Congressman Sean Duffy (R-WI), Chairman of the House Financial Services Subcommittee on Housing & Insurance, today wrote a letter to the Acting Inspector General of the Department of Housing and Urban Development, Helen M. Albert, and HUD Secretary Dr. Ben Carson to “immediately investigate what appears to be gross mismanagement of federal grant dollars that were supposed to fulfill a meaningful public health purpose.” Last fall, more than 100 LCO members petitioned Congressman Duffy about the mold issue in homes throughout their community. 

Read the letter below:

Acting Inspector General Albert: 

On September 26, 2016, a petition was delivered to my office in which one hundred and thirteen members of the Lac Courte Oreille Band of Lake Superior Chippewa (LCO) requested a forensic audit of all LCO tribal accounts and programs due to potential mismanagement of federal funds by the Tribal Governing Board (TGB) of the tribe. 

A primary concern for the petitioners is whether a 2015 Indian Community Development Block Grant (ICDBG) awarded to the tribe by the U.S. Department of Housing and Urban Development (HUD) for $800,000 was used properly. This money was supposed to go toward the mold remediation of 53 units in the Lac Courte Oreilles Housing Authority inventory. However, to date, only a handful homes have been remediated and estimated costs are the project have soared. 

To shed light on this situation, I wrote to then-Secretary Julián Castro requesting that HUD initiate a forensic audit of all tribal accounts and programs of the LCO, just as the petitioners had requested. HUD responded on October 26, 2016 and in that response, stated that: “as the recipient of ICDBG funds, the LCOB is required to submit audits in accordance with 2 C.F.R. 200 Subpart F; however, the audit for FY 2015 is overdue.” As of the receipt of that letter, the audit still had not been submitted by LCO.

As LCO had not submitted the required audit to HUD, I wrote directly to Chairman Mic Isham of LCO for the requisite documents. Unfortunately, Chairman Isham did not comply with my document request. And at this time, LCO has not provided me with a single document showing that the ICDBG were expended properly.

However, in statements to the media the Chairman remarked that the information I, and members of the media, had requested could be found on the Federal Audit Clearinghouse (FAC). Despite the Chairman’s comments, the LCO has not submitted information to FAC since 2014 making it unusable for my investigative purposes. It is not clear if LCO has submitted a required audit, or if the TGB intend to do so. 

I take the concerns of any of my constituents very seriously. If there has been mismanagement of funds by the TGB, it is a fraud against the most vulnerable in my community. I have personally toured some of the properties that were supposed to be remediated and was shocked that the TGB has not taken this situation more seriously. Respiratory illnesses are the fourth highest cause of death for tribal members and any misuse of these funds is dangerous neglect. 

In a November 2, 2016 Annual Status and Evaluation Report to HUD, LCO estimates that only 20 homes will be remediated and community members estimate that the final tally of remediated homes will be even lower than that. I respectfully request that the HUD Office of Inspector General immediately investigate what appears to be gross mismanagement of federal grant dollars that were supposed to fulfill a meaningful public health purpose. Should an investigation discover that wrongdoing has occurred, I encourage you to take any and all necessary action to represent the best interests of the tribal community.

I thank you for your prompt assistance in this matter.

Per Congressman Sean Duffy

***Previous Post***

Congressman Duffy Says Tribal Members Deserve Answers

Tuesday, April 11, 2017 | by Joe Morey

Congressman Sean Duffy recently said he continues to pursue audits of alleged mismanaged federal funds by the LCO Tribe. On October 6 of last year, Duffy requested four federal agencies to perform forensic audits of the tribe’s finances, but his request with Housing and Urban Development has gained special attention after Duffy himself visited the reservation and toured several homes contaminated with toxic mold infestation.

On September 21, 2015, the tribe received $800,000 from Housing and Urban Development (HUD) to remediate the mold problem in 53 homes along with a matching fund from the tribe in the amount of $342,000. When Duffy made his request in October of 2016, over a year later, not a single home had been remediated.

Read the original story: Congressman Duffy Requests Forensic Audit of Lac Courte Oreilles Federal Funds

And follow-up story: Congressman Visits Mold-Infested Homes at LCO; Audit Request Deadline Extended


“I’m going to use all the tools at my disposal to fight for tribal members who aren’t being served by tribal leadership,” Duffy said. This includes possibly holding Congressional hearings in the House Financial Oversight and Investigations Subcommittee where I am chairman,” he added.

Duffy said he has discussed holding hearings with members of his committee and has support from both democrats and republicans.

