A Bronx-based homeless service provider filed for federal bankruptcy amid an ongoing criminal investigation and after the city decided to withdraw almost all of its contracts.
The new management of Aguila Inc., whose operations and former senior executives and associates are under investigation by the state attorney general’s office, Letitia James, filed for Chapter 11 protection before the U.S. bankruptcy court in Manhattan after the city’s homelessness services department canceled ten of the provider’s 11 contracts.
The social services company had received $ 250 million from DSH since 2012 to provide shelter and other services to homeless residents.
Audits carried out in the past by the city’s comptroller’s office had identified poor and unsafe conditions in some of its shelters and lax oversight by the city’s homeless services department.
The department confirmed Monday that it is phasing out the remaining contract with Aguila Inc. for homelessness and coronavirus prevention services at the Park View Hotel on West 110th Street near Central Park – leaving the provider without the capacity to provide services or generate income.
Aguila also sought bankruptcy protection after his new management team and board members conducted a thorough audit that “uncovered gross mismanagement and wrongdoing by his leadership previous “, according to a press release published by the company marked by the scandal.
The bankruptcy filing will pause around 20 different actions and lawsuits filed against Aguilar by former employees, said executive director Ray Sanchez, who was installed last year to clean up the mess. Some former employees accused Aguila of salary theft.
Aguila’s board of directors fired former executive director Jenny Rivera after it was revealed that she and other associates were the target of a criminal investigation by AG James’s office.
A search warrant reviewed by The Post last year found investigators claimed they had ‘probable cause’ to investigate Rivera and anonymous co-conspirators for a host of alleged crimes, including commercial bribery and receiving bribes, robbery, criminal possession of stolen property, falsifying business records, depositing false instruments and money laundering.
The investigation also targeted a one-time event in the Bronx Democratic Party establishment.
Former Bronx County Clerk Luis Diaz was suspended from duty by the State Courts Administration Office last fall after the AG’s office obtained a search warrant and raided his office.
It turns out that Diaz, a former state assembly member who made $ 210,900 a year as a county clerk – the same as a state Supreme Court judge – was moonlighting. for years as a paid consultant for Aguila.
Diaz’s name also surfaced in a lawsuit filed against Aguila by the Neighborhood Association for Intercultural Affairs, which was seeking to take over or merge the two organizations. Rivera and Aguila’s board illegally withdrew from the deal, according to the lawsuit.
Diaz was seeking to be a paid consultant for the revamped company under a new board of directors, according to the lawsuit.
AG James’s office declined to comment on Monday.
An internal review of Aguila’s board minutes showed that the nonprofit shelter provider had considered a potential bankruptcy filing as early as September 2019.
Sanchez said bankruptcy became inevitable in October 2020, when city officials informed him that all of Aguila’s contracts except one would be canceled and / or reassigned to other suppliers.
“The immediate result of the filing is that all pending litigation involving Aguila is stopped, providing an opportunity to restructure and stabilize the organization. My predecessor was incredibly contentious and the plethora of lawsuits wasted resources and hampered our ability to focus on our mission, which is of service to our fellow New Yorkers, â€said Sanchez.
“I have to make a good faith effort to save this organization,” he said.
He said steps taken to get Aguila’s finances in order included sacking the former CEO and chief of staff, implementing new financial controls and reporting, and replacing some board members. d’Aguila by lawyers experienced in overseeing corporate governance and not-for-profit groups.
Former legal advisor to Bronx Borough President Ruben Diaz Jr., Sanchez joined Aguila a year ago to address concerns from his board of directors that his consultant, ex-clerk Luis Diaz, had collaborated with others to orchestrate a “fraudulent affiliation and merger transaction”. with the Neighborhood Association Inter-Cultural Affairs.
Aguila is just one in a series of struggling homeless nonprofits with contracts with the city. A Post review found more than $ 4 billion had been paid to struggling operators over the past eight years, including a provider who channeled city funds to for-profit businesses it owned. and put family members on the payroll.
Comments are closed.