Two men were arrested on Wednesday and charged with conspiring to defraud New York City of millions of dollars by channeling money from a nonprofit meant to house the homeless to companies that they secretly ran.
The men, Peter Weiser and Thomas Bransky, ran Childrens Community Services, a nonprofit the city paid to provide services to homeless people through 28 shelters. Between November 2014 and February 2020, the city granted it 12 contracts worth roughly $913 million, according to a news release from the U.S. Attorney’s Office of the Southern District of New York.
“The defendants engaged in a yearslong scheme to pocket millions in taxpayer dollars through the systematic exploitation of city programs intended to meet the basic needs of some of the most vulnerable New Yorkers,” the U.S. attorney, Damian Williams, said in a statement.
Mr. Weiser made more than $7 million in illicit profits from the scheme, while Mr. Bransky earned $1.2 million in salary, according to the complaint.
Avraham C. Moskowitz, a lawyer for Mr. Weiser, 80, said his client “vigorously denies the charges against him and looks forward to his day in court.” A lawyer for Mr. Bransky, 47, declined to speak about the case.
The shelters in New York City’s sprawling homeless network are run mostly by nonprofits that work under contracts with the city. The business has attracted unscrupulous operators: In recent years, a series of shelter officials have been accused or convicted of bribery or self-dealing. In 2021, then-mayor Bill de Blasio ordered a sweeping audit of the industry, which then was receiving more than $2 billion annually from the city.
Mr. Bransky was the chief executive of Childrens Community Services, which Mr. Weiser founded and initially funded, prosecutors said. Mr. Weiser concealed his involvement with that nonprofit and other companies that it paid for services such as providing electronics, security, furniture and food, they said.
Some of the companies had few or no employees, and some had addresses in empty houses or apartments, prosecutors said.
The subcontracted companies often paid real firms to actually perform the work and then charged Childrens Community Services bloated rates, according to the complaint. The city paid over an extra $50 million to these companies, because of “inflated prices and unreasonable markups for goods and services,” the release said.
“The defendants concealed their scheme by straw ownership of companies, false statements and fictitious bids,” Jocelyn Strauber, the commissioner of the Department of Investigation, said in a release.
The charges were years in the making.
Childrens Community Services began to provide emergency operations for hotels used as shelters in 2014. By 2017, the city had given the nonprofit contracts totaling around $700 million, leading many to question why the city was granting so much money to a fairly new company.
In 2018, staff members of the Department of Homeless Services found that Childrens Community Services was hiring subcontractors without city approval.
Two years later, the city sued. Steven Banks, then the commissioner of social services, said that any wrongdoing had not harmed any of the homeless people served by the nonprofit organization.
Mr. Weiser and Mr. Bransky are each charged with one count of wire fraud and one of conspiracy to commit it, as well as one count of embezzlement of government funds. Mr. Weiser is also charged with money laundering. If convicted, the men could face decades in prison.
Both men pleaded not guilty and were released on bail.
Nikita Stewart and Andy Newman contributed reporting.