The former executive director of Village of Hempstead Housing Authority (VHHA) and three contractors have been arrested for allegedly stealing $500,000 in federal funds in a bid-rigging and kickback scheme, authorities said.

Stacey Stackhouse, 51, was charged Tuesday with conspiracy to commit wire fraud along with 51-year-old James Alimonos of Bethpage, 47-Year-Old Demetrios Kaouris of Plainview and Michael Lambros, 48, of Queens.

“The defendants here were entrusted to use federal funds to provide safe and affordable housing to senior citizens and low income residents,” said Loretta Lynch, U.S. Attorney for the Eastern District of New York. “Instead, as alleged, they bypassed the rules in order to siphon taxpayer dollars into their own pockets.”

Prosecutors said Stackhouse, of Westchester, bypassed the bidding process and awarded construction contracts to companies owned or controlled by Alimonos, Lambros and Kaouris at prices several times greater than the true cost in exchange for kickbacks.

In one instance, Stackhouse awarded a $273,900 roof repair contract to a construction company controlled by her alleged co-conspirators, who did the work for $23,000, pocketed the rest and gave Stackhouse and others $25,900, authorities said.

Stackhouse was responsible for obtaining competitive bids on work funded through the U.S. Department of Housing and Urban Development (HUD). Requests for bids on such government contracts are required to be published. Stackhouse was responsible for awarding contracts to the most qualified lowest bidder.

The foursome is scheduled to appear Tuesday before U.S. Judge A. Kathleen Tomlinson in Central Islip federal court. If convicted, they face up to 20 years in prison.

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Timothy Bolger is the Editor in Chief of the Long Island Press who’s been working to uncover unreported stories since shortly after it launched in 2003. When he’s not editing, getting hassled by The Man or fielding cold calls to the newsroom, he covers crime, general interest and political news in addition to reporting longer, sometimes investigative features. He won’t be happy until everyone is as pissed off as he is about how screwed up Lawn Guyland is.