has cut ties with one of the biggest homeless shelter operators in the city after it was revealed that the CEO collected more than $1million a year in salary while steering millions of dollars in business to other for-profit companies he headed.
Jack A Brown III, the Chief Executive Officer of CORE Services Group, received more than $352million in city funding to operate 15 homeless shelters and hotels around New York.
However, a blockbuster investigation found that the 53-year-old Brown hired his unqualified relatives, redirected millions of dollars from his non-profit business towards his for-profit companies and collected a seven-figure salary,reported.
Lame-duck Mayor Bill de Blasio, who had made fixing the city’s homeless crisis one of his top priorities during his eight years in office, immediately cut ties with CORE.
State finance officials confirmed that Brown, the highest-paid shelter operator in New York, showed ‘a disturbing pattern of ethical violations’.
New York City has cut ties with CORE’s CEO Jack A Brown III (pictured), 53, after it was revealed that he redirected six-figure funds from his non-profit organization to his three for-profit companies
Brown has since been ordered to pay the city back more than $2.3million for CORE’s ‘excessive executive salaries,’ but the organization refused, which ultimately led to Isaac McGinn, a spokesman for the Department of Social Services (DSS) – the agency that oversees the operation of homeless shelter – announcing that NYC was severing ties with Brown
Pictured: CORE’s homeless shelter Beach House which serves 160 homeless adult families
Pictured: Bronx parent Housing Network, which NY Mayor Bill de Blasio ordered to hire an independent investigator to examine multiple sexual misconduct allegations against chief executive Victor Rivera
Pictured: MacDonough Family Residence, a shelter managed by CORE that provides temporary housing accommodations and social services to homeless families and their children until permanent housing alternatives become available, according to CORE’s website
Brown’s company denied all accusations in the Times investigation.
A CORE spokesman told DailyMail.com in a statement that ‘incorrect information about confidential discussions with the City has surfaced’ was made public although they didn’t elaborate on which details were inaccurate.
The statement added: ‘The fact is that, for the past 18 months, CORE performed $33million in services for DHS clients, which the City requested, but was not paying for, and CORE struggled to maintain services in the face of payment delays.
‘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.’
Brown has since been ordered to pay the city back more than $2.3million for CORE’s ‘excessive executive salaries,’ but the organization refused, which ultimately led to Isaac McGinn, a spokesman for the Department of Social Services (DSS) – the agency that oversees the operation of homeless shelters – announcing that NYC was severing ties with Brown.
‘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,’ 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.’
According to The Times, in a letter to officials at DSS, Brown suggested that it was his decision to stop working with NYC. CORE was also reportedly providing services for more than a year without payment from the city.
‘I am proud of what CORE achieved,’ Brown wrote in a letter to The Times.
In an earlier statement provided to DailyMail.com CORE claimed The Times’ 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’.
It added: ‘It also fails to acknowledge the quality service that Jack Brown and CORE have provided to New Yorkers in need for more than a decade, despite the many financial and operational challenges involved in working with New York City’s notoriously overburdened homeless services system, and the fact that CORE has been forced to cover millions in unpaid City bills for shelter operations. ‘
The homeless population in NYC has reached its highest levels since the Great Depression, according to data put out by non-profit groups.
In July 2021, there were 48,431 homeless people, including 14,923 homeless children, sleeping in city’s municipal shelter system. Of those, 18,653 were single adults – a 103 percent spike in the past decade.
Over the course of the 2020 fiscal year, 122,926 different homeless adults and children slept in the municipal shelter system – among them more than 39,300 homeless children, according to the Coalition for the Homeless.
There were 47,979 homeless people – including 14,881 homeless children – sleeping each night in the NYC municipal shelter system in August 2021, according to the agency.
Brown reportedly doled out high-paying jobs to at least five family members – including his mother Delores Brown (right), a house manager; brother Curtis Marcus Brown (left), a managing director; as well as his aunt and niece – and reportedly gave them employee benefits, including gym memberships and cars
The coalition added that thousands of homeless people sleep throughout the streets, subways and other public spaces but there is ‘no accurate measure’ of such data and city surveys ‘significantly underestimate the number of unsheltered homeless New Yorkers’.
CORE’s shelters included Beach House, which serves 160 homeless adult families, and Bergen House Senior Transitional Residence, which is home to 104 single adult men aged 62 and older, according to CORE’s website.
CORE also oversaw Commercial Hotel Shelter #1 through #9, all described as ‘a general population shelter’ for adult men. The company’s website accounted for at least 938 adult men living in these facilities, which also provided case management and assistance in finding permanent housing and developing life skills.
Yet at least $32million of the city funding provided for these shelters was siphoned into Brown’s for-profit companies, The Times reported.
These included the security firm ProCORE, which policed Brown’s shelters; maintenance company CORE facilities, which made repairs in Brown’s shelters; and catering business Flavor Foods, which fed the homeless residents in Brown’s shelters.
‘Out of more than 1,100 employees, only five are related to Jack Brown,’ CORE said in a statement to The Times
Since 2017, CORE has also paid more than $3million in rent money to a private company owned by Brown.
He had been pushing to operate a shelter in Crown Heights, Brooklyn, but his efforts were rejected in 2017 when residents said the neighborhood was already overburdened and cited CORE’s questionable past.
According to The Times, millions more went to real estate companies Brown showed an ownership interest in.
A look at state records revealed that CORE has spent more than $420,000 over the last two years lobbying politicians in New York.
