The Department of Justice (DOJ) is reportedly investigating Southwest Key Programs, the nation’s largest operator of shelters for migrant children, of possible misuse of federal funds, according to The New York Times.

The Austin-based nonprofit charity operates 24 shelters to house migrant children who arrive in the U.S. on their own or who were separated from their families.

The United States attorney’s office for the Western District of Texas, in conjunction with the FBI, is examining its finances and whether it improperly spent federal money, according to The Times.

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Neither the DOJ nor the U.S. States attorney’s office for the Western District of Texas immediately responded to requests for comment from The Hill.

Records and interviews compiled by the Times suggest Southwest Key Programs has engaged in potential self-dealing with its top executives, stockpiled tens of millions of taxpayer dollars and lent out millions for real estate purchases. It reportedly funneled money through several for-profit companies to help turn public funds into private money, which was then given to company executives.



At least eight of Southwest Key’s executives earned more than the federal salary cap of $187,000, including CEO Juan Sanchez who made $1.5 million, according to The Times.

Jeff Eller, a spokesman for Southwest Key Programs, told The Times there had been management mistakes, but there was no criminal intent or “desire to game the system.” He added that the charity had not yet been contacted by federal authorities but it had a “policy of working with any and all investigations.”

The company also said it would commission an internal inquiry.

Southwest Key Programs was thrust into the spotlight after the White House implemented its “zero tolerance” policy which resulted in a large number of family separations. The program now houses up to 5,000 children, according to The Times. A total of 14,000 migrant children are currently in federal shelters.

Federal investigators are also probing International Educational Services, a smaller shelter provider also based in Texas, which lost its federal contracts in February over similar allegations. Sanchez helped start that company more than 30 years ago, though he is no longer affiliated with it, according to The Times.

The allegations against Southwest Key Programs could possibly throw a crucial government partnership into jeopardy. When International Educational Services’ contracts were revoked, its shelters’ operations were transferred to another organization, Comprehensive Health Services, a for-profit company.