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United States ex rel. Wuestenhoefer v. Jefferson

United States District Court, N.D. Mississippi, Greenville Division

January 16, 2015

UNITED STATES OF AMERICA ex rel, KELLY NICOLE HORTON WUESTENHOEFER; and KELLY NICOLE HORTON WUESTENHOEFER, individually Plaintiff,
v.
A.J. JEFFERSON, et al., Defendants.

MEMORANDUM OPINION AND ORDER

DEBRA M. BROWN, District Judge.

This False Claims Act and unlawful retaliation action is brought by Kelly Nicole Wuestenhoefer ("Relator") on behalf of herself and the United States. Doc. #29. Relator alleges that her former employer, Defendant South Delta Regional Housing Authority ("SDRHA"); Ann Jefferson, SDRHA's former Executive Director; and various other persons and entities, engaged in "wrongful, fraudulent and illegal conduct" with regard to funds of the United States Department of Housing and Urban Development ("HUD"). Id. at 12. Relator further alleges that SDRHA and its employees retaliated against her for her role in uncovering the fraudulent conduct. Finally, Relator alleges that SDRHA's accountant, Lloyd and Associates, LLC, and its owner, Michael Lloyd (collectively, "Lloyd") wrongfully aided the fraudulent conduct.

Before the Court are a number of pending motions: (1) Lloyd's motion for summary judgment, Doc. #206; (2) Lloyd's motion for attorney fees, Doc. #208; (3) SDRHA's motion for summary judgment, Doc. #245; (4) a motion for summary judgment by Defendant Patricia Logan, Doc. #247; (5) a motion for summary judgment by Defendant Dinnial Love, Doc. #249; (6) a motion for summary judgment by Defendant Howard Sanders, Doc. #251; (7) a motion for summary judgment by Defendant Larry Cordell, Doc. #253; (8) a motion for summary judgment by Defendant Robert Gray, Doc. #255; and (9) Lloyd's motion to strike, Doc. #244.

I

Summary Judgment Standard

"Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law." Norwegian Bulk Transp. A/S v. Int'l Marine Terminals P'ship, 520 F.3d 409, 411 (5th Cir. 2008) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 22-23 (1986)). To award summary judgment, "[a] court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Norwegian Bulk Transp. A/S, 520 F.3d at 411-12 (internal quotation marks omitted). To this end, "[t]he moving party bears the burden of establishing that there are no genuine issues of material fact." Id. at 412.

"If, as here, the nonmoving party bears the burden of proof at trial, the moving party may demonstrate that it is entitled to summary judgment by submitting affidavits or other similar evidence negating the nonmoving party's claim, or by pointing out to the district court the absence of evidence necessary to support the nonmoving party's case." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998) (citation omitted). If the moving party makes the necessary demonstration, "the burden shifts to the nonmoving party to show that summary judgment is inappropriate." Id. In making this showing, "the nonmoving party must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Cotroneo v. Shaw Env't & Infrastructure, Inc., 639 F.3d 186, 191-92 (5th Cir. 2011) (citation and internal punctuation omitted). When considering a motion for summary judgment, the Court "resolve[s] factual controversies in favor of the nonmoving party." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).

II

Relevant Facts

A. HUD's Funding Regulations

The HUD Housing Choice Voucher ("HCV") program "pays rental subsidies so eligible families can afford decent, safe and sanitary housing." 24 C.F.R. § 982.1(a). HCV programs "are generally administered by State or local governmental entities called public housing agencies (PHAs)." Id. HUD provides PHAs with the housing assistance funds necessary to run the HCV program ("Housing Assistance Payments" or "HAPs") and with "funds for PHA administration of the programs." Id.; Doc. #206-1 at 7.

HAP funding "may only be used for eligible HAP needs of rent, family self-sufficient escrow payments or utility reimbursements [and] shall not under any circumstances be used for any other purpose, such as to cover administrative expenses...." Doc. #245-9 at 4 (emphases omitted). In instances where a housing authority "is found to have misappropriated HAP funds by using the funds for any purpose other than valid HAP expenses... HUD will require the immediate return of the funds of the HAP." Id.

