As the myriad federal and state investigations into Praxis Housing’s finances approach their first anniversary, the embattled nonprofit that houses hundreds of homeless men and women infected with HIV/AIDS is struggling to stay afloat.

Plagued by the high costs of lawyers and accountants hired to comply with subpoenas issued by the Attorney General’s office, the group can’t afford even basic improvements, like new mattresses and repainting. In January, it seemed as if it might have to close its flagship shelter, the 95-bed Barbour Hotel.

Meanwhile, the group’s former directors–G. Sterling Zinsmeyer and Gordon Duggins–who resigned last year amid allegations of fiscal impropriety, are still doing a healthy business with the city. They now devote their time to a for-profit venture, which stands to gross as much as $8.7 million in public funds this year for operating nine family shelters.

That’s an affront, says Praxis’ new executive director, Charlie King, who estimates that legal fees have drained $250,000 to $300,000 from his group’s roughly $7-million annual budget. “It is a crime for Praxis to suffer while those responsible for the suffering profit and flourish from their for-profit homeless housing initiatives,” King says.

Harder to quantify is the investigation’s effect on employee morale. “It’s been very frustrating,” says Claude Howard, Praxis’ director of human resources, adding that the vitally important work of his nearly 100-person staff has been tainted by the scandal.

Last year, City Limits revealed that Duggins, an Episcopal priest, and Zinsmeyer, a former president of the Stonewall Democrats, a powerful gay and lesbian political club, had shifted hundreds of thousands of dollars in restricted public funds to support a crop of for-profit shelters they owned exclusively [see “Shelter Games,” May 2003].

Those shelters are still run by Duggins and Zinsmeyer under the name Interim Housing Inc. (IHI), and are still under contract with the city’s Department of Homeless Services for $38 to $92 per client per night.

The mysterious IHI has no listed address or phone number but is registered with the state, records show. City payments to the company are sent to a post office box.

Ron Torossian, a personal spokesperson for Zinsmeyer, would not comment on IHI or even verify its existence. “What financial issues [Praxis] may have suffered during Mr. King’s tenure isn’t [Zinsmeyer’s] responsibility. he says. “We frankly fail to understand why Praxis is spending $300,000 in legal fees when nothing was done wrong.”

Still, Praxis remains under investigation by five separate agencies. When the inquiries first began, says Jim Anderson, spokesperson for DHS, the agency conducted their own investigation into the quality of services at the Interim sites and found them to be satisfactory. Until the investigations are concluded, he says, “It would be premature to disrupt the lives of families.”