Nicholas Kulish, Kim Barker and Rebecca R. Ruiz

<h1>For months, Juan Sanchez was at the center of the national uproar over family separations at the Mexican border because the nonprofit he founded, Southwest Key Programs, was housing migrant children taken from their parents. </h1>

On Monday, facing intense scrutiny from his own organization and federal investigations over alleged financial improprieties, he stepped down after 32 years at the helm.

The charity’s chief financial officer, Melody Chung, left last month after a New York Times article outlined allegations of mismanagement and possible malfeasance at the charity.

Southwest Key began an internal investigation after the article was published in December. The Justice Department also started investigating.

The Southwest Key shelter in a former Walmart superstore in Brownsville, Texas, known as Casa Padre, became a symbol of the Trump administration’s family separation policy, with immigration advocates likening it to a warehouse for children. But it was also a generator of millions of dollars in federal grants at a nonprofit unusually concerned with its bottom line.

From its humble beginnings in Brownsville, the charity became the largest player in the shelter system for unaccompanied minors nationwide. In the last decade, Southwest Key was awarded almost $1.8 billion in federal money to care for those children. The nonprofit can house up to 5,000 children in its 24 shelters in Texas, Arizona and California, including the former Walmart.

Sanchez earned $1.5 million in 2017, the most recent tax return available. His wife earned $500,000. His daughter from a previous marriage also held a senior position, but her salary was not available. Chung earned $1 million.

But the modern-day Horatio Alger tale of a shoeshine boy and Golden Gloves boxer turned Harvard doctorate and nonprofit chief executive came to an end with Southwest Key’s announcement of Sanchez’s departure.

The Southwest Key board, in consultation with Sanchez, decided it was time to begin a new chapter at the charity, Orlando Martinez, the board chairman, said in a statement. “Our mission has never been more critical than it is today, and we must look carefully at what is required to evolve and grow as an organization,” he said.

“This was a very difficult decision,” Sanchez wrote in an email to employees that was obtained by The Times. “Recent events have convinced me and our Board of Directors that Southwest Key would benefit from a fresh perspective and new leadership. Widespread misunderstanding of our business and unfair criticism of our people have become a distraction our employees do not deserve, and I can no longer bear.”

Sanchez’s wife, Jennifer Nelson, remains as a top executive.

Sanchez’s resignation came amid questions from The Times about Southwest Key’s handling of charter schools spun off from the organization. Sanchez serves on the school board. It is unclear whether his resignation will change that.

As of February, there were more than 11,000 minors in the shelter system, housed in about 100 sites. As the number of unaccompanied migrant children continued to pose a crisis, Sanchez had been central to the administration’s plans.

Southwest Key, which was sitting on $61 million in cash in the fall of 2017, also lent millions of dollars to real estate developers, acting more like a bank than a traditional charity. It has rented shelters rather than buying them, an unusual practice that has proved lucrative for shelter owners, including Sanchez and Chung, The Times reported in December.

Sanchez, Chung and a friend owned a shelter in Conroe, Texas, through a shell company. Asked by The Times last year about that potential self-dealing — whereby the executives collected rent paid by the federal government — they announced that they would seek to sell their ownership stakes. There is no record that the property has yet been sold.

A spokesman for the Department of Health and Human Services, which oversees migrant shelter grants, said late last year that the government had hired forensic accountants to review the finances of shelter operators, including Southwest Key.

Joella L. Brooks, a longtime Southwest Key employee and current chief operating officer, was named interim chief executive. Sanchez said that a “nationwide search” would begin for a permanent replacement.

“I’m grateful for the opportunity to continue serving our dedicated employees and youth in need,” Brooks, who joined the organization almost 30 years ago, said in a statement.

In 1987, Sanchez, who had grown up poor near the Mexican border, used his mother’s address in Brownsville on founding documents for the nonprofit. The charity took out loans of $6,700 to buy a photocopier and a computer. Sanchez’s salary at the time was a modest $35,000.

While its initial business was in juvenile justice, it was in the housing of unaccompanied migrant children that its revenues exploded. Chung noted in her resignation letter to staff that when she started working at Southwest Key 20 years ago, the nonprofit had roughly 500 employees and gross revenue of $16 million. By the time she resigned, those numbers had grown to 8,000 employees and gross revenue of more than $400 million.

Chung closed her resignation letter last month, “May the Lord continue to bless the company abundantly forever!”

This article originally appeared in <a id="10929eda-8b1f-45a4-a2ec-e02f5edb3147" href="https://www.nytimes.com/2019/03/11/us/southwest-key-migrant-shelters-resignations.html">The New York Times</a>.

Top Officials Resign From Troubled Texas Charity for Migrants

The charity’s chief financial officer, Melody Chung, left last month after a New York Times article outlined allegations of mismanagement and possible malfeasance at the charity.

Top officials resign from troubled Texas charity for migrants

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Nicholas Kulish, Kim Barker and Rebecca R. Ruiz

Articles written by the author

Top officials resign from troubled Texas charity for migrants