New York CIty Council Member Ben Kallos

Wall Street Journal Councilman Calls for Hearing on Nonprofit Contractors and Their Business Ties by Katie Honan

Councilman Calls for Hearing on Nonprofit Contractors and Their Business Ties

A New York City councilman is calling for a hearing to look at nonprofit city contractors after officials opened an investigation into the allegedly undisclosed business ties that a top homeless shelter provider has with a security firm.

The Wall Street Journal reported Thursday that the city’s Department of Investigation had opened a probe into the relationship between Acacia Network Housing Inc., a nonprofit homeless services provider, and SERA Security Services LLC. SERA was founded by the Acacia’s CEO, Raul Russi.

Since 2010, Acacia has received more than $1 billion in contracts from the city’s Department of Homeless Services to operate shelters. The nonprofit paid more than $12 million to SERA in 2017 for the firm to provide security services at some of Acacia’s shelters, according to the nonprofit’s most recent federal tax filing.

Ben Kallos, a Democrat who represents parts of Manhattan, said in an interview Friday that nonprofit contractors should be better scrutinized over their business ties.

“We should be using our tax dollars for caring for our neediest, and we shouldn’t have to worry about self-dealing,” the councilman said.

The city requires that a contractor and its principals disclose any business connections.

SERA, which has its own direct contracts with the city, listed Jose Rodriguez as its CEO in its most recent disclosure forms with the city’s contract records system. Mr. Rodriguez also serves as the chief legal officer for Acacia.

However, Homeless Services said it wasn’t aware of Mr. Rodriguez’s ties to both SERA and Acacia until The Wall Street Journal inquired about the connection last month. The agency said it also wasn’t aware of Mr. Russi’s connection to SERA.

The chief of staff of Acacia previously said that there was no conflict of interest between the nonprofit and SERA. She also said that no officer or director at Acacia has any beneficial interest in SERA or receives any financial benefit.

Mr. Kallos said the Journal’s article raised concerns about misrepresentations and how the city ensures organizations are being honest.

“This is something that should have been caught in the process and a simple audit of tax returns and of the documents that should have and would have been submitted,” he said.

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