South Florida Developers Charged in $36M LIHTC Fraud Scheme

South Florida Developers Charged in $36M LIHTC Fraud Scheme

According to charges recently filed in Miami federal court, two principals of the Miami-based Carlisle Development Group, once the state’s biggest developer of affordable housing, stole tens of millions of dollars in U.S. government subsidies by inflating construction costs and receiving kickbacks from contractors. According to prosecutors, they even set up shell companies to collect the illicit payments secretly.

In total, the principals and four other defendants were accused of stealing $36 million in U.S. tax credits from 14 government-subsidized projects built mostly in Miami-Dade County. The federal investigation into the company started in late 2011 when two senior executives quit and went to the U.S. attorney's office with their allegations of fraud.

Tax-credit applications are reviewed carefully on a project-by-project basis by the Florida Housing Finance Corp., which distributes millions of dollars in credits under strict Internal Revenue Service guidelines. An email from May 2009 between two companies implicated in the charges asserted that the venture’s partners “obviously falsified construction contracts” for an affordable housing project so they could qualify for more government funds.

U.S. Attorney Wifredo Ferrer, noting that the defendants were already guaranteed millions in fees from these projects, said they were “motivated by personal greed” to steal additional “federal funds intended for the construction of housing for the poor, the homeless, and the elderly of South Florida.” He said his office has recovered nearly $11 million in government funds stolen by the defendants. The principals are charged with two conspiracy offenses that carry penalties of up to 10 years in prison. Others charged in the high-profile case were the company’s partners in other affordable housing deals.