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Not-for-Profit/Vendor Fraud Cases

DOI recognized that publicly-funded not-for-profits were a potential area for corruption and we have continued to shine a bright light on various frauds involving public officials and unscrupulous insiders who siphoned funds from not-for-profit organizations that receive City money. DOI has an established unit to focus on this kind of case. Following are some examples of investigations from that unit:

  • In November 2008, a lengthy DOI investigation resulted in federal embezzlement charges against Hugh Blackburn, a former deputy director of two not-for-profits serving low-income children and families in the Bronx and Queens. Blackburn was charged in an elaborate scheme, creating shell companies to divert cash from the not-for-profits where he worked. In April 2009, he pleaded guilty to embezzling hundreds-of-thousands of dollars, and in July 2009 he was sentenced to 30 months in federal prison.

  • In December 2008, a DOI investigation led to the arrest of O’Dell Holland, the program director of Tremont Community Council Home Attendant Program, Inc., a Medicaid-funded, Bronx nonprofit home attendant program that contracted with the City Human Resources Administration between January 2004 and June 2008. Holland was charged by the U.S. Attorney’s Office for the Southern District of New York with embezzling more than $500,000 in funds from the nonprofit between 2007 and 2008.

  • In June 2009, John Bess, the founder and former chief executive officer of the now-defunct The Valley, Inc., was arrested on charges of embezzling tens-of-thousands of dollars from that not-for-profit organization. Bess founded The Valley in 1979, operated it from within the Cathedral of St. John the Divine in the Morningside Heights section of Manhattan, and, until 2006, received funding from several City agencies, including the Department of Youth and Community Development (“DYCD”) and the Administration for Children’s Services (“ACS”). Bess was indicted on charges of Grand Larceny in the Second Degree, Repeated Failure to File Personal Income and Earnings Taxes and three counts of Offering a False Instrument for Filing in the Second Degree.
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