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BUFFALO, NY - 2 On Your Side has reported exclusively about Buffalo's inappropriate use of community grant funding. The U.S. Department of Housing and Urban Development, Office of Inspector General says the payments were made from 2005 to 2010. And went to prohibited activities like employee salaries, travel expenses and lobbyists.

2 On Your Side has also reported on how the federal government claims the city tried to cover up some of the payments and that the city, "exercised reckless disregard and/or deliberate ignorance," in the monitoring of city agencies that were spending the money.

Now, 2 On Your Side is revealing how Buffalo has been held responsible for the illegal spending -- and how it could be penalized in the future.

In 2011, Timothy Wanamaker, the former director of the Buffalo Economic Renaissance Corporation -- was convicted of using federal money for travel expenses.

City officials revealed to us Wednesday that Wanamaker was responsible for all the other illegal payments we've reported -- showing that the city's mismanagement of the funds was at a wider scale than previously thought.

The federal report states that the U.S. Attorney's Office requested HUD OIG investigate Buffalo's spending of community development grants.

And that in March of 2013, the U.S. Attorney's Office, "issued a letter to the HUD OIG closing their case into BERC and BURA [...]." We asked U.S. Attorney William Hochul about this at a press conference Tuesday.

REPORTER: Can you comment on why this case was closed?

HOCHUL: "No I can't comment on that."

REPORTER: Can you confirm on whether that was your office that specifically did close that case or was that [an office] in NYC or D.C. Or somewhere else?

HOCHUL: "As you know we don't confirm or deny any investigations."

Currently, the city says that HUD has not asked for any of the $1.6 million back. This is money that the city could still hang onto.

But, as HUD's report states, the illegal payments could be resolved under the U.S. False Claims Act, this means that the city may just have to pay fines.

"The conversation isn't over, the conversation is continuing, so we're still working with them on what the final outcome is going to be," said Brendan Mehaffy, the executive director of the city's Office of Strategic Planning.

HUD OIG ended its investigation into the city in 2011. But the report states, "this case will be closed and reopened," but the report redacts under what circumstances the case will be reopened.

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