A nonprofit funded by the state of New York is being accused of paying for excessive executive perks, according to a report issued by the office of state Comptroller Thomas DiNapoli. The findings are now being referred to U.S. Attorney Preet Bharara's office for review.
Phoenix Houses of New York, which operates a number of residential and outpatient rehab programs in New York City, Long Island, and upstate New York, is alleged to have provided $223,000 worth of inappropriate perks while under contract with the Office of Alcoholism and Substance Abuse Services (OASAS). This includes allegedly paying $91,050 for executive bonuses, $40,447 for fringe benefits, and $35,996 for vehicle leases from July 2009 to June 2010.
The report also alleges that Phoenix Houses failed to report $290,000 in Medicaid revenue to OSASAS which would have reduced the amount the agency's payments to the nonprofit.
"This was money intended to treat people struggling with substance and gambling addiction, not to subsidize unwarranted perks for high-salaried executives," DiNapoli said. "My office will work closely with U.S. Attorney Bharara's office to ensure that those abusing the public trust are held accountable."
Auditors and investigators also discovered that one employee allegedly made $4,000 in "improper" purchases of Wal-Mart gift cards used for alcohol, cigarettes, and other inappropriate items. The employee allegedly covered up these purchase by submitting falsified receipts.
Based on the finding, DiNapoli recommends that OASAS should strengthen controls to monitor Phoenix Houses' contract compliance, recover the alleged improper funds, and recover executive overpayments if they are determined to not be justified.
A call to Phoenix House for comment was not immediately returned.
You can read the full report on state Comptroller's Office website.