"[A]dministrative fees may only be used to cover costs incurred to perform... administrative responsibilities for the [HCV] program in accordance with HUD regulations and requirements." 24 C.F.R. § 982.152(a)(3). If excess administrative funds ("administrative fee reserves") exist at the end of a fiscal year, "the PHA may use these funds for other housing purposes permitted by State and local law. However, HUD may prohibit use of the funds for certain purposes." 24 C.F.R. § 982.155. Since 2004, HUD has restricted the use of administrative fee reserves "to activities related to the provision of rental assistance under the [HCV]." Doc. #244-3 at 3.

PHAs must "maintain an administrative fee reserve [for the HCV] program.... The PHA must credit to the administrative fee reserve the total of [t]he amount by which program administrative fees paid by HUD for a PHA fiscal year exceed the PHA program administrative expenses for the fiscal year [plus i]nterest earned on the administrative fee reserve." 24 C.F.R. § 982.155. Furthermore, a PHA "must engage and pay an independent public accountant to conduct audits in accordance with HUD requirements." 24 C.F.R. § 982.159(a).

HUD requires reports on "Financial Operations and Accounting" for two primary purposes: (1) "to determine if funds expended during the period were used for the program activities authorized by HUD in accordance with approved budgets and program regulations;" and (2) "to monitor HA performance...." Doc. #245-5 at §§ II-1, II-2.

B. SDRHA

SDRHA is a Mississippi public corporation organized "to provide affordable housing to qualified individuals in" Bolivar, Humphreys, Sunflower, Issaquena, Sharkey, and Washington Counties. Doc. #206-1 at 1. The County Commissioner from each of the six counties serviced by SDRHA appoints an individual to sit on SDRHA's Board of Commissioners ("the Board"). Id. The six appointed commissioners elect a seventh person to serve on the Board. Id. The Board shoulders the responsibility of "oversee[ing] federal funds." Doc. #311 at 12. Although the Board governs SDRHA, an Executive Director hired by the Board administers the corporation's day-to-day operations. Doc. #206-1 at 1.

During the time period relevant to this suit, SDRHA operated: (1) a Housing Choice Vouchers program run by HUD; (2) a Section 8 New Construction ("NC") & Substantial Rehabilitation program run by HUD; (3) SDRHA Owned Rental Housing; and (4) a SDRHA-run "Homeownership" program. Doc. #206-1 at 2. Simultaneously, SDRHA maintained five separate bank accounts: (1) "Section 8 New Construction/Sub Rehab ("NC Account"); (2) "Housing Choice Voucher" ("HCV Account"); (3) "Business Activities" ("Business Account"); (4) "Component Unit/other" ("Component Account"); and (5) "Disaster Voucher Program" ("DV Account"). Id. at 7. The Business Account operated as SDRHA's "primary authoritywide operating account."[1] Id.

SDRHA obtained funding from HUD by submitting information to HUD through the Voucher Management System ("VMS"). Doc. #245-2 at ¶ 5. VMS submissions were submitted monthly. Id. Based upon the information contained in the VMS submissions, HUD would deposit three types of funds into the NC Account: (1) NC HAP funds; (2) HCV HAP funds; and (3) administrative funds. See Doc. #206-1 at 8; Doc. #245-2 at ¶ 6. During the time period relevant to this suit, "HUD would base their housing assistance payments... on the previous year's expenditures. So whatever they would receive in 2008 would be based on what they spent in 2007 with an inflation factor." Doc. #206-2 at 20. The administrative fees, in turn, were "based on the number of units leased on the first day of each calendar month." Id.

