The Real Deal New York

Financial problems plague NYC halfway house provider

Roughly 800 Narco Freedom residents could be forced to find new homes
July 27, 2015 03:36PM

Narco Freedom, one of the city’s largest chains of “three-quarter” halfway houses, is on the verge of bankruptcy.

As a result, a bankruptcy attorney says 11 of the organization’s 18 halfway houses should be closed, which would force a scramble to find new housing for roughly 800 people with substance abuse issues, according to the New York Daily News.

“The finances of this organization are designed to lose money,” bankruptcy attorney Lori Lapin Jones said in a report filed in Manhattan Federal Court. According to the same analysis, Narco Freedom suffered losses of more than $6 million in 2012 and $800,000 in 2013. Jones is asking the state to release $2.9 million in Medicaid funds to keep Narco Freedom operating temporarily.

Narco Freedom’s owners, former CEO Alan Brand and son Jason, are under indictment, accused in a Medicare kickback scheme centered around the halfway houses. State authorities claim addicts and recently-released convicts would receive temporary housing in run-down three-quarter houses operated by the Brands, so long as they were enrolled in drug treatment programs controlled by Narco Freedom. The Brands would receive $84 in Medicare funds for every counseling session residents attended; allegedly netting them thousands every week.

Narco Freedom currently has about $4.6 million in cash, which will likely run out by October.

Most of Narco Freedom’s residents are unemployed. Roughly 62 percent were found to have a mental illness and 55 percent have a physical disability, the newspaper reported. Almost all of those surveyed — roughly 89 percent — had no other place to go. [NYDN]Claire Moses