The Housing Hustle

The cornerstone of Ronald Reagan's campaign for the White House was an attack on Government waste, fraud and abuse. Singled out for special scorn were "giveaway" programs for the poor. Now, as Congress delves into a spreading scandal at the Department of Housing and Urban Development, the hypocrisy of Reagan's rhetoric has been brought into sharp relief. During his Administration, a massive giveaway did take place, but to the greedy, not the needy. HUD, whose prime mission is to provide shelter for low-income citizens, instead became a gold mine for Republican insiders, ambitious developers and powerful Washington consultants.

At the heart of the scandal is Samuel Pierce, Reagan's HUD Secretary. Though Pierce was the only black to serve in Reagan's Cabinet -- and its only member to remain in office throughout both Reagan terms -- the former President once greeted him as "Mr. Mayor" at a conference of mayors. Under Pierce's feckless leadership, HUD's budget was pared 70% (it stands at $14.9 billion for 1989). Little was done to halt a decline in the nation's inventory of low- income housing, from which 4.5 million units have disappeared since 1973. Critics charge that programs were dismantled, talented staffers were fired and unqualified managers were promoted. Pierce went along with all of it, earning the nickname "Silent Sam."

As he prepared to leave the Government in January, Pierce pointed proudly to his three Government decorations and declared, "President Reagan asked me to reduce the size and cost of Government and at the same time try to take care of the most needy. I think I did that very well." The cynicism of that boast has become glaringly evident. Since the release of a HUD inspector general's report in April, the agency has become the target of inquiry by two congressional committees into charges of influence peddling. The Justice Department has launched a nationwide probe into the possible theft of as much as $100 million in HUD funds. Says Democratic Congressman Tom Lantos of California, chairman of a House panel that has held hearings on the agency's problems: "The scandal at HUD seems to have no end. It is the most mismanaged department in memory."

Three broad areas of misconduct are under investigation:

RENT SUBSIDIES. A program to provide subsidized housing was turned into a treasure trove from which millions of dollars in rent subsidies, tax credits and consulting fees were doled out to prominent Republicans and a handful of rich developers. Pierce stood idly by as his executive assistant, Deborah Gore Dean, 35, turned over contracts to firms that enlisted Washington insiders as consultants. They included Dean's close friend former Attorney General John Mitchell and former Interior Secretary James Watt.

THEFT OF FUNDS. The Justice Department last week launched a nationwide inquiry into a pattern of abuse by escrow agents who pocketed money they received from the sale of foreclosed homes over a four-year period. Among the targets is a Maryland woman, nicknamed "Robin Hud," who brags that she stole $5.5 million in HUD money and gave it to the poor.