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REVIEW & OUTLOOK

October 31, 2012, 12:54 p.m. ET

HUD's Shady St. Paul Dealings

By MA RY KISSEL

The Department of Justice convinced the city of St. Paul, Minn., to withdraw a Supreme Court case earlier this year. The Obama administration apparently didn't want the High Court to rule on the legal theory underpinning DOJ's shaky antidiscrimination settlements. In exchange, the feds dropped two False Claims Act cases against the citywhich could have netted millions of dollars on behalf of taxpayers. Now it turns out that high-level officials at the Department of Housing and Urban Development were involved in this shady quid pro quo, too. In a letter sent last week to HUD Secretary Shaun Donovan, GOP Rep. Darrell Issa's Oversight Committee reveals that HUD changed its mind about joining a False Claims Act case against St. Paul sometime between October and November last year. Career DOJ attorneys supported joining the case and questioned HUD's decision. According to documents examined by investigators, Dane Narode, an associate general counsel in the Office of Program Enforcement, told DOJ to consult HUD general counsel Helen Kanovsky for an explanation. This is the first time that Ms. Kanovsky's name has been mentioned in connection with St. Paul's decision to withdraw Magner v. Gallagher, a landmark case that examined whether disparateimpact analysis, a type of statistical method, is legal under the 1968 Fair Housing Act. The letter reveals that Ms. Kanovsky was in contact with DOJ's civil-rights chief, Thomas Perez, about the negotiations and that Sara Pratt, another HUD official, was involved, too. Secretary Donovan's role remains unclear. House investigators now want to interview these HUD officials and others involved in the St. Paul quid pro quo. They say it "raises numerous legal and ethical questions about the Administration's actions and whether DOJ and HUD elevated its ideological agenda above the taxpayers' interest in fighting fraud and mismanagement." If Justice's stonewalling to date is any indication, they may have a tough time convincing HUD to cooperate. Taxpayers, however, deserve to have these questions answered.

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