New York Times reports Southwest Key subject of probe, but shelter provider says no contact with feds

The nation's largest provider of migrant children shelters, in response to a New York Times report that the Justice department is investigating it for possible misuse of millions of dollars in federal money, told CNN on Friday it has not been contacted by federal investigators.

The nation’s largest provider of migrant children shelters, in response to a New York Times report that the Justice department is investigating it for possible misuse of millions of dollars in federal money, told CNN on Friday it has not been contacted by federal investigators.

Jeff Eller, a spokesman for the profit and nonprofit operations of Southwest Key, said neither Southwest Key programs or enterprises have been contacted, nor received a target letter.

The United States Attorney’s office for the Western District of Texas had no comment on the report, spokeswoman Lora Makowski said. She would not confirm nor deny that an investigation is taking place.

The Times article cited two sources familiar with the matter who said the United States Attorney’s office for the Western District of Texas and the FBI are trying to determine whether Southwest Key misused federal funds.

The Times reported Southwest Key had acted more like a bank than a charity by “potential self-dealing with its top executives,” stockpiling tens of millions of dollars and making real estate loans, including one that developers used to turn a former Walmart into a shelter that Southwest Key rents.

The nonprofit, the Times reported, sent federal money through for-profit companies and turned public funds into private money.

Over the past 10 years, Southwest Key, based in Austin, Texas, has received about $1.5 billion for operating 83 programs across the country that include shelters for migrant children and youth justice initiatives. It was slated to take in about a half billion dollars from federal contracts this year.

In response to the Times’ reporting, Southwest Key has hired an outside law firm to conduct its own internal review, Eller said.

“We have a policy of working with any and all investigations and we will do so in this case if it happens,” he said.

Eller first acknowledged to the New York Times in a December 2 article that the organization had made mistakes.

“Could we have done things better? Yeah. And should have? Yeah,” Eller told the New York Times. “But there wasn’t a desire to game the system.”

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