New York City non-profit executives rip off taxpayers to increase their salaries while failing to provide basic services to the groups they were awarded funds to help, according to an investigative report from The New York Times.
Jack A. Brown III, who runs a non-profit homeless shelter called CORE Services Group, was awarded $352 million by New York City to help homeless people get back on their feet. However, Brown earns over $1 million a year and uses allotted funds to hire contractors and family members to pocket an excessive amount of extra cash, NYT reports.
The company's website states that "CORE is a community-based human services organization that applies a culturally sensitive, holistic and integrated approach to addressing the needs of its clients, including families with children, youth and adults."
According to the Times, "The nonprofit has channeled contracts worth at least $32 million into for-profit companies tied to Mr. Brown, allowing him to earn more than $1 million a year, The New York Times found. Millions more have gone to real estate companies in which he has an ownership interest. He has also hired his family members and given employees perks such as gym memberships and cars."
While homelessness increases in the city, non-profit executives are profiting off the crisis and lining their pockets with taxpayer funds.
Through legal filings, business records, tax documents, and interviews, The Times found that non-profit executives hired companies owned by relatives and gave family members high-paying jobs.
For example, a non-profit executive gave millions of dollars to companies that he and his family owned and a homeless shelter operator in the Bronx laundered kickbacks through a consulting company ran by his family. The report also says that a former homeless organization board member secretly oversaw for-profit entities that he gave millions of dollars to. The board member is under criminal investigation.
James Brown III, the CEO of CORE Services Group, hires a security company that he founded to police his shelters. Brown also started a maintenance company and a catering company that he hires for his shelters, the report states.
In addition, the CORE executive owns two companies that have rented buildings to CORE, all ran by family members that rake in six figure salaries.
According to records, Brown is the highest-paid shelter operator in the state of New York.
Despite being granted $352 million dollars of taxpayers money, residents living in one of Brown's largest homeless shelters complained unlivable conditions. Some of the complaints include infestations, chronic fights, and mold.
"A lot of money is going into this place but it's not going to us," Annabelle Alexander said to The New York Times. Alexander lived in the Queens Beach House shelter before recently moving out.
According to state laws, non-profit executives are permitted to run for-profit businesses if they disclose the information to the city.