Employees at CORE and its related companies have contributed $8,700 to the political campaigns of NYC’s Mayor-elect and Brooklyn Borough President Eric Adams.
Adams even supported CORE’s establishment in Crown Heights and urged residents to drop their opposition,but a spokesperson for Adams denied that the contributions to his campaign led to his support for the Brooklyn CORE shelter.
Brown also doled out high-paying jobs to at least five family members – including his mother Delores Brown, brother Curtis Marcus Brown, aunt and niece – despite their lack of qualifications. He reportedly gave them employee benefits, including gym memberships and cars.
Curtis served as CORE’s managing director and Dolores was one of CORE’s house managers.
‘Out of more than 1,100 employees, only five are related to Jack Brown,’ CORE said in a statement to The Times.
Meanwhile, residents of Brown’s homeless shelters have told The Times that they were fed moldy bacon, undercooked meatloaf and powdered eggs, which led to outbreaks of diarrhea and stomach cramps.
The food was provided by Brown’s catering company Flavor Foods. CORE has consistently denied that it received reports of food-related illnesses in its shelters.
‘The health and safety of our clients is CORE’s highest priority, and we take all resident complaints related to violence and drug use in our facilities seriously,’ CORE said in a statement to The Times.
Since 2017, CORE Services Group has received more than $352million from outgoing NYC Mayor Bill de Blasio’s (left) administration to operate homeless shelters despite a checkered past that includes allegations of fraud and ethical violations. CORE executives have also contributed thousands to the campaigns of Brooklyn Borough President and mayor-elect Eric Adams (right)
A look at state records also revealed that CORE has spent more than $420,000 over the last two years lobbying politicians in New York although the nonprofit released a statement saying Brown (pictured) has never been accused of wrongdoing
The security guards that were hired by Brown from his own private company reportedly slept on the job while doing nothing to stop rampant drug use among residents as well as fistfights in the hallways.
‘It’s hell in here,’ said one resident, 58-year-old Tracey Covington, who has lived in the Beach House shelter in the Arverne section of Queens, which is CORE’s largest shelter in New York City.
CORE has categorically denied the claims made in The Times story. Despite being dropped by the city it still has a provider profile on NYC Department of Homeless Services’ website.
The profile states: ‘CORE is is fundamentally committed to treating individuals and families with dignity and respect throughout the process,’ adding that the organization has provided ‘more than 800 beds of emergency, traditional and shelter-based housing’.
The Times investigation revealed that Brown drew significant salaries as CEO of three for-profit companies.
In 2019 he earned $520,000 in total from the security, maintenance and catering companies – on top of the $529,000 wage that he received as head of the non-profit, according to The Times.
Victor Rivera (pictured), 61, was arrested and charged by federal authorities in March just weeks after an explosive piece from The Times claimed he engaged in a decade-long pattern of sexual abuse and financial misdeeds while he was president and founder of the Bronx Parent Housing Network, one of the city’s largest homeless shelter networks
In 2003, Brown was vice president of Correctional Services Corporation, a Sarasota, Florida-based privately run prison (pictured) that won more than $22million worth of contracts to operate correctional facilities in NY in the 1990s. The company eventually sued Brown, alleging he stole confidential documents before quitting to start a competing non-profit
Records obtained by the news source showed that in one year alone, Brown spent $460,000 on gym memberships for employees at his private firms.
In February, de Blasio ordered an independent audit of the city’s nonprofit shelter providers after a published report described multiple sexual abuse accusations against the top executive of another group.
De Blasio also ordered the Bronx Parent Housing Network, which operates under CORE, hire an independent investigator to examine multiple sexual misconduct allegations against chief executive Victor Rivera.
In March, Rivera, who was fired from his position, was arrested and charged with conspiracy, honest services wire fraud and money laundering.
The charges against Rivera were announced by US Attorney Audrey Strauss, who said Rivera accepted kickbacks and bribes for years.
‘Victor Rivera sought to leverage his position as the CEO of a non-profit into a very much for-profit situation for himself,’ the attorney said in a release.
Prosecutors did not identify the agency but The Times reported that Rivera engaged in a decade-long pattern of sexual abuse and financial misdeeds while he was president and founder of the Bronx Parent Housing Network, one of the city’s largest homeless shelter networks.
In court papers, prosecutors described a scam in which Rivera from at least 2013 until 2020 enriched himself and his relatives by soliciting and accepting bribes and kickbacks from contractors doing work for his agency.
A homeless man living in an encampment in Manhattan’s Tompkins Square Park was pictured talking to police officers as authorities cleared the sidewalk and homelessness among single adults has seen a 103 percent spike in the past decade
They said Rivera made at least hundreds of thousands of dollars in illicit gains while laundering some of the corrupt payments through intermediary entities he controlled, including a purported consulting company supposedly owned by a relative.
Margaret Garnett, commissioner of the New York City Department of Investigation, said Rivera ‘schemed to enrich himself and his relatives’ when he should have used the city-funded nonprofit to serve the underprivileged, including the homeless.
Rivera was one of CORE’s founders 20 years ago and ‘knows first-hand what it is like to be surviving the streets of the Bronx,’ according to the Bronx Parent Housing Network website.
This isn’t the first time Brown and his company have faced a public scandal.
In 2003, Brown was the vice president of Sarasota, Florida-based Correctional Services Corporation, a privately run prison that won more than $22million worth of contracts to operate correctional facilities in New York State in the 1990s. The company eventually sued Brown, alleging he stole confidential documents before quitting to start a competing non-profit.
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