Grand Jury Probing HUD Chief’s Statements

November 15, 2007 3:31 p.m.

In case you haven’t heard it enough times, it’s not the crime, it’s the cover-up. Or in this case, the lesson is not to make sweeping statements under oath that can be easily debunked. And for that, you can thank Housing and Urban Development Department Secretary Alphonso Jackson.

After Jackson boasted to an audience that he didn’t give contracts to critics of the President, the department’s inspector general and Congress pounced. Jackson, eager to clear his name, proclaimed, “I don’t touch contracts.”

Unfortunately, that appears not to be true, as the National Journal first reported last month. Now a grand jury is digging deep into Jackson’s help for his friends:

Behind the scenes, Jackson has helped to arrange lucrative contract work running into the hundreds of thousands of dollars for friends and associates who went to work at HUD-controlled housing authorities in New Orleans and the Virgin Islands, according to people familiar with his actions. Indeed, one of Jackson’s good friends, Atlanta lawyer Michael Hollis, appears to have been paid approximately $1 million for managing the troubled Virgin Islands Housing Authority. Before landing at the authority, some sources said, Hollis had no experience in running a public housing agency.

Jackson’s past efforts to aid his friends are causing him no end of headaches. For several months, a federal grand jury, Justice Department prosecutors, the FBI, and the HUD inspector general’s office have been exploring Jackson’s role in contracting decisions at the housing department. According to people familiar with the investigation, federal agents are focusing on Jackson’s relationship with one friend in particular, William Hairston, a stucco contractor from Hilton Head Island, S.C.

In interviews several weeks ago with National Journal, Hairston acknowledged that Jackson had helped him land a lucrative job around January 2006 at the Housing Authority of New Orleans, or HANO. HUD and a former HANO official have said that Hairston was paid about $485,000 for working as a construction manager at HANO during an 18-month period. As it turns out, new information uncovered by National Journal suggests that Hairston was paid even more than that. HSD, a Georgia company that was affiliated with Hairston, was paid $186,280 under a direct contract with HUD, federal procurement records show. A HUD document identified Hairston as a representative of HSD.

Federal investigators are digging deep into Jackson’s relationship with Hairston, a sometime golfing buddy of the secretary’s. According to the people familiar with the inquiry, federal investigators are also reviewing allegations that Hairston did work on Jackson’s vacation home in Hilton Head. Investigators recently questioned at least one Jackson associate on that issue; National Journal could not confirm the allegations.

Apart from Hairston, investigators are exploring the circumstances under which HUD awarded management contracts for the Virgin Islands authority, the sources said. The grand jury is seeking information on Hollis and on a HUD contractor that initially employed him in the Virgin Islands, according to a copy of a grand jury subpoena obtained by National Journal. Hollis refused to answer questions about whether Jackson had aided him.

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