The Congressman’s initial request for an audit was done on behalf of 113 LCO tribal members after they submitted a petition alleging mismanagement of federal funds by the LCO Tribal Governing Board. The tribal members requested a full forensic audit of all accounts, departments and agencies of or related to tribal activities.

Several weeks later, Duffy visited two homes where entire rooms have been sealed off because of mold infestation. Duffy told WDIO News out of Duluth that he still felt the effects of breathing the mold several days later.

"I couldn't spend that length of a time in the residence. I had to get out and get fresh air," Duffy said. "When you have that kind of living condition, that kind of mold, and you have children with asthma, well no wonder they have asthma," he said.

“It’s unacceptable,” Duffy told DrydenWire. “Tribal members deserve to live in a home that is safe. They deserve leadership that cares about their health and well-being.”

LCO Chairman Mic Isham continues to tell the media they have had annual audits of their federal grant dollars and that Duffy could easily access those audits in the Federal Audit Clearinghouse in Washington, DC.

“Those audits the chairman talks about aren’t like traditional audits,” Duffy said. “And anything we have access to in Washington doesn’t show where the funds are actually spent. There should be a full forensic audit to determine where every dollar was spent and to determine that there hasn’t been any misuse of funds.”

A spokesperson for Congressman Duffy said they couldn’t find federal forensic audit information on the tribe. “We have top-level numbers, but there’s no way to indicate (from HUD documents) how the money was spent,” he said.

A search of the clearinghouse confirmed the same findings. What was found was that the tribe received more than $13.7 million in federal grant funds in 2015 for housing, the school and the college.

The tribal government conducts its own spot-check independent audits, but not forensic audits, which provide a much more in-depth analysis of financial management and conditions. The most recent forensic audit performed at LCO was an independent audit done by Forensic Solutions LLC, in 2013, which found 17 findings of possible widespread fraud at LCO.

Duffy sent a letter to Chairman Isham on February 22 requesting, “all records related to the use of federal funds received in the past ten fiscal years, including but not limited to grant applications, audits, and other financial reports.”

“The chairman says he is about transparency, and yet he is defensive,” Duffy said. “He said just come and talk to us, so I said send me the documents but he refuses to send them and tells us to go to HUD for the information. If he won’t provide these documents, I wonder what he is hiding. He’s asked me to work with him and yet he won’t comply.”

Duffy said the LCO chairman’s constituents deserve better. “Don’t they deserve answers? Don’t they deserve transparency? We’re going to help them get that transparency.”

Duffy said when the chairman behaves this way it can jeopardize future funds for housing.

“He has a chance to alleviate any concerns that tribal members have or that I have. He refused to take the opportunity.”

Duffy indicated that it’s going to take some time because of the transition of a new administration at HUD, but, “I’m not going to let up.”

Housing says only 6 homes will be fixed

In 2014, the LCO Housing Authority had an engineering firm do an inspection of its 346 homes on the reservation for mold occurrences. They found 10 sq. ft. of mold or more in 185 of those homes. The housing authority applied for a grant and was awarded $800,000 along with the tribal match of $342,000, for a total of $1,142,000, to fix the worst 53 homes.

A year later, remediation hadn’t begun on any homes and soon after the Duffy request, the housing authority announced they would begin working on the first 5 homes. Chairman Isham announced in February that the project had been scaled back to 20 homes which would be done in four phases of five homes each. He also said the total cost of the project had nearly doubled to $2.2 million.

“There’s no transparency between what the tribe drew up for numbers and what they actually did,” Duffy said.

In November of 2016, the LCO Housing Authority sent an Annual Status and Evaluation Report to Washington stating the project didn’t begin for a full year because of unforeseen issues and time delays.

Isham told WDIO the tribe had to put more money into each home because they discovered the mold problem was worse than originally thought, and they encountered many setbacks.

Just last week, the LCO Housing Authority Director, Mark Montano, told local media the amount of homes being fixed had been reduced to only 6 homes, “because of the high cost of remediation.” He said it was going to cost between $140,000 and $170,000 per home.

A local contractor who spoke on the condition of anonymity said he believed the cost of completely taking down each home leaving the basement foundation and rebuilding would have cost around $100,000 per home.

“Even with digging down around the basement and insulating, building a new on-average 1,200 sq. ft. home on the foundation that already had well and sewer is only going to cost around $100,000,” the contractor said.

