Deep financial problems for HACM dating back to 2018.

Originally published in Urban Milwaukee

By Jeramey Jannene – Jul 24th, 2025 10:31 am

Brad Leak (left) presents HACM’s financial condition to the board. Photo by Jeramey Jannene.

New audits of the Housing Authority of the City of Milwaukee reveal that the city-affiliated agency’s issues are much older and deeper than once thought.

“We now at HACM incurred another $1 million worth of debt on the [affordable housing developments] on top of the $2.9 million [in inappropriate transfers], on top of the $5.3 million we are negotiating with the city,” said chief financial officer Brad Leak in attempting to summarize HACM’s interconnected financial issues to the agency’s board on July 9. He previously disclosed “serious cash shortages” and a $1.7 million loss in 2024.

More layoffs and cost-cutting measures are possible, said Leak at the meeting, as the agency continues to find a way out of the financial hole it dug.

It can be hard to keep track of HACM’s issues that have come to light since a new board was installed. Willie Hines, Jr. and other top executives resigned in late 2024 and Leak, an outsider, became CFO in early 2025 and began disclosing financial problems.

While issues with the agency had been raised by a campaign by Common Ground Southeastern Wisconsin, the major pieces began to emerge when a damning seven-page letter from the U.S. Department of Housing and Urban Development (HUD) was released in December.

Hines, the already embattled secretary-executive director, announced his retirement shortly before the letter was released. Deputy Director and former CFO Fernando Aniban announced his upcoming resignation in December, then pushed it forward to early January from February. Finance director Rick Koffarnus also stepped down.

HACM, according to HUD’s 2024 letter, was plagued by a poor governance structure, an insufficient and poorly controlled financial staff, inadequate management of its physical assets, and a failure to conduct a strategic physical needs assessment. It had already placed the agency under a corrective action plan, where HUD said the agency’s management of one of its largest programs was “at risk for serious fraud, waste and abuse.” It forced the agency to outsource management of the $42 million annual voucher program.

At the end of January, Leak revealed his staff had figured out why the agency couldn’t pass an audit: it had illegally transferred federal money from its Section 8 voucher program to pay for its general operations.

But a new audit covering all transactions from 2017 to 2022 reveals it wasn’t a new problem.

The inappropriate transfers started in 2018.

“This report makes me furious,” said board member Karen Gotzler at the June 11 board meeting. “The interesting thing is the CFO at the time [Aniban] knew it was happening, he was responsible for doing it and it was not rectified for seven years.”

Gotzler said she was concerned the agency lacked internal controls to prevent it from happening again, and that the board wasn’t getting information from its auditors.

But the past problems, Leak said, “revolved around” the fact that “all of the financial staff did not trust their own intuition and knowledge, they did what they were told, and that was one of the weakest internal controls, programs, and systems you can have.” Leak was working in housing on the East Coast at the time this was happening.

New systems, which the audit recommended, require multiple parties to sign off on any large transfers. Leak said he has made it clear to his staff that they are to do what they think is right and what their training tells them, not what he says.

“This is the level of competence that is needed going forward,” said board chair Charlotte Hayslett.

The audit, as presented in detail at the July meeting, did reveal that the then-HACM financial team did attempt to rectify the problems. “There was an attempt to pay some of this back,” said CliftonLarsonAllen auditor Jordan Boehm of a 2021 transaction.

HUD will ultimately create a repayment plan, said Boehm and Leak.

But additional audits have found additional holes in other HACM programs.

Negotiating With City

A February review by independent City Comptroller Bill Christianson at the request of Council President José G. Pérez found that HACM owed the city at least $4.1 million for services rendered. HACM is affiliated with the city, but has undergone what Christianson called a “gradual decoupling.”

Leak has since publicly referred to the total as $5.3 million.

He’s negotiating a repayment plan that he told the commission, in June, would take “5 to 10 years” to be paid off.

“I believe we have some assets we should consider bartering,” he said of income streams. He declined to publicly identify them.

