But on Monday, HUD sent copies of its auditors’ report to Grassley, R-Iowa, and Ashford, D-Neb., who in turn provided copies to The World-Herald. The senator and congressman each had asked HUD in June to release the report.

Read HUD’s audit report

The report contains more details and recommendations connected with the audit findings. Previously, HUD had released only an executive summary of the forensic audit, which examined OHA’s finances and governance from 2001 through 2012.

Ashford was executive director of the housing authority from 2003 to 2006. The HUD audit report did not criticize him directly.

The report contains findings critical of other OHA employees and board members.

Its biggest finding, as explained earlier in the executive summary, is that OHA improperly used Section 8 housing and other funds to prop up the housing authority’s nonprofit development arm, Housing in Omaha Inc.

That occurred after Ashford’s tenure as the agency’s executive director.

HUD has ordered the housing authority to repay $1.1 million in misdirected funds to the federal government. The agency is negotiating with the government on the terms of that repayment, said Clifford Scott, OHA’s chief executive officer.

The auditors also criticized the practice of putting elected officials on the OHA board. It recommended that the City of Omaha and the housing authority end that practice.

Currently, no elected official is on the OHA board.

The auditors concluded that local elected official Fred Conley had a conflict of interest with a local businessman while serving on the OHA board.

Conley has said that he had no such conflict of interest. The World-Herald reported in June that HUD was seeking to prohibit Conley from any involvement in federal contracts. Conley, who currently serves on the boards of Metropolitan Community College and the Papio-Missouri River Natural Resources District, is contesting the action.

HUD held a hearing on the matter in June. A decision has not been announced and is not expected until at least mid-August.

The report, in an addendum, credited Ashford with successfully completing the requirements of a court-ordered housing discrimination lawsuit settlement that had resulted from OHA’s demolition of public housing in the 1990s.

The report said that the later misallocation of funds, after Ashford’s tenure, was related to the lawsuit. OHA had used Housing in Omaha Inc. to buy and build enough housing to settle the lawsuit, and those properties later were losing money.

Ashford said Monday that it was paramount to resolve the lawsuit.

“We had to get 284 (housing) units in three years,” Ashford said.

He said that HUD officials in Nebraska were familiar with the Housing in Omaha developments and that HUD and private investors projected that the developments would not lose money.

The audit report criticized the hiring of former Omaha City Councilman Frank Brown to head Housing in Omaha.

That occurred while Ashford was OHA’s executive director. Ashford said that Housing in Omaha’s board hired Brown because it needed someone to manage its properties and that Nebraska HUD officials approved the hiring.

But the audit report said that employing Brown was unnecessary and that doing so contributed to the deficits that led to the misallocation of funds.

The report said that Brown, who had served on the OHA board, and fellow board member William A. Begley “created a culture of fear and intimidation that unduly influenced management decisions.”

Begley said Monday that that is untrue. Brown could not be reached for comment Monday.

The audit report also said that Begley pushed for contracts of fire protection equipment to two vendors, and “made sure these two vendors had the highest priority when it came to payments.”

The report recommended that Begley’s actions “be referred to an appropriate agency for further investigation.”

Begley said Monday that he did push for those contracts, but there was nothing wrong with doing so. He said he had no financial interest in the companies and received no benefit from the contracts.

“That’s an area of expertise that I understood quite well, and I knew those two companies were capable of doing the job we hired them to do,” Begley said.

He said he forwarded calls from the companies concerning payments to OHA officials in the same way he handled all such requests.

The report also said that Conley and Omaha City Councilman Ben Gray, while they were on the OHA board, had “unduly influenced management decisions, i.e. reversing a staff termination through extraordinary change in personnel policy.”

The report also said that Gray and Conley had exerted political influence on the board.

Gray said the termination was unjust, and that he and Conley along with the OHA board reversed it. He said he didn’t exert political influence.

The report’s criticism of Gray and Conley resulted from their pressuring then-U.S. Sen. Ben Nelson, D-Neb., to request the audit after HUD refused to do one, Gray said.

“In my judgment, the national HUD engaged in a witch hunt where they were interested just with myself and Fred Conley rather than addressing commingling checkbooks and other issues that had almost led to the federal government taking over the housing authority.”

The housing authority is now on good footing with HUD, said Scott, the chief executive officer. The OHA has taken all the corrective actions spelled out in a recovery plan with HUD, although it has not yet paid back the $1.1 million, he said.

Contributed By Christopher Burbach / World-Herald staff writer