“I know mold companies are expensive, but nearly $200,000 per home seems pretty expensive,” he indicated. “The original construction of these homes was done pretty cheaply and that’s why you’re having these problems today. The basements weren’t water proofed, they were poorly insulated, among other things.”

A tribal member who works as a carpenter said, “All those houses should have been inspected from the foundation up. Cold drafty basements never get a chance to dry up and once it gets wet, it stays wet. And drain pipes to the sewer are almost always cut out way bigger then they need to be. That never dries up, then the mold and rot set in for good. Even during the hot summer months, you can probe a metal rod into the ground next to the foundation and see all the moisture that stays.”

Health issues become major concern

Richard Conger was one of the tribal members who took Congressman Duffy on a tour of two LCO homes. Conger said as soon as you opened the front door of the home you can smell the mold pour out.

"When the furnace kicks on in the morning, I can just imagine what that does," Conger said. "It brings all that mold throughout the house and those people have to live like that," he said. “Children live in the home and this is what the Congressman was able to witness for himself.”

Duffy told DrydenWire back in November, “Days later, I am still feeling the effects of the mold, and I only spent a short amount of time in these houses. Yet, that is where small children, some with severe asthma, lay their heads each night.”

Conger said one of the homes had a bedroom that was actually sealed off from the rest of the home because of how bad the mold is.

An LCO Community Health Profile from 2001 to 2010, revealed the fourth highest cause of death for tribal members was chronic lower respiratory disease.

“How many people have been getting sick,” Conger said. “I would like people at LCO to start getting their children checked over completely, especially for any respiratory conditions.”

One tribal member named Natalie said her mother’s home was full of black mold, “And she was constantly sick before she passed away in 2014.”

Another tribal member said her mold is so bad in her basement and one of the bedrooms of her home that they can’t use them.

“Housing only brought me a mold cleaner but the mold keeps coming back,” She said. “They told me if I want a different home I have to find someone to switch houses with me. Who’s going to switch with a moldy house?”

She continued, “Every time I say something about how my kids got sick from the mold and we’re stuck in one room because we can't use the downstairs they say all u can do is try and find someone to switch with. They don't help me with it and everything I do point out that is wrong I have to pay for them to come fix whatever it is.”

One tribal member named Vivian shared her story about how she is excluded from the mold remediation because she owns her home, which she bought from the LCO Housing Authority in September of 2012.

Vivian lived in the home with her mother since 1988 and under a rent-to-own agreement, they were able to purchase the home after 18 years.

“My basement has had mold problems for many years and when my mother agreed to buy this house they said it would be brought up to code,” Vivian said. “My mother signed the paperwork September 2012, they then denied doing or saying that and she passed away in January of 2013, and I am now stuck struggling trying to fix the entire house up.”

Vivian explained to DrydenWire that prior to their purchase of the home, the LCO Housing Authority refused to bring the home up to code because Vivian’s mother still owed $129 in back payment. The home remained a rental as long as they owed the money. In September of 2012, they were able to pay the overdue balance, but then the home transferred into ownership status, and they then refused to bring it up to code because they owned it.

Jeff Tribble, one of the tribal members who took Congressman Duffy on the tour of LCO homes, said HUD homes under home ownership are clear in their purchase agreements, “Housing has to replace all sub-standard materials, damaged material caused by deterioration, weathering and other natural damages not caused by vandalism.”

Tribble said Housing doesn’t have a choice, they have to do this.

Vivian said she told Housing this but they refused to help her. “I've talked to Chairman Isham and he said, ‘if I do it for one, I'll have to do it for all, and then proceeded to say, he has NO SAY on housing.”

Vivian said she now lives in the home with her son and two grandchildren, who both have asthma. She said she can’t afford to fix the issues in her home and she can’t afford to move somewhere else.

Vivian said she can’t do what she wants with the home because it’s still on tribal land. “I can’t put up a fence, but, yet they wouldn’t bring my home up to code.”

One question was asked on how they are choosing which six homes to fix from the 53 originally chosen. A tribal member named Whitney said her house was one of them.

“I pointed out the condition of my home and that I had a new born baby and my mother had just passed from breathing complications and they moved me out a week later,” she said. Whitney explained that she didn’t think Housing made a choice based on knowing the right people, but because of the condition of her home.

“We lived in that house for years upon years, and now that I think about it I’m pretty sure the condition of the house is why I don’t have a mother. It’s why my daughter will never know what it’s like to have a grandma. Every day it was a struggle for my mother to breath up until her last actual breath in that mold infested place we call home.”

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