CHA Paid Alleged Gang Leader Thousands To House Tenants

Johnny Herndon was paid $34,000 a year to provide apartments to Section 8 public housing residents.

Kevin Tanaka | Sun-Times

The Chicago Housing Authority has been paying more than $34,000 a year in rent for three Section 8 voucher-holders to lease apartments from an alleged gang leader who’s been in jail the past two years awaiting trial on charges he ran a heroin-trafficking ring in West Garfield Park, records obtained by the Chicago Sun-Times and Better Government Association show.

Johnny “Goo” Herndon is accused of operating the drug ring since the early 1990s and using the profits to buy and rehab dozens of apartment buildings, including buildings where some rents are subsidized through the Section 8 program, according to court records.

CHA

 Federal authorities described Herndon, 57, as the "alleged patriarch" of a faction of the Gangster Disciples, one of the city's most notorious gangs.

Federal agents and the Chicago Police Department arrested him in August 2014, along with 34 of his alleged subordinates. He's been held at the federal Metropolitan Correctional Center in the Loop ever since.

Herndon has been one of the CHA’s Section 8 landlords since at least 2005, when the agency began keeping computerized records. The CHA says it's unable to say whether he was getting Section 8 payments prior to that. Over the past 10 years, he has leased apartments to 12 households in the federally funded Section 8 "housing-choice voucher" program, the CHA says.

Though Herndon's arrest was widely reported, CHA officials say they didn’t know about it until last fall.

“CHA took steps immediately to suspend Mr. Herndon from further participation in the HCV program in October 2015 after learning through a tip to our fraud hotline that he was incarcerated related to drug charges,” CHA spokeswoman Molly Sullivan says. “The federal government has never notified CHA of the pending charges against Mr. Herndon.”

A spokesman for the U.S. attorney’s office in Chicago declined to comment.

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The CHA has placed Herndon on its “do not lease” list, one of 10 landlords added last year. All are barred from getting any new Section 8 tenants, though the CHA says it can’t force their current tenants to leave until their leases expire.

Johnny Goo Herndon

Johnny “Goo” Herndon | Photo: ABC7 News

Records show that as of the beginning of this year the CHA was paying Herndon $2,888 a month to help cover the rents for four voucher-holders.

One voucher-holder has since died, and payments for another apartment have been suspended because of building-code violations. Those payments will resume if repairs are made, according to Sullivan. Otherwise, the CHA will require the tenant to move.

“CHA sends the monthly [payment] for these units via EFT [electronic funds transfer] to the account specified by Mr. Herndon,” Sullivan says.

The CHA ran background checks on Herndon in June 2012 and July 2014, when Section 8 tenants told the agency they wanted to lease apartments from him, according to Sullivan.

“Nothing showed up on either of these background checks that would have prevented him from remaining in the program or to cause CHA to suspend Mr. Herndon," Sullivan says.

The most recent background check came a month before law enforcement officers finished their undercover investigation of Herndon and his drug ring, which authorities say operated in a two-square-block area surrounding Herndon’s home in the 4500 block of West Jackson Boulevard on the West Side.

Photo

The CHA was paying Johnny Herndon $684 a month for an apartment leased by a man at this building in the 4500 block of West Congress Parkway. He paid another $116 under his Section 8 lease. The CHA says it has terminated the payments because the man died. Kevin Tanaka | Sun-Times

Herndon had been arrested on drug charges by the Chicago Police Department in June 2006 and pleaded guilty to cocaine possession in February 2008, according to court records. He was sentenced to three years of probation but was twice accused of violating his probation — in April 2008 and January 2011. It’s unclear what those violations involved or what became of them. Herndon completed his probation in April 2011.

His lawyer didn’t respond to requests for comment.

Federal authorities and the police began investigating Herndon and the drug-trafficking operation, which they say included “open-air drug markets,” in late 2012, according to his indictment.

Herndon, who played high school basketball, told a government source he got into the drug trade after his dreams of playing professionally didn’t pan out. “I went back home and started selling some drugs,” authorities say Herndon told the source, who was secretly recording the conversation. “I’ve been doing this s--- for 25 years. . . .

“I was selling bags [of narcotics], so I didn’t give a f---, make about $15,000 a day and put $2,000 into buildings," Herndon told the source, according to his indictment. "That’s how I got started.”

Since 1993, Herndon has spent more than $1 million buying 31 properties in Chicago, the suburbs and northwest Indiana, according to the indictment. There are no mortgages on any of those buildings, which authorities plan to seize if Herndon is convicted.

Herndon collected more than $20,000 a month through his apartments, including the Section 8 units, according to the indictment. Authorities say he used drug proceeds to buy and rehabilitate some of the buildings.

Five of Herndon's buildings are on the police department's list of "troubled buildings," deemed to pose a danger because of criminal activity, including drug dealing or gangs, as well as building-code violations. Two CHA voucher-holders lived in two of those buildings.

Mick Dumke of the Sun-Times and Brett Chase of the BGA contributed reporting.