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Press Release

Former President And CEO Of New York City Non-Profit Organization Pleads Guilty To Embezzlement Of Government Funds

For Immediate Release
U.S. Attorney's Office, Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that DEREK BROOMES, the former president and chief executive officer (“CEO”) of a nonprofit housing organization based in Harlem, New York (the “Housing Nonprofit”), pled guilty before U.S. Magistrate Judge Kevin Nathanial Fox to abusing his position at the Housing Nonprofit to embezzle hundreds of thousands of dollars in federal funds. 


U.S. Attorney Geoffrey S. Berman said:  “Derek Broomes abused his position by selfishly diverting hundreds of thousands of dollars in public funds designed to assist low-income citizens living with HIV/AIDS.  It is hard to imagine a more at-risk, vulnerable tenant population than the one Broomes chose to victimize, and for that reason today’s guilty plea is a deserving one.”


According to the allegations contained in the Complaint, the Indictment, and publicly-available documents:


The Housing Nonprofit is a faith-based, non-profit organization located in New York, New York that develops and provides low-income housing in Harlem to a variety of constituencies.  In approximately 2002, DEREK BROOMES, the defendant, became the chief financial officer of the Housing Nonprofit.  In approximately 2011, BROOMES became its president and CEO.  Prior to joining the Housing Nonprofit, BROOMES worked briefly as a Deputy Commissioner at the New York City Human Resources Administration (“HRA”) and, for three years at the City’s Department of Investigation (“DOI”) in various capacities, including as an investigator and Deputy Inspector General.


Since at least 1999, the Housing Nonprofit has participated in the federally funded Scattered Site Housing Program (“SSHP” or the “Program”), through which the Housing Nonprofit receives federal funds that it uses to subsidize rents for low-income individuals who are living with HIV and/or AIDS.  According to Program rules, SSHP funds are to be maintained in a segregated account and used exclusively for Program costs, including rental payments for residents covered by the Program.  In fiscal years 2014 and 2015, the Housing Nonprofit received more than $3,000,000 in SSHP funds.


Beginning in at least 2013, BROOMES abused his position as president and CEO of the Housing Nonprofit, stealing hundreds of thousands of dollars in funds from his employer by charging personal and unauthorized expenses to a corporate credit card issued in his name (the “Corporate Credit Card”).  Using the Corporate Credit Card, BROOMES routinely paid for personal auto repairs, medical bills, electronics, clothing, and gifts.  None of these charges were authorized by the Housing Nonprofit, which ultimately was required to pay the monthly bills on the Corporate Credit Card.  In total, between approximately March 2013, when the Corporate Credit Card was issued, and March 2015, when it was cancelled, BROOMES charged $394,145.65 to the Corporate Credit Card.  Of that, an analysis conducted by the Housing Nonprofit determined that more than $200,000 of those charges were either personal or otherwise unauthorized.


To cover those expenditures and other operating expenses at the Housing Nonprofit, BROOMES misappropriated hundreds of thousands of dollars in federal funds that were provided through the SSHP.  Specifically, BROOMES diverted the SSHP funds, which were intended to be used to cover rent payments for residents covered by the Program, to the Housing Nonprofit’s operating account, where they were used to pay for unauthorized expenses, including the monthly Corporate Credit Card bills.  As a result of BROOMES’s diversion of SSHP funds, the Housing Nonprofit was often unable to make rent payments for SSHP apartments on a timely basis.  The Housing Nonprofit thus fell increasingly behind on its rent obligations due to a lack of sufficient SSHP funds in its accounts, and tenants it sponsored in the SSHP began to receive threats of eviction by landlords who were owed months’ worth of back rent by the Housing Nonprofit. 


Moreover, to conceal his conduct, BROOMES submitted, and caused others to submit, false and fraudulent reimbursement requests to HRA, which administers the SSHP, in which BROOMES and others acting at his direction certified that the Housing Nonprofit had properly used SSHP funds for program expenses, including rental payments, when, in fact, substantial amounts of those funds had been diverted to cover unauthorized expenses, including the substantial charges incurred by BROOMES’s use of the Corporate Credit Card.  BROOMES personally signed false and fraudulent paperwork submitted to HRA as a part of the Housing Nonprofit’s monthly certifications and reimbursement requests on May 8, 2013, and July 19, 2013, and directed others to sign similarly false monthly certifications and related paperwork throughout the duration of the charged scheme.


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BROOMES, 72, pled guilty to one count of embezzlement from a federally funded program, which carries a maximum penalty of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.  As a condition of the plea, BROOMES consented to the entry of a forfeiture order in the amount of $203,408.80 and further agreed to entry of an order of restitution.  BROOMES is scheduled to be sentenced by the Chief Judge Colleen McMahon on April 26th, 2018.


The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Edward B. Diskant and Alison G. Moe are in charge of the prosecution.

Updated January 29, 2018

Press Release Number: 18-033