NYC homeless-shelter operator stashed friends on payroll, created profitable spin-offs: information

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The CEO of one of many metropolis’s largest nonprofit shelters stashed kin on the payroll and funneled thousands and thousands of {dollars} into corporations he has monetary stakes in — alleged obvious conflicts of curiosity that town claims it’s now cracking down on.

The Post examined 2,000 pages of tax returns, contracting disclosures and authorized paperwork involving CORE Services Group and located a net of corporations with in depth ties to the nonprofit’s CEO, Jack Brown.

Experts instructed The Post that the set-up seems to serve little objective apart from inserting Brown on the middle of profitable transactions.

Among the alleged questionable practices revealed by the paperwork:

  • Brown created a string of for-profit corporations which have acquired thousands and thousands of {dollars} to supply key providers at CORE’s shelters, paperwork present.
  • A agency by which Brown holds a considerable stake acquired greater than $3 million in lease over two years from his non-profit, in line with tax filings.
  • At least three relations of Brown or members of the CORE’s numerous boards are employed by the nonprofit or associated entities, in line with information.

City officers have now revealed that final month, they ordered CORE Services to shutter the for-profits corporations Brown had established to supply providers.

“Any time a provider doesn’t comply with our oversight efforts, we take corrective action, including requiring restructuring as necessary, ending business relationships in some cases, or in rare instances working with law enforcement to identify bad actors,” stated Department of Homeless Services spokesman Isaac McGinn.

City Department of Investigation spokeswoman Diane Struzzi added, “DOI is aware of concerns surrounding CORE and declines further comment.”

Questions about CORE’s monetary set-up come because the nonprofit has scored greater than $800 million in metropolis contracts since 2014, primarily to function homeless shelters throughout town.

The Post first started inquiring about CORE and Brown in February after studying the nonprofit operated the shelter in Brooklyn’s Gowanus neighborhood the place accused subway ripper Rigoberto Lopez allegedly stayed earlier than the A-train stabbing spree in February. The crime spree left two lifeless and two others badly injured.

Brown made a minimum of $501,000 from CORE and its affiliated nonprofits in 2019 alone, in line with the group’s tax returns from that 12 months, that are probably the most not too long ago obtainable.

Brown's CORE Services Group operated the shelter where "A-Train Ripper" Rigoberto Lopez was staying.
Brown’s CORE Services Group operated the shelter the place “A-Train Ripper” Rigoberto Lopez was staying.
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Brown bought one other greater than half 1,000,000 {dollars} from his associated for-profit subsidiaries, the New York Times said in a report revealed Sunday.

His brother, Curtis, was paid $140,000 the identical 12 months, the paperwork present.

The brother of a member of the nonprofit’s board of administrators, Gordon Jackson, made a minimum of $190,000 as CORE’s head of neighborhood affairs.

Additionally, information reveal that one other tightly linked nonprofit managed by Brown employs Mallory Jones, whose husband sits on the subsidiary group’s board and made $174,000 that 12 months.

Previously, Brown was a prime government at a non-public jail operator, Correctional Services Corp, enmeshed in an early 2000s Albany bribery scandal. The firm was fined $300,000.

He later scored a contract from the federal authorities to function a midway home close to the Navy Yard in Brooklyn. The website was exposed in newspaper reports within the early 2010s as providing shoddy providers.

Several consultants who examined CORE’s tax returns and different filings reviewed by The Post stated they’re stuffed with “red flags” that warrant additional examination by native and state authorities.

“What I’ve seen is that there are lots of flags in these filings, and there may be a perfectly good explanation, but somebody ought to be looking at this,” stated Daniel Kurtz, the previous head of the state Attorney General’s Charities Bureau.

“There are too many transactions where there are more questions than answers,” he added.

For occasion, on one a part of the CORE’s annual filings with the IRS, the group certifies that its board is supplied with copies of its tax returns earlier than they’re submitted to the feds, Kurtz stated. But buried in a disclosure towards the tip of the doc, CORE clarifies that its “president” — Brown — “opinions [tax return] earlier than it’s filed.

