NYC homeless services provider Aguila files for bankruptcy

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A Bronx-based homeless services provider has filed for federal bankruptcy protection amid an ongoing criminal probe and after the city moved to pull almost all of their contracts.

New leadership at Aguila Inc., whose operations and former top executives and associates are being investigated by state Attorney General Letitia James’ office, filed for Chapter 11 protection in US Bankruptcy court in Manhattan after the city Department of Homeless Services cancelled ten of the 11 contracts with the provider.

The social services firm had been awarded $250 million from DSH since 2012 to provide shelter and other services to homeless residents.

Audits done in the past by the city comptroller’s office had identified shoddy and unsafe conditions at some of its shelters and lax oversight by the city Department of Homeless Services.

The department confirmed Monday that it is phasing out the remaining contract with Aguila Inc. for homeless and coronavirus prevention services at the Park View hotel on West 110th Street near Central Park — leaving the provider without the ability to provide services or generate revenue.

Aguila also sought bankruptcy protection after its new leadership team and board members conducted an extensive audit that “uncovered egregious mismanagement and wrongdoing due to its previous leadership,” according to a press statement released by the scandal-scarred firm.

The bankruptcy filing will pause about 20 different actions and lawsuits filed against Aguilar by former employees, said executive director Ray Sanchez, who was installed last year to clean up the mess. Some former employees accused Aguila of wage theft.

Jenny Rivera, the former CEO fo Aguila, was fired by the company's board of directors.
Jenny Rivera, the former CEO for Aguila, was fired by the company’s board of directors in 2020.

Aguila’s board of directors fired prior executive director Jenny Rivera after it was revealed she and other associates were the targets of a criminal probe conducted by AG James’ office.

A search warrant reviewed by The Post last year revealed that investigators claimed they had “probable cause” to investigate Rivera and unnamed co-conspirators for a host of alleged crimes including commercial bribery and bribe receiving, grand larceny, criminal possession of stolen property, falsifying business records, false instrument filing and money laundering.

The investigation also has targeted a one-time fixture in the Bronx Democratic Party establishment.

Ex-Bronx County Clerk Luis Diaz was suspended from his duties by the state Office of Court Administration last fall after the AG’s office obtained a search warrant and raided his office.

It turns out that Diaz, a former state assemblyman who made $210,900 a year as the county clerk — the same as a state Supreme Court justice — had been moonlighting for years as a paid consultant to Aguila.

Diaz’s name also surfaced in a lawsuit filed against Aguila by the Neighborhood Association for Inter-Cultural Affairs, which sought to take over or merge the two organizations. Rivera and the Aguila board illegally backed out of the deal, the suit claims.

Diaz was angling to be a paid consultant for the revamped firm under a new board of directors, according to the suit.

AG James’ office declined comment Monday.

An internal review of Aguila’s Board minutes showed that the not-for-profit shelter provider had been considering a potential bankruptcy filing as early as September 2019.

Sanchez said bankruptcy became inevitable in October of 2020, when city officials informed him that all but one of Aguila’s contracts would be canceled and or reassigned to other providers.

“The immediate result of filing is that all pending litigation involving Aguila is halted, which provides an opportunity to restructure and stabilize the organization. My predecessor was incredibly litigious and the plethora of lawsuits squandered resources and inhibited our ability to focus on our mission, which is serving our fellow New Yorkers,” said Sanchez.

“I have to make a good faith effort to save this organization,” he said.

He said actions taken to put Aguila’s fiscal house in order include firing the former CEO and chief of staff, implementing new financial controls and reporting and replacing some Aguila board members with lawyers with experience in overseeing corporate governance and non-profit groups.

A former counsel to Bronx Borough President Ruben Diaz Jr., Sanchez joined Aguila a year ago to address concerns by its board of directors that its consultant, ex-clerk Luis Diaz, had collaborated with others to orchestrate a “fraudulent affiliation and merger transaction” with the Neighborhood Association Inter-Cultural Affairs.

Aguila is just one in series of troubled not-for-profit homeless with city contracts. A Post review found more than $4 billion has flowed to troubled operators over the past eight years, including one provider who steered city funds to for-profit businesses he owned and put family members on the payroll.

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