The Department of Housing and Urban Development says the Union City Housing Authority is breaking federal rules in its contract and spending processes, and HUD is now conducting a top-to-bottom review of the agency. Both are the result of a recent Kane In Your Corner investigation into excessive legal fees paid by the agency.

"In regards to our legal contract, HUD has deemed it invalid," says UCHA Chairman Marty Martinetti, an outspoken critic of Housing Authority Executive Director Virgilio Cabello.

HUD spokesperson Olga Alvarez says "HUD informed the board that the procurement for the legal contract was determined to be in violation of HUD rules." She adds that HUD is conducting a "comprehensive review" of policies and procedures at the agency.

Cabello says if HUD has any problems with the way he is running things, no one has told him. "I was not aware of any reviews that HUD might be conducting," he says. "I was not even aware that they had met with board members."

In April, Kane In Your Corner examined payments for legal services at the UCHA, which is partially funded by taxpayers. Julio Morejon, an attorney active in local politics, won the contract to serve as Housing Authority attorney by submitting the low bid. His contract allows him to be paid up to $44,000 a year, but a review of billing records showed he was actually getting paid more than twice that, with no resolutions authorizing the additional spending. Like Cabello, Morejon says he is unaware of any findings by HUD.