The president of the Los Angeles-based Community Partnership Development Corporation (CPDC) pleaded guilty this morning to charges of obstructing an audit conducted by the United States Department of Housing and Urban Development, which was looking into the expenditure of nearly $3.2 million of federal money on "engineering and construction management supervision fees."

Frank DeSantis, 49, of Santa Clarita, pleaded guilty to the felony obstruction charge before United States District Judge John F. Walter. DeSantis pleaded guilty to a one-count indictment that was returned by a federal grand jury in June and accused him of overstating work hours in relation to grant money that HUD had provided to the CPDC.

HUD provides funding, through the Low-Income Housing Preservation and Resident Homeownership Act of 1991 -- commonly called the Preservation Program -- to support the development and operation of privately owned rental properties for low-income families. The Preservation Program provides financial assistance in the form of grants to private owners for the purchase and rehabilitation of properties. In 1996 and 1997, DeSantis received Preservation Program grants, which he used to purchase three properties -- the New Brittany Housing Foundation Development, the L.A. Garden Community Association Development, and the Casa Community Association Development. In June 2002, HUD’s Office of Inspector General conducted an audit of the grant fund expenditures for the three developments. In order to explain the expenditure of $3,198,245, DeSantis submitted time sheets for CPDC employees. However, the time sheets proved to be false for three reasons: they were created long after the purported work took place, they showed more hours than the employees actually worked on the Preservation Program grant, and the time sheets failed to disclose that a significant number of hours were spent working on non-Preservation Program projects.

“Financial crimes aimed at multifamily housing undermine the economic viability of what is home to dozens and sometimes hundreds of families,” said Kenneth M Donohue, Inspector General for the U.S. Department of Housing and Urban Development. “To the extent that we can stop these destructive practices, the HUD Office of Inspector General will be a deterrent to these pernicious activities and a defender of the notion that people should be able to enjoy a safe and affordable home.”

DeSantis is scheduled to be sentenced by Judge Walter on February 4. At that time, DeSantis faces a statutory maximum penalty of five years in federal prison. As part of his plea agreement, DeSantis has agreed to pay $400,000 to reimburse HUD for some of the money provided in Preservation Program grants.

This case is the result of an investigation by HUD's Office of Inspector General.