Mayor Bill de Blasio was again forced to defend his struggling homeless shelter system on Monday after a weekend of newspaper revelations revealed that the CEO of a leading supplier cashed in then that he put friends on the payroll and funneled millions to for-profit businesses he controls.
Asked to comment, an annoyed de Blasio prefaced his response by asking the press not to “dumb it down”.
“There are only a limited number of organizations providing the services,” Hizzoner insisted when asked repeatedly why the city continued to contract with Jack Brown.
His remarks came just hours after The Post documented how Brown, who runs Brooklyn-based nonprofit shelter operator CORE Services Group, created a network of for-profit companies he channeled into. million taxpayer funds in recent years.
“It’s not as easy as getting rid of everyone who does something wrong every time they do it – because there would be very few. [providers] left, ”said de Blasio.
“If an organization is unacceptable, we get rid of it. If they can be fixed, if we can work with them to reform and they provide a product good enough to serve the homeless, we will continue to try to fix this if we can.
The New York Times ran a similar report on Brown Sunday.
New York City is obligated to provide every homeless person with a safe haven under the terms of a legal agreement signed in the 1980s under the Koch administration.
Officials have repeatedly claimed that they are struggling to attract qualified suppliers to provide the services.
Well-known nonprofits typically walk away from work because they say contracts don’t pay enough – a loophole exacerbated by city hall’s well-known problems paying its bills on time, according to advocates for without. – shelter and experts.
That, in turn, opened the doors for people like Brown, who has been a central figure in at least two previous contract scandals.
This time around, his nonprofit CORE has won city contracts worth $ 800 million since 2014 to operate shelters and provide services to the homeless – before returning to the limelight in the press and public. city surveys.
“The city was chronically behind in paying contracts and long-standing nonprofits were therefore unable to expand their shelters as the homeless population skyrocketed,” said one nonprofit executive, who asked not to be named because of his group’s relationship with city hall.
“The city was in desperate need of more shelters and was handing out contracts to anyone who raised their hand, regardless of the red flags that were raised.”
The Post’s review – supported by a review of over 2,000 pages of tax returns, court documents, and contract documents – found that Brown:
- Established a series of for-profit businesses that have received millions of dollars to provide key services at CORE shelters;
- CORE paid a company, in which Brown has a substantial stake, which received more than $ 3 million in rent over two years;
- At least three members of Brown’s family or members of CORE’s various boards of directors are employed by the non-profit organization or related entities;
For-profit companies provided key services to shelters operated by Brown, such as security, catering and building maintenance and management.
Documents viewed by The Post showed that Brown set up security firm, ProCore, the same month CORE was party to a legal settlement that required him to hire a security firm for a controversial new shelter in Crown Heights.
And they showed that city bureaucrats reported apparent conflicts of interest with vendors in 2017 as part of their review of the Crown Height Vault operating contract, but dropped their objections.
At the time, CORE told the city that the entrepreneurs were 100% owned by the nonprofit and that the proceeds from the sale were reinvested in the operations of the shelter.
However, those claims were undermined by a 2018 filing with the IRS in which a subsidiary of CORE Services reported that the for-profit companies were owned in a company owned by an executive there – apparently Brown.
He was one of only two executives listed on the subsidiary’s tax return – and he was also named CEO of for-profit corporations on filings with the New York Secretary of State.
Meanwhile, The Times obtained records showing that Brown’s for-profit companies paid him over $ 500,000 a year – on top of the more than $ 500,000 he was already making at Core Services and its affiliates at. nonprofit, which means he was cashing in around $ 1 million. one year.
Brown denied the wrongdoing in statements provided to both newspapers.
“I don’t think nonprofits, in general, should be making that kind of money,” said de Blasio, when asked about Brown’s seven-figure compensation as subscribed by taxpayers.
“How did this individual achieve what he did?” I would also like this answer and I do not find it acceptable ”, he added, affirming that the town hall would try to recover funds while awaiting the results of an audit already underway. “If someone does the wrong thing, they shouldn’t be rewarded.”
Authorities have already ordered Brown to take down his for-profit businesses.
During Monday’s press conference, de Blasio and Homeless Services Commissioner Steve Banks also repeatedly claimed that the CORE scandal was an isolated incident.
“We work with over 60 shelter providers and I don’t want the actions of some executives in this case to denigrate the work of the other big providers,” Banks said at one point.
Neither man mentioned the other three major current and former shelter operators trapped by the scandal over the past two years, many of which echo issues identified at CORE.
In February, The Times revealed that the head of the Bronx Parent Housing Network – a major shelter operator – had repeatedly harassed and sexually assaulted homeless New Yorkers, while giving work to family members, in setting up for-profit salespeople and even renting out a Mercedes on the nonprofit’s penny. The executive, Victor Rivera, was indicted in March in a program of corruption and bribery.
In October 2020, The Post revealed that state attorney general Letitia James had obtained a search warrant for the CEO of Agulia Inc., a politically linked Bronx nonprofit that had won $ 250 million. dollars in contracts with DHS over the years. The board of directors of the nonprofit fired Honcho Jenny Rivera.
Months earlier, in February 2020, federal prosecutors and the Investigations Department raided Queens-based community children’s services – which brought in some $ 600 million in municipal contracts – as they investigated allegations that executives had defrauded taxpayers with millions of fraudulent bills. The association was then placed in receivership by a state judge.