilton spends approximately $350,000 in time and expenses addressing issues raised by a four-reporter team from US News & World Report. The thrust of the article is that Cisneros is running the agency in a very corrupt way. Much of Hamiltonís initial efforts are spent disproving accusations against Cisneros. The effort than focuses on loan sales. The lead reporter, Ed Pound, insists that he "has been assured at the highest level of the HUD IGís office that Hamilton and Fitts are guilty of criminal offenses and will be indicted." Deputy Assistant Secretary Greer writes a powerful letter to Pound after numerous meetings insisting that Poundís allegations are not true.


HUD sells $847.2 million UPB in nonperforming unsubsidized multifamily loans in the North and Central Loan Sale. The North and Central Sale yielded proceeds of $847.2 million, equal to 73.38 % of UPB and resulted in savings to the government of $235 million. There were 82 bidders and 13 winners in this auction.


Ervin & Associates files the First Amended Complaint in the Bivens action. The descriptions of insider trading allegations are more elaborate and imaginative than in the first filing.


Fitts makes a keynote speech on money maps and community access to technology at a Neighborhood Networks conference held in Boston, highlighting Hamilton's partnership with Adelson Entertainment (an LA-based movie production company known for documentaries on government abuse) and the "money map" of LA. The money map shown during her speech focuses on South Central LA, and she relates that it has been prepared by Edgewood Technology Services, a Section 8 project-based data servicing company that performs money mapping services illustrating government investment and real estate in low income communities. The money map shows the correlation between HUD defaults and CIA drug dealing in South- Central LA that came at great loss to homeowners and taxpayers alike.

At the conference the HUD Neighborhood Networks Program is presented with a Hammer Award.


Meeting between the HUD staff and Lockheed staff under contract to manage HUDís TRACS database system regarding repeated problems experienced by Hamilton and loan sales team with access to data.


According to a Declaration of HUD IG Investigator James M. Martin filed in Support of Office of Inspector Generalís petition for Summary Enforcement of Subpoenas on March 3, 1998, under seal, in August, 1996, shortly after the OIG investigation began, the Civil Division of the US Attorneyís Office sought the involvement of the Criminal Division of that Office in the investigation.


Hamilton receives the first subpoena from the HUD OIG in connection with an investigation of Hamilton. The HUD OIG later asserts that the investigation was begun at the request of DOJ in response to John Ervinís qui tam (whistleblower) suit naming Hamilton, among others. [Delegation by DOJ to HUD OIG is statutorily prohibited under the False Claims Act and the subpoena has illegally circumvented DOJís False Claims Act requirement to disclose the filing of and nature of charges under a qui tam suit to the target of the suit. Hamiltonís efforts to argue the illegality of this were lost before Sporkin and a later appeal.]


Motion filed by Non Party USA in the qui tam lawsuit to extend time to 11/18/96 within which to make intervention decision and maintain seal on the case.


Dole announces that Jack Kemp will be his Vice Presidential running mate. Jack Kemp had been Secretary of HUD for the Bush Administration, and had hired and fired Catherine Austin Fitts as Assistant Secretary of Housing/FHA Commissioner.


Federal defendants in Bivens case file a Motion to Dismiss.


Ervin & Associates files an action in the US Court of Federal Claims seeking relief related to certain HUD contracts. Ervin & Assoc., Inc., v. United States, No.96-504 C (Fed. Cl).


DOJ files a Motion for Extension of Time within which to Make Intervention Decision and Maintain Seal in the qui tam action by Ervin and Associates against Hamilton. According to a later filing by the government on November 14, it states that based upon the relator's statement of material evidence supplied to the government with the qui tam complaint and the allegations in the related Bivens action, the Inspector General of HUD opened an investigation and, as a result of that investigation, a referral of the allegations in the Bivens complaint was made to the Criminal Division of the US Attorney's Office for DC, which opened a criminal investigation in the matter. The government says in this motion that the lifting of the seal in the qui tam action would hamper, injure and compromise the criminal investigation and for this reason the US Attorney (Barbara Van Gelder) moves to stay the intervention period.


Gary Webbís series, upon which the Dark Alliance book is based, begins in the San Jose Mercury News, with the Mercury News website providing access to substantial amounts of underlying documentation. The story appears at approximately the same time as the Republican National Convention, where Jack Kemp, Bob Dole's running mate, begins touting his accomplishments as Secretary of HUD and his ability to attract women and minorities to the Republican Party. The allegations in the Dark Alliance series address Iran-Contra drug dealing. Iran Contra allegations that were submitted to the Starr investigation included various allegations raised regarding one of the largest drug operations during Iran Contra, in Mena Arkansas, that include George H. W. Bush and the Clintons and the Rose Law Firm.


Ervin and Associates files a complaint against HUD in the US District Court in Colorado seeking declaratory and injunctive relief related to four HUD contracts that were to be awarded in the near future. Ervin also files a Memorandum of Points and Authorities in support of the motion for temporary restraining order and motion for preliminary injunction. Ervin & Assoc., Inc. v. Cisneros, et al. No. 96-1954 (D. Colo.). Ervin is represented by Stanley Garnett, Stephen Gurr and Patrick Carrigan of Brownstein, Hyatt, Farber & Strickland in Denver and Wayne Travell of Tucker, Flyer and Lewis in Washington. Judge Walker Miller is assigned to the case. Raymond Larizza, who is under Frank Hunger at the Department of Justice, represents the defendant.


A hearing is held before Judge Richey, during which he gives the government until November 18 to make a determination whether it will adopt the qui tam case. "No more extensions except for extraordinary good cause," he says. In attendance at this hearing are AUSA Barbara Van Gelder, OIG counsel Judith Hetherton and Ervin counsel Wayne Travell. Van Gelder says she has brought in Hetherton because she knew the judge would ask her whether the relator has any objections to giving the government additional time. Richey says that since Ms. Hetherton was there, he would grant the request without objection from the plaintiff (and Travell says he has no objection). Richey says he will expect to hear from the government "by pleading" at the next hearing.


Ervin files a Supplemental Certificate of Compliance and Information Sheet in the TRO case in Denver.


Hamilton receives a second subpoena from the HUD OIG shortly after C A Fitts talks to the IG and asks her whether she plans to "bury" the Denver audit of the loan sale program. Gaffney said, "how dare you suggest such a thing. That would be unethical."


Ervin files a Motion to Expedite Discovery in the TRO case against HUD in Denver. HUD files a motion to dismiss for improper venue before Judge Walker D. Miller or to transfer for improper venue or convenience before Judge Miller. HUD also files a brief in opposition to the motion for TRO.


The government files a motion to substitute original attachments regarding its motion to dismiss in the TRO case by Ervin. Judge John Kane grants a motion for Wayne Travell to appear pro hac vice, sets a hearing on the motion for September 12, grants the motion to expedite discovery and grants the governmentís motion to substitute original attachments. There appears to have been a hearing on these matters Ė a 38-page transcript of proceedings is prepared by Federal Reporting Service.


US District Court for the District of Columbia gives the government approximately 90 additional days within which to make its election whether to adopt the qui tam action by Ervin & Associates against Hamilton.


The government files a motion to vacate hearing on preliminary injunction and to stay discovery pending a ruling on jurisdiction and venue and a certificate of compliance in the Ervin TRO case in Denver.


Kansas City Neighborhood Networks Conference is held.


HUD sells $804.5 million UPB in single family loans in the Single Family Loan Sale #3. The Single Family #3 Sale yielded proceeds of $730.2 million, equal to 90.76 % of UPB and resulted in savings to the government of $164 million. There were 25 bidders and three winners in this auction. This bid includes the first "place based" bid, a pool of loans in Albuquerque.



The HFA negotiated sale of $14.52 million of HUD-held multifamily mortgage loans is closed with the Missouri Housing Finance Agency. Although the sale price is nominal, HUD achieves its objectives of providing for rehabilitation of the projects, retention of important tenant protections that are required under regulatory agreements, and resident initiatives programs while divesting itself of liability for future tenant subsidies. HUD also gains valuable information about how to value loans in neighborhoods where there are no marketĖbased housing projects. The values of moving to market based solutions are much more attractive than were previously assumed. Subsidy for housing is far more expensive than job training, jobs and market based housing with vouchers.


The government files a motion for protective order re: discovery requests and a certificate of compliance in the Denver TRO case. Ervin files an opposition to motion to dismiss for improper venue before Judge Walker D. Miller and a Declaration of John J. Ervin.


Minute order by Judge John Kane in the Ervin TRO case in Denver granting motion for protective order re: discovery requests, granting motion to vacate hearing on preliminary injunction granting motion to stay discovery, setting hearing on motion to transfer for improper venue or transfer for convenience, setting hearing for 9/12/96, denying motion to expedite discovery.


Ervin files a reply to response to motion for TRO in the Denver TRO case. The government files a motion to dismiss for lack of jurisdiction and a reply to response to motion to dismiss for improper venue.


A Notice of Submission of Declaration of Kathleen Trygstad by HUD re: disbursements is filed in the Ervin TRO case against HUD.


Judge John Kane denies the governmentís motion to dismiss the Ervin TRO case filed in Denver for improper venue. Judge Walker Miller grants the motion to transfer for improper venue and for convenience and transfers the case to US District Court for DC (Docket No. 96-2164).


Ervin files an Emergency Motion for a hearing on its application for preliminary injunction and for expedited discover in his TRO case against HUD. Ervin also files an amended complaint.


Ervin's asset management contract with HUD expires and a one-year renewal option is not exercised.


By direction of the Calendar Committee, the Ervin TRO case against HUD is reassigned from Judge Lamberth to Judge Bryant. The attorneys representing the government include Raymond Larizza, Joe Benedict Garcia and Douglas James Hughes.


Declaration by Chris Greer regarding Ervin contracts takes place.


A status hearing is scheduled for October 21 before Judge Bryant in the Ervin TRO case.


Ervin files Second Amended Complaint for Preliminary and Permanent Injunctive Relief, Declaratory Judgment and Other Relief in Ervin and Associates, Inc. v.Helen Dunlap, et al. (1:96-CV-001253) in US District Court. Wayne Travell and Daniel Hawke of Tucker Flyer and Lewis sign as counsel. The complaint says Ervin has filed over 60 FOIA requests with HUD during the past two years.


Ervin files a Renewed Motion for expedited discovery in the TRO case against HUD. The government files a motion to dismiss or in the alternative for summary judgment.


The government files a response to Ervinís opposition to motion for expedited discovery in the Ervin TRO case.


Helen Dunlap leaves HUD to join the Low Income Housing Coalition as its Director.


Substitution of counsel for the federal defendant in the Ervin TRO case; substituting Raymond Michael Larizza, Douglas and James Hughes for J. Benedict Garcia.


Ervin files a memorandum in opposition to the governmentís motion to dismiss or for summary judgment in the Ervin TRO case against HUD.



Hamilton's counsel at Morrison & Foerster sends letter to US News and World Report describing conversation with HUD OIG, which told him OIG was conducting a routine audit and there was no reason to think there was any criminal investigation.


The government files a motion to quash subpoenas in the Ervin TRO case.


Lauch Faircloth, Chairman, Senate Subcommittee on HUD Oversight and Structure, writes a letter to Henry Cisneros (then Secretary of Housing) regarding charges made by Ervin & Associates against HUD.


A motion hearing is held before Judge Bryant in the Ervin TRO case against HUD. Daniel Matthew Hawke makes an appearance.


Judge Bryant issues an order denying the renewed motion for expedited discovery.


Reply by the government to response to motion to dismiss and to motion for summary judgment is filed in the Ervin TRO case against HUD. Notice of voluntary dismissal of case by plaintiff without prejudice pursuant to Rule 41(a)(i) is filed.


Federal Register publication of 24 CFR Part 291 Disposition of HUD-Acquired Single Family Property; Streamlining Final Rule; SUMMARY: This final rule amends HUD's regulations for the disposition of HUD-acquired single family property. In an effort to comply with the President's regulatory reform initiatives, this rule will streamline these regulations by eliminating provisions that are redundant or are otherwise unnecessary. This final rule will make the single family property disposition program regulations clearer and more concise.


Stipulation of dismissal is entered for the Ervin TRO case. Later, on January 24, 1997, a transcript of the 10/21/96 hearing is filed. On February 27, 1997 an Administrative Record is filed by the government.


John Deutch attends Town Hall Meeting in the Watts neighborhood of LA. He meets Mike Ruppert (see, and promises a full CIA IG investigation of Gary Webbís allegations in the Dark Alliance series in the San Jose Mercury News. The CIA Inspector General later publishes a two-volume report and the DOJ Inspector General also publishes a report.


Campaign fundraising is an issue of concern; soft money donations set substantial new records; largest "hard" money or direct donors were law firms (#1 largest to Clinton and #2 largest to Dole); top contributors included Ernst &Young and Goldman Sachs donating to both Clinton and Dole.


The date that Ervin's Bivens complaint speculates the company will be forced to lay off half of its employees if Ervin & Associates is not given HUD contracts or paid $2.5 million allegedly owed by HUD.


Publication of "White Male Over 40 Sues HUD, and the Departmentís Big Loan Sale Is in Peril", by Jim McTague, in Barronís.


Clinton is re-elected and the GOP retains its majority in both houses of Congress. Clinton wins the womenís vote overwhelmingly, with majorities of black, Hispanic, labor union and young voters. The GOP holds House and Senate 227-207 and 55-45, respectively. The Democrats win New York, California, Illinois, Michigan, Ohio and lose Texas and Georgia; labor spends approximately $35mm in soft money; E&Y, a large HUD contractor and financial advisor is largest contributor to Clinton and Dole in 1996 campaign. Goldman Sachs also is large contributor.


US News and Word Report publishes an article "Of Contacts and Confidence" that reported allegations of irregular contracting practices at HUD involving Hamilton and aired accusations that Hamilton had steered some of the HUD note sale business to favored Wall Street firms. In pre-publication conference, Ed Pound, the principal reporter, tells Hamilton that the HUD OIG "at the highest level" had assured him that Hamilton is guilty of criminal acts.


Ervin files Plaintiffsí Opposition to Federal Defendantsí Motion to Dismiss Ė Hollis, Larizza and Sitcov of DOJ are listed as counsel for HUD.


Resignations of Cisneros (11/21), Leon Paneta, Warren Christopher Perry. Erskin Bowles is appointed as White House Chief of Staff. The DNC returns $1.4 million in questionable campaign contributions.


Frank Hunger, Assistant Attorney General, and Barbara Van Gelder, Assistant US Attorney, move the District Court for the District of Columbia for an extension of time during which to provide the Court with notice of its election whether to intervene in the qui tam action by Ervin & Associates against Hamilton until thirty days after the completion of an ongoing criminal investigation in the matter and any resulting criminal proceedings. The motion is unopposed by the relator (Ervin).


By letter of this date, according to later testimony by the HUD Inspector General, Senators Bond (Chairman of the Subcommittee on VA/HUD Appropriations) and Faircloth (Chairman of the Subcommittee on HUD Oversight and Structure) request that the HUD OIG conduct a comprehensive review of HUDís use of its contracting authority. In response, a team of 26 auditors reviewed HUD contracting from 1992 Ė 1996. While the OIG audit was under way, HUD contracted with the National Academy of Public Administration for a review of FHA contracting.


The US District Court for the District of Columbia, Judge Richey, grants the government's motion to extend time in the qui tam action by Ervin & Associates against Hamilton seeking a stay until 30 days after the completion of the criminal investigation and any resulting criminal proceedings or to notify the Court that it declines to adopt and directs that the filings shall remain under seal until further order of the Court. (Sporkin hears the case in the future while Richey is sick and then the case is reassigned to Sporkin on March 10, 1997 Hamilton has not been able to obtain transcripts of this hearing either because the hearing did not occur or because tapes of the hearing are not available. For this and other dates, Hamilton is trying to ascertain if tapes are "missing.")


Hal DeCell, Assistant Secretary of HUD for Congressional Relations, responds point by point to Lauch Fairclothís initial letter saying HUD believes that Ervinís charges are baseless complaints of a disgruntled contractor. The letter also notes that this will "turn the clock back" and adversely affect a successful loan sale program. HUD assured Senator Faircloth that it is investigating the matter to see if there is any substance to Ervin's charges.


DOJ awards four indefinite delivery/indefinite quantity contracts for
Automated Litigation Support Services for services to the DOJ Civil
Division, Antitrust Division, Civil Rights Division and Criminal Division
with a five year expenditure ceiling of $375MM. The four contractors are
Aspen Systems Corp, CACI, Inc. Commercial, DynCorp and Rust Federal Systems, L. C. The Civil Division is designated the lead contractor.


Judge Charles Richey of the US District Court for the District of Columbia grants the motion of relator Ervin & Associates for a limited lifting of the seal to permit Ervin to make an ex parte in camera notification of the pendancy of the qui tam claim to Judge William Bryant of the same court, who was hearing the Bivens action by Ervin against the US. The order states that Ervin claims that the federal defendants in the Bivens action, represented by DOJ, are asserting that Ervin's claims in that case are "incredible and unsupportable" while at the same time "their colleagues at DOJ, whose work is being screened from government counsel in the Bivens action, are investigating criminal allegations" arising from both the qui tam and Bivens actions. The order states that it is being issued "to avoid penalizing Ervin in its case before Judge Bryant as the result of the Court's generosity to the government in this case, and because the government has failed to demonstrate in its Response to Relator's Motion how the ex parte in camera disclosure to Judge Bryant resulting from the limited lifting of the seal in this case will hamper, injure or otherwise compromise the government's criminal investigation relating to this case and to Ervin."


Lauch Faircloth, Chairman of the Senate Subcommittee on HUD Oversight and

Structure, sends a letter to Henry Cisneros, Secretary of HUD, responding to HUDís response to his earlier letter re: the Ervin litigation. He says charges that Hamilton improperly prepared congressional testimony seem to have merit and inquires about the Secretaryís progress in his promised independent investigation of HUD procurement process.


The leading, minority candidate for HUD Secretary, the Mayor of Seattle, is dropped from consideration for the HUD Secretary position as a result of a sudden HUD OIG "criminal" investigation into a HUD Community Development Block Grant to Seattle, the charges in which investigation much later are said to be unsubstantiated. Cuomo is announced as the new Secretary of HUD after rumors that Alfonse DíAmato informed the White House that his Banking Committee would confirm no other nominee. Cuomo is the son of Mario Cuomo, the former Governor of the State of New York. New York is a critical state in terms of both votes and campaign fund raising for the Democrats in the 1998 and 2000 presidential election.


Jack Quinn resigns as White House Counsel and is replaced in 1997 by Charles Ruff, the DC Corporation Counsel who is a former DC US Attorney, partner of Covington & Burling, and Iran Contra prosecutor.


HUD sells $873.2 million UPB in nonperforming multifamily family loans in the Midwest Loan Sale with Hamilton as crosscutting financial advisor. The Single Family #2 Sale yielded proceeds of $762.7 million, equal to 87.35 % of UPB and results in savings to the government of $360 million. There were 62 bidders and 13 winners in this auction.


DOJ creates a Campaign Finance Task Force.


Hamilton reports to HUD regarding the results of an internal investigation into a discrepancy between the bidders' information packages and optimization instructions to Lucent Technologies during three previous loan sales. This anomaly had been discovered by Hamilton while it was in the process of preparing for the next loan sale. A number of high level Hamilton employees and contractors hired for this purpose spend countless hours researching the problem. Hamilton's report to HUD explains that this discrepancy has resulted in a potential four tenths of one percent reduction in gross sale proceeds to HUD. Hamilton assures HUD that it has taken steps to ensure that this discrepancy will not be repeated. HUD accepts these assurances and retains Hamilton for another three loan sales over the next ten months. Hamilton notifies its counsel and insurer of this development. A later study by the Policy Development & Research division at HUD is said to concur that the discrepancy is not statistically significant and falls within industry quality control standards for accuracy.


Status conference in the qui tam lawsuit before Judge Sporkin. An order is issued by Judge Richey directing that the US and the relator shall appear on 3/10/97 and be prepared to discuss the status of the criminal investigation and when the government will be prepared to intervene or notify the Court that it declines to do so. At the hearing, attended by AUSA Barbara Van Gelder and Ervin attorney Wayne Travell, Van Gelder reports that the investigation is proceeding expeditiously, with about 12 people working on the case, nine full time, 125 witness interviewed and the accumulation of over 30,000 documents. When pushed to estimate when the government will make a decision whether to adopt the qui tam case, Van Gelder says that as far as the civil matter is concerned, the government probably will take the case. She says that based on information derived from sources other than Ervin, the government is going to have to reorder the case, file an amended complaint, dependent upon information the criminal investigation is bringing in. Judge Sporkin gives the government six months to make its decision.


A tentative date is set for a likely FHA sale of unsubsidized multifamily mortgages in a structured financing similar to the controversial Partially Assisted sale. The planned pool consisted of approximately 66 apartment mortgages (UPB $244 million) and 20 partially assisted [i.e., Section 8 assisted] mortgages (UPB $58 million). HUD was shifting its focus to 847 subsidized mortgages with UPB of about $1.3 billion in its HUD held inventory. Among the options under consideration was a trust structure incorporating public-private partnerships involving private investors, government agencies and not-for profit organizations. Holland & Knight was hired as legal counsel to advise HUD regarding the trust structure. Dick Dunnells of Holland & Knight reports to members of the loan sale team that he has agreed to represent HUD only on the condition that HUD waive any conflicts of interests in his representation of clients who are HUD stakeholders. HUD agrees to the waiver.


Clinton and Gore are sworn in for second term; DNC scandals continue with revelations of large banks and banking regulators meeting at the White House in May 1996.


HUD sells $1.31 billion UPB in single family loans in the Single Family Loan Sale #4 with Hamilton as crosscutting financial advisor and Merrill Lynch as financial advisor for the sale. The Single Family #4 Sale yielded proceeds of $1.03909 billion, equal to 91.87 % of UPB and resulted in savings to the government of $247.39 million. There were 11 bidders and three winners in this auction. This sale includes a "place based" bid.


Catherine Austin Fitts leads a team to prototype the first integrated version of Community Wizard, a software tool designed to allow communities access all public data on resource use in their area, including all federal data. Throughout 1997, response to the tool is astonishing, from Congressional staff, to HUD leaders, to the HHS Secretary. Substantial software tool development has also resulted in numerous tools to analyze subsidized housing in a place based context, including detailed pricing tools that combine significant databases on government rules and regulations with all of Hamiltonís pricing results from the various loan sales, including HFA negotiations and the Partially Assisted Trust.

These tools make it possible to look at the HUD portfolios in entirely new and powerful ways. Additional tools made during this period illuminate substantial opportunities for both taxpayers and private investors, including databases of all federal contracting, budget tools, a HUD G4 tool and many others. The core part of the Hamilton Dream Machine, centered on Community Wizard and place based illumination of public and private investment and resource management, is coming to fruition.


Gingrich is reelected Speaker of the House.


The House Ethics Committee fines Gingrich $300,000 for campaign finance irregularities.


The DNC fundraising scandal continues. Documents released by NSC show that NSC had warned Gore about attending Buddhist temple fundraising; DNC agrees to return $1.57 million.


Ervin & Associates submits a Freedom of Information Act request seeking information regarding negative credit subsidy calculations for HUD note sales.


Ervin & Associates submits a Freedom of Information Act request seeking information regarding actual expenditures compared to budgets for the HUD Office of Community Planning and Development for 1993 - 1996, a period that corresponds to the incumbency of Andrew Cuomo as Assistant Secretary for Community Planning and Development. The request states that Ervin is particularly interested in cost overrun in travel, systems, consultants or staff.


Ervin files Plaintiffsí Motion for Leave to File Memorandum Regarding Inadequacies in SWAT Administrative Record Out Of Time in Ervin v Dunlap (96-CV1253) and Plaintiffs' Memorandum Regarding Inadequacies in the SWAT Administrative Record. In this memorandum, Ervinís counsel alleges that the SWAT, physical inspection and asset management contracts are "intertwined with HUDís portfolio re-engineering plan to transfer affordable housing assets to Wall Street insiders at deep discounts." This is not true on any account.


