Meet the Man Getting Rich off Detaining Migrant Children

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Southwest Key Programs, ostensibly a “charity,” is the organization behind largest network of detention centers housing migrant children in the country. On Sunday, The New York Times published an investigation of the nonprofit and the man behind it: Juan Sanchez, the organization’s chief executive who has made a fortune off of policies that terrorize immigrants. Under the Trump administration, which is now detaining record numbers of migrant children, it doesn’t look like the money will stop coming in anytime soon.

The Times likened Sanchez and Southwest Key to a “bank,” outlining a web of shady dealings, propped up at the expense of public funds funneled from government grants and contracts:

The organization, sitting on $61 million in cash as of last fall, has lent millions of dollars to real estate developers, acting more like a bank than a traditional charity. It has opted to rent shelters rather than buy them, an unusual practice that has proved lucrative for shelter owners — who include Mr. Sanchez and the charity’s chief financial officer.

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The biggest example of this practice—which comes with the benefit of helping to obscure kickbacks—was how Southwest Key went about renting and renovating a closed Walmart to house migrant children in Texas. Instead of buying the building itself, the organization loaned $6 million to a shell company to buy and renovate it. The building was then rented back to Southwest Key at $5 million per year, which, as the Times notes, was more than the property itself cost.

The Times uncovered another example in which Sanchez and another Southwest Key executive are directly profiting from this type of deal:

The lines grew blurry at times between the charity’s interests and his own. Ms. Chung, Southwest Key’s chief financial officer, introduced Mr. Sanchez to a friend, Ruth Hsu, a real estate broker. In 2005, she formed a limited partnership, Conroe CHS. Hers was the only name on the documents. But Ms. Chung and Mr. Sanchez were silent partners.

Conroe CHS (for Chung, Hsu and Sanchez) paid almost $950,000 for former boarding school dormitories and neighboring land in Conroe, Tex., near Houston, leasing the site to Southwest Key as its eighth shelter. Since then, the charity has paid the partners almost $3 million in rent, including about $275,000 last year.

Southwest Key has previously come under intense scrutiny since its shelters were the sites of numerous instances of abuse. In response to the fact that the organization missed a deadline to send in proof to the state of Arizona of background checks of its employees there, Sanchez told the Times that it was a “very small, minor thing.”

According to the Times, Sanchez was paid $1.5 million last year by Southwest Keys, up from $279,000 in 2012, and his wife earned $500,000 as vice president. As Marcus Owens, former head of the tax-exempt organizations for the Internal Revenue Service, put Sanchez’s financial dealings to the Times: “I think the word is ‘profiteering.’”

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