Whistleblower sues LMHA over alleged missing $17 million in Section 8 funds
A former Louisville Metro Housing Authority employee says as much as $17 million in Section 8 funds are missing from the agency. And after raising concerns about the unaccounted-for funds to federal officials, he was fired.
The plaintiff, Matt Swain, is now suing the housing authority, claiming retaliation under the Kentucky Whistleblower Act.
The housing authority, however, said there is no evidence of unaccounted-for funds at this time, and it "vehemently denies" the allegations made in the lawsuit, according to a statement from LMHA public information officer Jailen Leavell released Friday.
Swain joined the authority in April 2020 as its Safety, Security and Investigations supervisor and was later promoted to the OSHA/Safety, Security and Investigations manager, according to court documents. Near the end of April or beginning of May, a deputy director informed Swain of the alleged missing Section 8 funds.
Section 8 vouchers are given to low-income people by the federal government and can be used to cover all or part of a person's rent. Tenants must pay 30% of their adjusted gross income for rent and utilities.
In his lawsuit, Swain said he contacted a representative from the U.S. Department of Housing and Urban Development, which oversees public housing agencies that distribute the vouchers, and reported his knowledge of the mismanaged funds.
Approximately four days later, Swain said he was suspended without pay, citing job performance concerns. The suit calls the performance concerns "fabricated."
About two weeks later, on May 29, Swain was fired.
The housing authority, however, said it reported Section 8 housing department issues "with respect to income recertifications" to HUD in March.
"LMHA has new leadership and structures in place in the Section 8 program, is awaiting the results of a third-party audit, and is working closely with HUD on further reform," Leavell said in the statement.
This was not the first time Swain raised concerns about his observance of the "waste and mismanagement" of funds, according to the lawsuit. In February during a Zoom call with members of HUD, Swain mentioned that widespread subletting was occurring in LMHA properties, a form of fraud. Afterward, the suit claims executive director Elizabeth Strojan told Swain not to discuss subletting.
"She said, 'You don't talk about subletting anymore.' And so he's like, 'Well, you know, that doesn't sit well with me. I am going to talk about subletting again,'" said Swain's lawyer, Tom Coffey.
Leavell previously said Thursday the housing authority committed no wrongdoing and is dedicated to a positive workplace environment.
"While we cannot discuss the specifics of ongoing legal matters, we want to emphasize that LMHA has engaged in no wrongdoing and will defend itself vigorously against all allegations," he wrote. "Our agency is committed to providing a fair and respectful workplace for all employees, and we will address this issue through the appropriate legal channels. We remain dedicated to upholding our values and ensuring a supportive work environment."
Coffey, however, said the Kentucky Whistleblower Act was created for situations like this.
"It's designed to protect people who come forward with worries and complaints and concerns about government waste, abuse of authority, fraud, safety," he said. "If people are afraid that they can't come forward, then it only lends itself for people to further mismanage, further abuse their power, further commit fraud, further put people's lives in danger safety-wise."
Prior to joining LMHA, Swain was a Chicago police officer for 27 years. He is suing for retaliation and is seeking compensation and his job back.
Reach reporter Eleanor McCrary at EMcCrary@courier-journal.com or at @ellie_mccrary on X, formerly known as Twitter.
This article originally appeared on Louisville Courier Journal: Louisville housing authority missing $17M in Section 8 funds, suit says
