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Taylore Maxey (850) 488-4197
For Immediate Release:

Florida Housing to Pursue Ban on Developer

Tallahassee, FL – Today, Florida Housing Finance Corporation (Florida Housing) announced that it will pursue a ban on affordable housing development company Pinnacle Housing Group (PHG) from applying for or participating in any funding programs administered by the Corporation. This comes following the filing of a settlement agreement in federal court by the United States Attorney (US Attorney) in which DAXC, LLC—a subcontractor company with most of the same principals as PHG—admitted to wrongdoing, resulting in the principals of the company knowingly obtaining excess federal funds from the Low Income Housing Tax Credit (LIHTC) Program. The length of the ban is yet to be determined.

“The Board has the administrative ability to ban principals and affiliated companies from receiving any federal or state funding from the Corporation in the event either has engaged in misrepresentation regarding our programs,” said Bernard “Barney” Smith, Chairman of the Board of Directors. “And, we expect to authorize the Corporation to take legal action against the principals of DAXC.”
Regarding misconduct by low income housing developers, Assistant US Attorney Michael R. Sherwin said “such conduct will not be tolerated and those who abuse this critically important program will be prosecuted and punished.” Sherwin has acknowledged Florida Housing’s critical role in assisting the federal government in cases where there has been developer misconduct: “… Cooperation among state and federal agencies is not aspirational and will provide positive results when quality people are committed to a worthy mission,” Sherwin said.
Per the filing, the US Attorney determined that DAXC was set up to inflate the construction costs of four low-income housing contracts from 2009 to 2011 to obtain $3.1 million of excess federal funds that went for the personal benefit of the principals associated with DAXC and its affiliates. Specifically, inflated amounts for concrete shell work were included in itemized construction contracts submitted to Florida Housing’s representatives.

Starting in 2013, Florida Housing began prohibiting subcontractors affiliated with the developer or general contractor from involvement with developments awarded funding through the Corporation. Florida Housing is currently engaged in the rule-making process that governs funding programs it administers, including further strengthening this prohibition.
 2.To assist a homeowner(s) who has returned to work or recovered from unemployment or underemployment, the Mortgage Loan Reinstatement Payment (MLRP) Program will provide up to $25,000 as a one-time payment to help satisfy all or some of a delinquent first mortgage.
“One of our main priorities is to ensure that all applicable federal and state rules and laws are followed,” said Ken Reecy, Florida Housing’s Interim Executive Director. “We worked closely to assist officials from the US Attorney’s office and appreciate their efforts to help identify misuse and abuse of a program that is vital to providing low-income citizens of this state with affordable options for safe and decent housing. Florida Housing is committed to our mission, and will not hesitate to impose sanctions against those individuals and entities who commit misrepresentation in our programs.”
Per settlement documents, DAXC will pay a monetary penalty of $1,000,000 in addition to forfeiting more than $4.2 million to the federal government.

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