Blaze News investigates: Staff from migrant shelter accused of funneling taxpayer funds to family's business

Nongovernmental organizations have been tasked with providing shelter accommodations and a variety of humanitarian services to those flooding into the country in unprecedented numbers under the Biden-Harris administration's illegal immigration crisis.

The federal government's massive investments in NGOs have ignited concerns that the organizations are operating less like nonprofits and more like government contractors. However, these organizations are not beholden to the same transparency requirements as contractors, leaving them potentially more vulnerable to waste, fraud, and abuse.

So far in fiscal year 2024, Pima County, Arizona, has reportedly received nearly $21.3 million of taxpayer funds from the Federal Emergency Management Agency's Shelter and Services Program. The vast majority of that money was directed to Catholic Community Services of Southern Arizona's Casa Alitas, a program offering "shelter, necessities and travel assistance to asylum seeking families," according to its website.

'Are we going to find out more inappropriate activities with taxpayer money?'

While Casa Alitas started from humble beginnings in 2014 with an all-volunteer staff, it has since rapidly expanded as the immigration crisis has exploded. As recently as 2019, the program only provided services to 30 individuals a day. Those estimates have since climbed to as many as 1,800 daily.

In recent weeks, the Tucson-based program has been rocked by a massive corruption and conflict-of-interest scandal, with allegations that two of its former employees funneled taxpayer funds to a family-run business, intentionally overcharging to rake in additional profits.

As a result, the workers have since been removed from their positions, but now the program is facing calls for a federal investigation into the alleged misused funds.

Casa Alitas faces corruption accusations

According to publicly available tax records, Catholic Community Services of Southern Arizona, a service network in the Roman Catholic Diocese of Tucson, spent $14.5 million in federal funds in 2023. That same year, it nearly doubled its revenue, $42.2 million, compared to 2022, $24.3 million.

Within the last several months, the group's Casa Alitas program has come under fire after a couple of its employees were accused of misusing taxpayer funds.

The New Republic first reported that Pima County Administrator Jan Lesher released a May 17 memo stating that one of CCS' vendors was providing services to Casa Alitas "without a contract," which she noted was "in violation of County and federal procurement rules for the Federal Emergency Management Agency Shelter Services Program grant."

Lesher wrote that CCS had "taken disciplinary action against the employees involved in hiring the vendor and alerted the County about the lack of required procurement procedures and contracting."

She added that CCS was "taking the appropriate corrective actions" in response to the violations. However, the details and circumstances leading up to the realization of the violations were unclear at the time.

Lesher's memo quoted CCS Chief Executive Officer Elena Dwyre as stating that, following an internal review, the organization discovered that Casa Alitas had been "overcharged for services by a contractor."

"Upon further investigation we learned that two employees with that program [Casa Alitas] had violated our conflict of interest and purchasing policies," Dwyre was quoted as saying. "Those employee relationships were quickly terminated, the contractor relationship was likewise discontinued, and program partners were promptly notified of the issue."

The organization did not divulge the names of the employees. However, last month, an anonymous source shared internal documents with the New Republic that revealed who was allegedly involved in the illegal vendor contract.

According to the documents obtained by the news outlet, that questionable contract was with Amado Laundry Service, located in Amado, nearly 40 miles away from Casa Alitas in Tucson. The company reportedly sent 37 laundry invoices to the organization totaling $411,967.

The Arizona Daily Star reported that the laundry vendor was providing services without a contract and was selected without a competitive bid process.

The New Republic noted that the laundry company charged excessively high prices compared to other operators in the Tucson area. The news outlet found that other vendors charge anywhere from $1.15 to $2.80 per pound of laundry, while Amado Laundry Service charged the nonprofit between $3.10 and $4.50 per pound — a nearly 300% markup.

Additionally, photocopies of checks obtained by the New Republic revealed that the organization may have overpaid the vendor, sending it $438,940.55.

Furthermore, Arizona Corporation Commission records showed that the laundry company was not formed until several weeks after it started submitting invoices.

