Latest case of homeless shelter contract fraud in NYC highlights schemes across the nation:-A contractor in New York City pleaded guilty to federal theft charges related to a scheme that stole $12 million in contracts from homeless shelters. This is the latest plan in the country to put services for some of the most vulnerable people at risk.
The case shows how companies in Massachusetts, California, Indiana, and New York have stolen millions of dollars from programs that were supposed to help people who don’t have a place to live.
Latest case of homeless shelter contract fraud in NYC highlights schemes across the nation
“It’s disgusting that people would try to take advantage of a system that is already overworked and underequipped to protect people who are in grave danger because of the rising cost of living,” said Josh Goldfein, an attorney at the Legal Aid Society in New York.
As the country deals with record-high levels of homelessness caused by rising costs of living, Goldfein said that every dollar taken from shelters that aren’t getting enough money puts the safety of people who don’t have a place to live at risk.
As part of his plea deal last week, Liaquat Cheema, president of AFL Construction in Queens, was told to pay more than $3.2 million in forfeiture and compensation. He admitted to stealing money meant for homeless shelters.
Liaquat Cheema has admitted to being in charge of a plan to steal millions of dollars in public funds that were meant to pay for important repairs at New York City shelters for the homeless, said U.S. Attorney Damian Williams in a statement. “This Office will not stand for people who use public contracts meant to help people who aren’t getting enough help to get rich illegally.” We will keep working hard to find and break down plans like this one.
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Yearslong scheme defrauded New York out of millions
A complaint brought in the U.S. District Court for the Southern District of New York says that the New York City Department of Homeless Services gave AFL two four-year contracts in May 2014. The contracts were paid for with a mix of federal and city funds. At shelters in Manhattan, Brooklyn, Queens, and the Bronx, AFL did basic maintenance, landscaping, roofing, and getting rid of snow.
According to court papers, Cheema and other employees at the company, such as his son and in-laws, sent in fake invoices that lied about how much they spent on shelter materials. The lawsuit says that one time, a company charged AFL $12,800 for containers, but the group sent bills for a total of $17,120.
Court papers say the company also lied about the workers it put on projects and then deposited checks meant for those workers into their own bank accounts. A limousine driver who was named as working for the construction company said he had never worked for AFL.
Cheema pleaded guilty last week to conspiracy to commit wire fraud, a crime that can get you up to 20 years in jail.
USA TODAY asked Cheema’s lawyer for a comment, but they did not reply.
The Coalition for the Homeless says that this comes at a time when the number of homeless people in New York is higher than it has been since the Great Depression. Goldfein said the rise was because house prices were too high to afford.
He said, “Right now, the city is having a hard time dealing with all the people who are here who need help, and we need every dollar that can be used to help people get back on their feet.”
Schemes targeting homeless services across the nation
Saadian said, “The idea that some contractors are stealing money from homes that need it so badly and right away is so outrageous and frustrating.”
A well-known case in Los Angeles earlier this year against a real estate company showed how fraud schemes have put services for the homeless at risk. The Los Angeles Times reported that California Attorney General Rob Bonta said Shangri-La Industries put homeless housing projects at risk by illegally taking out loans on buildings that were at risk of default. In a legal suit, Bonta asked the company to return more than $100 million in housing program funds.
New York police say two men stole money from a nonprofit that the city paid to provide services to the homeless in October, which led to federal charges in a different complex fraud plan.
Prosecutors say the group set up fake companies that didn’t have many or any workers but claimed to offer IT, security, furniture, and food services. Instead, the businesses bought the goods and services from outside sellers and then sold them to Childrens Community Services for more than what it was worth. Court papers show that the scheme caused the city to pay more than $50 million that it would not have otherwise. This included paying prices that were too high.
In Indiana in May, an unlicensed contractor pleaded guilty to fraud and money laundering in a kickback scam. According to officials, Pigeon Township hired Terrance Hardiman to fix up a shelter for homeless people and build a food pantry. The U.S. Attorney’s Office says Hardiman lied on bills about how much the project cost by thousands of dollars and split the kickbacks with the township trustee and her community outreach director.
CBS News claimed that 14 shelters in Boston and Lawrence, Massachusetts, had to close in 2022 because they were linked to a fraud scheme. Manuel Duran got a year in jail after admitting that he rented out his homes to the homeless shelter he ran at inflated prices and lied on paperwork to hide the rentals.
In the past few years, federal and state governments have set aside billions of dollars to help the homeless, but the problem keeps getting worse. From 2022 to 2023, the number of homeless people rose by 12%, to 653,100. The U.S. Department of Urban Planning and Development said these numbers show the biggest rise in the number of people without homes since the federal government started keeping track in 2007.