Federal District Court Judge Bryant issues a memorandum and order in Ervin v Dunlap. The court grants the governmentís motion to dismiss Ervinís Fifth Amendment due process claim and request for relief in the form of a declaration that the second due diligence contract is void ab initio for lack of standing. In all other respects the governmentís motion is denied.


HUDís Office of Procurement and Contracts issues a "Notice of Termination for Default" to Ervin & Associates for a contract involving annual financial statement reviews for HUDís entire multifamily project portfolio. Notwithstanding this termination, the Technical Evaluation Panel found that Ervin merited a "reasonably high rating on past performance even with the default termination" in a June 1, 1998 report in connection with an RFP for due diligence services in November, 1997. Later, as part of a GAO protest of HUDís failure to award Ervin this contract, Ervin asserts that the basis for issuing the notice is under investigation by the HUD OIG.


Ken Starr announces that he will resign to head Pepperdine Law School; on 21st, he announces he will stay.


Kathy Rock, FHA Comptroller, meets with HUDís Office of General Counsel re: the optimization error reported by Hamilton. She subsequently documents the meeting with a memo to Assistant Secretary Retsinas. Later, Helen Dunlap report to Fitts that Kathy Rock has informed her that Deputy Counsel Glaser ordered the memo removed from documents provide to the Senate staff and indicates that the memo is not to be disclosed.


Switzerland agrees to establish $4.7 billion trust fund to pay Holocaust victims for trading precious assets with Nazis and concealing stolen Nazi assets.


Catherine Austin Fitts attends PC Forum.


Washington Post reports Gore raised $40 million with calls made from the White House.


HUD Inspector General Susan Gaffney testifies before the Senate Committee on Governmental Affairs on High Risk Problems at HUD. She states "Bringing HUD programs in line with staff capability would undoubtedly require a narrower, more precise definition of HUDís mission; and this would in turn provoke outcries from the many constituencies Ė both within and outside the Department Ė that have formed around HUD programs. Resolving the inconsistencies between HUDís avowed commitment to a place-based orientation and the realities of HUDís program-based organization would again require a clearer definition of HUDís mission, followed by a major shifting of authorities within the Department." "The Department does not have efficient, effective and integrated financial management systems that can be relied upon to provide timely, accurate and relevant financial information and reports. " She notes that "progress is being made" in getting the systems for accounting and budgeting for the project based assistance program and the similar system for tenant based assistance (HUDCAPS, TRACS) up and running. She complains about past failure to take enforcement action against those who misuse the system. She says, "We cannot assume that the States, localities, non-profits, and other recipients of federal funding will always act with wisdom and integrity. We should be dedicated to Ö resolve to move decisively against cases of fraud and abuse. In this regard the HUD OIG has proposed a series of legislative measures that we believe would significantly strengthen HUDís enforcement capacity."


HUD Inspector General Susan Gaffney testifies before the House Subcommittee on Human Resources, Committee on Government Reform and Oversight on HUDís Mission, Management and Performance.


The qui tam lawsuit is reassigned to Judge Stanley Sporkin after the death of Judge Richey. Hamilton has not been able to obtain transcripts of the hearing scheduled for this date either because the hearing did not occur or because tapes of the hearing are not available. For this and other dates, Hamilton is trying to ascertain if tapes are "missing."


The Senate voted unanimously to authorize (S.Res. 39) the Senate Governmental Affairs Committee to conduct "an investigation of illegal or improper activities in connection with 1996 Federal election campaigns." A deadline of December 31,1997, was imposed on the investigation.


Order by Judge Sporkin in the qui tam lawsuit directing that the relator shall appear on 5/20/97 and the US shall be prepared to discuss when it will be prepared to intervene or notify the Court that it declines to do so.


GAO decision in the matter of Ervin & Associates related to Ervinís contention that the agency (HUD) improperly conducted a limited competition for equity monitoring services for FHAís Class B Trust Certificate interests in the HUD Partially Assisted Sale and improperly failed to solicit Ervin in a limited competition for equity monitoring services. The limited solicitation RFP was issued on June 27, 1996 Ė after the Partially Assisted Sale. GAO denies the protest. It states, "While some tasks that Ervin has performed arguably overlap with the responsibilities of the equity monitor, (e.g., reviewing annual financial statements), overall, the expertise required to perform the equity monitoring contract is specialized in nature in that it primarily calls for extensive analyses of complex financial transactions. The fact that Ervin employees possessed professional degrees in accounting and real estate financing does not change the fact that the tasks required here differ significantly from those Ervin has performed under the multifamily housing services contracts, which primarily involve property management (i.e., physical inspections, property disposition, etc.)." The 12-month contract for $700,000 was awarded to Alschuler, Melvin and Glasser, LLP. John Ervin represents Ervin and Richard Marchese of HUD OGC represents HUD.


Ervin & Associates submits a Freedom of Information Act request seeking all emails sent on HUD's ccMail system since June, 1993 from Helen Dunlap, C. Austin Fitts, Kathryn Rock and Chris Greer. In Ervin's request, he notes that he understands that if any messages on HUD's email system were held for more than 24 hours, they would be included in nightly back-up tapes.


Hamilton receives letter from HUD advising that HUD intends to consolidate various advisory services and will cancel the crosscutting contract upon issuance of new contract.


Hamiltonís subsidiary, E2 NetAnalytics, meets with its advisory board at SafeGuard Scientifics to unveil the Solari model and financing communities with stock corporations. The response is very positive. One member warns, however, that it may be too late. He says a decision has been made to move all capital out of the US and abroad starting in September.


A proposal for the appointment of an Independent Counsel for fundraising is rejected by Attorney General Reno. Counsel would have investigated whether funds had been improperly raised for Clintonís 1996 reelection campaign. Reno said that the Justice Department probe had not yet found "credible evidence that high ranking executive branch officials had committed illegal acts."


Clinton nominates Eric Holder to be Deputy Attorney General. He is confirmed and sworn in on that day. Wilma Lewis replaces Holder at DC US Attorney. Holder had worked at DOJ after graduation from law school in the Public Integrity Unit. Hamilton is later told that Holder was supportive of Operation Safe Home efforts as part of the manpower and resources available to the "War on Drugs."


Apartment Investment and Management Company, ("AIMCO") entered into a Stock Purchase Agreement with Demeter Holdings Corporation, and Capricorn Investors, L.P pursuant to which AIMCO would acquire 5,619,695 shares of common stock, par value $.01 per share of NHP Incorporated from Demeter and 1,310,427 shares of NHP Stock from Capricorn. As a result, Capricorn and Harvard (and presumably other investors such as Heller and Warburg Pincus) receive stock in AIMCO, continuing a significant investment in HUD housing. WMF, Inc. (a successor to Washington Mortgage] is spun out to the NHP shareholders, who continue their ownership of the largest issuer of HUD multifamily mortgage banker.


The initial report issued by the National Academy of Public Administration on FHA contracting is issued. As a result, Congress directed HUD to contract with NAPA to conduct a "top to bottom" redesign of the HUD procurement system.


A hearing is held in the qui tam case. During a hearing in the case, (attended by AUSA Barbara Van Gelder, Daniel Hawke, Bernard Olieniacz, Ervin's in-house counsel, and Judith Hetherton, counsel for the HUD OIG) in which the Honorable Stanley Sporkin asked whether the two cases were linked, Barbara Van Gelder of the U.S. Attorneyís Office stated that "there is incredible linkage". She explained further that, "In the matter before Judge Bryant [the Bivens case], what has happened is the qui tem [sic] statute will not allow you to file against the government or anybody who is an SES level or above. In the matter before Judge Bryant, the same parties are now the plaintiffs against HUD and Ms. Helen Dunlap whom they say have conspired with the defendants [, Hamilton,] in the qui tem [sic] to prevent them from, among other things, getting various and sundry contracts from retaliating against them for being whistleblowers in this matter and in other matters, and also for just having a general conspiracy to run their mortgage program." Van Gelder refers to Ervin and his counsel as "bounty hunters." In scheduling the next hearing, Van Gelder notes that they must consider "our agents['] summer vacations."


Order by Judge Sporkin in the qui tam lawsuit extending time to 9/9/97 for the US to intervene or notify the Court that it declines to do so.


The date of a Real Estate Acquisition Agreement by and among AIMCO, AIMCO Properties, L.P., Demeter Holdings Corporation, Phemus Corporation, Capricorn Investors, L.P, J. Roderick Heller, III and NHP Partners Two.


Subpoena to AFL-CIO by Senator Fred Thompsonís Government Affairs Committee. During this period, Catherine Austin Fitts has dinner with Richard Ravitch, Chairman of the AFL-CIO Housing Trust, who was lobbying for renewal of long term government subsidies on a non-competitive basis, and not interested in on-line tenant access to training. He said, "If I can get long term government subsidy contracts, what do I care if people have education or jobs?"


HUD Secretary Andrew Cuomo announces the HUD 2020 Management Reform Plan, which included staffing reductions and, according to HUD Inspector General testimony, "a series of complicated and far reaching organizational and management process changes in HUD." Among the changes were the establishment of a centralized Real Estate Recovery Center and a Troubled Agency Recovery Centers (in Cleveland and Memphis), a Section 8 Financial Management Center in Kansas City, four Home Ownership Centers (in Santa Ana, Denver, Philadelphia and Atlanta) and an Enforcement Center. The reorganization also resulted in the establishment of new positions for "community builder", many of which positions were filled through temporary appointments. By the end of September, 1997 HUD had lost more than 1,000 employees due to early buyouts, authority for which expired at the end of the fiscal year. In late 1997 and early 1998, HUD had a "colossal merit staffing process" that resulted in 1,300 Ė 1,400 employees having no position and many others having new positions. Employees with no assigned positions were forced to apply for new positions in the "New HUD." HUD 2020 envisioned an eventual staffing level of 7,500, but Secretary Cuomo froze the level at 9,100 HUD programs were consolidated and the public and assisted housing portfolios substantially improved."


Apartment Investment and Management Company ("AIMCO") acquired all of the issued and outstanding capital stock of NHP Partners, Inc., and the AIMCO Group acquired all of the outstanding interests in NHP Partners Two Limited Partnership.


The coup against Gingrich, alleged to have been led by Bill Paxon, fails. Paxon subsequently resigns his Republican Leadership Committee chairmanship and announces he will not run for reelection.


HUD disconnects Hamilton from the HUD ccMail email system.


The Senate begins campaign fundraising hearings (Senator Fred Thompson-R, Tennessee presiding). Of over 100 subpoenas issued by the Government Affairs Committee and posted on the Internet, not one was issued to Goldman Sachs, despite the ranking of Goldman partners and employees as one of the largest donors to both Republican and Democrats.


HUD sells $112.68 million UPB in health care loans.


Subpoenas to 25 fundraising groups and associations are issued by Senator Thompsonís Committee.


Hamilton launches the StreetEquity website with a design book for a Solari, a local software developer/tool maker that facilitates circulation of knowledge that supports continuous reengineering of resource management within communities and that permits small business and real estate access to the stock market in a manner that allows small business and farmers to compete with corporations on a level playing field based on performance. Earlier, Hamilton has launched the Hamilton Workshop, providing access to some of Hamiltonís tools. The concept of the workshop was based on Leonardo DaVinciís workshop in Italy during the Renaissance. DaVinci had wanted to create new kinds of art and sculpture, such as the large San Marcos horses, and so it required inventing and building new tools to make such art and sculpture possible. Hamiltonís premise was that new powerful tools need to be built and made accessible to create new liquid markets.


Mike Espy is indicted on 19 counts; he pleads "not guilty."


Clinton signs Balanced Budget Act passed by the House and Senate on July 30 and 31st.


Ervin & Associates submits a Freedom of Information Act request seeking information on Ernst & Young's GNMA contracting vehicle under which it performed "Mark to Market" services for FHA.


HUD automates subsidy application submissions through its TRACS systems managed by Lockheed-Martin.


A trial date set for suit against Clinton by Paula Jones; it is scheduled for May 1998.


Senator Fred Thompson issues an order to AFL-CIO to produce documents; AFL-CIO organizes a coalition of those subpoenaed to stop subpoenas.


A grand jury begins an investigation into GOP dealings with a Hong Kong figure.


HUD sells $1.14 billion UPB in single family loans in the Single Family Loan Sale #5 .The Single Family #5 Sale yielded proceeds of $1.03 billion, equal to 89.99% of UPB and resulted in savings to the government of $265.19 million. There were 31 bidders and one winner in this auction. There was a "place based" bid component in the sale.


DOJ begins a preliminary investigation into whether an independent counsel should investigate Goreís campaign-related calls from White House.


Hamilton makes its first convertible preferred investment in a neighborhood stock corporation (subsequently referred to as the "Solari Model").


Status hearing before Judge Sporkin in the qui tam lawsuit setting a status call for 3/9/98. AUSA Barbara Van Gelder, Wayne Travell and Daniel Hawke are in attendance, making numerous statements that are not truthful The hearing focuses primarily upon Judge Sporkin's questions regarding why the SEC is not involved in the investigation. Van Gelder notes that even though the qui tam complaint mentions only 3 or 4 loan sales, she believes that the government should investigate all 12. Travell explains the allegations in the qui tam suit thus: "ÖHUD put together a group, a pool of these mortgage notes and then provided inside information to certain Wall Street concerns, and provided false information publicly with regard to the quality of the notes in the pool." They describe the sealed bid auction "people were invited to come in and bid for these notes." Van Gelder says, "Some people got longer invitations than others." She confirms the judge is correct when he says, "And then in the invitation to bid some people were told information they shouldn't haveÖ." Travell represents to the judge: "And to date we believe that -- the note sales are all but complete at this point, and it is our information that although these are generally available, made available to the public for anyone to bid on, there have only been three successful bidders." In fact, there were more than three successful bidders in the first loan sale. By this date there had been 22 HUD loan sales with at least several dozen different winning bidders or members of bidding pools. This fact was reported widely in the financial press and in materials produced to the HUD OIG under the Hamilton subpoenae.


Order by Judge Sporkin extending time to 3/10/98 for intervention or declination to do so and directing that counsel for the government and the relator shall be prepared to discuss all aspects of the case at a hearing on 3/9/98.


Ervin & Associates submits a Freedom of Information Act request seeking information on a recent dispute between Inspector General Susan Gaffney and Secretary Cuomo reported in Legal TImes and The Washington Post, including the complaint filed by George Weidenfeller against Susan Gaffney, the anonymous letter that Susan Gaffney forwarded to the President's Counsel on Integrity and Efficiency, Dwight Robinson's memorandum criticizing Gaffney, including her decision to hire a public information officer and any findings by the FBI provided to HUD.


Ervin & Associates submits a Freedom of Information Act request seeking information, in connection with a complaint letter from Karen Burstein, counsel for Asset Strategies, on September 6, 1995, on "documentation within HUD that would identify the 20 firms referred to in Burstein's teaming partner example" and "documentation identifying Hamilton's teaming partner relationships within HUD." Ervin stated that "we are exercising our right as citizens and taxpayers to pinpoint and eliminate 'corrupt practices at HUD' and to investigate highly suspect actions by Secretary Cuomo, including his decision to allow Nic Retsinas to remain FHA Commissioner although the wrongdoing being investigation [sic] occurred on his watch."


Teamster scandal touches Democratic fundraising scandal.


Thompson announces that the Government Affairs Committee will turn to campaign finance reform; cover for shutdown.


DOJ announces that Reno has opened a formal inquiry into whether President Clinton had illegally solicited campaign donations at the White.


Beginning of the federal fiscal 1998 year. HUD produces certified financials for this year. However, HUD is not able to produce certified financials for the following year. Efforts to do so require $17 billion of "adjustments" to the opening balance, signifying potential substantial problems in fiscal 1998.


NY Times reports that DOJ is widening the investigation into Democratic Fundraising, including how the DNC circumvents federal law by transferring at least $23 million to the state Democratic parties.


NHP received a HUD OIG subpoena for documents re: "any arrangement whereby NHP provides compensation to owners of HUD multifamily projects in exchange for property management."


Hamilton invests substantial funds in dealing with HUD contract compliance in face of serious leak campaign implying that Hamilton has engaged in criminal wrongdoing and assuring that an indictment of Fitts is forthcoming; Hamilton's market access is destroyed by a combination of Ervin, DOJ, Cuomo and HUD OIG actions, Hamilton receives additional subpoena and HUD OIG demands to take possession of all Hamilton documents; E&Y contracts are also cancelled (after a DNC fundraising scandal involving E&Y contributions) and subject to recapture by HUD OIG, who continues to lobby the Senate for scandal hearings on HUD contracting.


Federal fiscal 1998 Year begins; HUD OIG later testifies on March 22, 2000 that opening balances for FY 1999 indicated $17 billion shown missing and unaccounted for in fiscal 1998 in connected with new systems and unsupervised contractor access.


Henry Hyde and other Republicans ask Reno to appoint independent counsel; Reno says "no."


White House releases videos of Clinton with financial supporters in White House.


Videotapes to released to Thompsonís committee by the White House of Clinton with donors.


Republicans say tapes indicate Reno spoke too quickly in her decision not to appoint an independent counsel.


Campaign fundraising reform bill is thwarted by filibuster; Lott uses provisions limiting contributions by unions.


Vote and filibusters take place re the McCain-Feingold campaign reform bill; the bill is killed.


According to admissions in Ervin V. Dunlap, Ervin alleges that Kathy Rock, then FHA Comptroller, was informed that Tim Ito of USNWR had told Joe McClosky (who was HUDís staff member in charge) that BlackRock had received confidential payment histories prior to BlackRockís submission of its bid in the HUD Single Family Note Sale #3. HUD says that, in fact, Joe McClosky determined the information actually given to BlackRock by HUD was post-sale information concerning HUD Single Family Note Sale #2, which would have been available to any purchaser upon request.


Janet Reno says she was angry at Clinton for not informing her about fundraising tapes; she rebukes those pushing for independent counsel.


An article in The Washington Times by George Archibald entitled "HUD Halts Contracts to Major Clinton Donor," reports that the Ernst & Young financial advisory contract has been cancelled. Besides Hamilton, Ernst & Young was the financial advisor most familiar with the FHA portfolio and its problems, and E&Y was the financial advisor in connection with a controversial project to securitize HUD held mortgages on HUD assisted Section 8 properties.


Ervin & Associates submits Freedom of Information Act requests seeking information on Ernst & Young contracts with HUD.


Hamilton receives letters from HUD (1) canceling the crosscutting financial advisory contract, (2) withholding funds owed to Hamilton for work performed and (3) demanding the return of all HUD portfolio data. Although HUDís letter stated that the contract cancellation was "for convenience of the government," newspaper accounts relate it to loan sale bid issues Hamilton had reported to HUD in 1996 that had been addressed by the appropriate HUD staff and dismissed as not material. There are intimations that Hamilton proprietary software programs like Community Wizard belong to HUD and that HUD should receive a free copy. All work, including Community Wizard and community databanks, comes to a halt as Hamilton prepares to raise working capital through a private placement memorandum. All HUD efforts to encourage Congress to pass requirements for place based disclosure stop.


An anti-trust suit brought against Microsoft by DOJ.


Ervin & Associates submits Freedom of Information Act requests seeking information regarding the $3.88 million optimization error reported by Hamilton to FHA in December, 1996, the notice canceling Hamilton's contract, documentation regarding the Department's intent to cancel Hamilton's contract and documents and work product required under the Federal Acquisition Regulation to be turned over by Hamilton to HUD upon the cancellation of its contract and documents actually turned over by Hamilton.


Article in The Washington Times by George Archibald entitled "Cuomo Dumps Financial Advisor" reports the cancellation of Hamilton's financial advisory contract. The article says Cuomo "ordered a fresh top-level review of bid-rigging charges that have tainted multibillion-dollar federal mortgage sales." The article says HUD accused Hamilton of covering up erroneous instructions for a computer model used to select winning bidders. In fact, Hamilton had reported that error to the Assistant Secretary/FHA Commissioner and FHA Comptroller in December 1996. Departmental officials are quoted as saying the review directed by Mr. Cuomo "could run into the millions of dollars of additional claims." The article also says an unnamed source confirmed that Nicolas Retsinas, FHA Commissioner, "was completely on board and concurred with" the decision to terminate Hamilton's contract. The article also reports that the US Attorney's Office had requested a stay of legal discovery in the Ervin & Associates Bivens lawsuit because a criminal probe was being conducted to track the main allegations of the civil lawsuit. J. Ramsey Johnson, principal Assistant US Attorney requested the stay and said "the criminal investigation is ongoing and concerns an extremely complex set of facts." All HUD information on the issue is sourced from Hamilton (including calculations of $3.8 million and the description of the error) and continues to be sourced from Hamilton. It is reported to Fitts in 2000 that a later HUD PD&R study under Bill Apgarís leadership shows the error to not be statistically meaningful. No mention is made of the fact that the error disadvantaged Goldman Sachs in one bid.


Article in the Washington Post by Jennifer Rothacker entitled "HUD Fires Financial Advisor." It says that a news release by the department said that Cuomo's investigation of Hamilton had concluded that Hamilton "failed to provide accurate financial advisory services to the mortgage note sales program" since its contract started in 1992.


Article in the Associated Press by Jennifer Rothacker entitled "Financial Firm Fired after HUD Discovers $3.8 Million Error."


Anonymous telephone call to Hamiltonís bank warning Hamilton is "about to go under."


Article in The Washington Times by George Archibald entitled "HUD Orders Fired Firm to Surrender Documents." [This article is undated but refers to Hamilton laying off about 1/3 of its workforce "this week."] The article focuses on the aspect of the HUD OIG subpoena requiring that Hamilton turn over bid documentation and suggested that Hamilton might resist turning over the materials" because of legal complications in a criminal probe and the firm's defense in a civil lawsuit charging corruption," a fired Hamilton employee is reported as saying. Senate sources reportedly said Jenner & Block's representation of Hamilton was complicated by the fact that President Clinton had nominated the wife of a Jenner & Block partner as General Counsel at HUD. Robert Pincus, President of Franklin National Bank, denies reports by laid-off employees that Hamilton was closing.


In Amended Qui Tam filing on September 3, 1998, Ervin & Associates provides a list of evidence provided to the US Attorneyís Office to support the allegations in the suit. Evidence provided on October 20, 1997 is described as follows "Copy of HUD termination letter to Hamilton, and detail of implications of the termination; letter was leaked by Howard Glaser in return for agreement to not run a story on Ernst & Youngís political contribution links to HUD contracts." Howard Glaser was Deputy Counsel at HUD, having moved into this position from the Community Planning and Development Division where he worked for Assistant Secretary Cuomo before Cuomo became Secretary.


Hamilton lays off most of its employees.


Article in The Washington Times by George Archibald entitled "HUD Ignored Charges of Bid Rigging." Here, Andrew Cuomo takes credit for having asked FHA two years earlier to look into charges that Hamilton illegally gave inside information to Wall Street bidders. Agency officials are credited with saying that Cuomo was going to "move against HUD officials who protected Hamilton and prolonged corruption that embarrassed him." Cuomo is reported as being angry that his own promised program to clean up waste, fraud and abuse had been "clouded by a criminal probe of note-sale corruption that might have been prevented." The article says counsel for Asset Strategies had charged that BlackRock had received a "servicing tape" containing payment history of all HUD-backed mortgages. The article goes on to say that the Department had issued a brief statement in Nic Retsinas' name "saying Hamilton was fired because 'at this time it was appropriate to recommend termination of the contract.' HUD cited 'past performance errors by Hamilton' among other things." The article says the charges of bid-rigging were part of an ongoing criminal investigation by HUD's Inspector General and the US Attorney's Office. A Hamilton employee is attributed with the statement that the bids were "changed" before they were fed into the Lucent/Bell Lab computer.


