Overview:
A former Palau Housing Authority loan officer allegedly defrauded more than a dozen elderly and low-income housing applicants — many of them retirees — out of thousands of dollars in cash she collected under the guise of official loan and bidding payments. Victims say they have received little communication from PHA or law enforcement, and nearly a year after the case was transmitted to the Attorney General’s office, no charges have been filed. A 2023 independent audit of PHA’s finances reveals a pattern of weak internal controls that investigators say may have made the fraud easier to commit and harder to catch.
By: Eoghan Olkeriil Ngirudelsang
NGERULMUD, Palau — A former Palau Housing Authority employee is accused of allegedly defrauding more than a dozen low-income and elderly housing applicants — most of them retirees — out of thousands of dollars in cash, using a scheme investigators say continued for more than a year before she was caught. Months after the case was referred to the Attorney General’s office, no charges have been filed, victims say they have received little information, and an independent audit of PHA’s finances has since flagged serious weaknesses in internal financial controls that watchdogs say may have allowed the misconduct to go undetected.
The Scheme
The accused, a woman who served as a loan officer at PHA, is alleged to have contacted housing applicants by phone, claimed there was an urgent problem with their loan payments or that fees were owed, and then arranged to collect cash in person at public locations — including supermarkets, a coffee shop, and private residences. In each case, victims say, the employee promised to provide official receipts but later delivered only handwritten slips from store-bought receipt books.
The total amount siphoned may be over $10,000, according to investigators and victims. Identified victims number at least 10, though one victim was told by a PHA staff member that there could be as many as 19.
“Based on the different dates and events described by the victims, the fraud appears to have continued for many months, possibly even more than a year,” investigators said. Amounts lost ranged from a few hundred dollars to several thousand dollars per victim.
Victims Describe the Same Playbook
Multiple victims described an identical pattern: a phone call from a PHA staff member claiming a payment problem, an urgent instruction to bring cash to a public location, and a promise of an official receipt that never materialized.
A 79-year-old retiree living in one of the Keiukl states on Babeldaob said she believed she paid approximately $150. She said the employee told her a loan allotment had not gone through and that she needed to pay in cash. The two met at a Surangel’s Super Center, where the transaction took place near the fruit section.
“I believed her and believed that she was doing her job well and helping me, so I did not suspect anything,” the victim said. “Until now no one has reached out to me regarding my money lost. It was from my hand to hers, cash. But I still wonder — will that be credited toward my loan payment, returned to me, or will it totally be lost?”
A second victim, a female retiree in one of the Desbedall states of Babeldaob, said she paid $288.60 after being told it was for a bidding fee she was required to split with the contractor. She met the employee at Coffee Berry, a coffee shop across from Yano’s clinic, where the employee appeared to be working on a laptop — a detail the victim said put her at ease.
The victim said she grew suspicious after seeing the receipt left at her door the next evening. “How can PHA, a legitimate government office, not have official-looking receipts?” she said. “I kept the receipt in my purse and gave it to them when PHA later called asking questions.” She said she still has not been told what will happen to her money.
A 76-year-old man in Koror said the employee deceived him on two separate occasions, collecting $1,000 the first time and approximately $425 the second, telling him both times she would return with a receipt that never came. PHA staff later visited his home to take a statement, he said, but he has heard nothing since.
“Until today, I still have not received any word on whether the amount taken could be credited toward my housing loan or any form of update,” he said.
One victim said she made repeated attempts to contact PHA’s executive director to arrange a meeting about the payments, but calls were never returned. She said an earlier meeting might have led to the employee’s discovery sooner.
Case Stalled at Attorney General’s Office for Nearly a Year
According to Criminal Investigation Division Detective Takeshi, the case was transmitted to the Attorney General’s office in approximately March or April of last year. For many months, the case sat without clear resolution.
“Several calls to the AG’s office produced little information, with responses limited to comments such as ‘they are working on it’ or instructions that a formal written letter of inquiry had to be submitted before receiving even basic status updates,” according to investigators.
The AG’s office eventually returned the case to detectives requesting additional information. Detective Takeshi said investigators are working to gather those additional details and will re-transmit the case once that work is complete. As of publication, no charges have been filed and the case has not been adjudicated, meaning officials cannot confirm the exact number of victims.
Audit Flags Weak Financial Controls — Findings That May Have Enabled the Fraud
A 2023 independent audit of PHA’s finances, released by the authority’s auditors, found a single material weakness in the agency’s accounting and internal control systems — and the findings draw a troubling parallel to the conditions under which the alleged fraud unfolded.
Auditors found that PHA failed to perform regular monthly reconciliations on all bank accounts. Two accounts carried unreconciled overdraft balances totaling nearly $889,000. The audit stated plainly that without regular reconciliation, “accounting errors, missing transactions, or potential misuse of funds may go undetected.”
Auditors also found that individual fund accounts within PHA’s system did not balance properly, that money transfers between programs were recorded incorrectly, that loan loss reserves for the Home Rehabilitation Loan Program, Low-Income Housing Program, and Section 8 Program were improperly recorded, and that a $5 million loan was misreported — showing up as a receivable in the books even after repayments had been made.
The audit identified the root causes as limited accounting staff with specialized governmental expertise and a lack of formal written policies requiring regular account reconciliations and supervisory reviews. Critically, auditors noted this was not a new problem: the same material weakness had been flagged the previous year as Finding 2022-001 and remained unresolved as of Sept. 30, 2023.
For victims of the alleged loan officer fraud, the audit’s findings carry grim relevance. The absence of regular reconciliations and the lack of supervisory oversight of individual transactions mean that cash collected off the books — and never recorded in PHA’s system — would be extraordinarily difficult to detect through routine financial review.
Auditors found no violations of laws, regulations, contracts, or grant requirements during their review. PHA management agreed with the audit’s findings and said it plans to implement corrective actions by fiscal year 2026, including hiring additional qualified accounting personnel and developing written accounting policies.
About PHA
The Palau Housing Authority’s stated primary mission is to “administer subsidized, low-cost housing projects and assist in correcting housing conditions endangering the health and safety of Palauans.” The agency serves among the most financially vulnerable segments of the population, including low-income families, the elderly, and retirees — the same groups most heavily represented among the alleged fraud victims.
What Victims Are Waiting For
For now, victims say they are waiting for answers on three fronts: whether criminal charges will be filed, whether any of the money they lost can be credited toward their housing loans or returned to them, and whether PHA will take steps to ensure this cannot happen again.
None say they have received clear answers on any of those questions.
Island Times has sought comment from the Palau Housing Authority executive director and the Office of the Attorney General. This story will be updated as additional responses are received.
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If you were affected by fraud at the Palau Housing Authority or have information about this case, contact Island Times confidentially.
