After theft, Dakota County officials decline to comment definitively on possible U.S. probe

Dakota County officials are declining to comment definitively on a news report that the federal government is investigating a county agency in connection with the alleged embezzlement of $271,000 by a former employee.

KSTP Channel 5 reported Tuesday that, according to an unnamed source, the Dakota County Community Development Agency (CDA) was being investigated by the U.S. Department of Housing and Urban Development (HUD) on allegations that former software coordinator Vangyee Leng Yang had diverted Section 8 housing voucher funds to phony accounts he created for clients who were either dead or ineligible.

Asked about KSTP's report, Tony Schertler, the CDA's executive director, issued a statement: "There are no indications that there is an investigation by the federal government into the CDA."

Other county officials declined to comment on a possible federal investigation.

HUD officials refused to either confirm or deny an investigation, which is the department's standard response to avoid any interference with a possible investigation, HUD spokeswoman Gina Rodriguez said.

Yang, 39, who was fired by the CDA in June, was charged this month with five counts of theft by swindle for the alleged theft. He allegedly used his database access to funnel housing assistance checks into the fake accounts.

Yang allegedly stole $271,325 between April 1, 2016, and May 31, 2018. If convicted, he faces up to 20 years in prison and fines ranging from $6,000 to $100,000. His first court appearance is scheduled for Jan. 14.

A police report was filed in May by Eagan police regarding the theft, Yang was placed on administrative leave and an internal investigation began. The CDA also reported the theft to HUD and its Office of Inspector General.

"We were dismayed to discover that an employee used his access to manipulate data to divert vital housing assistance resources for his own personal use," Schertler said.

He added that the CDA was cooperating with HUD to "reconcile reporting for our federal allocation of housing assistance funds" and will continue to work with them as required.

The CDA runs more than 30 housing and community development programs serving over 10,000 county residents, the CDA website says.

HUD provides $22 million to the CDA annually to fund the Housing Choice Voucher program. Every month, about $1.6 million in rental assistance payments are made to landlords on behalf of the program's participants.

Dakota County Attorney Jim Backstrom has said that prosecutors would seek an even harsher sentence than recommended because the alleged theft included multiple incidents and the loss was much greater than the minimum loss specified by the statute. The alleged crime also occurred over a long period of time and involved a high degree of sophistication, Backstrom said.

Dakota County Commissioner Tom Egan declined to say whether a federal investigation was underway.

"There isn't much I can tell you — it's being handled internally," he said. "They're working diligently internally and with our county attorney's office in making sure we get this resolved so it never happens again."

Egan said he was at Tuesday's CDA meeting when the KSTP reporter asked Schertler about a possible federal investigation. Before that, commissioners hadn't heard anything about it, he said.

Commissioner Joe Atkins said in an e-mail that the CDA "holds the integrity of the administration of our programs in high regard."