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KEMP SUSPENDS TOP HOUSING OFFICIALS PROBE FINDS MISUSE OF FUNDS BY FIVE IN PASSAIC, N.J., AUTHORITY

Housing and Urban Development Secretary Jack F. Kemp on Monday suspended top officials of a New Jersey housing authority over the misuse of federal funds.

Kemp has broad but seldom-used powers to deal in the same way with wrongdoing in housing authorities in other states, including New York.

In a probe led in part by Joseph Lynch, Buffalo-area manager of HUD, it was learned that the family of the executive director of the Passaic Housing Authority was paid about $400,000 in 1988.

Lynch, who is acting administrator of HUD Region II, said the authority's executive director, Paul Marguglio, received salary payments of $245,956. The rest went to Marguglio's wife and other family members.

Lynch said the investigation started as a routine audit about nine months ago, and "we just followed the money trail."

HUD said the authority's deputy executive director, Donald V. Pieri, was paid $106,868, and that the authority's attorney, August Michaelis, was paid $486,327 over a three-year period.

Kemp also suspended the authority's board chairman and its vice chairman. Kemp ruled none of the suspended officials can be paid with federal funds or take part in HUD programs.

Because HUD provides a large share of the budget of most housing authorities, such a ruling effectively sidelines the offending official.

Kemp also suspended a number of Passaic authority employees, including one who maintained an animal shelter on authority premises. Kemp directed the authority to recover excess compensation paid to its officers and begin dismissal proceedings against them.

Neither Lynch nor any other HUD official would comment on whether the Buffalo Municipal Housing Authority's violation of federal anti-bias laws could constitute grounds for suspension of any BMHA officials.

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