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Assembly candidate Morshed Alam used money from a public contract to make rent payments on his private home, a violation of City policy, several sources said.

Alam used to head the American Bangladesh Friendship Association, which received a $16,000 contract from the Department of Youth and Community Development in July 2005 to perform immigration services like citizenship drives and translations for new residents.

The basement of Alam’s Jamaica home, located at 169-08 Grand Central Pkwy., served as the makeshift headquarters for the group. Between July 1 and Jan. 30, Alam used $4,200 of the funding to pay for the rent on that property, expenditures that city officials now call a clear conflict of interest.

Alam said the payments were approved at the time. He said he used his own home only because the organization could not afford other locations on its small budget.

“We were confused about the rules on property. It was totally out of ignorance,” Alam said. “Whatever actions we must take, we will take.”

Those actions likely include returning the rent money, sources said. But there are also questions about how the rest of the funds were spent.

On Jan. 23, representatives from DYCD visited the organization and found little evidence that the group was active. The DYCD halted payment on the contract only days later.

“The visit noted no discernable attendance and/or registration records,” Timothy Johnson, DYCD’s director of discretionary contracts, wrote in a Feb. 1 memo, according to the New York Post, which first reported the situation.

In response, Alam said his organization agreed to cancel the contract due to low participation. Many people are leaving the area because of the high rent, he said.

Before canceling the contract, the City had already paid $10,000 of the total $16,000 sum. Alam claims those dollars were well spent on valuable services to new immigrants.

DYCD officials said the agency would conduct an investigation into whether additional funds were misappropriated. They had no further comment on the case.

The contract was granted through a discretionary request, the type that Council members request from the City budget. It is unknown which Council member requested the funding.