However, the real bombshell was revealed when the news outlet uncovered who the laundry business was registered to — the mother of Diego Piña Lopez, the organization's then-executive director.

While the nonprofit never released the names of the two employees who were removed from their positions, after the scandal was uncovered, Piña Lopez and his immediate supervisor, Teresa Cavendish, were no longer employed by CCS.

Despite the shady business dealings, Dwyre confirmed that the vendor did, in fact, provide laundry services to Casa Alitas.

While Piña Lopez was allegedly allowing his mother's business to soak up taxpayer dollars, Casa Alitas, the largest shelter in Arizona, was heading into a potential funding crisis.

Federal funding was set to run out at the end of April, and local leaders, including Piña Lopez, were voicing concerns that illegal immigrants could be released onto the streets unless the organization received additional financial resources from the federal government.

At the time, he told the Arizona Republic, "I think that's going to lead to a lot of chaos, and a lot more cost across the board for folks to get services, as many of the people coming through leave fairly quickly here."

Casa Alitas warned 30 workers — half its staff — that they may no longer receive pay after March 31. The organization even geared up to shut down the largest county-owned building it used to provide services to illegal aliens due to the potential dried-up funds.

Piña Lopez claimed that the nonprofit would be forced to prioritize providing shelter to families with children, warning that the county's street releases would reach up to 400 individuals daily.

"We've avoided the street releases for so long because we've all worked together and we've developed a really nuanced system, and I think we just need to keep working towards that," Piña Lopez told the Arizona Republic. "And if we're going to have this problem where the funding is going to be held up for a little while, then we need to figure out as a team how we're going to work through as Tucson, and to build out our resources to look different, but not to be different."

He noted that the organization would have to rely on community donations and volunteers to keep its operations going if the funding were to end.

Lesher noted that "everybody was out looking very hard to see how we can squeeze the nickels and roll the programs as far as they could be rolled," unaware at the time that the laundry vendor was absorbing some of those needed funds.

Ultimately, the funding did not run out, with Congress passing a $1.2 trillion spending package in March.

Piña Lopez declined requests for comment from the New Republic or the Arizona Daily Star. Cavendish did not respond to requests for comment from either news outlet.

What now?

The scandal involving Casa Alitas prompted concerns about how taxpayer funds are being spent by organizations and NGOs tasked with providing services to illegal aliens.

County Supervisor Steve Christy told the Arizona Daily Star that his "first response" to the uncovered unethical activity was that "maybe it's symptomatic of a bigger problem."

"Are we going to find out more inappropriate activities with taxpayer money? It's certainly very troubling to me," Christy stated.

On August 20, Congressman Juan Ciscomani (R-Ariz.) penned a letter to the Department of Homeland Security Inspector General Joseph Cuffari asking the agency to take a closer look into CCS and the potential misuse of taxpayer funds.

Ciscomani requested a "comprehensive investigation into the use of federal funds," noting that Pima County has already received more than $20 million in fiscal year 2024 through FEMA's SSP.

'We were shocked to discover two Casa Alitas employees had violated our conflict of interest and purchasing policies.'

"It is my understanding that while Pima County is the fiscal agent, these funds go primarily to Casa Alitas migrant operations. Moreover, it is my understanding that when compared to other SSP grant recipients, the burn rate of funds used by Casa Alitas has been incredibly high," Ciscomani told Cuffari.

The congressman requested the Office of Inspector General to conduct a review of "all federal dollars" provided to the county through SSP since 2020.

"Specifically, the dollar amount provided to Catholic Community Services' Casa Alitas," he noted.

The congressman also requested reviews of "all procurement processes documented by" Casa Alitas and a "comparison of the cost per migrant, per day, of all funds awarded under SSP."

A spokesperson for Ciscomani told Blaze News that the DHS OIG acknowledged receiving the letter but has not yet responded.

"Amid allegations of corruption and the misuse of taxpayer dollars, I am calling for a thorough and comprehensive investigation into the operations and use of funds by Casa Alitas," Ciscomani said in a statement sent to Blaze News. "It is critical that we ensure transparency and accountability in the use of federal funds meant to address the ongoing migrant crisis. Congress, and the American people, deserve transparency and anyone who has taken advantage of these programs must be held accountable."

