SF Homeless Services Nonprofit to Pay $1 Million After Investigation Found Fraud

The San Francisco City Attorney’s Office announced Tuesday it has reached a $1 million settlement with a homeless services nonprofit, which it had previously accused of nepotism and fraud.

Under the agreement, Providence Foundation of San Francisco admitted wrongdoing, removed employees who participated in the misconduct, reimbursed the city for fraudulent invoices and paid current and former employees who were denied holiday pay, among other concessions.

“I’m proud we were able to resolve this amicably,” City Attorney David Chiu told KQED. “This is a great example of how an organization can turn itself around and do the right thing.”

The organization operates the Oasis Hotel, a 59-unit shelter, a navigation center, multiple voucher and housing subsidy programs and services for people experiencing homelessness. Dexter Hall, Providence’s Interim Executive Director, said the settlement was “a pivotal moment” for his organization.

“It’s public recognition of the transformation that we have led over this past year,” he told KQED. “Under my leadership, a new board’s leadership, as well as our talented team members, Providence has implemented some very sweeping reforms.”

Representatives of Providence and its lawyers did not immediately respond to KQED’s request for comment. The organization operates the Oasis Hotel, a 59-unit shelter, a navigation center, multiple voucher and housing subsidy programs and services for people experiencing homelessness.

It’s not the only homeless services nonprofit to come under scrutiny. Last year, city officials also audited HomeRise, a housing provider for people exiting homelessness, accusing it of wasteful spending and mismanagement.

In Chiu’s investigation of Providence, his office found that previous leaders signed off on falsified invoices — totalling $105,000 of taxpayer funding — related to maintenance for the Oasis Hotel. The company submitted invoices claiming it painted the hotel’s exterior and removed deadbolt locks, despite that work not happening at all, the investigation found. Rust and fungus remained on its outer walls.

Chiu’s office also accused the nonprofit of hiring family members, including children of the executive director and vice president of the board, violating an anti-nepotism provision in a city grant agreement. Separately, San Francisco’s Office of Labor Standards Enforcement started its own investigation after receiving complaints from employees who claimed labor violations.

The city suspended funding for Providence to operate the Oasis Hotel and its other programs and threatened to debar it, permanently cutting off future funding.

Hall said he and other colleagues now require more transparency and oversight for the hours employees work and how expenses are approved.

“With this matter behind us, we really do stand stronger, clearer and more committed than ever,” he said. “We’re not just rebuilding systems, we’re rebuilding trust, and we’re committed to doing that with our families, seniors, youth — all who deserve nothing less than dignity, stability and hope.”

In the case of HomeRise, the city’s report found the company had spent $12,500 on a social event and $200,000 in bonuses. The developer operates about 1,500 units across 19 properties, making up almost a third of city-funded homes.

But rather than cut off funding, it instead urged other city agencies to strengthen oversight of HomeRise contracts and directed the housing provider to improve how it managed city funds.

Chiu told KQED the city does not want to debar organizations if it doesn’t have to and called the announcement a “win-win” because Providence cooperated with the investigation and agreed to reform its practices.

“The city has spent an incredible amount of dollars in recent years investing in addressing the homelessness crisis in our streets, and we need to make sure that every dollar is put to good use,” he said. “I think today’s announcement is a step forward toward that accountability and assuring that public dollars are addressing the needs and crises on our streets.”

The Board of Supervisors is expected to approve the settlement agreement in the coming months.