Article in the Wall Street Journal by Carl Johnston and Anita Sharpe entitled "HUD Fires Contractor after Finding Errors Tied to Program on Mortgages." The article appears to tie the "firing" by Secretary Cuomo with his discovery of the loan sale optimization error. [In fact, the letter terminating Hamilton's contract states that it was terminated for the convenience of the government, not for cause.] The article says Cuomo was alerted to mortgage auction irregularities in 1995 while he was an Assistant Secretary [of Community Planning and Development]. [His reference is to a letter from counsel for Asset Strategies, Inc., a disgruntled subcontractor on a mortgage loan sale whose recommendations were not adopted. When Asset Strategies refused to go forward, it was fired.] According to the article, HUD had filed documents with the court indicating it was exploring the settlement of the Ervin action against HUD the previous week.


Fred Thompson decides to wind up hearings on campaign fundraising (original schedule called for a 12/31/99 cutoff date).


An article in The Washington Times by George Archibald entitled "HUD Told Last Year of Rigged Loan Sales." In this article, the discovery of the optimization error is attributed to "other contractors." It said the discovery occurred on October 24, 1996 at a planning meeting for the sale of additional multifamily loans and attributes this information to "a former Hamilton employee who asked not to be named." The employee is quoted as saying that Hamilton didn't tell HUD of the problem until December 5th, having "sat on" the information for six weeks. [Hamilton conducted an investigation after finding the possibility of an error and reported it to HUD as soon as Hamilton had Lucent reaffirm calculations on all sales and drawn some conclusions from its research.)


The White House declines to testify at Thompson hearings.


The HUD OIG issues third subpoena to Hamilton requiring, among other things, all documents related to e.villages, Neighborhood Networks and statements of work prepared by Hamilton. The subpoena arrives at Hamilton in the afternoon; a story in The Washington Times morning edition states that Hamilton has been subpoenaed.


Washington Times article entitled "Legal Doubts Raised over HUD Contracts" by George Archibald. Archibald reports that a draft HUD IG report questions the legality of a $20 million financial advisory contract given by HUD (through GNMA) to Ernst & Young one month after the firm gave $132,000 to President Clinton's 1996 presidential campaign. According to the story, documents turned over to the Senate Governmental Affairs Committee in connection with its program of campaign fundraising indicated that Dwight Robinson of the Secretary's Office ordered that the contract be given to E&Y.


House Majority Leader Dick Armey reportedly summonses Nic Retsinas to the Hill for a closed door meeting with staffs of the House and Senate banking committees "to get to the bottom of bid-rigging charges."


President Clinton signs into law the Multifamily Assisted Housing Reform and Affordability Act of 1997 providing for retention of project-based subsidies and work-out of HUD portfolio or insured mortgages on terms advantageous to housing finance agencies, nonprofits and owners.


Article in The Washington Post by Judith Havemann entitled "Firing of Outside Financial Adviser Only Adds to Political Furor for HUD."


An 8-page letter from Judith Hetherton to Jenner & Block (counsel for Hamilton at that time) demanding certification of compliance with the subpoena and questioning the completion of document production.


An article appears in The Washington Times by George Archibald entitled "HUD Firm Dumped for Dubious Campaign Gifts." This article says campaign finance scandal around Ernst & Young's contributions to the DNC is the last thing the Secretary wanted, because he was angling for the No.2 spot with Al Gore on the Democratic ticket in 2000. Cuomo blames Nic Retsinas for a "rogue operation" to hire E&Y without his knowledge. National Mortgage News is quoted as reporting that Retsinas was one of two top contenders for the position of executive vice president of Mortgage Bankers Association.


An article is run in US News and World Report by Tim Ito entitled "HUD has Second Thoughts on Loan Advisor." The article refers to a Justice Department criminal investigation of the HUD loan sale program. The magazine takes credit for having published an article that was "the first public hint of trouble with the program."


The HUD OIG receives special appropriation for Operation Safe Home in the approximate amount of cancelled contract authority from Hamilton HUD contracts.


A two-page letter is sent from Jenner & Block to HUD OIG Counsel Judith Hetherton Re: new subpoenas and Hethertonís October 28 letter Re Hamiltonís compliance with August, 1996 subpoenas. The letter states Hamilton is still a going concern. There is discussed more on "back-up tape dispute" [in which the HUD OIG counsel alleges Hamilton has destroyed a back-up tape for a particular date in June and Hamiltonís counsel reports that there is no such tape in existence as far as Hamilton IT personnel can determine] and OIGís insinuation that Hamilton may have revised or tampered with electronic communications produced under subpoena. It requests a meeting to discuss narrowing the burdensome requests.


The GOP wins big in off-year elections; Christine Todd Whitman takes NJ, Gilmore takes Virginia, Gulliani takes NY, with numerous Democratic mayors keeping their seats in Boston, Cleveland, Detroit, Minneapolis and Pittsburgh and in and 11/25 runoff in Atlanta.


An article appears in The Wall Street Journal entitled "HUD Halts Program To Auction Mortgages as It Seeks Adviser." "Hamilton took with it the technical capacity -- including personnel and access to technology -- to conduct the auctions." [No advisor was hired for several years.]


HUDís CFO Richard Keevey testifies before Stephen Hornís House Subcommittee on Government Management, Information and Technology, noting that, "we have a successful asset sales program that has made us the leader in the federal government in this area." In opening remarks, Horn refers to "the positive experiences of the Department of Housing and Urban Development" in selling assets and declares that, "the excellent returns they have had are eye-opening."


Housing industry newsletter Real Estate Alert reports that an unnamed HUD spokesman has averred that "Even though Cushman, Merrill and Kenneth Leventhal are still pre-qualified as HUD financial advisers, the agency now wants to select a senior advisor to replace Hamilton before proceeding with sales." Later in the month, HUD announces that the loan sale program has been halted. HUD withdraws the RFP for crosscutting financial advisor. Despite termination, the Office of Management and Budget allows appropriating committees in Congress to assume, for purposes of determining the budget costs of issuing FHA insurance for new single and multifamily projects, that HUD has not discontinued the loan sales for calculating the cost of new mortgage insurance originations. HUD assumes that it has a high recovery rate for purposes of issuing new low cost insurance, but in fact uses a low recovery rate to negotiate workouts and other servicing policies favorable to the same industries enjoying the low cost financing. This "multiple personality budgeting" negates the very internal controls legislated at OMB's request in credit reform legislation in 1991.


The Federal District Court issued an order in the qui tam case (96-1258) lifting the seal for the limited purpose of advising Hamilton that it was named as defendant.


House staff report that HUDís IG has been lobbying Senator Mackís staff heavily in an attempt to convince the Housing Opportunity and Community Development Subcommittee to hold hearings on the subject of HUD contracts, particularly the Hamilton crosscutting contract and how much Hamilton has been paid under the contract. A lobbyist later reports to Fitts that Senate staffers have been told by the HUD IG that claimed taxpayer savings of more than $2 billion are false and that the Denver audit was thrown out due to unprofessional work.


DOJ informs HUD that the OIG's investigation is unrelated to releasing the Hamilton check for work performed under its HUD contract. HUD had previously stated that it could not release the check because of the on-going investigation involving Hamilton.


Hamilton is informed that the original HUD contract documents have been moved to the Inspector General's Office from the HUD Contracting Office. Indications are that a lot of contracting has been moved to a special contracting office in Denver.


Attorney General Reno announces that she will not request appointment of an independent counsel to investigate Clinton and Gore for fundraising irregularities.


A lawsuit is filed in Michigan courts against Hamilton and others by a defaulted borrower whose note was sold to HUD's loan sale program.[Stearns Building Limited Partnership v. The Hamilton Securities Group, Inc. (1:97-04955), Michigan Eastern Bankruptcy Court, Judge Ray Reynolds Graves].


Jenner & Block writes a letter to Dick Chapman at DOJ and AUSA Barbara Van Gelder re: their upcoming meeting regarding the length and conduct of investigation of Hamilton. The letter says Hamilton will have to go out of business if it continues much longer. It states that Hamilton produced 27,000 pages of documents and 133 diskettes of information in response to subpoena between June and August. It complains of leaks to the press, a fishing expedition, burdensome and duplicative subpoenas, and illegal withholding of funds.


In the morning, Hamiltonís attorneys (Jenner & Block) send a letter to DOJ expressing concern re: the length and conduct of the HUD OIG investigation. In the afternoon, HUD IG issues Hamilton a fourth subpoena, this time requesting that Franklin National Bank produce all personal financial information relating to

Catherine Austin Fitts.


Hamiltonís attorneys send a letter to HUD requesting a meeting with Deputy General Counsel Howard Glaser to discuss Hamiltonís request that HUD cease withholding payments.


Assistant Secretary Hal DeCell answers Connie Mack's November 14, 1997 letter to HUD. According to a May 1999 FOIA request by Ervin & Associates, the letter states that the Department had initiated an independent analysis of the bid results of the HUD note sales.


Henry Cisneros is charged in a federal indictment on 21 counts with conspiracy, obstruction of justice and making false statements to the FBI.


Hamiltonís attorneys meet with Assistant US Attorney Barbara Van Gelder. Van Gelder introduces Tony Alexis as her replacement. She indicates that there is no reason for linking any investigation of Hamilton with HUDís withholding of payments to Hamilton, and agreed to communicate this to HUD. Alexis also agrees to call HUD OIG counsel Hetherton regarding the reasonableness of subpoenas.


Volume I of the CIA IG Report is delivered to Senate Select Committee on Intelligence regarding charges that the CIA supported drugs in South Central LA.


Hamilton supplies a certification by Catherine Austin Fitts re the completion of Hamiltonís response to the August subpoenas to the HUD OIG.


Judith Hetherton sends a letter to Hamiltonís attorneys defending the OIG against charges of delaying its investigation, accusing Hamilton of failing to comply with the HUD IGís subpoenas and repeating the IGís requests for information from Hamilton. Later that day, Judith Hetherton sends a second letter to Hamiltonís attorneys asking them to provide more detail on allegations that the HUD IG was leaking information. On that day, Hamiltonís attorneys send a letter to the HUD General Counsel requesting a meeting on HUDís wrongful withholding of $1.5 million in payments to Hamilton.


Hamilton files a formal complaint with Neil Gallagher, Chairperson of the Integrity Committee of the President's Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency ("PCIE"). The complaint is filed under Executive Order 12933, Section 1(a) for gross unprofessional conduct by the Inspector General ("IG") of the US Department of HUD against Hamilton. The complaint gives a detailed account of the HUD IG's abuse of authority and possibly criminal behavior. (IC #212).


Catherine Austin Fitts sends letter to HUD Deputy General Counsel Howard Glaser reiterating DOJís statement to Hamilton that DOJ has not (as maintained by Glaser) informed HUD not to pay Hamilton for amounts owed.


GAO writes a letter to Hamilton posing many (more than 20) questions re: Hamiltonís compliance with a joint venture agreement with the Department of Labor, which agreement was allowed to expire without renewal by Hamilton a year earlier. The GAO letter purports to be in response to "Congressional inquiry" and is detailed in its references to specific provisions of the joint venture agreement.


Charlie Trie indicted by a grand jury in connection with the election fundraising scandal.


Alan Greenspan takes a walking tour of Maxine Watersís district in LA.


According to the Wall Street Journal, the Asian financial crisis has shaken up US foreign policy in areas from defense cuts by allies to South Korean funding for a reactor project. Defense Secretary Cohen toured the region to reassure leaders of US support and discuss revising arms acquisition plans.


Henry Cisnerosí one-time mistress pled guilty to criminal charges linked to payments the former HUD Secretary made to her after they ended their affair.


Hamilton files a Freedom of Information Act ("FOIA") request with Darlene D. Hall, FOIA Officer of the HUD IG's office, requesting nine categories of information. FOIA Number: FIIG216055. Hamilton sends a second FOIA request (FI-216692) to Charlene Anderson, FOIA Coordinator in the Office of the General Counsel of HUD.


Monica Lewinsky denies the Clinton affair in affidavit filed in Paula Jones suit.


Hamilton files a motion for temporary restraining order. [Hamilton Securities Group, Inc. et al v. Department of Housing and Urban Development, (1:98-CV-0036), US District Court, District of Columbia (Judge Stanley Sporkin)]. In an attempt to prevent HUD from holding up the processing of checks for amounts due under its HUD contract. A settlement agreement re: HUD OIG disclosure policy is trashed when Abbe Lowell tries to slip in a provision that would prevent Hamilton from suing HUD later. Fitts catches it and insists that Hamiltonís case be withdrawn.


Hearing before Judge Sporkin on Hamiltonís motion for a temporary restraining order.


Tripp turns over tapes to Starr.


Tripp wired by Starr for conversation at hotel.


Conference call hearing with Judge Sporkin in the Hamilton TRO case. The motion for temporary restraining order is denied in an order issued on January 20. On the call from the Department of Justice and HUD are Robert Hollis (DOJ), Daniel van Horn (USA), Bryan Saddler (OIG), David Gottesman (DOJ), Tim Lorenza (DOJ), Rich Brown (DOJ), Harold Wilson (DOJ), John Opitz (HUD OGC), Ginger Stevens (HUD OGC) and Bart Shapiro (HUD OGC). The issue before the court has to do with the letter provided by Hamilton's insurance carrier regarding coverage in the case of an error or omission. Hamilton maintains that its coverage provides security for the HUD claim of $3.8 million. The DOJ/USA refuse to accept this security because the insurance company is unwilling to waive policy exclusions, the most important of which is an exclusion for fraud.


Wall Street Journal (byline: Michael Frisby) publishes article "HUD Dismisses Law Firm Doing Advisory Work" in which it reports HUD has fired Holland & Knight, "a politically connected law firm that was doing legal work for HUD while also representing clients battling the agency." This fact was disclosed to HUD before Holland & Knight agreed to represent HUD. The article also reports that HUD had referred the Holland & Knight matter to the Washington Bar Association and that government officials were considering whether the firm should be barred from federal contracts. Dick Dunnells, the partner in charge of the HUD account, is furious at the politically motivated smear of his firm. No mention is made in the article that Dunnells is representing Franklin National Bank, Hamiltonís bank, and is making efforts to get Hamilton paid.


A three-judge panel approves the expansion of Starrís inquiry to include possible obstruction of justice in Jones case; Reno approves a broadened mandate; Starrís investigators question Monica Lewinsky.


Clinton denies having an affair with Monica Lewinsky in Paula Jones affidavit.


National Mortgage News, Brian Collins, reports that the US District Court rejects Hamiltonís application for a temporary restraining order. "Hamiltonís president Fitts told reporters at the hearing that HUDís suspension of the note sale program is costing the agency $5 Ė 10 million a month."


Stories on Monica Lewinsky proliferate in the general news. The Washington Post "postpones" its front-page investigative story about Hamilton, which never runs.


The AP reports that Janet Reno has sealed the release of DOJ IG report on Dark Alliance allegations because the release might "compromise an undercover investigation expected to last an extended period."


The filing of (1) HUD Defendantsí Motion to Dismiss Complaint and (2) HUD Defendantsí Opposition to Plaintiffsí Motion for a Preliminary Injunction and (3) HUD Defendantsí Statement of Points and Authorities in support of Motion to Dismiss, submitted by Frank Hunger (AUSA), Robert Hollis (Asst. Dir., Commercial Litigation Branch), Michael Sitcov (A. Dir. Fed Programs Branch) David Gottesman (Commercial Litigation Branch, DOJ) for OIG and Raymond Larizza and Richard Brown (Federal Programs Branch, Civil Division, DOJ) Attorneys for HUD, Retsinas and Cuomo and Of Counsel: Carole Wilson (AGC, Office of Litigation and Fair Housing Enforcement). Angelo Aiosa (AGC for Litigation), Barton Shapiro (Trial Attorney), Virginia Kelly Stephens (Attorney) of the Office of General Counsel of HUD.


Charlie Trie, a friend of Clinton, indicted for fundraising.


The declassified version of the CIA OIG Report - Volume I is released to the public.

Some time between Feb and Apr - 98

Ervin & Associates serves Jenner & Block, Brand, Lowell & Ryan and Rasmus (Hamilton's auctioneer) with subpoenae. By this time Jenner & Block had resigned as Hamilton's counsel because the insurance carrier refused to pay agreed bills, and Hamilton had run out of funds to pay Brand Lowell, but both firms were forced at their own expense to complete comprehensive privilege logs listing all documents from their representation of Hamilton and justifying why such documents were subject to attorney client privilege. Rasmus was required under its subpoena to produce customer records showing what Hamilton computer equipment was purchased by each purchaser -- information Rasmus did not want to disclose because of its privacy obligations to clients. Also, Hamilton was required by the Office of Inspector General to turn over creditor lists and directories of Hamilton's former employees, business associates and teaming partners as well as contact many vendors to extend subpoena compliance to their digital records. *


VP Gore announces that Maxine Watersí district has been awarded an Empowerment Zone status by HUD and made eligible for $300 million in federal grants/tax benefits. HUD Drug Elimination Grants and "War on Drug" activities increase under Secretary Cuomo.


Senator Lott pulls a surprise and brings up the campaign finance reform bill well before the agreed-upon date of March 6.


Bill Paxon announces that he will not seek reelection.


Attorneys General from 11 states issued new subpoenas in their antitrust probe of Microsoft; separately, DOJ issued more subpoenas.


NAPA releases its Interim Report focusing on improvements needed in the FHA Office of Housing contracting.


Assistant US Attorney Barbara Van Gelder leaves the DC US Attorneyís Office for private practice at Wiley, Rein & Fielding in Washington. Before leaving, she informs Hamiltonís attorneys in the presence of her replacement, Tony Alexis, that DOJís investigation has no reason for HUD to withhold payment of Hamiltonís money, and they will call HUD to communicate that as well as to ask HUD to not abuse the subpoena process. Subsequent events as well as documents unsealed in 2000 indicate behavior highly contradictory to these promises.


Hamilton and HUD OIG battle regarding possession of documents and subpoena compliance. HUD intimations of fraud cause Hamiltonís errors and omissions insurance carrier to decide not to pay Hamiltonís attorneys as the carrier had agreed. The attorneys resign.


The Stearns Building Limited Partnership (plaintiff) and Hamilton Securities Group (defendant) stipulated and agreed (1) that the time in which Hamilton may answer or respond to their complaint could be extended to March 2, 1998, and (2) that the law firm of Jenner & Block may withdraw its appearance on behalf of Hamilton in the matter. (In Re: Stearns Building Limited Partnership v. The Hamilton Securities Group, Inc. (97-54216-G) US Bankruptcy Court, Eastern District of Michigan Southern Division.)


Jenner & Block letter to Judith Hetherton stating its resignation on January 29 was as the result of inability of Hamilton to pay fees. Hetherton accused Hamilton of choreographing J&Bís withdrawal in order that Brand Lowell could disavow agreements made by Jenner & Block. Hetherton later threatens Abbe Lowell with intimations of what they will do if he files "a frivolous law suit."


An order is entered by Judge Sporkin to postpone a hearing in the TRO case from February 5, 1998 to February 18, 1998 based upon information that parties are exploring ways to resolve the dispute.


Reno recommends the appointment of an independent counsel to look into Bruce Babbittís fundraising activities.


Jenner & Block informs the HUD OIG that J&B represents Russell Davis, a former board member and Vice President of Hamilton. The OIG had requested an interview with Davis but, when told he was represented by counsel, declined to follow through with the interview.


HUD's Office of General Counsel responds to Hamilton's January 7, 1998 FOIA request (FI-216692). The letter states that the department will expedite the processing of Hamilton's request.


A Louisiana contractor files a Motion to Compel Production of Documents [United States of America v. Streuby L. Drumm, Jr. et al (1:98-MS-0066), in the US District Court, District of Columbia (Judge Stanley Sporkin)]. The motion asks the court to compel Hamilton to produce documents to comply with the commands of a subpoena duces tecum issued on behalf of the US District Court of the District of Columbia, in connection with an aforementioned proceeding pending in the U.S. District Court for the Middle District of Louisiana.


John Greer deposition in Ervin v Dunlap et al (4 volumes, 1,125 pages).


A motion hearing is held before Judge Sporkin in the TRO case, dealing with matters other than the motion to restrain HUD from withholding payments. More than ten attorneys appear from the government in three separate representations, confusing the judge. The judge focuses on the prospect of a Hamilton bankruptcy. Hamilton's counsel indicates that no bankruptcy filing is currently contemplated. The judge finds that Hamilton's challenge to the overbroad reach of the OIG's subpoena is not ripe for decision and that the more appropriate course of action is to allow the OIG to file a subpoena enforcement action and for Hamilton to challenge the subpoena issues at that time. A settlement is reached verbally with the HUD and Department of Justice regarding press leaks, but counsel for the Inspector General refuses to join in this settlement. The issue is resolved when Judge Sporkin adds language to his order acknowledging the IG has represented to the Court its obligations not to leak. Regarding the approval of any settlement language by the non-OIG HUD defendants represented by AUSA Gottesman, Gottesman tells the judge, "The client agency will give its recommendation to the Department of Justice. The Department of Justice will have the final say." The judge responds, "Is that right? I always thought it was the other way aroundÖ. No, seriously, I always thought when I was in an agency that the Department looked to the agency. I never knew that we looked to the Department [of Justice]. It's the agency's equities that are involved."


Federal Register publication of Statement of Policy on Disclosure of Mortgage Loan Sales Information; SUMMARY: This notice sets forth the policy of the Department of Housing and Urban Development regarding information that will be provided when responding to Freedom of Information Act requests for information on the Department's Mortgage Loan Sales Program. This notice sets forth that policy and its rationale.


The as-of date for layoff of all remaining Hamilton employees.


HUD OIG signs a memorandum of understanding with the DEA that provides conditions under which HUD OIG agents may be authorized to investigate drug related activities under Title 21, a "non-traditional role for an IG."


Vernon Jordon testifies before the Clinton grand jury.


Judge Sporkin issues a court order in the Hamilton TRO action (1) dismissing counts 3 and 4 without prejudice, (2) dismissing counts 5 and 6 "without prejudice on the basis that Defendant Gaffney has represented to this court through counsel that she is cognizant of and understands her and her officeís obligations with respect to the confidentiality of investigations conducted by the office of the Inspector General of the US Department of Housing and Urban Development, and that she and her office have complied and will continue to comply with these obligations."


HUD files Petition for Summary Enforcement of Subpoenas against Hamilton [Susan Gaffney, HUD IG v. Hamilton Securites Inc., et al (1:98-MS-0092), in the US District Court, District of Columbia [Judge Stanley Sporkin] signed by Wilma Lewis and Daniel Van Horn and with Judith Hetherton and Brian Saddler listed as Of Counsel. Filed Under Seal. The filing says "The Hamilton Entities have acknowledged that they maintain and have possession of records responsive to the subpoenas which they have failed to provide to the OIG." Also filed is a Memorandum of Points and Authorities in support of PTE. HUD files Declaration of James Martin under seal in support of the Office of Inspector Generalís Petition for Summary Enforcement of Subpoenas (with 37 Exhibits). Fitts cashes in her 401(k) and sells her interest in a family farm to pay for attorneys to appeal to Judge Sporkin for a Special Master to serve as trustee for Hamilton documents and digital files.


GAO discussed the Departments of Justice's and Treasury's asset forfeiture programs. GAO noted that: (1) the asset forfeiture programs present a high risk for abuse and fraud because of program mismanagement and internal control weaknesses; (2) the US Marshals Service mismanagement, ineffective oversight, slow disposition, and poor record keeping of seized property has resulted in excessive costs and millions of dollars in lost revenue; (3) the Justice asset forfeiture program lacks closing procedures to ensure the proper recording of all seized property in its property management system; (4) the Customs asset forfeiture program lacks adequate safeguards over seized property and has incomplete and inaccurate accounting and reporting of seized property; (5) the agencies have made many improvements to their asset forfeiture programs; agencies need to additionally enhance their tracking systems and to develop and implement policies and procedures to ensure proper accountability for and stewardship over seized property; and (6) although consolidating the management and disposition of seized assets could reduce administrative costs and duplicative efforts, the agencies cite legislative acts and federal reporting requirements as barriers to developing a joint plan for consolidation.


