- Roughly 15 federal and state officers raided Cadence McShane Construction’s offices in Austin, San Antonio, and Plano, seizing boxes and cell phones, according to the Austin Business Journal.
- The raid follows a whistleblower lawsuit alleging the contractor’s 17% profit margin on a HUD-funded San Antonio apartment project exceeded the agency’s 10% cap by roughly $7 million.
- The case highlights growing federal scrutiny of contractor billing on subsidized housing projects at a time when construction costs and HUD compliance are both under pressure nationally.
Federal authorities raided Cadence McShane Construction‘s offices in Austin, San Antonio, and Plano, with roughly 15 federal and state officers exiting the Austin location with boxes and cell phones, according to The Real Deal, which cited the Austin Business Journal. Plano-based Cadence McShane, one of the region’s largest general contractors, confirmed the activity and said it fully cooperated.
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A Whistleblower Suit Sets the Stage
The raid, identified as involving the U.S. Department of Housing and Urban Development, came two days after the San Antonio Business Journal reported a whistleblower lawsuit against Cadence McShane.
Opportunity Home, the city’s public housing agency, filed the suit. The contractor is trying to block the agency from accessing records tied to its work on the Horizon Pointe apartment complex in Converse, a San Antonio suburb. Cadence McShane argues that the request reaches beyond that project.
Cadence McShane has not been charged with a crime. The company told the Austin Business Journal that it fully cooperated with investigators during the raid. No arrests were made at any of the three offices.
The Details
Two Cadence McShane employees, Randall Molnar and Andrea Hughes, allege the company earned a 17% profit margin on the project. That figure exceeds HUD’s typical 10% cap for low-income housing work.
The employees claim the margin came from overcharging the federal government by roughly $7 million. The alleged overcharges involved about $45 million in construction work.
Both employees also claim an unnamed executive asked them to submit fraudulent change orders. They say they refused. Molnar is no longer with the firm.
Cadence McShane reported $315.3 million in construction billings in 2025. The company also had 79 local employees in Austin alone. Those figures underscore its scale in the Texas general contracting market.
Zooming Out
The raid comes amid a broader federal push to investigate housing-related fraud and compliance issues. For example, fair housing nonprofits are separately suing HUD over a funding restructure.
That dispute highlights the growing scrutiny around HUD’s oversight of subsidized housing funds this year. It also comes as federal agencies take a closer look at how contractors handle public housing dollars.
Why It Matters
The case comes as HUD-funded housing projects face greater scrutiny over cost overruns and contractor margins. At the same time, affordable-housing developers are dealing with higher construction and financing costs.
If investigators find wrongdoing, Cadence McShane could face liability under the federal False Claims Act. The potential exposure could also extend beyond the Horizon Pointe project.
For general contractors working on HUD-funded multifamily and affordable housing projects in Texas, the raid offers a warning. Federal officials may take a closer look at profit margins on capped-fee public housing work.
The case also follows other enforcement actions against real estate players this year. One example is a California investor who was charged in a $100 million real estate loan fraud scheme.
Meanwhile, higher material and labor costs are making public housing projects harder to execute within tight margins. That pressure could increase scrutiny of change orders, project costs, and contractor profits.
What’s Next
Cadence McShane’s effort to block Opportunity Home’s records request will continue in court. Meanwhile, the federal investigation remains ongoing.
The outcome could influence how closely HUD reviews contractor profit margins on other subsidized housing projects across Texas. It could also affect how public housing agencies handle records requests involving federally funded developments.