Under then-SDRHA procedures, the HCV HAP funds were transferred to the HCV account; the administrative funds were transferred to the Business Account; and the NC HAP funds remained in the NC Account. Doc. #206-1 at 8. If the administrative funds exceeded the allocable expenses for the NC or HCV programs, then SDRHA created a "payable (due to)" entry for the corresponding program. Id.

Pursuant to SDRHA and HUD's Consolidated Annual Contributions Contract ("ACC"), SDRHA was required to use the funds in compliance "with the requirements of the U.S. Housing Act of 1937 and all HUD regulations and other requirements, including any amendments or changes in the law or HUD requirements." Doc. #245-3 at 3. The ACC provided that "[i]f the [housing authority] is not adequately administering any Section 8 program in accordance with HUD requirements, HUD may... [d]irect the HA to use the funds to improve administration of the Section 8 program or for reimbursement of ineligible expenses." Doc. #245-3 at 3. Furthermore,

[u]pon written notice to the HA, HUD may take possession of all or any HA property, rights, or interests, in connection with a program, including funds held by a depository, program receipts, and rights or interests under a contract for housing assistance payments with an owner, if HUD determines that... [t]he HA has failed to comply with any obligations under this consolidated ACC...

Id. at 3-4.

C. Ann Jefferson's Tenure as Executive Director

In September 2006, Ann Jefferson was hired as SDRHA's Executive Director. Doc. #225 at ¶ 1. At that time, Relator was employed as SDRHA's Property Manager and Broker and Accounts Receivable Analyst. Id.

After Jefferson was hired, "she and others in management... did everything toward the running of the housing authority." Doc. #311 at 17. Although the Board maintained its responsibility to oversee federal funds, it "had very little to do with the daily activities of the authority." Id. at 12-13. The Board held quarterly meetings, at which it would "look at different [financial] things." Id. at 11. However, Larry Cordell, a Board member, admitted that this review was largely cursory, and that the Board members acted as Jefferson's "rubber stamp" on matters of spending. Id. at 38-39.

"Almost immediately" after her hire, Jefferson terminated SDRHA's relationship with its previous accountants - Jason Casterline and Baird and Stallings CPA's P.A. Doc. #225 at ¶ 2. In their place, Jefferson hired Charles Buchanan to serve as SDRHA's auditor and Lloyd to serve as SDRHA's fee accountant. Id. Both Buchanan and Lloyd worked with Jefferson when she was employed at a housing authority in St. Louis. Id.

As the auditor, Buchanan had the "responsibility to make an opinion regarding... the accuracy of the financial statements." Doc. #206-2 at 55. In making this opinion, the auditor is required to have "actually reviewed documents, checks and the compliance issues that an auditor must abide by under the purview of being a [certified public accountant]." Id. Lloyd, as the fee accountant, performed a review "lesser than the level of review of an audit." Id. The position of fee accountant did not carry a "duty to find fraud." Id. at 60.

In June 2007, Jefferson fired Darlene Mauceli and Melanie Herbert, "long-term employees of SDRHA [who] constituted the entire financial Department of SDRHA." Doc. #225 at ¶ 3. A few months later, in the fall of 2007, Jefferson "convinced the Board of Commissioners to... increase her... check-writing authority from $10, 000.00 to $200, 000.00." Id. at ¶ 6.

In May 2009, Jefferson raised the rental rates for homes in SDRHA's rental program. Id. at ¶ 8. On July 22, 2009, the residents of SDRHA filed an action in this Court seeking to enjoin the rate hike. See Lowe v. South Delta Regional Hous. Auth., 4:09-cv-73 (N.D. Miss. Jul. 22, 2009) (" Lowe "), at Doc. #1; Doc. #225 at ¶ 9. On August 21, 2009, U.S. District Judge Allen Pepper convened an injunction hearing at which Jefferson testified.[2] Lowe, at Doc. #28.