AUSA David Gottesman of the Civil Division of the Commercial Litigation Branch of DOJ faxes a letter to Hamiltonís attorney claiming a prior interest in Hamilton auction proceeds and warning of personal liability of any company representative under the federal priority statute for any amounts paid to third parties ahead of HUD. Fitts is concerned that this will lay basis for seizure of any items at Fraser Court and begins research on asset forfeiture which eventually leads to retaining asset forfeiture attorney, David Smith, to help protect the Fraser Court sale in 1999. Williams & Connolly advises Franklin National Bank that the federal government could assert a claim ahead of the first lien creditor.


The Federal District Court issues an order (1) appointing Irving Pollack and Larry Storch as Co-Special Masters, (2) ordering OIG to pay fees and expenses of Special Master and all working under his authority who shall receive compensation at $100 per hour plus actual expenses, including cost of storing records, (3) ordering Hamilton to immediately deposit records with Special Master that are responsive to August 6 and 22, 1996 subpoena as modified October 24, 1997, which were not previously produced, (4) ordering representative(s) of Hamilton with personal knowledge of matter to submit to court a certification of compliance or, if not feasible, certifications satisfactory to the Special Master, (5) ordering Special Master to secure and preserve documents, (6) ordering Special Master to permit Hamilton access to records for purpose of winding up affairs and any other legitimate purpose, (6) ordering Hamilton not to sell, destroy, discard or otherwise dispose of any computer disc, hard drive or other electronic or computer data storage device that contains electronic records during period without prior approval of court and (7) ordering the Special Master to determine issues and make reports and recommendations as the court may direct and (8) ordering that only the parties, the court, the Special Masters, and agents shall have access to records furnished by Hamilton. Susan Gaffney, HUD IG v. Hamilton Securites Inc.,


Jim McDougal dies in a Texas jail after agreeing to cooperate with Ken Starr in exchange for a reduced sentence. Later reports indicate that McDougalís death may have prevented an indictment of Hillary Clinton.


Special Master Larry Storch of Storch & Brenner takes possession of Hamilton's offices.


Eight FBI agents, representatives of the Special Master and IG Office, take over Hamiltonís offices. Carolyn Betts is asked to leave. Elliot Cook stays to negotiate terms of digital document recovery. All computers are backed up by the FBI despite the existence of attorney-escrowed back ups. HUD demands that all computers must be scrubbed of all data before they can be sold and comes to the office to oversee scrubbing. When informed that Hamilton has taken the prime server with copies of all digital files, HUD takes the position that "Hamilton is not allowed to retain any knowledge" and that Hamilton cannot take these computers and Hamilton cannot have a copy of any of the knowledge, but does not follow with legal basis for this position. The HUD OIG attempts to falsify evidence by tampering with files in building; the building manager later provides affidavit to Hamilton attorneys that thwarts attempt.


Hamilton files suit against HUD in Court of Federal Claims in an effort to recover amounts withheld for services rendered under its HUD contract. Claude Goddard represents Hamilton in this action. [Hamilton Securities Advisory Services, Inc. v. The United States (98-CV-169), US District Court, United States Court of Federal Claims, Judge Marion Blank Horn] Separately, Michael McManus and Ken Ryan are retained by Lexington Insurance Company to represent Hamilton in connection with matters potentially covered by Hamiltonís errors and omissions insurance policy.


Representatives of the HUD OIG and FBI appear at Hamilton's offices to look at documents and copy information from computers, pursuant to Judge Sporkin's court order. Susan Gaffney, HUD IG v. Hamilton Securities Inc., et al (1:98-MS-0092)


Status hearing in the qui tam lawsuit before Judge Sporkin setting further status call for 7/10/98. Order by Judge Sporkin extending time to 7/10/98 for US to intervene or decline to do so. At the hearing, AUSA Anthony Alexis and Daniel Hawke make appearances. Barbara Van Gelder had left government service to take a position as partner at the Washington law firm of Wiley, Rein and Fielding. Alexis says the government needs at least another 120 days to determine whether it will adopt the case. He Alexis tells the judge that the government has had to move to enforce the Hamilton subpoena and because of that "we haven't seen any of those documents that allow us to conduct an evaluation."


Ervin & Associates faxes a letter to Andrew Cuomo stating that "with the elimination of Kathy Rock as FHA Comptroller, HUD has finally cleansed itself of all of the senior officials who were involved in the contracting and note sale corruption and favoritism that has infected your agency for too long." The "senior bad actors," that have been "purged" he says, include Dwight Robinson, Nelson Diaz, Nicolas Retsinas, Monica Sussman, Helen Dunlap, Stephanie Smith, Sarah Rosen, and Chris Greer. He complains that, unfortunately, the contracting officers who ignored their responsibilities by looking the other way are still active participants in HUDís retaliation against him and his company. He warns that "the extent of that coverup and retaliation by HUD will soon be made public."


At a 10:30 a.m. hearing before Judge Sporkin, the judge issued an order permitting Hamilton's auction to proceed that day, subject to the requirement that information will be copied from computers before they are sold. The auction is held.

Mid Mar-98

Rasmus (the auctioneer of Hamilton's furniture and equipment) was served a subpoena requiring detailed information about the identities of purchasers of Hamilton's assets and the assets purchased. The auctioneer subsequently "lost" all records of the sale and was unable to provide a full accounting to Hamilton. No final accounting of the proceeds of the auction was ever received by Hamilton, either from the auctioneer or Hamilton's first lien creditor, which received the proceeds.

Mid Mar-98

Catherine Austin Fitts' elderly uncle was served a subpoena for financial documents relating to her sale of her interest in a family farm in New Hampshire and looking for evidence that Fitts used it to entertain government officials. Fitts's uncle first received a telephone call from FBI agents in Washington stating that the OIG wanted documentation for Fitts' sale of her interest in the farm to him. He agreed to send the requested documents. Then, a few days later at about 6:30 pm, four agents from Boston appeared at his door in Portsmouth, N.H. to serve a subpoena for the information he had agreed to send to Washington.


Hamilton's General counsel faxed copies of 3/6 and 3/13 Sporkin orders and DOJ letter to David Frulla, Chris Lord (a Hill HUD committee staffer) and Mark Cohen (outside counsel for Lexington Insurance Company).


Kathleen Wiley appears on 60 Minutes.


Surprise Congressional hearings on Volume I of CIA Inspector Generalís Report on CIA- Contra Drug Trafficking are focused on the Dark Alliance allegations published by Gary Webb in the San Jose Mercury News (with extensive documentation provided for reading and download on the Mercury Newsís website) that the CIA was complicit in introducing crack cocaine into LA through its dealings with Iran-Contra related drug traffickers and use of known drug lords as "assets." The Memorandum of Understanding between DOJ and CIA entered into between 1982 and 1994 is disclosed that relieved the CIA of responsibility to report trafficking and money laundering by CIA proprietaries and agents to deal drugs. This Memorandum was developed in the same period that that additional legal changes permitted significant increases of intelligence agency outsourcing of sensitive national security functions to private government contractors.

Coincidentally or not, Hamiltonís offices had been seized and held for approximately one- two weeks prior to the hearing. Government-led efforts to back up computer tapes in Hamiltonís offices (in which Hamilton personnel are not permitted to participate) resulted in the destruction of many of Hamiltonís software tools and databases. This included removing from the World Wide Web, a money map of South-Central LA showing patterns of homeowner defaults/taxpayer losses in areas targeted by CIA drug dealing. This occurred after HUDís Office of General Counsel and Contracting Office insisted that Hamilton cleanse its systems of all HUD data, including publicly available data, and return it all to HUD. A HUD OIG investigator stated in mid-March that Hamilton had no right to keep a copy of the information on its own computers but refused to explain his reasons or legal basis for this statement. Included among the tools destroyed was Community Wizard, comprehensive GIS program for mapping of federal expenditures by census block. This program, combined with extensive Hamilton databases on real estate, investment, financing and resources by neighborhood could have produced detailed maps of the flow of federal funds, including HUD funds, into and out of LA during 1980s in South-Central LA and other areas that were the focus of the Dark Alliance allegations.


Meeting of attorneys assigned by Lexington at the offices of Jackson & Campbell (the team later moves to the larger Philadelphia firm of Drinker, Biddle & Reath). Hamilton's insurance company does a complete turnaround and provides a full team of attorneys to address Michigan, Louisiana, petition to enforce subpoena and court of claims legal actions and to help with all document production matters. The first concern is the complete control and mastery of all documents and protection from HUD. Hamilton spends all day with the new legal team, including local counsel retained to assist in Louisiana and Michigan cases, and insurance company counsel flown in from Boston. It appears that the originally selected law firm (which was willing to assume the case at $100 per hour) was replaced by new counsel.


Ervin & Associates submits six Freedom of Information Act requests seeking large amounts of information regarding the HUD loan sales.


Solari, Inc., a successor to Hamilton Securities, starts full time operation at Fraser Court


GAO decision in the matter of Ervin & Associates where Ervin protests that the agency failed to mail a copy of a solicitation despite its request to be placed on the source list. GAO denies the protest, finding that HUDís procedures should have resulted in Ervin receiving a copy of the RFP and that Ervin failed to avail itself of every reasonable opportunity to obtain the solicitation. John Ervin represented Ervin and Richard Marchese of HUD OGC represented HUD.


GAO decision sustaining Ervin & Associates protest of the award of an accounting services task order to Gardiner, Kamya & Associates. The RFP was issued 2/17/95. GAO finds that the task order is beyond the scope of the contract and that HUD should have conducted a competition for the acquisition.


At PC Forum, Fitts sits next to Goldman Sachsís chief of staff and finds out that Goldman is addressing "unexpected events," and may have to cancel its IPO for unexplained reasons. Shortly thereafter, Goldman announces that is planned initial public offering is postponed.


First Report of Co-Special Masters Irving Pollack and Laurence Storch concluding, among other things, that computers at Hamiltonís office could be released. Susan Gaffney, HUD IG v. Hamilton Securities Inc., et al (1:98-MS-0092)


Ervin & Associates submits six Freedom of Information Act requests seeking of information regarding the initiative to privatize the single family real estate owned disposition process, Kerry Company and its involvement in the "Beekman" project, task orders awarded for services related to Portfolio Reengineering or Mark to Market initiatives, the final report issued by the National Academy of Public Administration due on March 1, 1998 and contracts for the production of the report.


Judge Sporkin issues an order in the Gaffney Petition to Enforce case directing that all documents filed under seal remain under seal with the exception of the Courtís March 6 order. In the same case, Gaffney files a motion for TRO and preliminary injunction and a petition for summary enforcement of administrative subpoenas, a declaration and 37 exhibits.


Ervin & Associates submits a Freedom of Information Act request seeking information regarding Harvard University John F. Kennedy School of Government contracts to train participants in the "Community Builders Fellowship" program and involvement of former Assistant Secretary and FHA Commissioner Nicolas Retsinas in the training program.


Goldman Sachs announces its planned initial public offering is postponed.


Date of the closing/as of pricing date for the Franklin/BBT merger. (Hamiltonís Bank)


Newt Gingrich sabotages campaign reform in the House.


HUD Inspector General Susan Gaffney testifies before the House Subcommittee on Housing and Community Opportunity (chaired by Congressman Rick Lazio) on Single Family Housing and the Federal Housing Administration. She explains that the Management 2020 plan assumes that management of the huge single family portfolio will be assumed by contractors, and that HUD does not have the resources to oversee such contracts. She states, "A basic assumption of the plan is that the private sector can purchase HUDís pipeline of foreclosures and dispose of properties quicker and cheaper. We are concerned that if privatization plans donít work as intended, HUDís options are limited." She states that HUD is seeking bids on management of the REO (real estate owned) portfolio and hopes to sell 50,000 properties annually to bidders and to share the savings with HUD. She notes that historically, HUD has expended about 17% of market value in disposing of such properties, while private market disposition costs range between 12% and 18% of market value. "We hope this solicitation is successful, as there wonít be HUD staff available to return to the old way of doing business."


Paula Jones suit thrown out.


Lee Radek, Chief of the Public Integrity Section, Criminal Division sends a letter to Thomas J. Picard, Chairman, Integrity Committee, Presidentís Council on Integrity and Efficiency c/o FBI stating his reasons why Susan Gaffneyís conduct of the Hamilton investigation does not warrant a criminal investigation, as requested by a Hamiltonís filing with PCIE. Hamilton FOIAs the letter in the FBI files in 2000. All the reasons given for Radekís position are redacted.


Hamilton files a response in opposition to Gaffneyís petition for summary judgment and for summary enforcement of administrative subpoenas.


Gaffney files a motion (consent) to extend time to April 27 to file a reply memorandum in the PTE case. Judge Sporkin grants special master report and Special Masterís request for reimbursement of $33,660 for 336 hours of work and approves $2,000 in special master expenses


Susan Gaffney testifies before the House Subcommittee on Government Management, Information and Technology (chaired by Congressman Horn) regarding the Inspector General Act of 1978. She mentions that the HUD OIG has committed 50% of investigative resources to violent crime (drugs) and mentions her wish for statutory law enforcement powers (she currently has it under two year rolling blanket deputation from the US Marshals) and has requested statutory authority for asset forfeiture.


Hamilton files an exception to the recommendation of the Special Masters in the PTE case filed by Susan Gaffney.


The Hamilton "building manager" affidavit is signed. This affidavit was provided by a property manager to document an incident he witnessed during the period that office was seized and personnel from Hamilton not allowed in building to observe. According to the affidavit, HUD IG Counsel Hethertonís investigators had taken trash and emptied it into empty bins, and then Ms. Hetherton took pictures of the now full bin. Following the incident, Hetherton sent a letter to Hamiltonís attorneys alleging that Hamilton was throwing out financial records subject to subpoena.


Ervin & Associates files Plaintiffís First Request for Admissions (252 items).


Ervin issues subpoena to Hamilton for documents.


Hillary Clinton testifies on Whitewater; Webb Hubbell is indicted.


Second Special Masterís Report is filed with the Court in the PTE case.


GAO decision in the matter of Ervin & Associates stating that GAO will not consider the allegation that HUDís use of Section 8(a) program to meet its needs for various types of services is unconstitutional. The solicitations at issue were issued on November 21, 1997 for due diligence services for HUDís Housing Programs and comprehensive services for the Assistant Secretary for Housing/FHA Commissioner. John Ervin represents Ervin and Shari Weaver and Michael Farley of HUD OGC represent HUD. GAO denies the protests.


Gaffney files a reply to Hamiltonís opposition to the petition for summary enforcement of administrative subpoenas in the PTE case. She also files a response to Hamiltonís exception to the Special Masterís recommendation.


GAO decision in the matter of the Ervin & Associates protest of the award of task orders for (1) operations analysis of HUDís Office of Housing and (2) management studies and budget formulation for HUDís portfolio reengineering program on the basis that the task orders are beyond the scope of the management studies contracts. The original solicitation was issued July 12, 1995. Ervin was found to be technically unqualified for the contract. The seven firms awarded the contract were Booz, Allen & Hamilton, Ernst & Young, Abacus Technology, Anderson Consulting, Maria Elena Torano Associates, Soza & Company and Price Waterhouse. GAO denies the protests.


Judge Sporkin issues an order directing that Hamilton designate each particular document for which a claim of A/C privilege is made; for electronic records they may designate for future review by the Special Masters; specific tapes or disks that concern A/C communications; directing that government personnel shall not disclose Hamiltonís proprietary information to non-government personnel in the PTE case.


The Clinton Administration issues a report re Nazi wealth preservation by the Swiss.


Janet Reno asks for an Independent Counsel to investigate the Secretary of Labor, Alexis Herman.


CIA Inspector General, Frederick P. Hitz resigns from the CIA and joins Princeton University in a chair endowed by Goldman Sachs & Co: the John L. Weinberg/Goldman Sachs and Company Visiting Professor; Director of the Project on International Intelligence.


Thomas J. Pickard, Chairman of the Presidentís Council on Integrity and Efficiency, advises Hamilton that (1) it has completed its review of Hamiltonís PCIE complaint (2) it referred the complaint to the public integrity section of the DOJ for a determination whether the allegations, if proven, would constitute violations of federal criminal law that would be considered prosecutable, (3) the DOJ advised that the complaint did not provide sufficient information to warrant a criminal investigation and (4) the PCIE would take no further action concerning the matter and, thus, the file is in a closed status.


Susan McDougal is indicted again.



David Jay Gottesman files a notice of attorney appearance for the USA in the Hamilton Court of Claims case against HUD and files a motion to extend time to respond to the complaint to June 12, 1998. An order to this effect is granted the next day.


Judge Sporkin dismisses the Temporary Restraining Order case in the matter of Hamilton Securities Group, Inc et al v. US Department of HUD, et al. (1:98-CV-0036). (See 3/3/98 Entry)


Hamilton files exceptions to the Second Special Master Report with the court in the PTE action.


Gifts to the DNC are tied to the Chinese government, according to a NY Times article about Johnny Chung; articles on waiver for Schwartz of Loral and Chinese contributions for the rest of May.


Initial Certification of Compliance by Catherine Austin Fitts filed pursuant to March 6, 1998 order in Case 98-92 (filed under seal).


Hamilton files a response to Judge Sporkinís order that gives details about the Special Masterís duties an compensation and providing that only the parties, the Court and the Special Master and their agents shall have access to the records held by the Special Master.


Dark Alliance, by Gary Webb, is published by St. Martinís Press.


HUD Inspector Susan Gaffney testifies before the Senate Subcommittee on Housing Opportunity and Community Development (Chaired by Senator Mack) concerning the FHA Financial Statement Audit Report on Internal Controls and HUD 2020 Management Reforms. She testifies about FHA oversight and "recent plans to revise various FHA operational methods." She reports that the biggest change in staffing has been the reduction in single family staffing from a level of 2,700 in 1994 to a projected level of 759 by the end of 1999. She says the downsizing reflects single family note sales and assumes the use of rapidly developing technology and increasing reliance on private sector contracting to take over functions previously performed by HUD staff. She reports that all single family loss mitigation activities will be consolidated in the Oklahoma City office. She states that pending the operation of the Real Estate Assessment Center, HUDís Office of Housing has no mechanism to review financial statements or conduct inspections. She says that a recent audit of the Section 203K program found that 1/3 of the borrower data on the CHUMS system to be incorrect. She reported that a huge effort was under way at HUD to "scrub data." Hamilton played an integral role in the "scrubbing" of data for the Office of Housing.


Judge Sporkin orders the payment of $10,000 fees and expenses to the Special Master in the PTE case.


HUD Inspector General Susan Gaffney testifies before the House Subcommittee on Human Resources, Committee on Government Reform and Oversight (chaired by Congressman Shays) on HUD Contracting: Vulnerabilities Management and Proposed Solutions and the September 30, 1997 report titled "HUD Contracting." Among other things, the IG testifies that "In the information technology area, HUDís reliance on contractors is virtually total" Ö and "information technology contracts represent the highest dollar amount of contracting in HUD." She says she estimates that HUD contracting in the areas of single family property disposition, physical inspections of multifamily and public housing and Section 8 contract administration could easily exceed $1 billion per year.


Housing Affairs Letter reports that Secretary Cuomo and the OIG agree that HUD is taking major steps to prevent irregularities, possible bid-rigging and other abuses in procurement and contracting. Gaffney and new HUD procurement officer Stephen Carberry, in testimony before House Government Reform and Oversight Committee, outline efforts by the Department to eliminate deficiencies that led to ongoing DOJ criminal investigation of questionable procurement and contracting practices. In another article in the same issue, Gaffney is quoted as saying she wouldnít buy FHA stock if the agency were publicly traded on Wall Street. Congressman Mack then questions why KPMG gave FHA an unqualified opinion on its financial statements in 1997. A KPMG spokesman comments that the 1998 financial statements may not get a clean opinion unless FHA complies with the Federal Credit Reform Act of 1990.


Pursuant to a congressional request, GAO discussed the Department of the Treasury's implementation of the administrative offset provision of the Debt Collection Improvement Act (DCIA) of 1996, focusing on: (1) the status of referrals by agencies of delinquent nontax debts to Treasury for administrative offset; (2) actions Treasury has taken and plans to take to include all eligible federal payments in the administrative offset program; and (3) actions Treasury has taken, or plans to take, to consolidate the administrative, tax refund, and federal salary offset programs.


Judge Sporkin orders the Special Masters to execute a lease for storage space and that the government shall pay rent therefore in the PTE case.


The Government files a Motion to Dismiss for lack of subject matter jurisdiction in the Court of Claims case filed by Hamilton.


Deposition of Dolores Ammons-Barnett (four Volumes, 1069 pages).


The HUD IG testifies before the Senate Subcommittee on Housing Opportunity and Community Development, chaired by Connie Mack, regarding the FHA Financial Statement Audit Report on Internal Controls and HUD 2020 Management Reforms. KPMG Peat Marwick had performed the audit of FHA for the 1997 FY. She reports that as the result of previous audits by her office, a new Chief Procurement Officer had been hired and major contracting reforms were anticipated. She also reported that the National Academy of Public Administration had recently begun a detailed review of the HUD procurement system. HUD had only recently hired a Chief Information Officer in accordance with the requirements of 1996 legislation, and his authority and responsibility and placement within the organization had not yet been articulated.


Judge Sporkin orders that $9,800 in expenses be paid to the Special Master in the PTE case. Two days later the judge issues an order responding to the Co-Special Masters.


Susan McDougal is freed from prison.


Hamilton files a response to the motion to dismiss the Court of Claims case.


Hamiltonís filing in the Court of Claims seeking amounts owed by HUD. Claude Goddard represents Hamilton.


The Webster Hubbell tax indictment is thrown out.


There is so much harassment activity around Fraser court that Fitts becomes seriously concerned that an attempt will be made to seize the remaining Hamilton server by means of an illegal break-in or federal asset forfeiture set up. The server is moved to Hamiltonís law firm for safekeeping.


Joe Head, President of Hamilton's bank, Franklin National Bank, told Hamilton's accountants, Arthur Anderson, incorrectly, that Hamilton owed the bank more than the amount of the Federal income tax refund as reflected in the return that Arthur Andersen was preparing. In response to these assurances, Arthur Andersen agreed to cause AA to receive the refund directly and turn over the entire refund to the bank. In connection with the auctioneer's and bankís refusal to give Hamilton final accountings and the bank's admission that it had given confidential information on Hamilton to Tucker, Flyer & Lewis, a large client of the bank, questions continue about the relationship between the bank, its merger with BBT and possible efforts to undertake a seizure of Goldman's assets.


Hamiltonís bank exhibits strange behavior, provides inside information to hostile attorneys harmful to the bankís and Hamilton interests, lies to auditors about what is owed, refuses to provide a loan accounting statement to Hamilton and tries to grab tax refund money not owed to it. The bank then hires two experienced workout partners from Arnold & Porter. The bank officer later informs Fitts that he had told the bank chairman that this would not scare Fitts as "Arnold & Porter partners would not scare her----people show up at her house with guns and stuff." In late October, a loan workout proceeds after the bankís chairman investigates unexplained actions by the bank President. The bank continues to this day to refuse to provide Hamilton with an accounting.


Federal Defendantís Answers to Plaintiffsí First Set of Interrogatories is filed in the Bivens action. In this set of interrogatories, HUD admits that a series of attorneys in the Office of General Counsel, as well as two outside attorneys (Dick Dunnells and an attorney from Hunton & Williams) were notified of the existence of the optimization error and consulted regarding it by Kathy Rock during January Ė March, 1997. Undated, but apparently filed at about the same time, is Federal Defendantsí Answers to Plaintiffsí First Set of Requests for Admissions, which is filed by Ruth Harvey and Raymond Larizza under the signature name of Frank W. Hunger, Assistant Attorney General.



The HUD OIG issued a subpoena duces tecum to Citibank NA for access to Catherine Austin Fitts' personal financial records.


