March 11, 2019; New York Times
In case you need a reminder, Southwest Key Programs is the nonprofit whose massive expansion comes from “sheltering,” i.e., detaining, children separated from their families at the border. Over the last ten years, Southwest Key has been awarded $1.8 billion in contracts to do that job.
For a while, after its work took national center stage, the organization’s founder, Juan Sanchez, tried to change the narrative around Southwest Key through a homespun story of his own humble roots. The New York Times and some federal agencies remained skeptical and went looking through the tangle of relationships, high executive pay for family members, and profiteering that appeared to characterize the operation.
As the Times reports, “Sanchez earned $1.5 million in 2017, the most recent tax return available. His wife earned $500,000. His daughter from a previous marriage also held a senior position, but her salary was not available.” The federal salary cap in the agency was supposed to have been $187,000. Eight employees exceeded that.
Yesterday, Sanchez handed in his resignation after 32 years at the helm. This follows last month’s resignation of CFO Melody Chung following a December New York Times article that reported possible mismanagement and malfeasance at the charity:
Southwest Key, which was sitting on $61 million in cash in the fall of 2017, also lent millions of dollars to real estate developers, acting more like a bank than a traditional charity. It has rented shelters rather than buying them, an unusual practice that has proved lucrative for shelter owners, including Mr. Sanchez and Ms. Chung.
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Mr. Sanchez, Ms. Chung, and a friend owned a shelter in Conroe, TX, through a shell company. Asked by The Times last year about that potential self-dealing—whereby the executives collected rent paid by the federal government—they announced that they would seek to sell their ownership stakes. There is no record that the property has yet been sold.
These revelations did not mark the end of Sanchez’s attempt to paint his own portrait, even as he stepped down.
“This was a very difficult decision,” Mr. Sanchez wrote in an email to employees that was obtained by The Times. “Recent events have convinced me and our Board of Directors that Southwest Key would benefit from a fresh perspective and new leadership. Widespread misunderstanding of our business and unfair criticism of our people have become a distraction our employees do not deserve, and I can no longer bear.”
His wife, Jennifer Nelson, also remains as a top executive, and Chung ended her resignation letter with, “May the Lord continue to bless the company abundantly forever!”
As NPQ has mentioned, sometimes the violations of the law made manifest in malfeasance aren’t the most significant violations of public trust going on. In this case, where profiteering occurred on the backs of terrified detained children, the fact that the principals involved believe they can protest their righteousness testifies to the paucity of our public discourse.—Ruth McCambridge