Taos County Housing Authority
Outcome
Carmella Martinez, former Executive Director of the Taos County Housing Authority, was sentenced to 30 months in federal prison, and her husband Paul Martinez to 24 months, jointly ordered to pay $786,014.04 in restitution for stealing more than $786,000 over nine years by issuing fraudulent Section 8 HAP checks payable to themselves and personal accounts.
Details
Taos County Housing Authority — Executive Director Embezzlement (2004–2012)
Outcome: Carmella Martinez, 42, former Executive Director of the Taos County Housing Authority in New Mexico, was sentenced to 30 months in federal prison in January 2014, and her husband Paul G. Martinez was sentenced to 24 months. Both were jointly ordered to pay $786,014.04 in restitution for stealing more than $786,000 from the federal housing program over nine years.
Carmella and Paul Martinez pleaded guilty in August 2013 to conspiracy to commit theft from programs receiving federal funds. Over a nine-year period, Carmella Martinez stole from the housing authority by issuing fraudulent HAP (Housing Assistance Payments) checks — the federal rental subsidy payments for Section 8 voucher holders — directing payments to fictitious or unauthorized payees, including to Paul Martinez personally and to bank accounts held by herself and Paul Martinez. They then presented the fraudulent checks for payment at various locations.
The case was investigated by the FBI's Albuquerque Field Office and HUD's Office of Inspector General, and prosecuted by the U.S. Attorney's Office for the District of New Mexico.
Primary Source: Former Executive Director of Taos County Housing Authority Sentenced to 30 Months in Prison for Conspiracy to Steal Federal Funds
How Crucible Prevents This
The Taos scheme persisted for nine years — indicating that Housing Assistance Payment (HAP) checks had no independent payee verification against an approved landlord registry. Crucible's HAP check payee verification hook automatically cross-references every HAP disbursement payee against the certified landlord list, flagging any check directed to accounts associated with housing authority staff. A spousal relationship disclosure control would have immediately surfaced payments going to Paul Martinez's accounts as prohibited. An independent monthly reconciliation of all HAP disbursements would have surfaced the fraudulent payments within the first billing cycle.
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