The U.S. Department of Housing and Urban Development has asked federal investigators to review allegations of a wide-ranging welfare fraud scheme at Oakland's Your Black Muslim Bakery, officials said Tuesday.
HUD Regional Director Richard Rainey asked the agency's inspector general to begin an investigation in response to a story in The Chronicle on Sunday reporting that, for decades, the late Yusuf Bey allegedly directed his followers to defraud state and federal aid programs for poor people.
Bey might have pocketed millions of dollars over the life of the scheme, The Chronicle reported, quoting pretrial testimony in a negligence lawsuit filed against Alameda County.
Rainey was concerned by the report that Bey's scheme targeted the federal Section 8 rent subsidy program, said HUD spokesman Larry Bush.
"We have referred allegations of Section 8 fraud to the HUD inspector general's office, which is responsible for investigations," he said. "It's now in their hands. They have enforcement authority."
Bey, founder of the Your Black Muslim Bakery business empire, died of cancer in 2003 while awaiting trial on charges of raping teenage girls who had been placed under the guardianship of one of his wives.
In August, Bey's son and heir, Yusuf Bey IV, was arrested on kidnapping and torture charges. A bakery employee, Devaughndre Broussard, was charged with murdering Oakland Post Editor Chauncey Bailey, who had been inquiring into the bakery's financial problems.
The allegations of systematic welfare fraud at the bakery were contained in a lawsuit filed against the county by three women who said Bey had raped them.
In pretrial testimony, two of the plaintiffs and the Bey wife who was their former guardian said Bey had directed many of the 100 women he considered his wives to make fraudulent applications to government aid programs for the poor. The money went to Bey, said the former guardian and the plaintiffs, who are also among the bakery leader's former wives.
The testimony suggested that the scheme cost taxpayers thousands of dollars a month from the mid-1970s until Bey died. In addition to the federal Section 8 program, Bey defrauded the county Aid to Families with Dependent Children and state Medi-Cal programs, according to the three former wives.
The three former wives said two of Bey's sisters-in-law who work for the Alameda County Social Services Agency had helped to orchestrate the alleged fraud. The welfare workers have denied wrongdoing.
Alameda County Supervisor Gail Steele said this week that the county's lawyers had never told elected officials about the testimony concerning welfare fraud at the bakery - even when officials were asked this year to approve an out-of-court settlement of $188,000 to the three plaintiffs. The supervisors approved the settlement.
Steele said she was disappointed that she had learned of the issue from The Chronicle and not from County Counsel Richard Winnie, who had handled the lawsuit and recommended the settlement.
"To be honest with you, I don't know any more than what you wrote about," said Steele, who chairs the supervisors' social services committee. "It's very odd to have this testimony and to know we didn't have enough information."
Steele said she would ask Winnie to report to her on the matter.
Winnie told The Chronicle on Nov. 14 that his investigation into the fraud accusations had been hampered by poor record-keeping and the complicated nature of the alleged scheme. He did not respond to requests for comment Tuesday.
Yolanda Baldovinos, interim director for the county Social Services Agency, said she assumed that a proper investigation into the fraud allegations had been done before she came on the job three months ago. Baldovinos replaced Chet Hewitt, who left in June to become chief executive officer of Sierra Health Foundation in Sacramento. He could not be reached for comment.
"I have to expect that my predecessor acted on it," Baldovinos said. As for the testimony that two social services workers helped in the fraud scheme, she said, "I have not been privy to any of the discussions. The case was before my time."
