A report from the New York City Department of Investigation shows widespread corruption among nonprofit providers of services to the city's homeless shelters.
The report cites "hundreds of governance and compliance concerns,” including inflated salaries due to taxpayer funds pouring into the nonprofit's coffers, conflicts of interest, the hiring of family members, and failures to obey regulations such as non-competitive bidding on contracts.
The report is unrelated to the federal and state governments' sweeping investigation of "city contracts and the possibility of influence peddling and kickbacks" among Mayor Eric Adams' administration officials.
“When it comes to protecting the vast taxpayer resources that city-funded nonprofits receive, prevention is key,” DOI Commissioner Jocelyn Strauber said in a statement. “City-funded nonprofit service providers pose unique compliance and governance risks, and comprehensive city oversight is the best way to stop corruption, fraud, and waste before it starts.”
The "unique compliance and governance risks" mean that the people who are running these nonprofits are suspect.
The Department of Social Services says it's doing much, much better and will fix everything that's wrong. Promise!
“We take every instance of noncompliance very seriously, which is why DSS has completely stopped doing business with a number of providers highlighted in the report, enhanced invoice review policies and practices, and reinforced our robust audit and accountability mechanisms,” DSS spokesperson Neha Sharma said.
If the "audit and accountability mechanisms" are so "robust," why all the corruption?
One example cited in the report was Black Veterans for Social Justice, a provider that receives taxpayer funding and had allegedly employed its CEO’s children since at least 2007. But the company lied in a questionnaire to DOI, claiming the organization did not employ any immediate family members of senior employees or board members, according to the report.
The organization is now working under a monitorship agreement.
Another provider, South Bronx Overall Economic Development Corporation, improperly employed at least five relatives of senior employees — including the child and niece of the nonprofit’s executive director and the children and cousin of its chief administrative officer, the report says. A spokesperson for the Department of Social Services said the city is no longer doing business with them.
One shelter provider, SEBCO Development, purchased security services from a company owned by the nonprofit. This allowed SEBCO executives to draw two salaries from the taxpayer-funded security company and the nonprofit worth hundreds of thousands of dollars.
DHS-funded shelters host around 86,000 people every night, racking up $4 billion in spending in fiscal year 2024 — up from $2.7 billion annually in fiscal year 2022, according to the report. This is largely due to the influx of asylum seekers coming to New York.
The report did not include city-funded emergency migrant contracts.
City comptroller and mayoral candidate Brad Lander slammed Mayor Adams for not putting in place oversight and safeguards earlier.
“DOI’s latest 100-page investigation underlines the Adams administration’s failure to implement any of the anti-corruption recommendations from DOI’s 2021 report,” Lander said in a statement. “If the mayor continues to fail to implement these common-sense recommendations, further eroding public trust in our local government, then the City Council must take action.”
How much of that $4 billion is wasted or stolen? Finding that out is beyond the scope of one small investigative agency in a city government. The state of New York must take a hand in investigating the corruption and malfeasance and start putting people in jail for their crimes.
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