By Katie Honan 

New York City officials recently gave $5.3 million in contracts to a nonprofit that owes the state $143,678 for allegedly misusing grant money.

The city's Department for the Aging awarded the contracts to the nonprofit Institute for the Puerto Rican/Hispanic Elderly last month to provide services for senior citizens in the Bronx, Queens and Manhattan between Dec. 1, 2019 and June 30, 2021.

This past January the agency was hit with a $143,678 judgment, after the state attorney general's office sued it for allegedly misusing grants from the state's Office of Victims Services, court records show.

The lawsuit was filed in 2018 after an investigation by the Office of Victims Services found the institute had used grant money to fund immigration services rather than services for crime victims, court records show.

The investigation also found the institute didn't tell the state that Acacia Network Housing Inc., a large nonprofit, took it over in 2016, the lawsuit says. Acacia took over after the city's Department of Investigation opened a probe into the leadership of the institute, the lawsuit says.

DOI investigators said in a 2014 report that the probe found the institute's then-executive director misused funds. DOI didn't bring criminal charges against the executive director or the institute. The executive director no longer works for the institute, according to Acacia.

A spokesman for the attorney general's office said the institute didn't respond to the state's lawsuit. The judgment is currently enrolled in a state program that intercepts money from state tax refunds or any state contract payments.

Acacia spokesman John Schiumo said in a statement that neither Acacia nor the institute was notified of the judgment. Acacia and the institute would either take immediate steps to vacate the judgment or pay it, he said.

"Acacia Network was not a party to this judgment, was not responsible for it or subject to it, and was never notified of it, until it was brought to our attention last week," he said.

The Department for the Aging has contracted with the institute since 1997. The city has doled out more than $15 million dollars in contracts to the institute since 2015.

Zenovia Earle, a spokeswoman for the Department for the Aging, said in a statement that her agency wasn't aware of the state probe. The state grants that prompted the state investigation aren't affiliated with the city contracts, she said.

The institute's "contracts with the New York City Department for the Aging are in good standing," Ms. Earle said.

The nonprofit was selected through the city's request for proposals process that evaluated its ability to serve older residents, she said. The city contracts are subject to an evaluation, audits and feedback, according to Ms. Earle.

The institute is one of more than 70 organizations affiliated with the Bronx-based Acacia Network, which has absorbed smaller Latino nonprofits that have had financial or administrative difficulties.

Acacia is currently under investigation by the city over alleged undisclosed ties to a for-profit security firm.

The organization, one of New York City's top homeless-shelter operators, has received more than $1 billion in contracts through the Department of Homeless Services to run shelters since 2010, according to the city controller's office.

The city began investigating Acacia for not disclosing in city documents that it owns and operates its top subcontractor, the for-profit Sera Security, as well as the for-profit Distinctive Maintenance.

New York Gov. Andrew Cuomo last month ordered an investigation into Acacia and a housing management company that run affordable housing apartments in the Bronx, following allegations of bedbugs and drug-related crime in some buildings.

Mr. Schiumo has said there weren't bed bugs in the building and the nonprofit welcomes the investigation by the state.

(END) Dow Jones Newswires

November 13, 2019 13:13 ET (18:13 GMT)