City launches investigation after millions intended for homeless relief allegedly diverted
New York City officials have charged two executives connected to a homeless services nonprofit with fraudulently diverting over $50 million in taxpayer funds intended for homeless relief efforts.
Thomas Bransky, 47, CEO of Children’s Community Services (CCS) and Peter Weiser, 80, who helped found and initially fund CCS, face charges including wire fraud, money laundering and embezzlement.
Prosecutors allege Bransky and Weiser conspired to route millions in city contracts away from CCS’ intended homeless services and into shell companies under Weiser’s control. These companies are accused of providing overpriced or unnecessary goods and services to CCS like IT systems, security, furniture and food.
Allegations of shell companies and inflated prices
From 2014 to 2020, CCS received over $900 million in contracts from New York City’s Department of Homeless Services (DHS) to operate shelters and provide other critical assistance. However, the city’s Department of Investigation claims the two men created “fly-by-night companies” with few employees to obtain goods and services from legitimate vendors at market rates, only to resell them to CCS at inflated prices.
“By forcing the City to pay grossly inflated prices for these goods and services, the defendants were able to fraudulently divert tens of millions of dollars that should have gone to helping New York City’s homeless population,” said Inspector in a statement.
Reach allegedly stretched to $7M for Weiser, $1.2M in salary for Bransky
Court documents charge Weiser gained over $7 million through the scheme, using shell companies to conceal his majority ownership of CCS. As CEO, Bransky received more than $1.2 million in salary approved based on falsified financial statements.
The city alleges the two men submitted fake bids, hid connections between companies receiving contracts, and lied about how CCS selected vendors. Prosecutors say CCS contractors lacked qualifications and some operated out of residential properties instead of legitimate offices.
The investigation continues into potential involvement of other CCS executives and associated companies. If convicted, Weiser and Bransky each face decades in prison. CCS has ceased operations while DHS works to find new providers to care for the city’s homeless population.
Impact on growing homeless crisis in New York City
Homelessness in New York has been rising for over a decade amid high housing costs. According to reports, over 100,000 New Yorkers including 30,000 children slept in shelters last year – 68% higher than a decade ago. Nationwide resources have not kept up with demand, and fraud potentially depriving programs of millions in funding only compounds the crisis.
With CCS under investigation, the city faces challenges ensuring continuous care for its homeless residents through the winter months. DHS says it’s coordinating closely with other service providers to minimize disruptions. However, recovery of over $50 million in funds could help expand the social safety net for the thousands still in need of stable housing and support.
If convicted, this case sends a message that fraud targeting taxpayer money meant to aid society’s most vulnerable will not be taken lightly. It also highlights the importance of oversight for nonprofits handling vast public contracts. Most of all, it shows the urgent need to bolster homeless programs and address core housing issues fueling this nationwide crisis.