An Ohio judge has ruled against Millennia Housing Management after the national affordable housing company — which owns the condemned Forest Cove apartments in Atlanta — argued that federal enforcement proceedings against it are unconstitutional.
U.S. District Judge Dan Aaron Polster sided with the U.S. Department of Housing and Urban Development on Monday, finding the court does not have jurisdiction to decide the company’s constitutional claims. That’s because Millennia had not exhausted HUD’s adjudication process, which includes hearings by an administrative law judge and the potential for judicial review, Polster said.
Millennia argued HUD’s action seeking $7 million in civil penalties violated its Seventh Amendment right to a civil jury trial. The company said allegations it siphoned off millions of dollars from affordable housing complexes financed by HUD belong in a trial court.
Polster found Millennia’s claims are not yet ready for consideration because the company does not know the outcome of proceedings at the HUD Office of Hearings and Appeals. Even if the federal court had jurisdiction to consider Millennia’s claims, it would not find a constitutional violation, the ruling states.
“Plaintiffs’ claims would still fail on the merits,” the judge wrote in the 34-page order.
Credit: TNS
Credit: TNS
The court’s decision was another blow to Millennia and its CEO, Frank Sinito, whose Ohio home was raided in October by HUD and U.S. Department of Agriculture agents in a criminal probe.
After the raid, Sinito and Millennia asked HUD to pause the administrative proceedings relating to alleged unauthorized transfers of $3.3 million out of 16 government-backed properties insured or subsidized by HUD.
When HUD refused in November 2024, Millennia sued the agency in federal court in Cleveland, asking the judge to block the proceedings.
HUD is seeking more than $7 million in civil penalties, and a hearing at the agency was scheduled for June. According to department, Millennia took money out of the housing complexes without asking and placed it into entities Millennia controls.
In a response to Millennia’s complaint, the U.S. Justice Department said in a January court filing that a ruling in favor of the affordable housing provider would blunt HUD’s ability to regulate providers and protect tenants. It accused the company of trying to “short-circuit” administrative proceedings.
“There is compelling public and government interest in enforcing the prohibition against unauthorized use of government funds under the statutory housing programs HUD administers,” the Justice Department said in the Jan. 8 filing.
Millennia is represented by the Benesch law firm in Cleveland. Its attorney Marisa T. Darden declined to comment and did not respond to a question about whether the company plans to appeal. Inquires to HUD and the Justice Department went unanswered.
According to Polster’s order, Millennia questioned the use of HUD administrative law judges, or ALJs, to decide complaints, arguing they were not answerable to the U.S. president and were “insulated” from executive branch oversight.
But Polster said it was the HUD secretary, currently Scott Turner, who would decide whether to pursue complaints, and that as a Cabinet member the secretary serves at the president’s direction.
“The removal protections for HUD ALJs are constitutional. They do not violate separation of powers or impermissibly interfere with the president’s control of the executive branch,” the judge wrote.
The Ohio-based affordable housing provider has faced allegations of unsafe conditions at several of its complexes across the country and owns more than 200 properties, according to the Justice Department.
Credit: Ben Gray
Credit: Ben Gray
Millennia affiliate Phoenix Ridge, which owns Forest Cove, was not among the named companies and plaintiffs in the lawsuit.
Hundreds of residents lived in deplorable conditions at the Forest Cove complex in the Thomasville Heights neighborhood of Atlanta, in uninhabitable units with rats, mold and bugs.
In October 2023, the city announced a class-action lawsuit with civil rights attorney signing on to represent the residents. Earlier this month the AJC reported that, to date, no lawsuit has been filed.
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