Grand Jury Probing HUD Chief's Statements

Behind the scenes, Jackson has helped to arrange lucrative contract work running into the hundreds of thousands of dollars for friends and associates who went to work at HUD-controlled housing authorities in New Orleans and the Virgin Islands, according to people familiar with his actions. Indeed, one of Jackson's good friends, Atlanta lawyer Michael Hollis, appears to have been paid approximately $1 million for managing the troubled Virgin Islands Housing Authority. Before landing at the authority, some sources said, Hollis had no experience in running a public housing agency.

Jackson's past efforts to aid his friends are causing him no end of headaches. For several months, a federal grand jury, Justice Department prosecutors, the FBI, and the HUD inspector general's office have been exploring Jackson's role in contracting decisions at the housing department. According to people familiar with the investigation, federal agents are focusing on Jackson's relationship with one friend in particular, William Hairston, a stucco contractor from Hilton Head Island, S.C.