"Several weeks" after the Lowe injunction hearing, Relator received a copy of the hearing transcript. Doc. #225 at ¶ 10. Upon reviewing the transcript, Relator came to the conclusion that "Jefferson had committed perjury." Id. Relator contacted Paul Mathis, SDRHA's former attorney, and informed him that Jefferson committed perjury during the SDRHA proceeding. Id. at ¶ 11. Mathis, in turn, informed Judge Pepper of the alleged perjury. Id.

D. SDRHA Accounting Methods

As explained above, SDRHA's Business Account contained funds for the operations of its HUD and non-HUD programs. To the extent the funds for one of the HUD programs exceeded the operating expenses, SDRHA created a "due to" record for the relevant HUD account.

Lloyd provided monthly statements to SDRHA reflecting the account balances for the year. Doc. #245-4 at 46. Additionally, at the end of each fiscal year, Lloyd submitted to HUD, through HUD's Real Estate Assessment Center, a "balance sheet and income statement for the entire year of operations, broken down by non-HUD... business activities[, ]... the housing choice voucher program, the new construction program [and] any other activities that may be going on with South Delta for that particular year." Id. at 46-47, 64-65.

Buchanan performed annual audits of SDRHA's financials. See Doc. #245-7. It is undisputed that the annual audits were transmitted to HUD.

In the course of preparing the "due from/due to" monthly balances, Lloyd became aware that Jefferson regularly moved to the Business Account "much more" HUD administrative fees than were necessary for the operation of the programs. Doc. #245-4 at 71-72. Lloyd told Jefferson that the wholesale transfer of administrative funds "is not a practice that we typically follow in housing authorities, that you should look at our monthly reports and transfer the balance that is owed and not the whole administrative fees." Id. Lloyd testified that this "was her typical management decision to do that the whole time." Id. at 73.

Lloyd also disagreed with Jefferson on SDRHA's obligations following administrative fee transfers. Id. at 73-74. At various points Jefferson told Lloyd that the Business Account "never" owed the HUD accounts money. Id. Lloyd responded that SDRHA's non-HUD accounts did, in fact, owe the HUD accounts money. Id. at 74-76. Additionally, Lloyd informed Jefferson and Buchanan that it was "not a common practice to write off an inter-fund balance" and that the "proper" thing to do would be to pay off the balances. Id. at 83. While Lloyd reported the "inter-fund balances" to HUD, he never informed the Board of Jefferson's stance on the re-payment of HUD funds. Id. at 74, 83.

Unlike Lloyd, Buchanan followed Jefferson's mandate regarding the treatment of HUD funds. See Doc. #206-1 at 7-9. Sometime in 2008, Buchanan prepared an audit "for the period October 1, 2006 through December 31, 2007" ("FY 2007 Audit"). Doc. #245-7. In the FY 2007 Audit, Buchanan included a notation that:

GASB 34 standards require that year-end interfund receivable and payable balances be eliminated from the Statement of Net Assets.
Interfund receivables/payables of $373, 419 at December 31, 2007, were eliminated.

Id.

The audit for the fiscal year ending December 31, 2008 ("FY 2008 Audit") did not reflect any debt between the Business Account and the HUD accounts. Doc. #245-7. However, relevant Financial Data Schedule ("FDS") submissions showed that the Business Account owed $344, 076 to the HCV Account. Doc. #206-1 at 8. In 2009, the amount owed to the HCV Account was "written off"[3] by Buchanan and Jefferson. Doc. #206-1 at 8.

The audit for fiscal year 2009 ("FY 2009 Audit") reflected that the Business Account owed the HCV Account $174, 812. Doc. #245-7. In 2010, this amount was written-off by Jefferson and Buchanan. Doc. #206-1 at 8.

The audit for fiscal year 2010 ("FY 2010 Audit") reflected that: (1) the Business Account was owed $1, 871; (2) the HCV Account was owed $20, 416; and (3) the NC Account owed $24, 8111. Doc. #206-8 at 15.

