Monterey mayoral candidate Vince Malfitano faced repercussions from the U.S. Department of Housing and Urban Development Office of Inspector General for allegedly not following regulatory and operating agreements associated with a Bay Area assisted living facility he owned and operated until late 2017.
According to a HUD audit report published in June 2017, the agency began a review of Malfitano’s Cypress Meadows Assisted Living facility in Antioch based on a referral that “asserted that the owner took distributions from Cypress Meadows for expenses other than the operation and maintenance of the project.”
According to the review, HUD entered into an agreement with Cypress Meadows Antioch, LLC in 2004 to insure its mortgage of the 110-unit facility of more than $14 million under Section 232 of the National Housing Act.
HUD determined that Cypress Meadows “was not administered in accordance with its regulatory and operating agreements and HUD requirements.”
The review found that Cypress Meadows “disbursed a total of $478,690 for ineligible expenses, was unable to support $65,232 in expenses, and recorded project debt liabilities of an additional $412,723 for ineligible expenses.” The audit noted that Cypress Meadows did not collect $620,937 in rent from residents and did not deposit $163,462 in lease agreement charges into its bank account.
Examples of ineligible expenses include $1,352 for an onsite hair salon owned by Malfitano’s wife. “These expenses were not necessary for the operation and maintenance of Cypress Meadows and, therefore, should not have been paid for by the project,” the audit states.
Malfitano also violated HUD requirements when he did not collect over $500,000 in rent for three family members residing in two Cypress Meadow units, the audit found. The audit states that Malfitano’s mother and father moved into a two-bedroom unit in 2009, and his mother-in-law moved into a one-bedroom unit in 2014. “HUD told the owner that his parents could not live at Cypress Meadows without paying rent,” the audit found. “However, the owner refused to charge his parents rent and did not include them on the rent rolls. This action reduced the bed capacity of the facility without HUD’s permission.”
Additionally, Cypress Meadows did not make payments on its mortgage and was $2.8 million delinquent on its Federal Housing Administration-insured loan, according to the audit.
In a letter included in the report, Malfitano’s lawyers disagree with numerous charges outlined in the audit. Later in 2017, following the review, Cypress Meadows was sold and rebranded as the TreVista at Antioch.
Malfitano declined to respond to the Weekly’s questions for this story. As he campaigns for mayor on a ticket of transparency and fiscal discipline, other concerns about his professional history have come to light.