In a settlement deal inked last month, Rev. Gordon Duggins and G. Sterling Zinsmeyer, the embattled former directors of Praxis Housing, were fined $700,000 and barred from running a nonprofit for the next decade. But that hasn’t stopped them from doing business with the city’s Department of Homeless Services (DHS).
Attorney General Eliot Spitzer charged that Duggins and Zinsmeyer acted as “faithless fuduciaries” when they improperly funneled hundreds of thousands of dollars in public money into their own private venture, Interim Housing, Inc., without clearance from Praxis’ board of directors and at the expense of their own employees. Interim Housing has since become a major for-profit homeless service enterprise, with seven shelters throughout Brooklyn and the Bronx.
Spitzer’s settlement prevents Zinsmeyer and Duggins from running a nonprofit in the future, but does nothing to keep them from profiting from past wrongs. Though DHS has closed most of its scatter-site shelters and Interim Housing Inc. is one of its worst-rated providers, the agency still pays roughly $77 per day for each of Interim’s 224 rooms.
DHS declined to answer specific questions regarding the contracts. “We are aware of the attorney general’s actions and are reviewing the situation,” said spokesperson Jim Anderson.
Calls to a lawyer for Duggins, chief executive of Interim, were not returned. Ron Torossian, a spokesperson for Zinsmeyer, former president of the gay and lesbian Stonewall Democratic political club, said his client did not have a financial stake in Interim Housing and would not benefit from DHS contracts. State records indicate, however, that he is the principal executive officer of Interim.
“It’s very troubling,” said Patrick Markee, senior policy analyst at the Coalition for the Homeless. Markee said the city’s ongoing relationship with the former Praxis heads is the latest example of DHS’ weak oversight of shelter providers. In one recent case, DHS offered up a $20-million contract to Bernard Kahn, former head of the Hebrew Academy for Special Children, who resigned in 2004 after reportedly using $1.4 million for private expenses. After learning about Kahn’s checkered past in the New York Post earlier this month, DHS officials said they put Kahn’s contract on hold pending an investigation into the allegations.
It’s unclear whether the former Praxis heads will face any similar sanctions. Hugo Puya, a former Praxis accountant who worked closely with investigators in Spitzer’s charity bureau, called Spitzer’s settlement deal “a joke” that did little to penalize Zinsmeyer and Duggins. The $350,000 in payback money, Puya noted, could be recouped through DHS’ contracts with Interim.
“The moral of the story,” Puya said, “is that crime pays.”