Status hearing in the qui tam lawsuit setting a further status call for 11/16/98. The transcripts for the hearing indicate that AUSA Anthony Alexis, Daniel Hawke, Bernard Olieniacz and Judith Hetherton attended the hearing. Tony Alexis tells Judge Sporkin, "Ms Heatherton from HUD is, along with Dan van Horn, and it's like pulling teeth, even with the special masters, in helping to try to get all the documents, and my understanding is they don't even have the documents to even begin the review. So HUD hasn't even begun the review of the documents." Hetherton points out that they do have some documents, and then they tell the judge that what they donít have is the electronic documents. In fact, Hamilton turned over all electronic documents it believed were responsive to the original subpoena in 1996. Alexis also reveals that Goldman Sachs is about to go public. He says, "We are at a critical phase in terms of actually interviewing people. I donít want to have the governmentís infomatter [sic] on this matter at this particular time, because one of the defendants, Goldman Sachs, is about to go public. You know, the last thing we want to do is have some kind of negative impact on the stock."


The government files a response to Hamiltonís opposition to Motion to Dismiss in the Court of Claims case.


Judge Sporkin issues an order for the payment of $16,600 in expenses to the Special Master in the PTE case.


Clinton nominates John D. Hawke, Jr., currently Under Secretary for Domestic Finance, as Comptroller of the Currency. Hawke is a former Senior Partner at Arnold & Porter, where he headed the financial institutions practice and served as Chairman of the firm from 1987 to 1995. He served as General Counsel of the Federal Reserve from 1975-78.


Wrangling takes place on the Monica Lewinsky case; secret service agents are called to testify; claims of attorney-client privilege are challenged.


International Monetary Fund announces it will provide $12.5 billion in loans to Russia; during July and August, an average of $3.7 billion per day is deposited from Russia into Bank of New York correspondent banks.


The HUD OIG issued a subpoena duces tecum to Morgan Guaranty for access to Catherine Fitts' personal financial records. Fitts did not receive notice from the government about the subpoena until September of 1998.


Fitts files a motion for order pursuant to customer challenge provisions of the Right to Financial Privacy Act of 1978 in response to the HUD OIG subpoena of her personal Citibank NA financial records. [C. Austin Fitts v. US Department of HUD (1:98-MS-00262), US District Court, District of Columbia, Judge Stanley Sporkin]


Deposition of Bill Richbourg by Ervinís counsel in Ervin v Dunlap et al Ė four volumes (945 pages of transcript) + 85 exhibits.

When the Qui Tam is unsealed in May 2000, Hamilton learns that Ervin alleges that Richbourg is the basis for allegations re insider trading. In his deposition for the Bivens case in July 1998, Richbourg says he knows of no wrongdoing on the loan sale. Memos provided by Ervin in 2000 regarding his basis for claiming that Cargill and First Financial of Waco/J-Hawk were the basis of bid rigging allegations combined with affidavit provided by Cargill to Hamilton combined with Richbourgís deposition, indicate that DOJ had ample reasons to know in 1996 that Ervinís allegations were unfounded.


Goldman Sachs partners vote approval for the Goldman IPO; AIG agreed to buy Sunamerica.


House Government Reform and Oversight Committee recommended that Attorney General Reno be held in contempt of court in connection with fundraising hearings.


Swiss banks agree to compensate Holocaust victims with $1.25 billion.


Clinton testifies, admitting to "inappropriate behavior."


Judge Sporkin orders $10,800 in expenses be paid to the Special Master in the PTE case.


A preliminary inquiry into Goreís role in fundraising is begun by DOJ.


Long Term Capital Management suffers significant trading losses trigged in part by Russian economic situation; with Goldman in the lead of a rescue package, the company struggles to deal with a complete write down of equity reported to be in the amount of $4.7 billion.


Catherine Austin Fitts contacts UniCor, the DOJ proprietary company that markets prison labor to federal agencies. Fitts speaks to the head of the data servicing division, which is implementing a plan almost exactly like Edgewood Technology Services, including training in the area of Geographic Information Systems products. He says his business is growing like gangbusters. The parallels between the UniCor business plan and Edgewood Technologies are so strong that Fitts wonders if Ford and Nordheimer have given the data servicing business plan to DOJ after Fitts declined to promote the plan to DOJ with them. They had taken the position that the federal government would not want data servicing businesses in residential neighborhoods, just in prisons. The DOJ website also indicates that that DOJ is marketing place based software to local police.


Goldman Sachs said it would shelve its plan to go public.


The IRS sends its refund check directly to Hamilton. As a result of a number of factors---including the bankís refusal to provide an accounting; its misrepresentations to Hamiltonís accounting firm about what is owed regarding IRS funds that the accounting firm intended to turn over to the bank; and its disclosure of inside information to Tucker, Flyer (Ervinís counsel)--- Hamilton does not pay the bank.


Democratic fundraiser, Mark Jimenez, a Miami businessman, was indicted on 17 counts of illegal contributions to the 1996 Clinton-Gore campaign and other races.


Hamiltonís attorneys inform the Court in the PTE case that they have changed their address to Drinker, Biddle & Reath.


Ervin & Associates amends the Qui Tam filing to add allegations developed since the case was filed in June 1996. Transcripts unsealed in 2001 from the qui tam hearings reveal that DOJ developed the filing with information produced in government investigations after the original filing, whichóalong with the Bivens case---DOJ indicates was they also developed in partnership with Ervin and his attorneys.


Reno begins a 90-day preliminary investigation into Clinton fundraising related to soft money contributions.


Reno announces that she has decided against seeking an independent counsel following a previously undisclosed preliminary investigation of Housing and Urban Development Secretary Andrew M. Cuomo. Cuomo's former business partners in a Florida thrift institution had accused him of conspiring to influence federal regulators in an effort to drive them out of business, allegations that Reno rejected. In court documents, Reno said she had "determined that there were no reasonable grounds to believe that further investigation was warranted and that, therefore, no independent counsel need be appointed."

Not only did Reno exonerate Cuomo, she decided that the Justice Department would represent him and two other federal officials, including Nic Retsinas, in a lawsuit filed the previous month by the owners of Oceanmark Bank. They claim that Cuomo and his fellow investors conspired to seize control of the troubled $60 million thrift, and that Cuomo enlisted two allies at the Treasury Department's Office of Thrift Supervision to help them. (One of these officials was Nic Retsinas, the FHA Commissioner at HUD who also served as Acting Head of OTS).


Third report of the Co-special Masters is filed in the PTE case.


Starr presents his case for the impeachment of Clinton.


Primary season nears an end; Anthony Williams wins the DC Democratic mayoral primary.


Judge Sporkin orders the payment of $7,800 in expenses to the Special Master in the PTE case.


Fitts files a motion for a protective order pursuant to customer challenge provisions of the Right to Financial Privacy Act of 1978 in response to the HUD OIG subpoena of her personal Morgan Guaranty financial records. [C. Austin Fitts v. US Department of HUD (1:98-MS-00347), US District Court, District of Columbia, Judge Stanley Sporkin]


Hamilton files a motion for leave to conduct discovery and a motion to unseal the record in the PTE case


The HUD OIG files its status report in Susan Gaffney, HUD IG v. Hamilton Securities Inc., et al (1:98-MS-0092)


A motion hearing is held with Judge Stanley Sporkin in C. Austin Fitts v. US Department of HUD, (Misc. No. 98-262) to determine if the government has the right to access Fitts' personal Citibank bank records. Nothing substantive is accomplished during the hearing because Judge Sporkin denies receiving necessary filings needed to rule from the Defendants {the government} even though his [Sporkinís] law clerk acknowledge that the filings were received and Hamiltons attorneys have a receipt for delivery.


Susan Gaffney files a response to Hamiltonís motion to unseal, a status report and a response in opposition to motion for leave to conduct discovery (with 7 exhibits) in the PTE case.


Filing of Joint Statement of Petitioner and Respondent Concerning Pending Issues Awaiting Resolution by the Court. (Misc. No. 98-92., the PTE case)


Hamilton is told that Jim Martin, lead HUD IG auditor assigned to the investigation has moved over to join the HUD enforcement center.


Beginning of federal fiscal 1999 year. HUD is not able to produce certified financial statements for this year, making $59 billion of adjustments in the effort to do so.


Joe Head of Franklin National Bank returns Hamiltonís calls and is referred to Hamiltonís outside counsel.


Federal Fiscal Year 1999 begins; in March 22, 2000 testimony, the HUD OIG refuses to certify the HUD financials saying that $17 billion of adjustments were required for the opening balance from FY 1998 and $59 billion of adjustments were required for FY 1999.


HUD files a notice of filing in camera material in 98-MS-347 (one of the Right to Privacy cases brought by Catherine Fitts). Fitts and HUD file a joint statement concerning pending issues awaiting resolution by the court.


Joint Statement is filed by Gaffney and Hamilton and Fitts concerning pending issues awaiting resolution by the Court in the PTE case.


Fitts files a response (oppositions) to in camera material in the right to Privacy case 98-MS-347.


One hour after Henry Hydeís Committee votes to move forward with impeachment hearings, CIA IG Fred Hitz's report is quietly released/posted on the CIA website confirming long-standing allegations of cocaine trafficking by Nicaraguan Contra forces. Reagan-Bush Adminstration's protection of these drug operations and tracking drug trafficking and the money laundering directly to Reagan's National Security Council, overseen by Oliver North.


Hamilton files Respondentsí Reply to Petitionerís Opposition to Motion for Leave to Conduct Discovery in C. Austin Fitts v. US Department of HUD (Misc. No. 98-262) in the US District Court for the District of Columbia.


Judge Sporkin grants motion to unseal the record and issues an order establishing a filing schedule for various motion responses and replies in the PTE case. Hamilton files a reply to Gaffneyís response to motion for leave to conduct discovery.


Judge Sporkin orders partial record unsealed in Gaffney v THSG and HSAS, Misc. No. 98-92. (the PTE Case)


Hamilton files Hamilton Securitiesí Response Concerning the Protection of Proprietary Information in Misc. No. 98-92 (the PTE Case) , in the US District Court for DC., Filed under seal.


GAO decision in the matter of Ervin & Associates where Ervin alleged that the agency (HUD) improperly evaluated Ervinís proposal for due diligence services in connection with a November, 1997 RFP to facilitate the sale or restructuring of HUD-held or insured single family and multifamily and Title I home improvement and manufactured housing loans. GAO found that the proposal was properly excluded from the competitive range as not having a reasonable chance of being selected for award in view of the agencyís receipt of significantly higher-rated, lower-cost proposals. Ervinís total proposed cost for sample task orders was 40-62% higher than the total estimated costs proposed by several firms whose proposals were rated technically superior. Specifically, the Technical Evaluation Panel found that Ervin did not have demonstrated experience in performing due diligence on transactions with various listed criteria, including representation of both buyers and sellers, including private and public entities; real estate or real estate based assets similar to those being offered; transactions substantially equivalent in structure to those contemplated under the contract (i.e., whole loan sales, securitized transactions, "N-series" debt-equity transactions, single asset auctions, negotiated transactions); transactions substantially equivalent in assets to those contemplated under the contract (i.e., transactions with multiple, complex, nonperforming, subperforming, and/or performing residential, single and multifamily and commercial assets); and varying levels of rent subsidies and/or with substantial low and moderate income residents. Ervin represented himself, and Virginia Kelly Stephens of HUD OGC represented HUD. Stephens also represents HUD in connection with Hamiltonís lawsuit against HUD in the Court of Claims.


Hamilton files Hamilton Securitiesí Supplemental Opposition to the Petition for Summary Enforcement, Responding to Issues Raised in OIG 9/24 Status Report and Reiterating its Request for Leave to Conduct Discovery.


Clinton and Congress agree on a federal budget.


Hamilton files its HUD contract wind-up claim.


HUD files Federal Defendantsí Answers to Plaintiffsí First Set of Requests for Admissions in Bivens case.


Gaffney files a Motion (consent) to extend time to file her reply concerning the protection of proprietary information in the PTE case. Another motion to extend time is filed on October 20.


Ervin files Plaintiffsí Second Request for Admissions (412 items, 23 exhibits) in Ervin v. Dunlap et al case.


Tucker, Flyer & Lewis, Ervin & Associatesí counsel, responds to DBRís request to specify documents believed to be responsive to Ervinís April 22, 1998 subpoena to Hamilton, but not previously produced to Jenner & Block.


Hamilton files Hamilton Securitiesí Supplemental Opposition To The Petition for Summary Enforcement addressing issues regarding (1) electronic records and financial records, (2) OIG has no basis for insisting on additional electronic records because it has not reviewed the records already available to it, and (3) Hamiltonís privilege claims. Misc No. 98-0092


HUD files a reply to Fittsí opposition to the filing in camera in the Right to Privacy case.


Gaffney files a reply to petition concerning the protection of proprietary information in the PTE action.


Gaffney files a motion to extend time to November 4 to reply to remaining aspects of Hamiltonís September 25 status report in the PTE case. Judge Sporkin grants the order on October 30.


Gaffney files a motion to extend time to October 12 to reply to the remaining aspects of the PTE status report. Judge Sporkin grants the motion on November 12.


Congressional elections take place; the weekend before the elections, HUDís Operation Safe Home does two high media exposure drug sweep swats in Boston and San Francisco. Many innocent people complain.


Schumer defeats DíAmato in New York; Anthony Williams is elected Mayor of DC.


Declarations of Richard Holmes and Jack Rogers filed in Support of Inspector Generalís Petition for Summary Enforcement of Subpoenas, Defending OIGís Actions Described in Raul Luddertís Affidavit. Misc 98-92 (filed under seal). Gaffney files a reply to the petition for summary enforcement of administrative subpoenas.


Hamilton Counsel attends a meeting at Department of Justice.


Connie Mack, Chairman of the Subcommittee on Housing Opportunity and Community Development, sends HUD a letter consisting of over 16 pages and requesting information regarding HUD note sales bid analyses.


Judge Sporkin orders the payment of $1,280 in expenses to the Special Master in the PTE case.


Status hearing in the qui tam case before Judge Sporkin. Tony Alexis, Dan Hawke and Wayne Travell are in attendance. Dan Hawke, counsel for Ervin, makes a number of misrepresentations to the court, with no correction by anyone else present. Among the misrepresentations are:

  1. Hawke represents that HUD had no knowledge that BlackRock was a subcontractor to Hamilton. He says "HUD knew that they [BlackRock] were buying. What HUD didnít know was is that Blackrock was acting as a subcontractor to Hamilton. And they were working out of Hamiltonís offices while the auctions were being planned that Blackrock --." The fact is that over a period of many months, HUD attended regularly held meetings also attended by BlackRock and that both HUD and its outside counsel, Dewey Ballantine, knew that BlackRock was a subcontractor and in fact HUD consented to it. BlackRock advised HUD on a multifamily transaction that it did not bid on. It bid only on single family transactions. It maintained offices separate from Hamilton in Washington.

(2) Hawke represents, "In that [WOM] auction, the winner was Goldman Sachs walked away [sic] with $164 million in mortgages that they should not have won. Hamilton knew it, and C. Austin Fitz [sic}, the president, submitted an affidavit to you in which she said she didnít know or that Hamilton Securities did not know of the error until a year after, in fact, they really did." The fact is that the only two people Hamilton later could determine knew about the error did not disclose it to anyone else on the board of directors or to Fitts. Also, Hawke failed to tell the judge that the second optimization error resulted in Goldman Sachs LOSING a great deal more than $164 million in mortgages.

  1. Hawke indicates that they have reason to believe there are emails between Blackrock and Hamilton implicating them in a conspiracy and that these are the very documents that DOJ has been unable to obtain from the Special Master. Hawk continues, "Blackrock didnít have a contract with HUD. Itís only relationship with HUD was as a bidder in the auctions. So the reason why the electronic files that the special master is reviewing and all the documents that the special master is looking at, we believe there is a treasure trove of Ö [conspiratorial] communications."

An indication of what "they are after" in the investigation is hinted at in Hawkeís response to Sporkinís question "Has someone gone back to them, Goldman, to get the money [i.e., the $164 million from the WOM sale they got in error] back?" Hawke says, "Well, thatís what the qui tem [sic] action is for is to basically, -- is to Ė we believe that there were false claims presented in the bid documents, and we believe that this was Ė the reason why no one has gone back is because that was part of the scheme, that the people who were involved with Hamilton and on behalf of HUD were involved with covering that up."


Status hearing in the PTE case is scheduled for this date (this appears to have been postponed to December 3, even thought the record does not show a postponement).


Hamilton files a supplemental memorandum in opposition to the petition for summary enforcement of administrative subpoenas.


Status hearing before Judge Sporkin in the PTE case.


In the matter of case Misc. No. 98-262, C. Austin Fitts v. The United States Department of HUD, Judge Sporkin's Order (1) denies Movant's opposition to Respondent's filing of pleadings in camera; (2) denies the Movant's request that Fitts be furnished with a copy of the Respondent's in camera filings; and (3) denies Fittsí Motion for Order pursuant to customer challenge provisions of the Right to Financial Privacy Act of 1978.


In the matter of case Misc. No. 98-347, C. Austin Fitts v. The United States Department of HUD, Judge Sporkin's Order (1) denies Movant's opposition to Respondent's filing of pleadings in camera; (2) denies the Movant's request that Fitts be furnished with a copy of the Respondent's in camera filings; and (3) denies Fitts Motion for Order pursuant to customer challenge provisions of the Right to Financial Privacy Act of 1978.


Hamilton files a motion to quash subpoena or for a protective order in the PTE case.


GAO decision in the matter of Ervin & Associates where Ervin protests the exclusion of its proposal from the competitive range under an RFP issued by HUD for property inspection services in connection with HUD-held mortgages, properties for which HUD acts as the Section 8 contract administrator and properties owned by public housing agencies. GAO denies the protest. Ervin represented himself. Bruce Kasson of HUD OGC represented HUD.


Judge Sporkin issues an order that the parties will split expenses of having the special masters review assertions of privilege and non-responsiveness and that the government shall pay for other work performed by the special master; the 4/29/98 order is vacated.


Stearns Building Limited Partnership v. The Hamilton Securities Group, Inc. (1:97-04955), US Bankruptcy Court of Michigan was settled by Goldman Sachs and the suit was dropped. Judge Graves dismissed the complaint filed by Stearns against Hamilton with prejudice, but without costs.


Gaffney files a motion to strike Hamiltonís motion to quash subpoena in the PTE case.


From The Wilderness breaks the story of the October 8, 1998 CIA Inspector General impeachment ploy.


American Spectator runs an article on Andrew Cuomoís past involvement with financial fraud, including the role of Arco, now HUDís largest multifamily servicer.


District Court Judge Sporkin's Order in the matter of Gaffney v. Hamilton 1:98-MS-0092, (1) grants Gaffney's motion to strike, (2) grants Gaffney's motion for protective order, (3) and strikes Hamilton's motion to quash subpoena or in the alternative motion for protective order.


Hamilton files a response to Gaffney's motion to strike the motion to quash subpoena and motion for protective order in the PTE case.


Judge Sporkin orders the payment of $5,800 in expenses to the special master in the PTE case.


Ervin & Associates submits a Freedom of Information Act request seeking information regarding Ernst & Young contracts through GSA for work under the HUD Mark to Market program.


A hearing is held in the qui tam action before Judge Sporkin. Anthony Alexis, Judith Hetherton, Daniel Hawke and Wayne Travell are in attendance. Alexis requests a continuation of the seal for 90 days. Hawke agrees but says he wants a conference in 60 days. The next hearing is scheduled for March 29.


Federal Register publication of 24 CFR Part 291 Disposition of HUD-Acquired Single Family Property; Final Rule; SUMMARY: On May 29, 1998, HUD published for public comment a proposed rule that would amend HUD's regulations for the disposition of HUD- acquired single family properties.


Hamilton appeals District Court Judge Sporkin's January 5, 1999 order striking Hamilton's motion to quash subpoena or in the alternative motion for protective order. [Susan Gaffney, HUD IG v. The Hamilton Securities Group, D.C. District Court of Appeals, 99-5046.] On March 22, R. Craig Lawrence, Daniel Van Horn and Wilma Lewis enter an appearance with the court in this matter.


U.S. District Court Judge Warren Urbom finds former Franklin S&L manager Lawrence E. King guilty of numerous crimes committed against Paul A. Bonacci. Bonacciís story has been described by John Decamp in his book "The Franklin Cover U", including an appendix regarding William Colbyís advice to DeCamp regarding DeCampís efforts to investigate the use of pedophilia rings during Iran Contra to manipulate and blackmail high level business and government leaders.


GAO affirms that HUD remains on the "High Risk" agency list. HUD gets its "first ever" clean audit opinion.


AEW is selected as Financial Advisor for the Permanent Mark-to-Market
Program of the Office of Multifamily Housing Assistance Restructuring (OMHAR). The Mark-to-Market program was created under Congressional mandate to ensure the preservation of affordable housing; reform the operation and improve the efficiency of federal rental housing assistance programs; address the problems of financially and physically troubled properties; and encourage owners to restructure loans while limiting the cost to the government of the pertinent housing and mortgage insurance programs. Over the course of the next several years, OMHAR is expected to oversee activities related to the restructuring of as many as 4,000 loans with principal balances of about $6.0 billion. AEW is also one of the largest shareholders in AIMCO, the largest HUD landlord who will be the beneficiary of the policies developed. As of the end of the year 2000, AEW owned 2.5 million shares of AIMCO valued at $124.3 million.


The HUD Office of Inspector General issues the first unqualified opinion regarding the financial statements for the 1998 federal fiscal year. The audit was performed by KPMG LLP.


Rosemary Lyons and Olivia Woods file a Complaint for Damages, Injunctive Relief, and Declaratory Relief against the Central Intelligence Agency, United States Department of Justice, Estate of William Casey, Robert Gates, John Deutch, George Tenet, Estate of William French Smith (former US Attorney General), Edwin Meese, Richard Thornburgh, and Janet Reno for selling or facilitating the sale of drugs in several Los Angeles communities.


HUD Inspector General Susan Gaffney testifies before the Senate Subcommittee on Housing and Transportation (chaired by Senator Allard) on Management and Performance Issues Facing HUD and Nancy Cooper, District Inspector General for the Southeast/Caribbean District testifies before the House Government Reform Committee (chaired by Congressman Burton) on Preliminary Results of the Audit of HUDís Property Management and Disposition Activities.


Judge Sporkin orders the payment of $13,000 expenses to the special master in the PTE case.


The General Accounting Office reported to Attorney General Janet Reno that the Department of Justice's Asset Forfeiture program has been designated a high-risk area by the Comptroller General because it has been characterized by mismanagement and internal control weaknesses. "Over the years, we have reported on the existence of major operational problems relating to the management and disposition of seized and forfeited property that resulted in unnecessary losses to the government. "


Ervin & Associates submits a Freedom of Information Act request seeking comprehensive, project by project information regarding HUD Mark to Market restructurings and related databases.


A status hearing is held before Judge Sporkin in the qui tam case. Anthony Alexis, Wayne Travell, Dan Hawke and Judith Hetherton attend the hearing. Alexis reports on the status of the investigation, "In terms of who we actually want to interview, weíve approached some people, but weíve come up against the proverbial stone wall, and there is no way that at this particular time I can evaluate until we a) have some documents and Ė" The judge asks what kind of a stone wall and Alexis says, "Theyíre not going to talk, based on advice of counsel, and we canít give them immunity, because we may be giving the wrong person immunity. And if I sit them down for a civil Ė" Alexis says he doesnít want to put someone in a deposition and have the person invoke the fifth amendment. It appears that by "they" Alexis is referring to Kathryn Rock, former HUD Comptroller, who had retained counsel. Alexis asks for an additional 60 days. They schedule a hearing the second day after Memorial Day.


HUD awards seven companies a total of 16 contracts to handle most aspects of its property disposition program across the country with respect to approximately two-thirds of HUD's total inventory at the time. The contracts are to handle foreclosed homes/single family properties as a result of growing inventories from increased volumes and cancellation of loan sales. Now, with no loan sales, government asset purchasers buy real estate, not mortgages, and the mortgage files are not assigned. HUD estimated that it would spend $927 million over a 5-year period for these contracts.


Claude Goddard files a notice of change of address with the Court of Claims when he joins the law firm of Wickwire, Gavin.

