Unveiling Corruption: The Dark Reality of Homeless Shelter Contracts

Homeless Shelter

A firsthand account reveals the harrowing reality of mismanagement and neglect within shelters, as organizations capitalize on government funds meant for homeless people. As investigations uncover widespread fraud and financial mismanagement, urgent calls for accountability and reform echo nationwide to protect the integrity of services for those in dire need.


The Devastating Impact of Homeless Shelter Contract Fraud and How it Puts Homeless People at Greater Risk

In 2017, I stayed at a homeless shelter called Parkview in Harlem. It was beautifully situated across the street from Central Park, facing the Harlem Meer.

This homeless shelter was formerly a hotel, then managed by a provider called Aguila, Inc. As picturesque as it was from the outside, you’d never imagine the hell waiting for you beyond those double doors and, even further, through the metal detectors and up those elevators, escorted by NYPD.

On the inside, you were consistently spoken down to, yelled at, and told you were lazy degenerates who deserved even less than what you were given.

The summers were squelching, as they often are in NYC. With no central air, the humidity painted the walls and dripped in the tight hallways. Rats scurried around, and the trash cans were piled high. The toilets were constantly clogged, and the shower curtains were covered in mold. If you were lucky, you might find a stove with a burner still attached, but it was unlikely.

One day, as I was renewing my SNAP benefits, I noticed on my application, listing under housing costs was a shocking $7,000/month, paid to Aguila, Inc. I couldn’t believe my eyes. How was it possible that this organization was bringing in $7,000 per resident, per month, and wasn’t even able to get a fan in the kitchen. There was no food on site and abysmal case management.

Aguila’s Over Billing and Financial Mismanagement Exposed

A few short years after I left Parkview, the city’s Department of Homeless Services cut ties with Aguila, once the city’s largest homeless shelter provider in NYC. By 2021, Agulia filed for bankruptcy amid ongoing criminal probes.

According to City Limits:

“Less than a decade ago, Aguila ran more than 40 shelters for single adults and families with children. The troubled but politically connected nonprofit managed to win contracts totaling more than $250 million since 2012, despite scathing accounts of financial mismanagement and unsafe conditions uncovered by the city comptroller’s office.”

In the official financial audit, “Over Billing and Payments Made to Aguila, Inc.,” Comptroller John C. Liu and Deputy Comptroller for Audit Tina Kim stated that DHS should recoup $913,949 in improper payments. It should also investigate unsupported payments of $9.1 million and contracts for shelter and social services costing $10.3 million.

The audit found that DHS failed to ensure reasonable and adequately supported non-contracted payment rates. They also failed to:

  • review and approve the facility leases and security contracts
  • monitor their operational performance
  • client safety
  • sanitary conditions
  • ensure that clients were transitioned to permanent housing in a timely manner

According to the comptroller’s contract database, the city has paid Aguila $331,500,000 since July 1, 2012.

Nationwide Fraud in Homeless Shelter Contracts Unveiled

This isn’t the first case of organizations like Agulia taking advantage of the homeless shelter contracts, and it’s likely not to be the last. In more recent cases, a NYC contractor pleaded guilty to federal fraud charges in connection with a scheme that skimmed money from homeless shelter contracts worth $12 million.

According to USA Today“Queens-based AFL Construction president Liaquat Cheema was ordered to pay more than $3.2 million in forfeiture and restitution as part of his plea deal last week, federal prosecutors said, after admitting to siphoning money intended for homeless shelters.”

Court documents show that Cheema and other employees, including his son and in-laws, submitted fraudulent invoices and inflated the amounts they spent on shelter materials. Cheema pleaded guilty to conspiracy to commit wire fraud.

Earlier this year, Los Angeles real-estate firm Shangri-La Industries was accused of jeopardizing homeless housing projects by taking loans out on the buildings that then became at risk of foreclosure. California Attorney General Rob Bonta demanded in a civil lawsuit that Shangri-La return $100 million in homeless housing program money.

Moreover, 14 shelters across Boston were forced to shut down in 2022 because of connections to a fraud scheme. 

Not only is it reprehensible to fraudulently divert money away from the most vulnerable demographics to line your own pockets, but it severely harms homeless people. When shelters shut down, like in the above Boston case, hundreds of vulnerable people have nowhere to go.

How can anyone justify such greed?

Call for Accountability Following Shelter Contract Fraud

In the wake of egregious financial mismanagement and shocking criminal probes, the depth of exploitation against vulnerable populations comes to light. From exorbitant contracts to outright fraud, the betrayal of trust and diversion of essential funds meant for those in need underscores an unfathomable level of greed.

As we confront these distressing realities, cities must uphold vigilance to safeguard against future instances and ensure the integrity of services for those most in need.


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Jocelyn Figueroa

     

Jocelyn Figueroa studied Creative Non-Fiction at The New School and is a blogger and freelance writer based out of New York City. Formerly homeless, she launched her own blog discussing shelter life in New York City. Today, Jocelyn is on a mission to build connections through storytelling and creative writing. Check out her book about homelessness at https://ko-fi.com/scartissueproject

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