But similar to a restriction on paying the federal government back for the illegal Section 8 transfer, HACM faces a challenge with paying the city back. “We can’t pay the city back with any federal funds,” said the CFO.

New Issues at Travaux

With the January revelation of serious financial issues and their source, HACM instrumentality Travaux was among the hardest hit when approximately 20 layoffs and other cost-cutting measures took place.

As a result of federal funding changes, Travaux was created and is used to take advantage of federal low-income housing tax credits and as a development project management for HACM. It was once viewed as a possible revenue generator.

But, in July, Leak said it’s requiring cash transfers from HACM and subject to its own inappropriate transfers.

“We found the same type of accounting irregularities at the LLC level,” said Leak. LLCs, limited liability companies, are the public-private partnerships used to renovate aging HACM properties or develop new ones. Because each has different partners, cash must be tightly controlled within each development. Each LLC gets audited, which is where the issues were uncovered.

“There were funds that were transferred from Beecher Court as well as Lapham to pay for Travaux payroll,” Leak explained. “Similar to the way funds were used from the Section 8 program. Again, this is very unfortunate, but this is the actual truth.”

Leak said changes were coming.

“There will be some cost reduction measures taking place within the next three weeks… we’re not prepared to put those on the record tonight, because they may impact some individuals,” said the CFO on July 9.

He said he thought it would take 18 to 22 months to be “out of the woods” at Travaux.

“There were just years of neglect at this agency that current leadership, this board, will have to work through,” said Leak. “Keep our heads down, remain positive, because at the end of the day ‘safe, clean affordable housing’ isn’t just a mantra, it’s what we do every day.”

There was also likely to be upcoming issues with “uncashed checks” and the Carver Park LLC said Leak. He previously reported uncovering that the city hadn’t cashed checks for debt payments by HACM years earlier, but multiple sources later indicated it was most likely that those checks were never provided to the city.

The CFO said he has spent substantial time at Travaux, which is based out of the Convent Hill building apart from HACM, and discovered an issue with its most recent past budget. “The first I looked at 2024, I see development fees are budgeted at $3.4 million,” but “we didn’t make one dime of development fees,” said Leak, indicating it was a strategy to balance the budget. “We don’t even have $3.4 million of deals on the table that we could have possibly closed to generate that.”

Travaux, he said, was partially bailed out by $2.6 million generated by contributing federal land to a development agreement. He said federal land is always a positive for housing authority finances because of how it is accounted for.

The number of issues facing HACM drew plenty of concern from the board.

“This report is like, we take one step forward, we get smacked 20 steps backward,” said Hayslett of the mushrooming issues.

“Since this board has taken over and a new executive leadership [was installed], we have incurred, easily, a new $10 million in debt,” said Leak. “It’s not due to anyone’s fault except for the people that knew what they were doing.”

Leak, in January, said he didn’t think the financial issues would result in criminal charges because the money was used for housing, just not as it was approved.

A 2023 audit of HACM is expected to be completed by September.

The CFO also presented other cost cutting moves, including centralizing purchasing, improving tracking and cutting travel to conferences. “We are not getting on planes under any circumstances,” he said. He also praised Pam Watson, interim director of finance.

“It’s not a shell game we are playing,” promised Leak about addressing the issues.

“Thank you so much for being at the helm, making the tough decisions, righting the ship,” said board member and Alderwoman Sharlen P. Moore.

“Our biggest battle daily is fixing our finances, fixing our culture. The culture at this agency is damaged, but I’m not afraid to fix it,” said Leak.

Ken Barbeau, the former COO, serves as the interim secretary-executive director. A search process is underway for a permanent leader.

After publication, HACM provided the following statement regarding if layoffs have occurred since Leak’s July 9 comments: “HACM continues to carefully monitor its financial position and evaluate a range of potential cost-saving measures. Given the agency’s current financial challenges, layoffs unfortunately remain a possibility. However, no new actions regarding layoffs have been made at this time. HACM remains committed to transparency and to supporting our employees and residents as we navigate this difficult period.”