“They tick the box saying the board is checking the tax returns before they are filed, but further back they acknowledge that it’s the president [Jack Brown] doing the review,” Kurtz stated. “You can’t have the president reviewing his own conflicts of interest — and both statements can’t be true.”

A controversial shelter for seniors that CORE Services operates on a tree-lined stretch of Bergen Street in Brooklyn’s working-class Crown Heights neighborhood supplies a Rosetta Stone into Brown’s operation.

Residents sued over the plans in 2017, charging that metropolis officers had been successfully dumping the Big Apple’s homelessness disaster into their neighborhood.

Officials and the residents settled the identical 12 months, after agreeing to a bunch of concessions together with a promise from CORE that it will retain “the services of a security company to provide uniformed security personnel who will be on site twenty-four (24) hours a day, seven days a week.”

At least three family members of Brown or board members aee employed by CORE Services Group, according to records.
At least three relations of Brown or board members are employed by CORE Services Group, in line with information.
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That identical month, Brown filed paperwork to ascertain a for-profit safety contractor, ProfessionalCore LLC, which accounts for just about all of Core Services spending on contracted spending, tax paperwork present.

It netted $7.6 million of the $7.7 million that CORE spent on ‘security and monitoring’ providers in 2018, in line with the filings. The subsequent 12 months, in 2019, Core Services paid ProfessionalCore was paid $22.7 million for “security.”

The for-profit is one in all a minimum of three corporations that Brown established to supply providers for CORE’s sprawling shelter operation, which additionally consists of Flavor Foods LLC for meals distribution and Core Facilities Management for property administration.

The Mayor’s Office of Contracts and City Comptroller Scott Stringer raised questions on CORE and Brown’s “business affiliations” in July 2017, because the contract to run the Bergen Street shelter wound its approach via the forms.

CORE responded by telling officers its new for-profit corporations — and a brand new holding firm created for them — had been wholly owned by the non-profit and “part of a recently formed corporate structure that will enable CORE to further its mission.”

But CORE instructed the IRS one thing completely different when it disclosed the brand new holding firm on a tax return for an affiliated nonprofit in 2018, the practically identically named Core Services Group NY.

It described Core Companies Inc. as owned by an “officer” of the non-profit.

Only two executives acquired compensation from the affiliated non-profit that 12 months, one in all whom was Brown. Brown can be listed because the holding firm’s CEO in state information.

Brown also allegedly created for-profit companies that have received millions to provide services for CORE shelters.
Brown additionally allegedly created for-profit corporations which have acquired thousands and thousands to supply providers for CORE shelters.
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It didn’t disclose the connection on its 2019 return.

However, that 12 months it did reveal that it employs Jones as its vice chairman of human assets.

The tax returns filed by the principle CORE Services nonprofit in 2018 and 2019 additionally revealed the non-profit has shelled out $3.1 million to an organization that Brown has a considerable stake in to lease the Bergen Street shelter constructing.

“New York City government’s [oversight process] is badly broken. How many red flags do they need waved in their faces?” stated John Kaehny, the manager director of good-government group Reinvent Albany, to The Post.

“There is a chain of failure here that includes the Mayor’s Office of Contracting, DOI and the New York City comptroller.”

CORE Services instructed The Post in an announcement Sunday that the for-profit corporations Brown runs are owned by the non-profit and claimed that metropolis officers signed off on the association.

The rep disputed information accounts from February that positioned Lopez, the accused subway slasher, as a resident of the motel-turned-shelter CORE runs in Brooklyn, claiming he solely stayed there from July 8 to July 20, 2020.

“This story contains numerous inaccuracies, including false claims made by the City of New York, and rehashes outdated and unsubstantiated allegations against CORE or its leadership in a seeming effort to attack the integrity of a successful African American business leader,” the spokesman stated.

The rep didn’t elaborate on the alleged “inaccuracies” moreover the declare about Lopez.

Additional reporting by Reuven Fenton and Sam Raskin