The audit for fiscal year 2011 ("FY 2011 Audit"), which was prepared by Bell & Associates, CPA, of Chicago, Illinois, reflected that: (1) the Business Account owed $68, 436; (2) the HCV Account was owed $83, 848; and (3) the NC Account owed $15, 412. Doc. #206-9 at 15.

Although the FY 2008-2011 Audits did not specifically reference write offs, all the documents contained the following notation:

Interfund Transactions
Quasi-external transactions are accounted for as revenue, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions or expenditures/expenses in the fund that is reimbursed. These transactions are referred to as Transfer in or Transfer outs. Other quasi-external transactions are accounted for as receivables or payables when they are to be repaid to the paying program. All such transactions are eliminated in the Government-wide statement of Net Assets and Statement of Activities-Proprietary funds.

See Doc. #245-7 (emphasis in original).

E. Limited Financial Assessment

On November 15, 2011, HUD issued a Limited Financial Assessment ("LFA") regarding SDRHA's finances. Doc. #206-1. The audit identified Lloyd as "the fee accountant, " and Buchanan as "the auditor."[4] Id. at 3.

With regard to the FY 2008 Audit, the LFA concluded:

The FY 2008 annual report submitted to HUD did not show any balances in the inter-program due from or due to accounts. However... the accounting records showed that SDRHA had significant balances in the inter-program accounts. SDRHA management stated that because of guidance received from HUD, they incorrectly eliminated the inter-program accounts from the FY 2008 financial reports. The HCV program had a net receivable of $344, 076 that was due from the Business Activities (Non-HUD) program. The balance appears to have occurred because HCV administrative fees that were transferred to the Business Activities... account exceed the HCV related expenses paid out of the Business Activities... account.... Even though the Business Activities had sufficient resources to repay the loan, during 2009 SDRHA wrote-off the $344, 076 that the Business Activities... account owed to the HCV program. The [Executive Director] discussed the balances with the fee accountant because she did not think the balances were correct. A decision was made to write-off the balances. The write-off effectively resulted in an unallowable use of federal funds.

Doc. #206-1 at 8.

As to the FY 2009 Audit, the LFA concluded that at the end of FY 2009, "$174, 812 was due from the Business Activities... program [to the HCV Account] and $50, 059 was due from the New Construction program [to the HCV Account]." Doc. #206-1 at 8. The LFA further noted that, notwithstanding the fact that both the New Construction and Business Accounts had sufficient funds to cover their balances, "a decision was made to write-off the 2009 balances." Id. As with the FY 2008 write-off, the LFA concluded that "[t]he write-off effectively resulted in an unallowable use of federal funds." Id.

With regard to FY 2007, the LFA noted that the New Construction Account owed the HCV account $145, 727, and that the New Construction Account had sufficient funds to pay off the debt. Id. With regard to FY 2010, the LFA noted that the New Construction Account owed the HCV account $20, 416, and that the New Construction Account had sufficient funds to pay off the debt. Id. at 9. However, the LFA did not state that either the FY 2007 or FY 2010 debt was eliminated or that SDRHA's activities with respect to these amounts resulted in an unallowable use of federal funds.

F. Investigation and Jefferson's Response

On January 27, 2010, Relator contacted John Alexander of the United States Attorney's Office for the Northern District of Mississippi regarding her suspicions regarding Jefferson. Doc. #225 at ¶ 10. Alexander referred Relator to the Federal Bureau of Investigation ("FBI"). On February 5, 2010, Relator met with FBI Special Agent Steve Thomason and informed him "of the general nature of the information that [she] had regarding... Jefferson." Id. at ¶ 12. Three days later, Relator repeated this information to Agent Thomason and HUD Office of Inspector General ("HUD OIG") Special Agent Angela Pryor. Id. at ¶ 13. Agents for HUD and the FBI testified that Relator was the person responsible for bringing Jefferson's activities to the government's attention. Doc. #226 at ¶ 3; Doc. #227 at ¶ 4.

