N.Y.C. Severs Ties With Housing Nonprofit Run by Jack A. Brown III
Nine of the 62 groups that run shelters are on an internal city watch list for issues that include conflicts of interest and financial problems. All of them continue to receive city funding.
In February, after a Times investigation uncovered abuses by another homeless shelter operator in the Bronx, Mr. de Blasio ordered a sweeping audit of every nonprofit group in the city’s shelter system to examine conflicts of interest, spending and nepotism. Officials have said they aim to complete the review by the end of the year.
Mr. Brown, 53, was one of a number of nonprofit executives examined by The Times who found a way to personally benefit from an extraordinary infusion of city spending. In addition to serving as the chief executive of the nonprofit he founded, CORE Services Group, Mr. Brown started a security firm that policed his shelters, a maintenance company that made repairs in them and a catering business that fed the residents, records showed. Mr. Brown collected a salary as the head of each company.
Homeless people living in one of CORE’s largest shelters in Queens complained of threadbare services and poor conditions. A dozen residents interviewed by The Times said Mr. Brown’s catering company frequently served them moldy bacon, undercooked meatloaf and powdered eggs, causing them to become ill. They said the security guards from Mr. Brown’s company failed to break up fights and often slept on the job.
Nonprofit groups that receive city money are required to solicit at least three independent bids for most contracts to prevent price gouging. But CORE violated those rules and instead simply awarded millions of dollars in business to the companies overseen by Mr. Brown, according to an independent auditor’s report.
Mr. Brown and his business practices had previously come under scrutiny.
When Mr. Brown was an executive at a private prison company in 2003, the company was involved in one of the biggest lobbying scandals in New York history and fined $300,000 for breaking lobbying laws. (CORE said Mr. Brown had not been involved in any misconduct.)
He went on to work at a rival private prison company, Geo Group, and as the company was vying for a multimillion-dollar federal contract to run halfway houses, Mr. Brown quietly formed his own nonprofit organization, applied for the same contract and successfully underbid his previous employer. Geo Group sued Mr. Brown and his nonprofit for fraud, arguing that he had stolen confidential documents, according to court filings. Mr. Brown denied the allegations and settled the suit, with no admission of wrongdoing.