The DHS OIG did not respond to requests for comment.

Lorraine Rivera, the director of communications for the Diocese of Tucson, told Blaze News, "We are aware of the matter regarding Casa Alitas, and we are grateful for Catholic Community Services' professional and transparent approach in addressing this issue and promptly self-reporting it to Pima County, as well as the Diocese. CCS has assured us of its commitment to operate with integrity, cooperate with County officials, and continued dedication to our Catholic mission."

In a statement to Blaze News, Dwyre said:

As an organization rooted in faith, we at Catholic Community Services take seriously our duty to operate with integrity and to be good stewards of the resources entrusted to us. Earlier this summer, we learned our migrant shelter program, Casa Alitas, had been overcharged for laundry services by a contractor. Following an investigation into this discrepancy, we learned this contractor had not been procured in line with County guidelines, and we were shocked to discover two Casa Alitas employees had violated our conflict of interest and purchasing policies, which are in place to ensure fiscal responsibility.

Importantly, Casa Alitas promptly self-reported this incident to its program partners, including Pima County and the Diocese of Tucson. This was a clear violation of not only our best practices, but also of our values, faith and trust, and we are deeply disappointed by these actions. Those employees were quickly removed, and the contractor relationship was likewise discontinued.

Since that time, we have worked closely and cooperatively with Pima County leadership to thoroughly review all our contracts to confirm they are aligned with necessary federal rules and guidelines. Additionally, we have taken steps to rectify these billing issues with the County, improve training practices for employees and strengthen oversight of our purchasing processes.

While we are confident this matter will not impede our operations or our mission, we will continuously seek ways to strengthen our best practices.

NGOs profit off administration's crisis

The Biden-Harris administration has used its self-inflicted border crisis to pump billions of dollars into organizations that provide services to illegal aliens who are awaiting years-out court dates to review their not-yet-verified asylum claims. In addition to the chaos at the southwest border, the federal government has also expanded so-called "lawful pathways" to expedite the entry of foreign nationals in other ways, including by providing direct flights into the United States.

These efforts have led to an urgent need to provide shelter and humanitarian services to the illegal alien arrivals.

In late August, the administration announced it would distribute another $380 million to 50 nonprofit organizations and local municipalities providing such services, including funding to SSP. According to the federal government, the funds help to ensure that Customs and Border Protection's holding facilities do not become overcrowded.

So far this year, the administration has already earmarked $640 million in SSP grants. The latest round of funding will give Maricopa County and Pima County $38 million to split between them.

Jessica Vaughan, the director of policy studies for the Center for Immigration Studies, recently sounded the alarm about the potential of misused taxpayer funds, telling Blaze News, "These organizations, they call themselves advocacy groups or charitable organizations, or even NGOs, but what they really are is government contractors who are being paid by the government, seeking work with the federal government to perform these services to illegal migrants. In effect, resettling illegal migration, assisting illegal migrants."

She noted that some of the organizations have even crossed the line "into actually sheltering and harboring, and thereby encouraging illegal immigration."

"They operate funded primarily with taxpayer dollars, and yet they consider themselves to be largely immune from transparency or any examination of their activities," Vaughan explained.

In an effort to stop these potentially unlawful activities, Texas Attorney General Ken Paxton filed what Vaughan called a "very important and groundbreaking" lawsuit against an NGO that he claims is facilitating unlawful crossing and shielding illegal aliens from federal immigration officials, Blaze News previously reported.

Paxton's complaint claims that El Paso-based Annunciation House, a Catholic nonprofit, "by its own admissions" has facilitated illegal immigration.

His office has stated that "Annunciation House is in a category of its own among these NGOs" because it is "openly operating in violation of the law without any pretense of trying to comply with the law." The lawsuit aims to shut down the nonprofit's operations in Texas.

Annunciation House has denied these claims, stating that Paxton holds an "illegal, immoral and anti-faith position."