On February 10, 2010, Relator provided a container of documents to Agents Pryor and Thomason. Doc. #225 at ¶ 14. Included in the documentation was at least one invoice which Relator "strongly suspected was false." Id. Relator told the agents that she suspected Jefferson and Jimmy Johnson, a SDRHA contractor, "were working together to embezzle money from HUD... and to provide kickbacks to... Jefferson." Id.

About two years later, on February 12, 2012, Relator, appearing pro se, [5] filed this action under seal. Doc. #1. The original complaint, which was filed against Jefferson, SDRHA, the SDRHA Board, and various Board members, charged numerous violations of state and federal law. Id. Although the claims varied, the crux of the complaint was that Jefferson was engaged in a conspiracy to embezzle funds and that the Board acted with "indifference" to Jefferson's conduct. Doc. #1 at ¶ 20-24. While the complaint did not specifically name Lloyd or Buchanan as defendants, it alleged that:

Jefferson, with specific design, on or about January 2007, terminated South Delta's existing accountants and contracts, she considered essential to her conspiracy and then hired and retained out of state accountants and other contractors, she can control and who Plaintiff verily believes have assisted her in what the Plaintiff believes, is a criminal enterprise that assists Jefferson in covering up and otherwise, concealing the reporting of her true financial dealings and other activities, as the executive director, with respect to the disposition of South Delta's State and Federal funds.

Doc. #1 at ¶ 21.

Two weeks later, on February 26, 2010, Relator found in the SDRHA offices "blank invoices" for Johnson Brothers' Construction.[6] Doc. # 225 at ¶ 17. Relator provided these invoices to Agent Pryor. Id. On April 16, 2010, Relator agreed to act as a confidential informant for the FBI in connection with its investigation of Jefferson. Id. at ¶ 19.

In support of her investigation, Agent Pryor subpoenaed bank records of SDRHA and forwarded them to Kathy Howell, a HUD OIG research specialist. Doc. #227 at ¶ 8. Based on the information she developed during her investigation, Pryor convened a meeting with HUD officials. Doc. #334-1 at ¶ 5. At the meeting, "as a direct result of [Pryor's] investigation, " HUD elected to undertake the Limited Financial Assessment of SDRHA. Id.

On June 1, 2010, Relator met with FBI agents to prepare for the execution of a search warrant on SDRHA premises. Doc. #226 at ¶ 12. To this end, Relator provided the FBI "with a detailed blueprint of the building, including the location of each individual in the office and the job titles of each." Id.

On June 2, 2010, the FBI raided SDRHA. Id. at ¶ 13. Through this raid, the FBI "obtained additional documentation and bank records that assisted... in the investigation. The bank records that we[re] obtained in the raid were forwarded to Kathy Howell with HUD OIG to use in her analysis." Id.

On June 21, 2010, Assistant United States Attorney Robert H. Norman sent a letter to John T. Kitchens, who was then acting as Jefferson's attorney. Doc. #245-17. In relevant part, the letter stated:

I understand from Special Agent Justin Newsome that you represent Ann Jefferson, who as you know is under federal investigation for mishandling and misappropriating South Delta Regional Housing Authority funds.
I am writing to you to confirm Ann Jefferson's suspicions that Kelly Wuestenhoefer is cooperating with the Federal Bureau of Investigation and has provided information relating to the commission of federal offenses.
We learned from other cooperating sources that Ann Jefferson was convinced that Mrs. Wuestenhoefer was in fact a federal witness and was preparing to terminate Mrs. Wuestenhoefer's employment for that reason....

Id.

In June, July, August, and "early" September of 2010, "Jefferson... began removing job responsibilities and duties from [Relator] and efforts were made to make work extremely uncomfortable for her in hopes that she would quit." Doc. #295 at 2-3. More specifically, Jefferson "began to assign to [Relator] tasks that either could not be... accomplished, or if [Relator] did accomplish them, [Jefferson] claimed that Relator hadn't." Doc. #294 at 2-3. Jefferson also barred Relator from entering the accounts receivable room in SDRHA. Doc. #245-18 at 91. Additionally, Jefferson demoted Relator. Doc. #294 at 2.

