Civil War-Era Law Could Help Recover Funds from Fraudulent HUD Contractors

[Mejappz]

*** FOR IMMEDIATE RELEASE ***​

CIVIL WAR-ERA LAW COULD HELP RECOVER FUNDS FROM FRAUDULENT HUD CONTRACTORS

VENTURA, Calif. (May 23, 2025) – Signed into law by President Lincoln in 1863, the False Claims Act was a response to widespread fraud by contractors who supplied the Union Army with shoddy goods and services. It may now also be a remedy to go after fraudulent vendors and grantees of the U.S. Department of Housing and Urban Development.

The law’s purpose was to hold vendors accountable and to encourage whistleblowers to report fraud against the government by allowing them to receive a portion of any recovered damages.

Its “qui tam” provision enables private citizens (known as whistleblowers or relators) to file lawsuits on behalf of the government and then share in any funds recovered. The statute, codified as 31 U.S.C. § 3729 et seq., has been a potent weapon in combating fraud in areas such as healthcare, defense, and government contracting. Penalties under the federal statute can include substantial fines and treble damages, making it a significant deterrent against fraudulent activity.

The act has also allowed vigorous enforcement against those who defraud the United States while knowingly violating the civil rights and due process of citizens.

The False Claims Act could be the instrument by which hundreds of real property appraisers targeted by fraudulent HUD vendors and grantees are made whole. The vendors and grantees were engaged by the U.S. Department of Housing and Urban Development and conducted rogue DEI-related investigations under a Biden administration panel known as the PAVE Task Force.

The task force, wrote real property appraiser Ken Mullinix, “was simply a bureaucratic apparatus designed to justify federal grant funding, inflate internal performance metrics, and maintain political optics — not to administer justice.”

“This wasn’t enforcement,” wrote Mullinix. “This was theft of government funds dressed in legal theater. Homeowners were deceived. Appraisers were targeted. The law was sidestepped. And no one, until now, has exposed the machinery behind the curtain.”

Mullinix himself was put through a formal discrimination investigation by the Department of Veterans Affairs years earlier when a disgruntled homeowner, likely caught in a lender debt trap, filed a complaint against him when a value Mullinix concluded failed to justify an attempt at refinancing of the appraised property. The borrower, based only on a hunch, claimed racism. Mullinix says he was put through a yearlong investigation but one that followed the law. It included a jurisdictional review, an investigative plan, interviews, and a formal closure letter, which exonerated him.

Then HUD somehow got involved.

“When HUD began a mirrored investigation of me under the PAVE initiative, I immediately knew something was off,” he said. “There was no case number. No Administrative Law Judge referral. No recorded interviews. Just vague emails and a completely fabricated second charge — later disavowed. HUD repeatedly denied my requests for procedural transparency. I was being dragged through a fake legal process — and they assumed I wouldn’t notice.”

Mullinix now seeks recompense for the years he spent as a full-time defendant. He should strongly consider filing a “qui tam” lawsuit under the False Claims Act against HUD vendors and grantees linked to the investigations.

The Department of Justice — since January 20, under new management — says it is committed to enforcing federal civil rights laws and ensuring equal protection under the law through vigorous use of the False Claims Act. It wants to use the statute to go after those who defrauded the United States government by taking its money while knowingly violating civil rights laws and due process of citizens.

For example, it could target a university that accepted federal funds and then encouraged groups of students to create “no-go zones” that barred admittance to other groups of students based on skin color, national origin or religion. It might also go after universities that allowed male students to enter women’s bathrooms or schools that required women to compete against men in athletics. Colleges and universities may not accept federal funds while discriminating against their students.

Mullinix and the hundreds of his fellow real property appraisers who were ensnared in rogue, procedureless investigations by HUD contractors and grantees for simply doing their jobs should consider the False Claims Act as a remedy for the damages they suffered.

# # #​

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

# # #​