5 Apr-99

Gaffney files a motion for summary affirmance in the appeal of the PTE case.


Judge Sporkin issues an order allowing the Special Masters to allow Hamilton to take possession of Item 209 of the Special Masterís Inventory.


Hamiltonís attorney, Michael McManus of Drinker Biddle & Reath, requests that the PCIE reopen the file on Hamiltonís request that HUD IG Susan Gaffney be investigated for conduct of the investigation. Letters are also sent to Senator Fred Thompson, Chair of Senate Government Affairs Committee, and Senator Dan Burton, Chair of House Government Reform Committee. These letters contain detail regarding HUDís destruction of the Denver audit and persecution of the auditor who concluded that allegations against Hamilton were unfounded. Copies are provided to DOJ and GAO.


Judge Marian Blank Horn denies the governmentís motion to dismiss the Court of Claims Case for lack of subject matter jurisdiction in a published decision.


Hamilton files an opposition to Gaffneyís motion for summary affirmance and moves for a summary reversal in the PTE appeal case.

April/May 1999 (Est)

Frank Hunger, Al Goreís brother-in-law, leaves the Department of Justice for private practice. Hunger had been head of the Civil Division and was the lead attorney on numerous of DOJ filings in connection with the Ervin qui tam lawsuit.


Judge Marian Blank Horn orders a joint status report deadline of 5/24/99 in the Court of Claims case.


The sale of Fraser Court, Catherine Austin Fittsí home in Washington, is consummated, ending a period of prolonged physical harassment and surveillance.


Gaffney files a reply to Hamiltonís response to motion for summary affirmance and an opposition to the motion for summary reversal in the PTE appeal case.


In the matter of Hamilton Securities Advisory Services, Inc. v. The United States (98-CV-169)(the Court of Claims case), the government files a motion to extend time to respond to the complaint until May 27. This order is granted on May 10. The government files an answer to and Counterclaim to Hamilton's complaint alleging that Hamilton owes the government for its losses.


Hamilton files a motion to seal attachment B to Hamiltonís exception to recommendation of the special masters regarding certain privileged documents. Hamilton also files an exception to the recommendation of the special masters regarding certain privileged documents in the PTE case.

May 12, 1999

Robert Rubin resigns as Secretary of the Treasury. Soon thereafter he joins the board of directors of LISC, a New York based national not-for-profit organization active in the affordable housing area. Thereafter, he joins Citicorp, where he heads the Executive Committee. (A key congressional staffer informs Fitts during this period that they will not consider private equity investment in communities. They want to see only equity investment controlled by LISC and Enterprise).

12- May-99

Hamilton files a motion to extend time to file a joint status report until June 9 in the Court of Claims case. The judge grants the order and extends the deadline to June 9.


Hamilton files a reply to the response to the motion for summary reversal in the PTE action appeal.


Hamilton files a Motion to Unseal Qui Tam in Federal District Court for the District of Columbia (United States ex. rel. vs. The Hamilton Securities, Group, Inc. and Hamilton Securities Advisory Services, et al. 1:96-CV-1258 Sealed).


Mike McManus (Hamilton's counsel) has a meeting with Dick Chapman, an Assistant US Attorney in the Criminal Division in Washington, DC, in which McManus is told that (1) DOJ has declined to prosecute Hamilton on the criminal side and (2) a meeting with AUSA Tony Alexis will take place in two weeks to report whether the civil investigation will be dropped. In a subsequent meeting with Alexis, Mike is told that, so far, none of the civil charges raised by Ervin have panned out, but it is difficult to drop the investigation, given that other parties are targets, too. Mike reports that Dan Burton replied to the DBR letter by saying that the HUD OIG is authorized to conduct the investigation of Hamilton.


Gaffney files a response in opposition to the recommendation of the Special Master regarding certain privileged documents.


Hamilton is informed that Ervin seeks extension of the statute of limitations in connection with certain allegations in the Bivens lawsuit and has threatened to file suit against Rock, Chris Greer and others if the extension is not granted. By the second week in June, Hamilton is informed that Ervin has filed suit against him. Other named defendants include Annette Hancock, Hamiltonís HUD Contract Officer and Kathy Rock.


The House Select Committee on Intelligence holds a closed door hearing, purportedly on the subject of the CIA and drugs in LA. Maxine Waters, the Congressional member representing LA, is barred from the hearing. It turns out that the hearing was, in fact, a hearing on Volume II of the report of Inspector General Bromwich, which both houses of Congress had promised would be public. Volume II purportedly includes disclosure about the infamous "Memorandum of Understanding" or "MOU" between the Department of Justice and the CIA in which Justice provided assurances that agents of the CIA were not bound by obligations of other federal employees to disclose evidence of illegality. The hearing comes right after the delivery of the May issue of the From the Wilderness newsletter, which includes an article by Catherine Fitts accompanied by the HUD money map of South Central LA that was used to illustrate the 1996 Boston Neighborhood Networks speech that Fitts had made.


Recommendation of the Special Masters is filed in the PTE case.


The government files its answer to Hamiltonís complaint in the Court of Claims case and makes a counterclaim against Hamilton.


Judge Sporkin orders the payment of $13,200 to the Special Master in the PTE case.


Ervin files a complaint and jury demand in US District Court. The named defendants are Chris Greer, (represented by Richard Henry Gordin of Tighe, Patton & Babbin); Kathryn Rock (represented by Robert Powel Trout of Trout & Richards and Mary Hampton Mason of the Department of Justice Torts Branch, Civil Division); Annette Hancock (represented by Mary Hampton Mason and Paul Lawrence Knight); A. Delores Ammons-Barnett (represented by Richard Henry Gordin and Mary Hampton Mason); George Chabot (represented by Mary Hampton Mason and Paul Lawrence Knight); Lawrence Gnessin (represented by Richard Henry Gordin and Mary Hampton Mason); and unknown agents. Summonses are issued to the defendants.


Catherine Austin Fitts writes a letter to Maxine Waters. No response was ever received.


Hamilton's counsel receives a letter from Thomas J. Pickard, Chairman of the Presidentís Counsel on Integrity and Efficiency ("PCIE") that Hamilton's complaint about the HUD IG has been reopened. (IC #212)


Qui tam hearing before Judge Sporkin. The transcripts of the hearing reflect the following exchange: "Mr. Travell: Our allegations are that Hamilton was in cooperation with the Wall Street merchant banksÖ and was able to tip them with inside information which allowed huge blocks of these mortgage notes to be sold at a fraction of their value. Ö In several cases, the real winner was not awarded the contract, and we know it because Hamiltonís admitted that much. They actually awarded the contract to one of their favorite merchant banks, and not to the real winner. The Court: Was there a quid pro quo? Mr. Travell: We believe there is, Your Honor. The Court: You donít know where itís at, though? Mr. Travell: Well, thatís one of the things I think the investigation is trying to crack. The Court: Well, I donít even think they have touched the surface on that, though. Thatís the problem. Mr. Travell: Your Honor, I have to defer to Mr. Alexis on that aspect of it." The next hearing is scheduled for September 8. Hamilton has been unable to obtain transcripts of this hearing or any subsequent hearings that may have been held because the tapes of the hearings are unavailable. Hamilton is trying to ascertain what hearings occurred and whether the tapes are "missing."


Hamilton files suit alleging tortuous interference with business relations and abuse of process in DC Superior Court against John Ervin and Ervin & Associates. [The Hamilton Securities Group, Inc v. Ervin and Associates, et al, 1:99-CA-003864, Superior Court of the District of Columbia, Judge Susan R. Winfield.]


The Presidentís Counsel on Integrity and Efficiency reopens the Hamilton Gaffney complaint file.


Judge Sporkin orders payment of $3,000 of Special Master expenses in the PTE case.


Hamilton and HUD file a Joint Status Report in the Court of Claims in which HUD maintains that it needs at least a ten-month discovery period, which would mean no trial date would be set until at least April 9, 2000. Hamilton Securities Advisory Services, Inc. v. The United States, 98-CV-169


Ervin & Associates files a response to Hamilton's motion to unseal the qui tam file and the USA moves to extend time to 5/1/00 in which to file a supplemental pleading. Hamilton learns of these after the file is unsealed in April-May 2000.


AUSA Tony Alexis files opposition to Hamiltonís Motion to Unseal Qui Tam and responds to Hamilton's opposition to the AG's request for further extensions of time. The filing contains many mischaracterizations and misprepresentations apparently generated by Judith Hetherton, counsel for the OIG. Ms Heatherton is a former Assistant US Attorney, with experience working for the Iran-Contra special prosecutor and Charles Russ, former DC US Attorney, DC Corporation Counsel, and currently White House Counsel.


Hamilton files a Reply to HUDís Counterclaim in the Court of Claims. The Hamilton Securities Group, Inc. v. The United States of America, 98-169.


GAO reports that loan sales were positive for communities.


Hamilton files a Freedom of Information ("FOIA") complaint with the affidavit of former field auditor for HUD OIG who reviewed the loan sales for misconduct and found none. [The Hamilton Securities Group, Inc v. US Department of Housing and Urban Development, 1:99-CV-1563, US District Court, District of Columbia, Judge Stanley Sporkin.] Stacy Ludwig of the US Attorneyís office is listed as counsel for the government.


Hearing before Stanley Sporkin on Holland & Knight attorney-client privilege issues.


Motion hearing is held in the PTE case. Hamilton files a supplemental memorandum regarding privileged documents.


Kathy Rock, Delores Ammons-Barnett, and Lar Gnessin file motion to extend time to August 20 to answer the complaint in the Ervin case ("Bivens #2"). Judge Bryant grants the order on June 24.


The press reports the filing of motions to suppress mistress tapes in Henry Cisnerosís Case. A trial is scheduled for September.


The filing of Hamiltonís response to Tony Alexisís Opposition To Unsealing Of Qui Tam Case. United States ex. rel. vs. The Hamilton Securities, Group, Inc. and Hamilton Securities Advisory Services, et al. (1:96-CV-1258) SEALED


Judge Horn issues an order setting Notice of Compliance deadline to 8/3/99 for the parties to file a joint stipulation of facts and issues of law and sets a status conference for 8/10/99/


Ervin files a Notice of Removal to Federal court in the DC Superior Court case Hamilton Securities Group, Inc. v. Ervin and Associates, et al, 1:99-CA-003864. Hamilton's lawsuit against Ervin is moved into US District Court of the District of Columbia (Judge Stanley Sporkin).


Gaffney files a reply to Hamiltonís response to memorandum re: privileged documents in the PTE case.


The "Independent Counsel Law" sunsets without re-authorization.


Hamilton files a Motion to Remand in an attempt to return its lawsuit against Ervin to DC Superior Court, where it was originally filed. [Hamilton Securities Group v. Ervin and Associates, et al, 1:99-CV-1698, US District Court, District of Columbia, Judge Stanley Sporkin.


The government files a motion in the Court of Claims to reschedule the status conference. On July 6, Judge Horn grants the motion and resets the status conference for 8/17/99.


Hamilton's counsel receives a letter from Bryan Saddler, Associate Counsel of the HUD IG, requesting that the affidavit of the HUD Rocky Mountain audit leader be withdrawn on the basis that it was not authorized by the IG in accordance with applicable regulations. Case law provides, in fact, for an exception in the case of a lawsuit against the Government.


A per curiam order is filed granting the governmentís motion for summary affirmance in the PTE appeal case. Judges Williams, Randolph and Tatel.


Ervin files a motion to extend time to July 23 to file a response to Hamiltonís motion to remand in its case against Ervin.


George Chabot files a motion to extent time to answer in Bivens #2 case. Judge Bryant grants the motion on July 20.


GAO report confirms $2.2 billion of savings on loan sales program prior to its cancellation in October 1997. In a later meeting with Judy England Joseph, head of the group auditing HUD at GAO, she communicates that the calculations of savings to taxpayers were, if anything, understated. This finding disproves the HUD IG position that the HUD/OMB calculation of savings of $2.2 billion was false.


HUD files a motion to extend time to 8/2/99 to answer the FOIA complaint, which is granted.


Judge Sporkin issues an order granting motion to seal attachment B to Respondentsí Exception to Recommendation of the Special Masters re: privileged documents.


Ervin requests leave to file Opposition to Hamilton's Motion to Remand and for Attorneysí Fees ex parte and under seal. Hamilton Securities Group v. Ervin and Associates, et al, 1:99-CV-1698.


Ervin files an opposition to Hamilton's Motion to Remand, with portions redacted from Hamilton's copy because it contains "sealed, non-public information relating to the sealed matter" in the qui tam suit. Hamilton Securities Group v. Ervin and Associates, et al, 1:99-CV-1698


The date of the Declaration of Kathryn M. Rock.


Judge Sporkin grants Ervinís motion for leave to file opposition under seal in the Hamilton case against Ervin.


The Government in the Court of Claims case files a motion for leave to file a first amended counterclaim.


Ervin files a motion to extend time to file a response to the complaint in the Hamilton action against Ervin. On the 30th, Hamilton opposes this motion.


HUD files a motion to extend time to 8/12/99 to file its answer in the FOIA complaint, which is granted on 8/27/99.


Hamilton files Plaintiffsí Opposition To Defendantsí Motion For Leave to File Opposition Brief ex parte and under seal in the Federal District Court for the District of Columbia. Hamilton Securities Group v. Ervin and Associates, et al, 1:99-CV-1698


Hamilton alerts the PCIE of the latest activities of the HUD IG. The letter states that Hamilton filed a FOIA suit (The Hamilton Securities Group, Inc v. US Department of Housing and Urban Development, 1:99-CV-1563 ) against HUD to gain access to a favorable audit conducted on Hamilton by the Denver Audit Office of Inspector General for HUD. In addition to the complaint, Hamilton filed an affidavit of the lead auditor on the audit team. July 1, 1999, Hamilton received a letter from Bryan Saddler, Associate Counsel to the Inspector General, claiming that Lead Auditor's affidavit was unauthorized and therefore must be withdrawn. Hamilton's Counsel believes Mr. Saddler knew the position advanced by the OIG in his letter is legally wrong, and further that he must have known that prior to writing his letter. The Hamilton letter to the PCIE further expresses concern about interference with the Lead Auditor. (IC # 212)


Hamilton and the government file a joint motion to extend time to file the joint stipulation of facts and joint statement of issues of law and joint status report until August 10. Judge Horn grants the motion on August 6.


Hamilton's attorneys in its civil suit against HUD in the Court of Claims have a six-hour meeting with David Gottesman regarding the joint admissions statement requested by Judge Horne. Among other things, the Government's attorney refuses to admit the loan sale credit subsidy calculations. Hamilton Securities Group v. The United States of America, 1:98-CV-169, US Court of Federal Claims


A Joint Stipulation of Facts, Joint Statement regarding Issues of Law and Joint Status Report are filed by Hamilton and the government in the court of claims case. The government also files a Statement of Facts.


Daniel M. Hawke files a notice of withdrawal of appearance for Ervin & Associates in the qui tam lawsuit.


Charles Ruff resigns as White House Counsel and returns to private practice at Covington & Burling.


Daniel M. Hawke files a notice of withdrawal from the Hamilton case against Ervin. Ervin files a surreply to Hamiltonís motion for remanding for further proceedings and to collect attorneyís fees against Ervin.


The government files a motion for leave to a portion of a memorandum of points and authorities in support of its motion to dismiss/for summary judgment under seal in the FOIA lawsuit. The motion is granted on 8/27. At that time Judge Sporkin also orders that the declaration of R. Joseph Haban shall be filed in camera.


Legal Times reports that Abbe Lowell will join Manatt, Phelps in September. Charles Manatt is the leader of the DNC. Since representing Hamilton in its Motion for a TRO against HUD, Lowell has acted as counsel for the House minority in connection with the impeachment of President Clinton.


Hamiltonís FBI file, received on a FOIA request in 2000, includes a document dated August 16, 1999 entitled "(Redacted) C. Austin Fitts AntiTrust Fraud Against the Government" that concludes "Interviews of BlackRockís corporate officers, as well as those individuals who worked on the sub-contract between Hamilton and Blackrock and those directly involved in the note sales were completed. None of these interviews substantiated any of Ervinís allegations. Likewise, interviews of employees, partners and owners of Goldman Sachs & Company, Ocwen, Wilshire, National Security and others involved in the HUD note sales failed to uncover any concerns, suspicions, or evidence of collusion being involved in the sales. Even losing bidders did not attribute their lack of success to collusion, or other bidders having inside information. Interviews of HUD personnel involved in the note sales, as well as interviews of former Hamilton employees and sub-contractors were negative. All of the information obtained during the course of this investigation was presented to Assistant US Attorney Richard Chapman, United States Attorneyís Office, District of Columbia and to Senior Trial Attorney Hays Gorey, Antitrust Division, DOJ for a prosecutive opinion. Both AUSA Chapman and Senior Trial Attorney declined prosecution in this matter."


Joint Status Conference before Judge Horne in Court of Claims to hear arguments from parties re: whether Hamilton should be permitted to file a motion for summary judgment. The Government opposes this motion. Susan Gaffney, HUD IG v. Hamilton Securities Group, Inc., 1:98:-MS-0092. The judge returns Hamiltonís response to the governmentís motion for leave to file an amended counterclaim due to a technical rule-of-court problem and it is refilled. The judge sets a joint status report deadline for 9/3/99 and a status conference for 9/7/99.


The Government files an amended counterclaim in the court of claims case.


Hamilton files a motion (consent) to extend time to 9/7/99 to respond to the defendantís pending motions.


A Mandate is issued in District Court of Appeals. A rehearing has to be rescheduled for 1:98-MS-0092 in District Court before a decision can be issued in this case.


A certified copy of the order filed in the USCA dated July 2, 1999 on appeal, affirming the judgment of the USDC is entered.


Judge Sporkin orders the payment of $4,500 in expenses to the Special Masters in the PTE case.


Judge Horn directs the Clerkís Office to return Plaintiffís separate statement of facts for resubmission. The statement of facts is refiled on September 2.


Judith Hetherton, counsel to the HUD OIG, takes early retirement. Hetherton was the attorney responsible for efforts to pressure the Denver audit team and to falsify evidence during the seizure of Hamiltonís offices. She was a former Assistant US Attorney who had experience working for Charles Ruff (former DC US Attorney, Iran Contra special prosecutor and DC Corporation Counsel), in 1999 the White House Counsel. Bryan Saddler, Deputy General Counsel to the HUD OIG, assumes her duties with respect to the qui tam case.


Ervin & Associates files an Amended Complaint in the qui tam lawsuit. Williams Adley and Ocwen appear to have been added as defendants, since they are not listed on the original 6/6/96 filing. Included as an exhibit to the amendment is a 15-page Summary of Evidence provided to the US Attorney's Office and the HUD Inspector General under the Continuing Disclosure Obligations of 31 USC 3730(B)(2).

In addition to materials provided by Hamilton and other contractors to HUD under their contracts and publicly available information and press reports, Ervin lists as evidence transcripts of anonymous telephone calls, the 1995 Asset Strategies letter to Andrew Cuomo, an anonymous written message from the HUD Connecticut State office on Helen Dunlap's ongoing interference with HUD's contracting process, handwritten notes of meetings and phone conversations with Bill Richbourg (who had, by this date, stated in a deposition that he had no direct knowledge of wrongdoing), "printouts from Ervin's intelligence system," a letter describing anonymous phone message regarding Helen Dunlap's anti-male animus, a transcript of anonymous phone message regarding Hamilton's Democratic Party connections and $800,000 per month crosscutter fee; a letter describing anonymous phone call alleging two instances of forced subcontracting along with transcript of anonymous message, a letter describing information received from Toni Moss regarding bids being "rigged" for Blackrock, letter disclosing allegations heard with regard to provision of EDS servicing tape to BlackRock, relationships between Kathy Rock, BlackRock and Hamilton as well as Hamilton's failure to make competitive range in the Financial Advisor 2 procurement, letter allegng that Tim Ito (a reporter at US News and World Report) has stated that Hamilton did not make the initial competitive range in the FA #2 contract, correspondence between USNWR and Hamilton received anonymously; letter alleging that Ervin has been informed by Tim Ito that Ron Hughes is leaving Williams, Adley, letter disclosing Tim Ito's inquiries into whether BlackRock may have links to organized crime or money-laundering, letter endorsing Judge Sporkin's suggestion to use SEC fraud investigators instead of an outside consultant, letter received from Tim Ito regarding BlackRock's sale of loans to Goldman immediately after the SF #2 sale and BlackRock's and Berkeley Federal's submission of "complimentary" bids in the North Central sale indicating "collusion", letter alleging GE Capital had access to the workings of the optimization model before others, and a host of other "evidence."

An interesting item is disclosure of a "copy of HUD termination letter to Hamilton, and detail of implications of the termination; letter was leaked by Howard Glaser in return for agreement not to run a story on Ernst & Young's political contribution links to HUD contracts." Also interesting is "letter passing on information received from Carl Johnston (a reporter) regarding Nic Retsinas' testimony to Congress that confidential information had been provided to one of the bidders in the sale." Also disclosed is "letter detailing Hamilton Securities' (Austin Fitts) efforts to undermine the IG investigation Ö Government should seek a stay in Hamilton's litigation."


Henry Cisneros pleads guilty to a misdemeanor and is fined $20,000 for lying to the FBI about how much he paid his former mistress after a four- year investigation by Independent Prosecutor David Barrett costing taxpayers an estimated $10 million.


Hamilton files an answer to the governmentís amended counterclaim in the Court of Claims case and a status conference is held. The judge thereafter issues an order directing plaintiff to respond to interrogatories by 9/21, defendant to file a status report by 1/7/00, parties to file simultaneous briefs by 10/1/99, parties to file reply briefs by 10/15/99 and scheduling a status conference for January 12, 2000.


Hamilton files a motion (consent) to extend time to 9/17 to respond to defendantís motion to dismiss/for summary judgment and defendantís motion for leave to file in camera in the FOIA case. Judge Sporkin grants an order to this affect on September 9.


Order by Judge Sporkin in the qui tam lawsuit extending time to 11/8/99 for the US to intervene in the qui tam lawsuit or notify the Court that it declines and granting the ex parte application of the US and the seal is partially lifted for the limited purpose of allowing the US to disclose to Goldman Sachs and BlackRock Capital Finance LP the substance of the allegations of the qui tam complaint, including the fact that the US is investigating those allegations.


A Catherine Austin Fitts interview with Tony Alexis and members of HUD OIG staff indicate that there is no evidence of an understanding of loan sales, basic of facts of issues, or effort to learn these on the part of OIG personnel. For example, they admit they have not read any Loan Sale Design books provided by Hamilton to HUD setting forth the procedures followed on the loan sales. The interview reveals that the investigation lacks any forethought or factual examination. It appears that turnover on the investigation team has been high. Hamiltonís attorneys prepare a follow up letter to DOJ to educate them on basic facts regarding the auctions about which they appeared to be unaware.


Hamilton files a response in opposition to the governmentís motion to dismiss and for summary judgment in the FOIA case.


A status hearing is held in the qui tam case before Judge Sporkin. Tony Alexis and Wayne Travell attend the hearing. Alexis says "and in the meantime Iím making the private bar very happy. Goldman Sachs is represented by Paul Weiss and Blackrock is represented by Scad & Arps [sic] in New York." He says they have meetings to discuss the allegations with them. Alexis says since the last hearing "we filed an amended complaint which we did as a matter of right. No answer has been filed. What we did in our amended complaint is we attempted to garner all of the information that weíve obtained over the past three years which is consistent with the allegations we made in the original complaint. Tony says they are going to be interviewing purchasers and he needs another extension. The judge asks what progress they are making. Tony says "yes, Your Honor. I believe weíre at the endí I mean, I think that with the note sale people, itís fish or cut bait time, and I should know something probably in the next three to four weeks where weíre going to go one way or the other." They agree to a status hearing on November 8, 1999. Hamilton has been able to obtain no additional transcripts because the hearing tapes are not available for hearings after this date.