On September 13, 2010, the FBI raided Jefferson's home. Doc. #294 at 3.

G. Relator's Suspension and Termination

Following the raid on SDRHA, the Board developed "a concern about the morale of the employees... in the agency." Doc. #245-18 at 85-86. In response to this concern, the Board conducted a hearing during which they questioned numerous SDRHA employees, including Angela Brady, Relator, Dinnial Love, [7] Pat Logan, and Mattie Minor. Id. at 145-46. According to Brady, she, Logan, Love, and Minor were instructed by Jefferson "on what we should say to the board and counsel so as to get [Relator] fired." Doc. #295 at 3. Specifically, Jefferson told the employees "to tell the board... that [Relator] was harassing us and threatening us with retaliation by the FBI, ... that we were not comfortable working with her [and] that she was not doing her job." Id.

At the hearing, Brady testified that Relator had been "openly defiant" to Jefferson. Doc. #245-18 at 148. However, Brady told the Board that Jefferson instructed her, Love, and Logan to lie about Relator. Doc. #295 at 3-4.

On September 23, 2010, citing the "best interest of SDRHA, " the Board voted to place Relator on administrative leave, with pay. Doc. #245-19. In its letter informing Relator of the suspension, the Board wrote:

It has been alleged that on several occasions you have been advised and reminded to p[er]form your assigned duties as an employee according to your job description, including to refrain from the refusal to carry out direct orders which has and is causing confusion among the staff of SDRHA.
It has further been alleged that you have harassed and intimidated certain employees with threats of arrest. Most recently, we are advised that you have failed and refused to perform certain necessary inspections required to make sales of certain parcels of real property on the basis that you are physically unable to drive. You have been requested on an earlier date to provide a statement from a licensed physician verifying your alleged disability. Rather you produced a statement from a Nurse Practitioner on September 08, 2010 which is unacceptable to us. Your response to our request was that you did not feel our request for a statement from a licensed physician was necessary.

Doc. #245-19.

Following Relator's suspension, the Board received a letter from Mellanie Gentry, a tenant at SDRHA. Doc. #245-21. The letter stated that, following a meeting with Jefferson regarding a missing rent check, Gentry received a call from Relator, who stated that "she did not work in that office at this time, because she was the one who turned Mrs. Jefferies [sic] in to the [FBI] and they removed her from the office." Id. Relator also told Gentry that she had placed her rent check in a folder at SDRHA. Id.

On October 28, 2010, once again citing "the best interest of SDRHA, " the Board voted to terminate Relator. Doc. #245-22. In its termination letter to Relator, the Board stated:

When you were placed on administrative leave with pay pending our investigation you were advised to refrain from interfering with the business of SDRHA.
The reason of termination is because we have been advised and believe that you have discussed SDRHA business with clients of SDRHA, without the authority [sic] which has interfered with SDRHA business.

Doc. #245-23.

H. Criminal Action

On February 17, 2012, the United States of America filed an amended superseding indictment against Ann Jefferson and Jimmy Johnson. U.S. v. Jefferson, No. 4:11-cr-111 (N.D. Miss. Feb. 17, 2012) (" Criminal Case "), at Doc. #47-1. Of relevance here, the indictment charged that Jefferson, in her role as Executive Director for the South Delta Regional Housing Authority: (1) violated 18 U.S.C. § 641 by "willfully and knowingly" aiding and abetting Johnson in embezzling and converting approximately $10, 000 of United States property when she awarded Johnson a contract for construction that had already been completed and then caused SDRHA checks to be written to Johnson for payment on the contract ("Count One"); (2) violated 18 U.S.C. § 641 when she billed personal expenditures to an SDRHA account which she knew "included ...


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