[Former Newsom run...] City Flags FBI After Finding 'Criminal Activity' at Homelessness Nonprofit

[Leroy N. Soetoro]

https://sfstandard.com/housing-development/city-audit-finds-serious-
problems-at-government-funded-homelessness-nonprofit/

An audit found a pattern of serious problems at a government-funded
nonprofit that provides housing and other homelessness services, and the
city has referred the situation to the Federal Bureau of Investigation and
the District Attorney’s office as a criminal matter.

The audit by the San Francisco Controller’s Office found a record of
mismanagement at United Council of Human Services (UCHS), a nonprofit
providing homelessness services that received $28 million in grants
through a fiscal sponsor, Bayview Hunters Point Foundation.

The latter organization received $36.4 million from six grants to run Hope
House Consolidated, Hope House for Veterans, Bayview Drop-in Resource
Center, Jennings Safe Sleeping Village and a shelter-in-place site at Pier
94, all managed by UCHS.

But the audit found that UCHS, which receives federal funding for its
housing sites, had not properly vetted tenants or ensured that they were
prioritized appropriately through the city’s “coordinated entry” system
for homeless individuals. The organization has also failed to pay at least
$30,661 in rent, among other findings.

In a Nov. 17 letter to the FBI’s San Francisco office and Evan Ackiron,
head of the District Attorney’s white collar crime division, San Francisco
Controller Ben Rosenfield and City Attorney David Chiu wrote that “access
to housing was illegally sold to some residents.”

“Although the individuals responsible may not have been UCHS employees, it
appears that UCHS was aware of the criminal activity and did not initially
report it to the funding department,” the letter said.

The city Department of Homelessness requested the audit over concerns that
the nonprofit used rent from clients to cover other ineligible expenses.

The audit uncovered a pattern of severe mismanagement of resources
intended for homeless individuals that crossed over into illegality.

Out of 29 sample clients that the auditors examined, 83% were not properly
prioritized for housing placement; the nonprofit also did not retain
documentation for its tenants, according to the report. The inquiry also
found a pattern of errors in calculations of rent owed and inaccuracies in
tenant and unit information reported to the city.

The Controller found three UCHS employees who were enrolled in its Hope
House Consolidated housing program without going through the coordinated
entry process.

In addition, the nonprofit “intentionally” circumvented rules such that
the Department of Homelessness and Supportive Housing didn’t know how many
of their units were vacant. UCHS also improperly collected rent that it
never turned over to its fiscal sponsor and over-billed them for expenses
on its American Express card, the audit said.

“The City asked for this audit because the Mayor wants to ensure
accountability in how we deliver homeless services,” said the Mayor’s
Office in a statement. “We’ve already begun to implement reforms laid out
in this report by the Controller, and our goal is to use our local, state,
and federal funding dollars effectively.”

The Controller’s Office issued 14 recommendations, among them that the
city consider terminating its grant agreements with the organizations,
particularly those that involve federal funding.

While the city has the authority to modify contracts that involve local
funds, it has no such flexibility with the stringent requirements that
come with administering federal grants for housing.

Both federal and local government rules require certain prioritization and
record-keeping procedures for organizations that receive public funds to
provide low-income housing to homeless individuals.

Department of Homelessness spokesperson Emily Cohen said that the
department agreed with 13 out of 14 recommendations but that “we are
interested in finding a way to work with the provider; they have great
relationships and trust built with people in the Bayview […] we obviously
want to ensure we follow the law.”

“These are allegations,” she added.

UCHS’s CEO, Gwendolyn Westbrook—who’s said to be a politically-connected
operator in District 10—did not immediately respond to a message left at
her voicemail. But in a Nov. 11 letter to Shireen McSpadden, the city’s
homelessness director, and Mark de la Rosa, head of audits for the
Controller’s Office, Westbrook claimed the audit was “not representative”
and appeared to blame the fiscal problems on Bayview Hunters Point
Foundation.

The nonprofit has gone through several fiscal sponsors in the past few
years.

Its former fiscal sponsor, Bayview Hunters Point Foundation, approached
the city earlier this year citing problems at UCHS and said it wanted out
of the sponsorship arrangement. Felton Institute, another major nonprofit
organization in the city, took over fiscal sponsorship of UCHS in 2022.

“I support every District 10 nonprofit as they provide valuable services
for the community. I do after all, represent District 10,” said District
10 Supervisor Shamann Walton in a statement.

It isn’t the first time the city’s budget office has found problems at
UCHS.

A 2017 audit found a slew of organizational problems ranging from
inexperienced board members serving longer terms than allowed, $88,140 in
missing funds and a missing record of most employees who had ever worked
at the company. The report presented 30 recommendations to establish more
oversight at the nonprofit.

The nonprofit’s most recent tax return shows several employees making a $0
salary despite logging 40 hours a week for the organization.

In a statement, Supervisor Ahsha Safai called on the Controller’s Office
to perform a comprehensive audit of the homelessness department, saying
that “the troubling result [of the UCHS audit] is that HSH didn’t even
know the total number of occupied housing units they were funding.”

City-funded nonprofits have fallen under the microscope in recent months,
with Supervisor Catherine Stefani calling for new legislation to tighten
up oversight of nonprofits that receive city funding, also called
“community-based organizations.”

This fall, a scandal erupted at Positive Resource Center and Baker Places,
two related nonprofits that provide addiction treatment and other
services, when the organizations asked the city for a $4.2 million bailout
and threatened to close some of their programs.

Subsequent reporting by The Standard revealed that a top Department of
Public Health official, Lisa Pratt, had been drawing a second six-figure
salary from Baker Places, which receives the bulk of its funding from the
health department.

Safai has called for a hearing on the situation at Baker Places and
Positive Resource Center, which runs a network of drug rehab and other
behavioral health sites in the city.

Annie Gaus can be reached at an...@sfstandard.com
David Sjostedt can be reached at da...@sfstandard.com

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[Leroy N. Soetoro]

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