Homeless group’s bankruptcy fight
HE’S BEEN CALLED “the outsider who accidentally solved chronic homelessness” by The Washington Post.
His nonprofit, Pathways to Housing, has won international acclaim by asserting it has found the solution to the nearly impossible task of housing mentally ill homeless people.
On Pathways’ website and in his LinkedIn bio, Sam Tsemberis lists his Ph.D. in psychology from NYU, conferences touting the success of Pathways’ methods and a 2016 award from the American Psychological Association. Not mentioned: Tsemberis and Pathways are currently in bankruptcy court trying to settle debts of $25.7 million owed to dozens of creditors, records show.
Also not mentioned — the group’s mentally ill clients had all their Social Security checks routed to Pathways, which by mid-2012 had run up a $3 million budget gap.
Finally, Pathways doesn’t mention that for several months in 2011 and 2012, the group stopped paying rent for its extremely vulnerable clients, which resulted in more than 100 of them getting eviction notices.
In court papers, the trustee appointed in the bankruptcy case, Deborah Piazza, has alleged that Tsemberis and Pathways New York “knowingly and recklessly” used public dollars that were supposed to pay for the clients’ rent “but were used for other purposes.”
Pathways “was prevented from functioning properly, from succeeding as a going concern and from realizing its vast potential through the intentional actions and/or the systematic and grossly negligent mismanagement of the debtor by Tsemberis” and a parent group, the trustee wrote.
On Tuesday, Tsemberis is scheduled to attend yet another mediation session to try and work out a settlement.
Neither Tsemberis nor his bankruptcy lawyer, Joan Gillbride, returned calls seeking comment.
The Daily News first exposed Pathways’ eviction notice problem back in September 2014.
At the time, the group had been widely praised for its approach of providing housing to mentally disabled individuals before requiring treatment or sobriety.
As the number of eviction notices mounted, the state Office of Mental Health and state Attorney General Eric Schneiderman opened investigations.
By mid-2014, the state and city terminated their contracts with Pathways and began transferring their clients to other nonprofits. In January 2015, Tsemberis and the group filed for bankruptcy.
Since then the investigations are on hold pending the outcome of the bankruptcy case, while the trustee has raised serious questions about how the group spent millions of taxpayer dollars. In 2011, records show, Tsemberis created a “parent” group, Pathways National, that paid him a salary of nearly $300,000. Executive salaries at Pathways New York totalled $909,686, with five more executives making more than $100,000.
The group reported spending $277,610 for travel that year. Most of its funding came from the state and city, but it also reported “client income” of $1.15 million, its 2011 tax forms show.
Tsemberis remained on the board of Pathways New York, which began steering money to the national group and three newly created affiliates in other states. Tsemberis’ dual role “constituted a direct conflict of interest,” the trustee alleged.
The trustee notes that tranfer of funds to the national group occurred while Pathways New York had simply stopped paying rent for its clients and was running up huge debts. At one point in early 2014, Pathways owed $1.6 million to landlords.
If Tuesday’s settlement talks fail, a trial is set for mid-May in U.S. Bankruptcy Court in Manhattan.