Consultant ordered to pay housing agency $1.9 million over fraud

A consultant who allegedly misappropriated millions of federal taxpayer dollars meant to fund programs to empower and provide jobs for low-income residents in housing projects throughout the city has been ordered to pay $1.9 million in a civil case.

Dwayne E. Williams is accused of defrauding the agency in concert with top executives by improperly obtaining contracts and billing for services that his company never provided, according to the suit filed by the Housing Authority of the city of Los Angeles.

Former agency head Donald Smith and his deputy, Lucille A. Loyce, were accused of steering contracts to Williams and lying about the mismanagement of funds to the agency’s board. They were separately ordered by a jury to pay $528,000 for their mismanagement.

With Loyce’s support, Williams began consulting about 1995 for residents’ corporations set up in housing projects in the city, according to the suit. The corporations were part of a federal program to provide economic opportunities to residents and provide jobs in cleaning, trash and moving services in the projects.

Loyce forced the groups to hire Williams, a friend, and retaliated against those who refused to cooperate, while Williams double- or triple-billed for his services and sometimes charged for work he never performed over nearly 10 years, the housing authority alleged in the lawsuit.

At times, Williams said in his billing statements that he was working at two different locations at once, said Charles Slyngstad, an attorney for the housing authority. In his testimony during Loyce and Smith’s trial, Williams said the discrepancies were due to “transcription errors,” Slyngstad said.

A suit accusing Williams of fraud was dismissed earlier because of the statute of limitations, but was revived by an appellate court in 2008. After the case was sent back to the trial court, Williams’ attorney withdrew from the case, and Williams has not appeared in court or responded to legal filings since last summer, Slyngstad said.

A default judgment against Williams was entered last October. After reviewing evidence submitted by the Housing Authority, Los Angeles County Superior Court Judge Kenneth Freeman signed a ruling this week ordering Williams to pay $1.9 million to the agency.

In a phone interview, Williams said he was never made aware that the case had been revived. He defended his work consulting for the housing projects.

“I’m a businessman. I provided services to my customer, and my customer was satisfied with the services I provided,” said Williams, who added that he had moved out of state in 2008. “Had the work not been performed, they wouldn’t have paid me.”

victoria.kim@latimes.com