Hamilton files Plaintiffís Answers to Defendantís First Set of Interrogatories. Hamilton Securities Group v. The United States of America, 1:98-CV-169, US Court of Federal Claims.


GAO decision awarding Ervin protest costs in connection with a finding that the task order (issued in February 1995) Ervin protested improperly exceeded the contractorís scope of work. GAO recommended that HUD terminate the task order and conduct a competitive acquisition. Ervin claimed costs in excess of $13,000, assuming an hourly rate for Ervin of $340 per hour (for 15 hours of work) and an hourly rate for Bernard Oleniacz of $155 (for 51 hours of work). Ervin used a 300% overhead factor, which GAO found to be unreasonable. He countered that Ervinís actual overhead rate is 2,124%, which, if applied to the hourly rates listed in the claim, would result in an increase of almost $60,000 in claimed costs. GAO awarded Ervin only $1,448.19.


Beginning of federal fiscal year 2000.


Hamilton and HUD file briefs re: motion in limine on the issue of applicability of Inspection of Services Clause and Economic Loss Rule in Court of Claims. HUDís brief is signed by Robert M. Hollis, Asst Dir., and David Gottesman, Attorney, Commercial Litigation Branch, Civil Division, US Department of Justice under the authority of David W. Ogden, Acting Assistant Attorney General and David M. Cohen, Director. Virginia Kelly Ackerman is listed as of Counsel for HUD. Hamilton Securities Group v. The United States of America, 1:98-CV-169, US Court of Federal Claims.


Goldman Sachs discloses in its 10-Q filed with the SEC that it has been named in Hamiltonís qui tam suit in connection with the purchase of $4.7 billion of HUD mortgage loans.


The government files a motion (unopposed) to extend time to October 14 to file a reply memorandum in the FOIA case.


In the FOIA case, the government files a reply in support of motion for leave to file a portion of memorandum of points and authorities in support of motion to dismiss/for summary judgment under seal. The government also files a reply in support of motion to dismiss and for summary judgment, with affidavits (2) and exhibits. The government also files a motion for leave to file a small portion of its reply in support of its motion to dismiss/for summary judgment and opposition to Hamiltonís request for discovery in camera. Judge Sporkin issues an order granting the extension of time on October 19.


In the FOIA suit, Hamilton and the government file responses to the briefs submitted on 10/1.


In the FOIA suit, Hamilton files a motion (consent) to extend time to October 29 to respond to the request for discovery.


Judge Sporkin orders the payment of $3,200 to the Special Masters in the PTE case.


In the FOIA suit, Hamilton files a response (oppositions) to motion for leave to file in camera. On October 28, Judge Sporkin grants the additional time requested.


Status hearing in the Federal District Court in the Hamilton case against Ervin.


Hamilton files a motion (consent) to extend time to November 5 to respond to the governmentís opposition to its request for discovery in the FOIA suit. Judge Sporkin grants the extension on November 2.


Kathryn Kuhl-Inclan, HUD Assistant Inspector General for Audit, testifies before the House Subcommittee on Criminal Justice, Drug Policy and Human Resources regarding marketing and management contracts for real estate owned activities (single family) and procurement audit. She testified that the property disposition portfolio at HUD had increased 71% (to 42,300 properties) between the end of the 1996 fiscal year and February 1999. By September 30. 1999 the inventory had grown to 51,516 properties. She reported that the build-up in properties was largely due to the inability of the contractor hired to service 40% of the portfolio, Intown Properties, to handle the work. Its contract had been terminated and the properties it serviced were awarded to the six remaining "M&M" contractors. She stated that the procurement of this work (which amounted to approximately $927 million over 5 years) was conducted without carrying out the cost comparisons required by OMB to determine whether the contracting-out was warranted. No such procurement would have been required had the loan sales program continued.


Hamilton files a reply to the governmentís response to the motion for leave to file in camera in the FOIA suit.

8-Nov-99 Status conference at court hearing on qui tam on the scheduled for this date. Hamilton has not been able to ascertain in the hearing was cancelled or the tape of the hearing is not available, or "missing".


A Joint motion is filed by Hamilton and the government for a protective order in the Court of Claims case, which is granted on the 17th.


Ervin & Associates submits a Freedom of Information Act request seeking information regarding a HUD contract with Federal Asset Advisory Company to compile a questionnaire requesting feedback on HUD note sales. According to the FOIA request, the questionnaire is being conducted before proceeding with HUD note sales under Section 601 of the Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Act of 1999, which provides FHA with flexibility to choose the most cost-effective methods of paying insurance claims and disposing of acquired notes or properties under the FHA single family programs. Ervin applauds HUD's effort to "solicit feedback before proceeding with another ill conceived and possibly corrupt asset sales effort, particularly one that appears to be being patterned after the highly suspect multifamily partially structured transaction."


Judge Sporkin issues a memorandum opinion in the Hamilton v. Ervin case and an order denying Hamiltonís motion to remand and for attorneys' fees.


A motion hearing in the FOIA case is scheduled for this date.


Judge Sporkin issues an order regarding the production and use of documents in other proceedings.


Hamilton is informed that AUSA Tony Alexis, who has been intimating to Hamiltonís counsel for the past several months that he anticipates the government may not adopt the qui tam, has taken a regular "rotation" of assignments and dropped from the qui tam. AUSA Rudolph Contreras assumes Alexisí role. Hamiltonís expectations that the qui tam will be unsealed by Thanksgiving are not realized.


Hamilton receives a request for admissions from David Gottesman.


Lexington Insurance requests a copy of the "Manhattan" file.

Week of 13-Dec-99

Hamilton files a request under the Freedom of Information Act seeking Hamiltonís file related to the complaint filed with the Presidentís Council on Integrity and Efficiency.


A scheduled hearing with Judge Sporkin on the FOIA appeal is postponed until January.


Some time this past week Hamilton filed a FOIA request with the Department of Justice for the Hamilton PCIE file.


Standard & Poorís puts the U.S. financial system on its watch list of 20 countries that are vulnerable to a credit bust. Bill Greider, now reporting for The Nation, says, "Aside from the stock market, the credit-rating agency observes the rapid rise in domestic debt and in non-performing loans at commercial banks." The U.S. is now a debtor nation to the tune of 18 percent of the gross domestic product. (Source:


The government files a motion to extend time to respond to Hamiltonís discovery request. Hamilton responds on January 5th [opposing the extension]. On January 13, the judge grants the governmentís motion to extend time.


Hamilton and the government file a joint status report in the Court of Claims case.


A "settlement conference" is held in the Court of Claims case.


Judge Sporkin abruptly retires with no prior public notice.


Former CIA head Stansfield Turner's plane crashes on a trip in Latin America, killing his wife and seriously injuring him.


The U.S. Department of Justice acknowledges that key CIA testimony connected with the 1983 conviction of Ed Wilson for weapons smuggling was perjured. That conviction involved 40,000 pounds of C-4 plastic > explosives, sent in 1977 to Libyaís Moammar Qadaffy. It occurred at a time when the Theodore Shackley was running CIA covert operations and a newly appointed Stansfield Turner was reportedly trying to reign in agency covert operations. Now, as seven of the well known members in the American legal/court system grapple with potential perjury charges, we see the death of a retired CIA Executive [the Comptroller] on January 12th, the retirement from the Federal Bench of former CIA General Counsel Stanley Sporkin on Jan 15th and the near fatal air crash involving Stansfield Turner on the 16th.


Bryan Saddler, Acting Counsel to the Inspector General, informs Hamilton's counsel, Drinker Biddle & Reath, that the IG cannot take final actions until a judge is assigned to replace Judge Stanley Sporkin. Sporkin has retired with no advance notice, resulting in a delay of many months in reassigning his cases.


Bryan Saddler sends a letter to Special Master Lawrence Storch informing him that HUD has entered into a contract with a company that will capture and copy data from Hamilton's back-up tapes pursuant to Judge Sporkin's December 18, 1998 order.


Hamilton's counsel, Drinker Biddle & Reath, is informed by Special Master Lawrence Storch of the letter from Bryan Saddler to Lawrence Storch stating that HUD plans to begin to capture and copy data from Hamilton's back-up tapes. The correspondence indicates that a copy was sent to Drinker Biddle & Reath.

However, the firm never received a copy.


The HUD Inspector General testifies before the House Budget Committee, chaired by John Kasich, regarding Perspectives on Waste, Fraud and Abuse in Government.


Hamilton hears from Rudolph Contreras that DOJ expects that a new judge will be assigned to replace Judge Sporkin on the qui tam case on the following Monday.


Judge Horn rules in the Court of Claims case on the Motion in Limine that the government may proceed on its breach of contract claim. Hamilton is not greatly troubled by this ruling because it is confident the judge has made an error on the facts. Hamilton expects to be able to prevail on appeal based upon the reasoning in the opinion. Soon after this development the government realizes (1) the error in the judge's understanding of the facts (i.e., she bases her ruling on the assumption that the alleged damages are "consequential" as argued by the government, and they are not and (2) that the government has taken a different position on the issue of recoverability of consequential damages in the Yankee Atomic Power case, which is expected to be argued on appeal in the Court of Claims on May 3. The government files a brief requesting that the judge reissue her decision on alternative grounds.


Solari discovers an article in The Washington Times by George Archibald entitled "Justice Unable to Find Bids Worth $5.2 Billion." The article refers to the "criminal" investigation of Hamilton many times, even though the so called "criminal investigation" has been dropped by the Department of Justice and FBI findings are strongly in Hamiltonís favor. The article is filled with libelous material and inaccuracies, but the largest infraction of the Times is that it failed to contact Hamilton for comment. This is the last among many articles written by Archibald about Hamilton where he has failed to contact Hamilton for comment despite Hamilton's repeated complaints to the Times and has published numerous statements that are not true or are purposefully misleading. For example, Ervinís counsel is quoted in this article as suggesting there has been virtually no oversight of the loan sales by HUD, a charge that has no basis in fact. The "missing bids" referred to in the article are bid cards requested by Ervin in a FOIA request to HUD, which HUD denied, saying it did not have the cards. In all probability, some of the cards may have been included among the volumious documents produced to the government by Hamilton in response to the OIG subpoena or may still be in the possession of one or more of HUDís other financial advisors. In any case, no one at any time contacted Hamilton to ask where the cards might have been stored.


Qui tam lawsuit is reassigned to Judge Louis F. Oberdorfer.


Hamilton's counsel sends a letter to the Editor of the Washington Times, Wesley Pruden, demanding a meeting to discuss the ongoing inaccuracies, failure to verify alleged facts with Hamilton and libelous charges that Hamilton "admitted" to "bid rigging " in its coverage of Hamilton. Later, Hamilton's counsel receives a letter from the Timesís attorney proposing language for a retraction.


Gerri Salzman calls to cancel a planned dinner with Fitts, Betts and Dick Dunnells because of the Washington Times article that appeared on February 28 about Hamilton and HUD. The dinner is never rescheduled.


Solari launches its website with most Hamilton legal history linked to most legal documents with chronology of legal events, lists of all audits, investigations, and inquiries as well as all suspicious events related to physical harassment and surveillance. Notices of the launching of the website, with links to the site, are e-mailed to approximately 200 individuals affected by or interested in the case. Traffic to the site over the year includes visits from HUD, four separate servers at DOJ, Lockheed Martin, DynCorp, the Executive Office of the President, several US Government military groups, OíMelveny & Myers, the primary law firm representing the Gore campaign, and numerous other government and government contractor entities.


GAO issues a report entitled "Single-Family Housing: Stronger Measures Needed to Encourage Better Performance by Management and Marketing Contractors." The subject of the report is approximately $927 million in contracts for the management of approximately 2/3 of HUDís inventory of properties. GAO reports that, since the contracts became effective in April 1999, 6 of the

7 contractors had had significant problems with carrying out their responsibilities, particularly in regard to securing and properly maintaining the properties assigned to them (for example, Intown Management Group, which had 7 of the 16 contracts involving about 40 percent of the properties, had problems with meeting almost all of HUD's performance requirements. After trying unsuccessfully to secure better performance from InTown, HUD terminated all seven of the firm's contracts and selected three replacement contractors from among the remaining firms to absorb most of Intown's workload. However, two of

the three contractors that HUD selected were already having performance

problems under their existing contracts. The report states HUD staff have limited contractor incentives or tools available -- short of terminating contracts -- to enforce contractors' compliance and improve performance. HUD's inventory of acquired single-family properties at the end of fiscal year 1999 was 32 percent higher than it was a year earlier and over 100 percent higher than it was at the end of FY 1996. HUD's new management and marketing contractors increased the total number of properties sold from the inventory during FY 1999, and the

total number of properties in the inventory had begun to decline; however, the contractors had made relatively little progress disposing of older properties --properties in the inventory 6 months or longer. In fact, as of February 2000, about 20,000 of HUD's properties were in the inventory 6 months or longer--up from 13,000 properties in April 1999, the first month of the contracts.


Order by Judge Oberdorfer in the qui tam lawsuit directing that a status conference and a hearing on defendant's motion to unseal the file are scheduled for 4/18/00.


HUD responds to Hamilton's December 13, 1999 FOIA request for copies of FOIA requests and related correspondence by Ervin & Associates. The FOIA requests are voluminous (166 separate FOIA numbers are assigned) and date back to February 1996. Copies of these requests and correspondence between Ervin and HUD regarding these requests number about 300 pages. One single request, which is not atypical, asks for copies of Form HUD-720 Justification for the Use of Advisory and Assistance Services, for 23 named contracts. Another request asks for copies of "all status reports submitted by Hamilton Securities under the [DU100C000018161] contract." Another request quotes a Wall Street Journal article about two hosts for Democratic fundraising events who subsequently were selected for a major lending role in a $200 million HUD program to make federally assisted housing more efficient. Ervin requests:" all documents pertaining to the decision to enter into this agreement; the actual written arrangement itself and the federal notice outlining the loan program which mentions Energy Capital and Mr. Seigel by name; and any HUD documentation regarding the arrangement subsequent to the Wall Street Journal, including any press releases or termination of agreement, that occurred." Another request, dated March 27, 1997, asks for copies of all electronic mail messages sent from Helen Dunlap, C. Austin Fitts (Hamilton Securities), Kathy Rock and Chris Greer since June 1993.


Judge Horn in the matter of Hamilton Securities v. The United States of America (98-169, Court of Federal Claims) issued an order allowing the government to pursue Count I of its First Amended Counterclaim for consequential damages. The court also schedules a status conference for April 5, 2000.


DynCorp announces that it has been awarded a 10-year contract by HUD OIG. DynCorp already has a HUD OIG contract announced in 1999 and is subcontractor to Lockheed on the HUD network and prime contractor on DOJ Asset Forfeiture Fund, DOJ Automation Office Network as well as DOJ Litigation Support and Case Management Contracts. The largest outside investor in DynCorp is Capricorn, which is a major investor in the largest HUD multifamily mortgage insurance company, WMF, and appears to continue to hold a significant investment in AIMCO, the largest HUD property manager and landlord. The head of Capricorn, Herbert S. Winokur, who also served as the Chairman of DynCorp, is a board member of Enron, listed by Bob Rubin as one of the 44 companies he has significant contact with while at Goldman Sachs. Winokur is on the board of Harvard Endowment, as was Rubin before he resigned to become Secretary of Treasury. During the years of the Clinton Administration, the Harvard Endowment increases in value from $5 billion to $19 billion.


HUD OIG, Susan Gaffney, testifies before Stephen Hornís Committee on Government Reform, Subcommittee on Government Management, Information and Technology on the Status of Financial Management at HUD and regarding her refusal to certify HUDís financial statements for 1999 as required by law. She describes missing money in FY 1998 and FY 1999 of $17 billion and $59 billion, respectively, along with failure in the installation of new IT systems (HUDCAPS) and unsupervised access to accounting systems and information by HUD contractors. She reports that as a result of the methods used to convert from the "old" to the "new" system, in which standard industry procedures for preservation of an audit trail were not followed, there is no audit trail on which to base an audit certification. She reports that some 240 manual entries were required in order to reconcile HUDís accounts with Treasury.


In response to Judge Horn's March 15, 2000 order, Hamilton files a Motion for Reconsideration moving the court to reconsider its Order. Hamilton also files a Motion to Certify for Interlocutory Appeal and to Stay further proceedings moving the Court to amend its Order dated March 15, 2000, to include the finding prescribed by 28 U.S.C. Section 1292(d)(2), certifying the Order and the following controlling question of law for interlocutory appeal: "Whether the inspection of Services Clause provides the exclusive remedy when the services do not conform to contract requirements and the defects cannot be corrected by re-performance?" The motion also moves the Court to stay further proceedings, including discovery, pending the conclusion of any interlocutory appeal. Hamilton Securities v. The United States of America (98-169, Court of Federal Claims).


Government Executive Magazine reports on government efforts to meet financial statement requirements. HUD is the only agency whose grade drops; HUD is dropped from "D" to "F."


A status hearing is held in the Court of Claims case. Separately, Rudolph Contreras reports that he is meeting with his "superiors" regarding the qui tam lawsuit.


Assistant U.S. Attorney Rudolph Contreras reports to Hamilton's counsel that the government has elected not to adopt the Ervin & Associates qui tam case filed on June 6, 1996 and files a notice of declination with the U.S. District Court for the District of Columbia, Judge Oberdorfer presiding.


Judge Oberdorfer holds a combined hearing to unseal the qui tam case with Hamilton and to determine the status of the hearing from the government and Ervin. Ervin's counsel strenuously object to Hamilton's presence at the status hearing. Neil Getnick introduces himself to the court for the first time as co-counsel for Ervin.


Judge Oberdorfer, who has replaced retired Judge Stanley Sporkin with respect to the Ervin & Associates qui tam action naming Hamilton and Goldman Sachs, among others, holds the first hearing with defendant Hamilton actively present in the case although not yet served. Judge Oberdorfer issues an order unsealing the qui tam complaint and grants Ervin's consent motion for admission pro hac vice of Neil V. Getnick of the law firm of Getnick & Getnick in New York City. The complaint names as sources for the complaint, among others, William Richbourg of the FHA Comptroller's Office at HUD (who, in a deposition dated July 28, 1998, admitted he knew of no wrongdoing on Hamilton's part in connection with the HUD loan sales), Terry DeWitt, President of J-Hawke Corporation of Waco, Texas, Jeff Parker of Cargill, a bidding partner of Goldman Sachs in the HUD Single Family Loan Sale # 1 and an independent bidder in the HUD Single Family Loan Sale #2, and Michael Nathans of Penn Capital, a subcontractor to the Cushman & Wakefield/Price Waterhouse financial advisory team serving HUD in other (later) loan sales and a "business associate" of Mr. Parker, Mr. DeWitt and Ervin. Because neither Ervin's counsel nor AUSA Rudolf Contreras informed the judge during the status hearing that an amended complaint existed, the judge, who was new to the case, did not include the amended complaint in his unsealing order.27 & 28-Apr-00

Ervin files a motion to alter the briefing schedule for the qui tam lawsuit and Hamilton opposes the motion.


Press sources report a rift between Lee Radek's Public Integrity Section at the Department of Justice and the FBI, which had recommended appointing a special prosecutor to investigate campaign fundraising irregularities. The Department of Justice had declined to make the appointment of a special prosecutor in October of 1998, immediately after which announcement Goldman Sachs announced that the postponement of the initial public offering of its stock had been lifted. In Senate testimony on May 24, 2000, Radek denied witness reports that he had stated there had been intense pressure on Janet Reno not to appoint the special prosecutor that threatened her reappointment as Attorney General. Carolyn Betts, Solariís in-house counsel, writes a letter to Dan Burton, Chairman of the committee that held hearings on this matter, pointing out Radekís and the FBIís connection with the Hamilton case and asking for his help. Burton never responds.


Judge Oberdorfer orders that relator file its supplemental opposition to Hamilton's motion to unseal by May 5, the supplemental reply by Hamilton is due 5/15/00, the motion hearing is continued from 5/15 to 5/23/00 and directing that any and all amended complaints and the USA's declination to intervene in this matter be unsealed. USA files a motion to extend time to 5/1/00 in which to file a supplemental pleading.


Non Party USA in the qui tam lawsuit files a statement re the pending motion to unseal the file. Rudolph Contreras calls to say that the government is not opposing the unsealing of the qui tam documents.


Hamilton hears rumors that HUD is preparing to settle the Bivens #1 action, apparently not including claims against current HUD employees.


Hamilton issues a press release stating that the HUD loan sale qui tam has been unsealed after four years and HUD has declined to adopt the case. A copy of the qui tam complaint is posted on the Internet. Subsequently, Cargillís counsel and Jeff Parker, listed as sources for the allegations in the complaint, contact Hamiltonís counsel to deny that Parker is a source for Ervinís allegations.



Hamilton received documents from a previous FOIA request for all documents in Hamiltonís FBI file. The file contained a report 1999 report from the FBI noting that none of the interviews it conducted substantiated any allegations of bid rigging and insider trading in connection with the loan sales.


Harvard Endowment and Capricorn sell WMF, the largest HUD Multifamily mortgage broker, to Prudential.


Hamilton personally delivers letters to Annette Hancock, Hamiltonís HUD contracting officer, seeking to convert certain accounts receivable from HUD (viz, termination settlement claims in connection with the termination for convenience of the Crosscutting Contract and certain withholds and other amounts to close out a previous contract) dating back as far as 1994, to claims under the Federal Acquisition Regulation. When she delivers the letters to Hancock, Carolyn Betts comments that HUD is about to settle with John Ervin, who caused a huge mess for HUD, when it wonít pay Hamilton the amount owed under its contract.


Judge Oberdorfer holds a hearing on Hamilton's motion to unseal the full qui tam file.


Hamilton discovers that the qui tam files that have been unsealed recently have been mislabeled, which accounts for the slowness of production pursuant to court order.


Judge Marion Blank Horn, the presiding judge of Hamilton's suit against the government in Federal Court of Claims, announced in a conference call with Hamiltonís attorneys and HUD's attorneys that she was recusing herself from the case and vacating all opinions and orders issued by her to date over the past two years. The judge's explanation for her abrupt recusal was that her husband had had business dealings with Lucent Technologies, whom she believed was a potential witness in the case. She admits to Hamiltonís counsel that the purported potential conflict of interest arose after one of her orders had been issued, but she nevertheless vacated the order, leaving Hamilton to start all over with a new judge.


Judge Gladys Kessler orders a status hearing for 5/23/00 in the qui tam lawsuit.


Order by Judge Oberdorfer that all papers in this case be unsealed, that transcripts of any hearings on file under seal be partially unsealed and made available to the US for the purpose of reviewing and that the US shall notify the court in writing of its position re the unsealing of the hearing transcripts within 10 days of obtaining the transcripts and that Hamilton shall have 10 days to reply to the US position re unsealing of the hearing transcripts.


Hamilton's attorneys call Neil Getnick re: starting the Ervin depositions in Hamilton's suit against Ervin. They also file a withdrawal of Hamilton's objection to Federal jurisdiction in the case.


Judge Oberdorfer unseals the entire qui tam case file with the exception of the hearing transcripts. The order is necessary because the filing desk has failed to release all documents to Hamilton as the result of the judge's second order, maintaining that the order is ambiguous.


The House votes on the HUD appropriations bill.


Fitts, Fittsí family members and Solari employees send letters to Congress re: HUDís refusal to pay outstanding debts to Hamilton. Staff of various members of Congress report throughout the summer and fall that HUD has not or will not respond. A staff member of a Democratic congressman reports that she has "never seen anything like this." Several staff members and interested parties report that HUD has indicated that it is stalling until after the November election and that the key HUD issue is Hamiltonís lawsuit against Ervin and Cuomoís personal liability.


Ervin & Associates, relator in the qui tam lawsuit against Hamilton Securities Group, files a motion for additional time within which to make a determination whether to continue the case following the election by the Department of Justice not to adopt the case, stating as its justification the fact that the HUD Office of Inspector General is conducting discovery as part of an ongoing investigation.


