Developer pleads guilty to defrauding Road Home rental program

Businessman admits to overbilling Katrina recovery program

Praveen Kailas
Praveen Kailas

A developer whose family has close ties to Gov. Bobby Jindal has pleaded guilty to fraudulently billing a state Katrina recovery program, a scheme that was exposed in a WWL-TV investigation.

Praveen Kailas pleaded guilty to one count of conspiracy to commit theft of government funds and one count of theft of government funds.

He was charged in June and agreed to plead guilty Aug. 1. The case was unsealed Tuesday by Chief U.S. District Judge Sarah Vance.

It was not immediately clear why the case was sealed.

The U.S. Department of Housing and Urban Development and the FBI launched a probe of Kailas’ company, Lago Construction, in October after WWL-TV collected thousands of pages of Lago billing records and questioned how employees could have claimed hours working as construction monitors on the state’s Small Rental Property Program when witnesses and other documentary evidence showed they were actually working on other projects.

Now, Kailas, 29, has admitted that from June 6, 2011, to Nov. 16, 2012, he and others at Lago overstated the number of hours they worked on the Small Rental program. They also increased the number of employees billed to taxpayers through the program without adding any additional work.

Kailas admitted that he overbilled for six Lago employees and it resulted in the theft of “not more than $236,000,” according to the court documents unsealed Tuesday.

The Kailas family is one of the metro area’s biggest landowners and developers. Family members have been close to Jindal through southeast Louisiana’s small Indian community for years.

The family has contributed tens of thousands of dollars to Jindal’s campaigns over the years, including office space and supplies for his victory parties.

The Governor’s Office said it launched an internal investigation after WWL broke the story last year. But that inquiry was apparently dropped after Mark Maier, the consultant who partnered with Lago on the rental program, wrote a note absolving Lago of any wrongdoing. HUD’s inspector general and the FBI, however, kept working the case and the U.S. attorney’s office eventually filed fraud charges.

Jindal’s office sent this statement Tuesday: “We have no tolerance for fraud, which is why we moved swiftly and called for investigations by the State Inspector General and Attorney General, as well as the Inspector General for the U.S. Department of Housing and Urban Development. We appreciate today’s outcome and we support holding bad actors accountable for their actions, which is why we also added stronger controls to prevent this type of misconduct in the future.”

Praveen Kailas owns Lago Construction, and Cajun Elevation and Shoring and Tower Realty. He has also been coordinating a big development project at the Woolworth Building on Canal Street.

Despite that busy schedule, WWL-TV found that between July 2011 and June 2012, taxpayers were billed upward of $200 an hour for Praveen Kailas’ supposedly undivided attention to the Small Rental Program.

The station also found that his younger brother, Naveen Kailas, 25, claimed to work a full eight hours on Small Rental on all but eight weekdays the entire year — at a cost of $185,000 to taxpayers. That included days when he was also at meetings on another taxpayer-funded program, the home elevation grant program.

Two former Kailas employees, who spoke on condition of anonymity, said Praveen and Naveen rarely worked full days on the small rental program, though their timesheets indicate otherwise. Witnesses said some of the other Lago employees who claimed to work full time on the small rental program were actually overseeing projects in the elevation program or working on building a mansion for the Kailases on Bayou St. John

They also said Naveen spent most of his time on the elevation program rather than the small rental program. A competitor set up a “sting” that caught Naveen Kailas improperly offering freebies to clients under the home elevation program.

Court filings state that Kailas faces up to five years in prison for the conspiracy count and up to 10 years for the theft charge. He also could pay up to twice the gain from the scheme, or about $472,000.

Kailas’ attorney, Walter Becker, declined to comment.