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But in 1979 it was New York's current junior senator, Chuck Schumer, who arguably slammed Continental Wingate the hardest. In the early '70s, the companythrough a subsidiary, Los Unidostook over the federally subsidized Jose De Diego Beekman Housing Project in the Mott Haven section of the South Bronx. Schumerthen a state assemblymanconvened an investigative panel, whose final report reamed everyone from Continental Wingate to the city to the Carter administration. "How," asked Schumer's report, "was it possible for the federal government to spend $20 million on these houses and still have them remain such horrible slums?" The answer, the report concluded, was twofold: First, because Continental Wingate was "an unscrupulous developer only interested in profit," and second, because it had "well-placed friends in HUD's Washington and New York offices" who helped the company "make Section 8 subsidized housing a profitable venture." No prosecutorial action ever was taken, and Schumer's office did not respond to a request for an interview.
Twenty years later, however, the situation at Beekman Houses doesn't appear to be much better. While some problems that plague Beekman, such as drugs and crime, can by no means be laid at Continental Wingate's doorstep, it seems clear that the company has had some problems in its management role. In 1996, the weekly Bronx Beat newspaper found "at least" 1600 code violations in Beekman Houses; residents quoted in the articlemany of whom were meeting with HUD officialsweren't exactly laudatory about the management company. Nor, for that matter, was HUD's inspector general in New York.
In December 1996, HUD assumed a caretaker role at Beekman after Continental Wingate defaulted on $27.4 million in U.S. loans. According to a HUD source, the department began crafting a plan that would gradually ease Continental Wingate out of Beekman and require the company to contribute to an interim refinancing plan. On October 10, 1997, acting district inspector general David J. Niemiec sent a memo to assistant secretary for housing Nicolas P. Retsinas, expressing strong concerns about a proposed refinancing plan for Beekman in which "substantial benefits can accrue to these owners, while only a nominal contribution for their continued participation is required." Noting that the plan called for nearly $181 million of HUD money and more than $8 million in loans and tax abatements from the citybut only $1 million from Continental WingateNiemiec called the proposed plan "a poor deal for HUD and the taxpayers," adding that "the plan rewards a landlord who may bear responsibility for existing conditions and undermines HUD's enforcement ability."
Niemiec further noted that a previous report had found "major life-threatening health and safety conditions" at Beekman which "pose immediate health and safety risks" (over 80 percent of the units didn't meet basic housing-quality standards), and expressed concern about whether an interim plan between HUD and Continental Wingate "effectively provides a safe harbor to these landlords to participate in these future HUD programs, regardless of whether a HUD audit determines that the landlords are liable civilly or criminally for the condition of the developments."
A HUD audit on Continental Wingate's stewardship of Beekman Houses was completed earlier this year; one source characterizes it as "scathing," and HUD officials actually sent it on to the U.S. Attorney's office in Manhattan with an eye toward civil litigation. The matter appears to be a political hot potato; HUD officials in New York said that because the Justice Department now has the report, regulations prohibit them from releasing it. The U.S. Attorney's office, meanwhile, is cryptic: "The situation is, there is no public record on the matter," spokesman Herb Haddad said in a voice mail message, "so we would have no comment."
On March 31, however, The New York Times reported in a back-page story that the audit found, among other things, the diversion of $1.4 million from Beekman to various Continental Wingate holdings. On the heels of the IG report, according to a Washington-based HUD official who confirmed key details of the audit, the department asked Continental Wingate to contribute more to the refinancing plan, but the company balked. "So we took them over," said the official. "The whole takeover was unprecedented, because the conditions there were horrendous. Since then, we've made millions of dollars in capital improvements and have beefed up security, and Continental is out of the picture."
The Schusters' representative told the Times that "to the best of our knowledge and ability," Continental Wingate had been in "full and complete compliance" with HUD standards. While the company hasn't had similar problems elsewhere and enjoys a good working relationship with HUD in other areas, says the HUD official, Eisner's statement strains credulity. "You don't just take over a development if there's nothing wrong," the official explained. "We wouldn't have done so in this case if we didn't feel there was a grave problem and that it was putting the residents at risk." Asked about Continental Wingate's reaction to the audit, Eisner would only say that "we have responded fully to the government's questions regarding Beekman Houses, and we expect a positive resolution of this matter." As for the Clinton campaign's take on all this, calls were not returned.
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