Hamilton receives a call from the HUD FOIA office regarding the request for the PD&R report. The FOIA office reports that the Office of PD&R reports that it has no copy of any such report, and the FOIA officer states that she is forwarding a copy of the request to John Kennedy in the HUD Office of General Counsel (who heads the enforcement division), Hamilton's new contracting officer.


National Mortgage News reports that Apartment Investment and Management Co. (AIMCO) of Denver has entered into definitive agreements to acquire from Oxford Realty Financial Group the interests held by officers and directors in the Oxford entities that own and control the Oxford Properties, for $301 million. Oxford, a former employer of both Ervin and William Richbourg, is located in Bethesda, Maryland, as are Ervin & Associates and Lockheed Martin.


Ervin files a Motion to Dismiss or in the Alternative, for Summary Judgment in the Hamilton Action against Ervin. He relies primarily upon the argument that statements made as part of litigation are not actionable in cases of this type. Representing Ervin are both Wayne Travell of the Venable law firm and Aaron Handleman and Craig Brodsky of Eccleston & Wolf.


Associated Press reports on the recent Senate Government Affairs Committee hearings re the growing defaulted mortgage loan portfolio at HUD. The growing inventory has resulted from the discontinuation of the loan sales program. HUD subsequently announces that it will resume loan sales using personnel on loan from FDIC. Following the first such loan sale, William Apgar, Assistant Secretary of Housing, touts the sale using taxpayer savings figures that include the credit subsidies generated by the sales conducted when Hamilton was HUDís financial advisor.


The HUD Inspector General issues a "Seven Day Letter" to Secretary Cuomo regarding the "HUDís failure to stop flagrant waste, fraud and abuse" in the Puerto Rico Public Housing Authority.


Neil Getnick files a notice of withdrawal of appearance with the DC Federal District Court. He later files an "instanter" motion > for withdrawal of appearance. According to Blackís Law Dictionary > "instanter" means "instantly, at once" as in "the defendant was ordered to > file its motion instanter." Attorneys have stated that an instanter motion would be filed in order to have the effective date relate back to a previous date, indicating that Getnick was anxious to have it on record that he had withdrawn from the case before certain actions were taken by his client.


A telephone status conference is held Judge Bush in the Court of Claims case.


A status conference is held in the Petition to Enforce Subpoena case brought by Susan Gaffney against Hamilton.


Goldman Sachs Group, Inc. files an S-3 registration statement with the Securities and Exchange Commission for the offer of 46,000 shares of additional common stock with a proposed maximum offering price of $4 billion.


A status hearing with Judge Oberdorfer is cancelled and rescheduled for a later date.


Judge Urbina, Motions Judge in the Federal District Court for the District of Columbia, denies Ervin's motion for additional time to determine whether to continue the qui tam suit without the government. This means that Ervin is forced to decide whether to serve a complaint on Hamilton, Goldman, BlackRock, Ocwen, and Williams Adley by the day that is 120 days from April 17, 2000 -- August 15, 2000.


The government filed with the court in the qui tam case a statement regarding Ervinís notice of dismissal.


Carolyn Betts leaves a message with Annette Hancock, Hamilton's contracting officer, to call her regarding any additional documentation required to process Hamilton's claims for amounts owed under a contract termination settlement of the Hamilton crosscutting contract and amounts owed to Hamilton previously under an earlier contract. The call is never returned.


Ervin serves the amended Qui Tam complaint, in the form it was filed a year earlier with the court on Hamilton and Williams Adley, a minority due diligence contractor for the HUD loan sales. Previously, Ervinís new Qui Tam counsel admitted to the case by the court in April, 2000, who is a partner with a New York-based boutique, apparently high-profile, law firm specializing in this type of case withdraws from the case in a "noisy withdrawal." He then files a notice of withdrawal effective retroactively with the US District Court in DC, even though Wayne Travell had previously filed a notice of his withdrawal several weeks earlier. This action may indicate he wants to make sure that he is not associated with the complaint served on Hamilton and Williams Adley or to be a part of what Ervin is doing at that time.


Hamilton sends a letter to Marylea Byrd of the HUD Office of General Counsel regarding the Department's failure to respond to Hamilton's FOIA request for the "PD&R Report" within the time provided by law.


Hamiltonís attorneys file FOIA requests with HUD and then Hamiltonís attorney in the Court of Claims action against HUD requests from David Gottesman at the US Attorneyís Office in DC a copy of the HUD PD&R report that is alleged to have concluded that the $3.8 million optimization error was not statistically significant and is not a basis for withholding money from Hamilton. HUD at first refuses to make PD&Rís materials available, based on a claim of exemption for intra-agency documents not discoverable except in an action by an agency against another agency. On administrative appeal, HUD modifies its exemption claim stating that the materials are subject to a litigation privilege. Gottesman also refuses to provide the report to Hamiltonís attorney pursuant to the discovery request, referring to the FOIA request denial, and in any event states that the only documents responsive to the request consist of third party contractor studies performed for HUD during 1999. Given that the study or report by PD&R would have been created during 1998 when William Apgar served as Assistant Secretary of PD&R, this effectively denies the existence of the requested documents. Fittsí Congressman, Congressman Ed Bryant, of the Tennesseeís 7th District then requests copies of the same, as does Congressman Bob Clements of the Tennessee 5th District, and John Sununu of the New Hampshire 1st District. No responses are forthcoming as of 12-31-00 to these and other congressional requests.



Hamilton mails seven FOIA requests to HUD and the Department of Justice, including a request for Dyncorp contracts and subcontracts with HUD and the HUD Office of Inspector General.


Hamilton files a Supplemental Brief on issues raised by the new judge in the Court of Claims case.


Carolyn Betts leaves a message with Annette Hancock, Hamilton's contracting officer, in the Office of Procurement Contracts at HUD regarding failure to receive any response from the contracting office regarding documentation of amounts owed to Hamilton that was provided to HUD previously. The call is never returned.


Hamilton is told that Kathryn Kuhl-Inclan, Assistant Inspector General for Audit at the HUD OIG has left or taken early retirement.


The Associated Press reports that the FBI is investigating the HUD OIG in Boston, Fort Worth and DC after Internet gambling and pornography have been found on OIG staff computers and that several senior staff members of the HUD OIG has been suspended.


Carolyn Betts delivers a letter to the Chief Procurement Office at HUD questioning why the HUD contracting office has not responded to Hamilton correspondence providing requested documentation for amounts owed by HUD that are not subject to litigation. No response is received.


Hamilton discovers that the Yankee Atomic Power case has been decided. This is the case in which the government took the position opposite from the position it took in Hamilton's Court of Claims case on the issue of the availability of consequential damages under a government contract. The position the DOJ took in Hamilton's case put at risk damages in the Yankee Atomic Power case amounting to billions of dollars.


HUD conducts the first loan sale since the cancellation of Hamilton's contract in 1997. Salomon Brothers Realty Corporation was the sole winning bidder of the portfolio of single family loans. FHA Commissioner Apgar brags, " "FHA's mortgage sales have produced over $2.25 billion dollars in budget profits since 1994. These funds continue our housing and neighborhood initiatives and help reduce the deficit. The sales also reduce the burden on HUD administrative personnel, allowing them to concentrate on expanding homeownership and protecting the health of our $400 billion mortgage insurance portfolio." According to the HUD website, "Three private sector firms assisted HUD in this sales effort -- Myerberg & Company, L.P., a New York based investment banking firm, was the Transaction Specialist responsible for the marketing and sale of the portfolio. Gardiner, Kamya & Associates, P.C., a management consulting and certified public accounting firm located in Washington, D.C. provided Due Diligence service. Federal Asset Advisory Company, LLC., Program Financial Advisor, a joint venture real estate investment banking firm with offices in New York and New Jersey provided program oversight."


Hamilton files a Memorandum of Points and Authorities in Support of Its Motion to Dismiss or, in the Alternative, for Summary Judgment in the qui tam case.


Associated Press reports that DOJ has adopted a qui tam case against Harvard University and four associates for $120 million on Tuesday, claiming that Harvard staffers benefited personally from a U.S.-backed program to help post-Cold War Russia make the transition to capitalism. No mention is made in the Harvard Endowmentís investments in Russian bonds during the period or Secretary Rubinís prior role on the board of Harvard Management [Endowment].


The end of the federal fiscal year. The HUD OIG is required to issue a semiannual report to congress as of this date. As of December 31, 2000, no Semi-Annual Report to Congress had been posted on the Inspector Generalís website.


Beginning of federal fiscal year 2001.


A visit to the website of the Hamilton project manager, now providing financial advisory services independently, shows Annette Hancock in the HUD contracting office as a reference and provides her e-mail for anyone who would like to obtain a reference. This means that HUDís contracting office is openly recommending the project manager who lead Hamiltonís role in the loan sales at the time that HUD has accused Hamilton of "gross negligence."


The HUD FOIA office refuses to release DynCorp contracts to Solari under a Freedom of Information request file on August 7, 2000 due to "prime" contractor [presumably, Lockheed Martin] refusal to respond to FOIA office requests for copies of its subcontracts with Dyncorp. Regarding the HUD OIG direct contracts with Dyncorp, the FOIA officer of the OIG denies that it has documents satisfying a request for RFPs, RFP responses and contracts with Dyncorp notwithstanding information on the Dyncorp web page indicating such contracts exist. By telephone, the FOIA officer denies stating the contracts do not exist and indicates that the OIG contracts must be held in the HUD Contracting Office. HUD Office of Procurement Contracts personnel later deny having possession of any contracts between Dyncorp and the OIG.


From the Wilderness publishes article on Promis software, with allegation re DynCorp role in HUDís inability to produce certified financial statements and adjustment to the books of $59 billion for fiscal 1999.


The Senate passes the 2001 FY HUD appropriations bill.


A Stipulation of Dismissal in connection with HUDís settlement of the Bivens case is filed in US District Court. Reportedly, HUD has agreed to pay Ervin several million million in partial settlement of the civil litigation against HUD and current and former employees. Excluded from the settlement, reportedly, are certain intellectual property issues involving Ervinís HUD financial statement database. It appears negotiations have been under way for a long time. The stipulation of dismissal is signed on October 6 by Wayne Travell (representing Ervin), on October 11 by Raymond Larizza of the Federal Programs Branch of DOJ (representing HUD, Cuomo and Owens), and Terry OíDonnell (representing Helen Dunlap), on October 12 by Ruth Harvey of the Commercial Litigation Branch if the Civil Division of the Department of Justice (representing HUD, Andrew Cuomo in his official capacity, Cheryl Owens in her official capacity as Acting DAS for Operations within the Housing Division)


An Insight Magazine article by Kelly OíMeara on HUDís failure to certify its 1999 financial statements as required by law is posted on the Internet: "Why Is $59 Billion Missing from HUD?" Although HUD attributes the missing money to the faulty installation of a new computer system, HUD does not disclose the contractors involved and there appears to be no effort to recoup losses from these contractors.


Hamilton delivers to the HUD contracting office the releases requested by HUD for the processing of Hamilton's claims for contract termination payments and amounts withheld under and other amounts due under an earlier HUD contract.


Associated Press reports that HUD IG, Susan Gaffney files a sexual harassment complaint against Andrew Cuomo and other HUD officials.


Kathleen McGuan of Reed Smith LLP files on behalf of Williams Adley in the qui tam lawsuit Defendant Williams, Adley & Companyís Motion to Dismiss the First Amended Complaint and an accompanying memorandum of law.


Relator Ervin & Associates files Plaintiff/Relatorís Response to Defendant Hamiltonís Motion to Dismiss or, In the Alternative, for Summary Judgment in the US District Court for the District of Columbia in the qui tam lawsuit. An exhibit to the filing is a Declaration of John Ervin dated October 24, 2000 in which Ervin reveals that a major source for the qui tam lawsuit was a report by Michael Nathans of PCI, a contractor to Ervin & Associates, dated June 21, 1996, relating that Terry DeWitt of J-Hawke told him that Jeff Parker at Cargill told him that Hamilton received the Single Family Loan Sale #1 bids, Hamilton called the Goldman bidding group to encourage them to raise their offer by $.02 to $.74, but did not tell Goldman why, only if they raised their offer, they would be the winning bidder. On December 21, Hamilton files a response, together with an affidavit from Jeff Parker denying the truth of the allegation and stating that he had told Ervin as much in April or May, 2000, before Ervin served the qui tam complaint on Hamilton.


AIMCO announces a agreement with HUD for expedited processing of its mark to market restructurings. One of its largest investors, AEW, is serving as financial advisor to HUD-s market-to-market program.


Denver local news reports that Phil Winn, former HUD official and ambassador to Switzerland, is under investigation.


Rocky Mountain News reports an FBI raid on the HUD field office in Denver.


CBS 60 Minutes reports on a Florida insurance fraud scheme mentioning Andrew and Mario Cuomo and New York Mob and includes on-camera interviews with the FBI on the ongoing criminal investigation.


Hearing before Judge Oberdorfer in the Hamilton v Ervin lawsuit on the subject of Hamilton's motion to remand to Superior Court and Ervinís motion to consolidate the Hamilton lawsuit against Ervin with the qui tam lawsuit. Ultimately, the judge consolidates the case against Ervin with the qui tam lawsuit.


Clinton pardons Phil Winn, former HUD Assistant Secretary of Housing-Federal Housing Commissioner for involvement in HUD related Iran-Contra fraud.


Fox series on "missing money" mentions HUD adjustments of $59 billion.


Fitts receives a tip that alleges that Goreís staff and brother-in-law were key players in the targeting of Hamilton ó specifically, Quinn, Fabiani, Lehane and Hunger. Fabiani and Lehane both attended Harvard Law School, as did Howard Glaser, Cuomoís counsel. Fabiani is reported in campaign coverage to be a former Deputy Mayor of LA. A review of legal documents indicates that Hunger appears to have been the lead attorney in the DOJ Civil Division until his resignation from DOJ in the spring of 1999. The Washington Post in November 2000 has suggested on a possible Gore transition that Hunger is a likely candidate for Attorney General, describing him as Goreís "closest confidant." This raises the possibility that Hunger, Cuomo and Gaffney were cognizant that their efforts to destroy Hamilton and to falsify evidence and smear the firm would have led to a major fundraising scandal regarding Goldman and PNC at the same time that the Presidential impeachment process was under way. Qui Tam transcripts unsealed this month add to the growing evidence that all parties understand that the allegations were not true.


National Mortgage News reports that HUDís Office of Multifamily Housing Assistance Restructuring has struck a deal with AIMCO, a large apartment real estate investment trust in Denver, to expedite the restructuring of its properties receiving federal rental subsidies.


Hamilton receives a FOIA response from an Assistant General Counsel in the FOIA division in reply to an August 7, 2000 request


Hamilton files its reply to the Motion to Dismiss the Hamilton lawsuit against Ervin in the US District Court for DC (Judge Oberdorfer), including an affidavit by Catherine Fitts providing the Hamilton side of the story and an affidavit, declared under penalty of perjury, by Jeff Parker of Cargill, Inc., an alleged source for key Ervin allegations of insider trading. The affidavit states, "During that period in 1995, I spoke with Terry DeWitt at J-Hawk regularly, I have no recollection of stating that Hamilton Securities encouraged the Goldman/BlackRock/Cargill bidding group to raise its offer to $0.74, or any other figure, to win the bid. Ö. Approximately six months ago (around April or May 2000), John Ervin contacted me by telephoneÖ. He asked me to confirm the statement that I allegedly made to Terry DeWitt, and I told him that I had not recollection of that comment. Ö. I have no knowledge that anyone at Hamilton provided information to the Goldman/BlackRock/Cargill bidding group or to anyone else during the single-family No. 1 loan sale".


Hamilton receives a call from the HUD contract manager for the Lockheed contracts. She reports that, in response to Hamilton's FOIA request for a copy of subcontracts with Dyncorp under Lockheed's prime contract with HUD, she had requested a copy from the prime contractor. The prime contractor would not provide a copy to HUD. She also stated that she had no knowledge of a Dyncorp contract with the HUD OIG or where copies of OIG contracts are held. She reported, however, that the HUD OIG probably used a contracting vehicle with another agency, given the "relationship" between HUD and the HUD OIG. She said that a contract manager at HUD for a GSA master contract with a HUD task order would ordinarily have a copy of the master contract, since HUD issues the task order thereunder.


DAVID SHUSTER, FOX NEWS:  Senior staff working for Attorney General Janet Reno have threatened to fire an independent counsel investigating a possible cover-up at the Justice Department, Fox News has learned. Independent
Counsel Dave Barrett led the investigation of former Clinton housing
secretary Henry Cisneros, who admitted lying to the FBI. According to
sources, for the last 10 months Barrett has been presenting his grand jury
with new evidence alleging that officials at the Justice Department
improperly tried to influence actions by the Internal Revenue Service.
Barrett was warned by senior Justice Department officials to halt his
investigation . . . During his investigation, Barrett uncovered evidence of
possible tax fraud by Cisneros. But Justice Department officials, along with
the IRS, said that aspect of the Cisneros record was beyond the independent
counsel's jurisdiction. After looking at the evidence themselves, the
Justice Department and IRS both refused to pursue the matter.
According to well-placed sources, last year a top lawyer within the IRS
alleged that senior Justice Department officials were attempting to protect


The scheduled bid date for the HUD multifamily and health care note sale, which originally had been scheduled to go up for bid in November, 2000. Members of the loan sales team include Secured Capital as Multifamily Transaction Specialist (Financial Advisor) and Williams, Adley as Due Diligence Contractor. As of January 26, no posting on the HUD website announced the completion of the bid offering. The sales brochure indicates that potential bidders may review the Asset Review Files by appointment at a computer network system located at a Washington, DC due diligence facility scheduled to open on October 25 or may purchase the files on CD. Bidders were permitted to bid on any combination of loans. The sales brochure anticipated that the size of the portfolio to be offered was $800 million UPB.

Unknown Date to be determined

In the governmentís Memorandum of Points and Authorities in Support of Defendantís Motion to Dismiss and for Summary Judgment in the FOIA appeal case, filed in camera, the following statement is made, redacted in the original version provided to Hamilton: "Subsequently, on June 6, 1996, pursuant to 31 USC 3729 et seq. a qui tam complaint, which is referenced above, was filed under seal in this Court. About a month later, the Civil Division of the United States Attorneyís Office for the District of Columbia contacted the HUD OIG and requested the OIGís assistance in investigating the allegations in the qui tam action. Thereafter, the OIG commenced an investigation." This is interesting in light of the representation in an August 16, 1996 filing in the qui tam action, where the government states that based upon the relator's statement of material evidence supplied to the government with the qui tam complaint and the allegations in the related Bivens action, the Inspector General of HUD opened an investigation and, as a result of that investigation, a referral of the allegations in the Bivens complaint was made to the Criminal Division of the US Attorney's Office for DC, which opened a criminal investigation in the matter.


Hamilton files a Supplemental Memorandum in support of Its Motion to Dismiss or, in the alternative, for Summary Judgment, which incorporates information obtained from the transcripts of the qui tam hearings, which have just been unsealed and transcribed.   


Hamilton receives a call from the HUD FOIA office reporting that it finally has located the HUD/Dyncorp contract requested in an August FOIA request.


Ervin files a response to Hamilton's supplemental memorandum in the qui tam lawsuit.


HUD Secretary Designate Mel Martinez testifies before Congress.


HUD issues a press release headlined "Success of HUD Management Reforms Confirmed by GAO -- Department Removed from High Risk List" It says "The General Accounting Office (GAO) has taken the Department of Housing and Urban Development off its "high risk" list as a result of significant management reforms set in place under Secretary Andrew Cuomoís leadership." In fact, GAO removed the Community Planning and Development Office from its high risk list but affirmed the high risk status of HUD's Single Family Mortgage Insurance and Rental Housing Assistance Program ---approximately 75% of HUDís financial responsibilities. The release also highlights the Department's achievements while Andrew Cuomo served as Secretary, including "The HUD Office of Inspector General issued the first clean audit of HUDís financial statements in the Departmentís history in March 1999. This means that for the first time, the Departmentís financial statements are in complete compliance with all applicable federal requirements." It does not mention that HUD failed to produce audited financial statements for the 1999 fiscal year as required by law and that the Inspector General had testified before a Congressional Committee that $59 billion was unaccounted for during 1999. It quotes Congressman Jim Leach (IA), former Chair, House Banking Committee, "Some years ago there was a movement among some to abolish the Department of Housing and Urban Development. Led by Secretary Cuomo and supporters in Congress, that initiative was turned back. Most importantly, HUD now is considered an agency thatís on its feet, doing well, and doing wonderful public service for people in the housing and urban development arena."


Outgoing President Clinton issues a series of pardons that include Marc Rich and Henry Cisneros.


David Kass, HUD Deputy Assistant Secretary for Congressional and Intergovernmental Affairs, sends a nearly identical letter of response to inquiries from Senator Robb's office on behalf of two Solari employees. Regarding the Court of Claims case, he states, "The parties have raised several complex legal issues that bear on their entitlement to recovery and the scope of damages recoverable. Until the rights and liabilities of the parties are adjudicated by the court, final disposition of any monies withheld (and any additional moneys owed by Hamilton to the Government) would be premature. Moreover, the Government's decision not to participate in the Ervin litigation does not resolve the issues pending before the Court of Federal Claims since these are unrelated to the Ervin allegations." No explanation is given as to why the Office of Procurement Contracts purported to deny Hamilton the right to convert certain contract receivables to a claim, explaining that HUD and Hamilton had not reached an "impasse" regarding these amounts. The conversion of receivables to a claim is required before Hamilton can sue for such amounts or is entitled to interest on such amounts under the Federal Acquisition Regulation.

David Kass also sends a letter to Congressman Clementís office that says that PD&R never did a study of the $3.8 million optimization error. This is not a truthful statement.


George W. Bush is inaugurated.


The Washington Post reports that Cuomo has announced his race for New York Governor and that the announcement was moved from the home of the ex-wife of Marc Rich to a Kenneth Cole store due to the controversy around Marc Richís pardon. Cuomo is expected to run against Carl McCall, NY State Comptroller, in the Democratic primary.


Hearing in front of Judge Oberdorfer in the US District Court for DC on the Hamilton and Williams, Adley motions to dismiss qui tam lawsuit and Ervin's motion to dismiss the Hamilton v. Ervin lawsuit.


Susan Gaffney, HUD IG, issues a memo to all OIG employees entitled, "Final Disciplinary Actions for 2000" documenting wrongdoing by the HUD OIG staff. This document sets forth the charges made in connection with 20 reprimands, six suspensions and four "removals." The infractions by OIG personnel include making false statements, misuse of appropriated funds, altering prices, misuse of government monies and funds, use of government computers to access internet pornography and unauthorized contracting and violation of federal procurement regulations.


In accordance with Judge Oberdorferís request at the January 31 hearing, Ervinís counsel submit to the court a "Timeline of Karen Burstein Letter" and a "Chris Greer Timeline." The judge rules before Hamilton has an opportunity to dispute certain inaccuracies in and omissions from the timelines.


Judge Oberdorfer issues rulings (1) denying Ervinís motion to dismiss Hamiltonís case against it and (2) denying Hamiltonís and Williams Adleyís motions to dismiss the qui tam lawsuit. In the latter order, the judge includes a footnote "Discovery may lead to evidence of pre-filing law enforcement actions and public disclosure not now on the record." According to the order, Ervin's allegations that Hamilton "provided false invoices to the government to support exaggerated cost estimates" on their face allege an adequate level of specificity in order to justify not dismissing the claims. However, nowhere in the order does the judge mention Ervin's allegations of bid-rigging and insider trading. With respect to Hamilton's suit against Ervin, the judge states that, "Hamilton may be able to prove that Ervin's wrongful actions did cause HUD's cancellation [of Hamilton's contract]." And "If Hamilton proves that John Ervin acted with malice or improper purpose outside the scope of his employment, he may be liable personally in tort."


Kelly OíMearaís story "Cuomo Leaves HUD in a Shambles" in Insight Magazine is released on the magazineís website. Among other things, the article reports that Cuomo had engaged in "mendacity" in stating that HUDís high risk rating by GAO had been dropped.



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