Southwest Key, Largest US Migrant Youth Shelter Provider, Will Review Practices

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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 and finances, reports the New York Times. The decision responded to a Times article that raised questions about potential financial improprieties at the Texas charity. 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 governance. Over a decade, Southwest Key has collected $1.7 billion in federal grants. The Times described how the charity lent millions to developers to buy shelters and had enriched investors who rented facilities to Southwest Key, including Sanchez and the charity’s chief financial officer, part-owners of one shelter site.

The federal government capped executive salaries paid from the shelter grants last year at $187,000, but Sanchez earned $1.5 million as chief executive. His wife, a vice president, got $500,000; the chief financial officer, Melody Chung, $1 million. Sanchez said 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” in schools and juvenile justice programs. The independence and thoroughness of the investigation will depend on who leads 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,” Mayer said. “Everyone knows who is paying the bills and what the desired response is.” Federal officials are increasing scrutiny of shelter providers, hiring an accounting firm to review their finances. Southwest Key has 24 facilities for 5,000 children. The children’s shelter system is full, with a record 14,000 minors spread across 100 sites.

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