Rhode Island news
Appeals panel rules against developer
01:00 AM EST on Thursday, November 26, 2009
BOSTON — A three-judge federal appeals panel struck down a developer’s claims that he acted as a whistleblower in raising allegations that Woonsocket officials misled the U.S. Department of Housing and Urban Development about its commitment to affordable housing in order to gain grant money.
Gordon F.B. Ondis sought to recover damages under the federal False Claims Act based on what he alleged was his exposure of misrepresentations made by the city to HUD. The act allows citizens to bring action on the government’s behalf and recover lost revenue from people or entities who deliberately defraud the government. The “whistleblower” would then be entitled to a share of any money recovered.
Ondis had appealed to the 1st Circuit Court of Appeals after then U.S. District Judge Ernest C. Torres dismissed the suit in October 2008.
The appeals judges found that allegations Ondis raised had previously been exposed in newspaper articles and that Ondis had no firsthand knowledge of any fraud.
Howard Croll, a lawyer for Woonsocket Mayor Susan Menard, said he was pleased with the ruling. “That’s really what this is. He’s not a whistleblower,” he said.
Further, Croll said, the federal government’s refusal to join Ondis in the suit indicates “it found nothing to the allegations.”
Ondis, who owns federally subsidized housing in Central Falls and Woonsocket, alleged that Menard threatened to do away with all subsidized housing in a 2004 visit to one of his properties. He began an investigation into whether the city was gaining HUD grants under false assurances that the city would promote subsidized housing programs, when, in fact, it was trying to “stifle those programs,” wrote Senior 1st Circuit of Appeals Judge Bruce M. Selya in ruling.
Ondis had his staff search public records, conduct interviews and request documents. He then alleged that from 2000 to 2005, when the city received about $15 million in grants, it actually followed a policy to restrict such housing, the ruling said.
The act bars people from bringing a claim that “instead of plowing new ground, attempts to free-ride” previously disclosed fraud, or parasitic suits, Selya wrote. The allegations, he said, had already been raised in newspapers.
Congress plainly intended that act to encourage people who have firsthand knowledge of fraud, the ruling said.
“To achieve its real purpose, the [act] should reward only those who come forward with original, direct and independent knowledge of fraud,” the court said.
David C. Clarke, Ondis’s lawyer, could not be reached for comment Wednesday afternoon.
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