This blog on Texas education contains posts on accountability, testing, college readiness, dropouts, bilingual education, immigration, school finance, race, class, and gender issues with additional focus at the national level.
Juan Sanchez, Southwest Key CEO featured on the Front Page of the NYTimes
It would be interesting to parse out how much of his wealth comes from charter schools and how much from immigrant children's detention. The paper version of this NYTimes piece is more extensive, by the way. Like the late Molly Ivins would say about such things, "This is big bid'ness!"
Southwest Key Programs, the nation’s largest provider of shelters
for migrant children, will hire outside legal counsel and forensic accountants
to review its management practices and finances.
The decision comes in response to a New York Times article on Sunday that
raised new questions about potential financial improprieties at the Texas
charity. In a statement provided to The Times Monday night, Juan Sanchez, who
founded the nonprofit more than 30 years ago, said the comprehensive internal
review would identify potential conflicts of interest and areas for improvement
in the charity’s rules of governance.
Over the past decade, Southwest Key has collected $1.7 billion in
federal grants, including $626 million in the past year. The Times showed how
the charity had lent millions to developers to buy shelters and had enriched
investors who rented facilities to Southwest Key — including Mr. Sanchez and
the charity’s chief financial officer, part-owners of one shelter site. The
charity has also stockpiled more than $61 million in cash.
federal government capped executive salaries paid out from the shelter grants
last year at $187,000, but Mr. Sanchez earned $1.5 million as chief executive.
His wife, a vice president, was paid $500,000; the chief financial officer,
Melody Chung, $1 million. In all, eight people at Southwest Key earned more
than the salary cap.
Mr. Sanchez said in the statement that he was “disappointed that
the article failed to show the number of lives we’ve changed with the
significant number of reunifications, and it failed to highlight the good work
we do within our schools and our juvenile justice programs.” But he added that
the article “brought forth a number of issues that are of concern to me.”
In a memo to staff on Monday, he said that anyone asked to
participate in the review, including himself and Ms. Chung, would cooperate
fully or “face immediate consequences.”
But the independence and thoroughness of the investigation will
depend on the person leading it, said Lloyd Mayer, a professor at Notre Dame
Law School specializing in nonprofit law.
“It can be difficult as the outside investigator to write a
hard-hitting report to slam the very person who seems to be driving the
process,” Professor Mayer said. “Everyone knows who is paying the bills and
what the desired response is.”
inquiry comes as the federal government steps up scrutiny of shelter providers,
hiring an accounting firm to review their finances. That review is underway, a
spokesman for the Department of Health and Human Services said. The F.B.I. is
also investigating a former competitor of Southwest Key, the Texas-based International
Educational Services, for potential misuse of federal money, according to two
people informed of the inquiry.
Mr. Sanchez, 71, founded Southwest Key in 1987 in his hometown,
Brownsville, Tex., with a focus on juvenile justice issues, helping reform
youth offenders in their communities rather than sending them away.
As the number of unaccompanied migrant children grew in the
following years and a lawsuit forced the federal government to detain them
separately from adults, Southwest Key moved into the business of housing
minors. It has become the largest shelter operator nationwide, with 24
facilities capable of housing 5,000 children.
The children’s shelter system is full, with a record 14,000 minors
spread across roughly 100 sites. The Trump administration’s family-separation
policy focused intense scrutiny on the system this past summer.
Padre, Southwest Key’s mega-shelter in a converted Walmart superstore in
Brownsville, became a symbol for the outcry over the separation policy. Children’s
advocates decried the shelter as effectively a warehouse for children.
in addition to the questions raised about
humane care for minors, the financial transactions behind Casa Padre revealed
some of Southwest Key’s unusual business practices. Instead of buying the empty
store, Southwest Key lent $6 million to a company run by a pair of Brownsville
developers to purchase and renovate it, then began paying $5 million a year to
Mr. Sanchez defended Southwest Key’s practice of renting shelter
sites, saying the charity did not want to be stuck with the buildings if fewer
children crossed the border.
his memo to employees, whom he called the “Southwest Key Familia,” he affirmed,
“We will continue to seek to fulfill our mission to improve the lives of the
children and families we serve.”
Manny Fernandez contributed reporting.
A version of this article
appears in print on Dec. 4, 2018, on Page A22 of the New York
edition with the headline: Top Migrant Shelter Provider Orders
Internal Inquiry. Order Reprints | Today’s Paper | Subscribe