Advertisement

SKIP ADVERTISEMENT

N.Y.C. Severs Ties With Housing Boss Who Earned $1 Million a Year

The city will no longer work with CORE Services Group, the nonprofit run by Jack A. Brown, to provide housing and services to the homeless.

Jack A. Brown was tapped to operate shelters in New York despite a checkered past, The New York Times found in a recent investigation.Credit...Michael Appleton for The New York Times

New York City is severing ties with CORE Services Group, one of the largest nonprofit organizations running homeless shelters, citing the charity’s repeated management failures, conflicts of interest and excessive executive salaries.

The move came after a New York Times investigation published last month found that the chief executive of CORE, Jack A. Brown III, collected more than $1 million a year, hired his relatives and steered millions of dollars in business to for-profit companies he controlled. The city revealed it was ending its relationship with CORE late Monday in response to questions from The Times.

Mr. Brown had readily won contracts with the city even though state finance officials had concluded he had shown “a disturbing pattern of ethical violations.” He was the highest paid shelter operator in New York, according to a Times review of available records.

CORE, which has received more than $352 million in city funding in recent years, operates 15 sites of homeless housing, including shelters and hotels, around New York. The organization had ballooned in size as the city turned to nonprofit groups to open dozens of new shelters as part of Mayor Bill de Blasio’s homelessness policy.

The Times investigation found that as city money came in, Mr. Brown used the nonprofit organization to enrich himself. The group channeled contracts worth at least $32 million into for-profit companies tied to Mr. Brown, allowing him to earn a six-figure salary. Millions more went to real estate companies in which he had an ownership interest. He also hired at least five family members, including his mother and brother, and gave employees perks such as gym memberships and cars.

The city has known about some of Mr. Brown’s financial entanglements since 2017 but has continued to pay millions to CORE, even after identifying problems with the organization’s spending in 2019 and requiring the group to hire a forensic auditor.

Following questions from The Times in September, the city ordered Mr. Brown to close the for-profit companies — a security firm, a maintenance company and a catering business — and fold the services into the charity. City officials said they instructed Mr. Brown to step aside and ordered a number of reforms in the group.

The city also ordered CORE to repay the city more than $2.3 million for CORE’s “excessive executive salaries,” but the nonprofit refused, according to a letter the city sent to CORE this week.

CORE and Mr. Brown repeatedly flouted city mandates, said Isaac McGinn, a spokesman for the Department of Social Services, the agency that oversees the operation of homeless shelters.

“We and the mayor were crystal clear that if CORE did not reform in response to our corrective actions, the city would have no choice but to end our relationship with them,” Mr. McGinn said in a statement. “CORE’s repeated defiance has made clear they do not intend to change their ways or get their act together.”

In a statement, a spokesman for CORE said late Monday that the group had been providing services for more than a year without receiving payment from the city. “This situation was untenable, and CORE is in discussions with the city to secure an amicable resolution to minimize impacts on CORE’s clients and employees,” the statement read.

In a letter to officials at the Department of Social Services that was reviewed by The Times, Mr. Brown suggested it was his decision — not the city’s — to stop working together. Mr. McGinn disputed that characterization.

The CORE spokesman said that “incorrect information about confidential discussions” had been made public but would not say what information was wrong.

“I am proud of what CORE achieved,” Mr. Brown wrote to city officials.

Mr. McGinn said in his statement that the city planned to phase out CORE as a shelter provider by March. The city has already closed one of the group’s sites and plans to move homeless clients and reassign them to different nonprofit organizations. The statement said the city still intended to recoup millions of dollars from CORE and its chief executive.

As homelessness has soared in New York City in recent years, the city has outsourced the operations of its shelters to nonprofit organizations that run the buildings and provide services. This year alone, the city has directed $2.6 billion to these groups. But officials have struggled to eliminate conflicts of interest and self-dealing among some charitable organizations.

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.

A 2012 Times investigation found that after winning that federal contract, Mr. Brown’s charity, Community First Services, had failed to deliver key services to people leaving prison, such as counseling, vocational training and drug rehabilitation. That same year, the New York State comptroller’s office, which oversees the state’s finances, concluded that Mr. Brown had shown a “disturbing pattern of ethical violations.”

Mr. Brown changed the name of his nonprofit to CORE Services Group to distance himself from the bad publicity, he said in a deposition, and then applied to run New York homeless shelters — business he won handily.

More recently, Mr. Brown has expanded CORE’s ambitions. The group won a $60 million contract to run a federal halfway house in Washington, D.C., and applied for — and subsequently pulled out of — a deal to operate a public golf course in the Bronx.

Amy Julia Harris is an investigative reporter on the Metro desk. She previously worked at Reveal from The Center for Investigative Reporting, where her team project on drug rehab programs that require patients to work for free was a finalist for the Pulitzer Prize in 2018.  More about Amy Julia Harris

A version of this article appears in print on  , Section A, Page 14 of the New York edition with the headline: New York City Cuts Ties With Housing Group. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT