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GREENSBORO — A power outage on Thursday that displaced 35 residents of an apartment complex may have exposed an elaborate scheme by two local mental health agencies looking to profit from the Medicaid coverage of their clients.

According to city officials, the agencies — Ready 4 Change and United Youth Care Services — recruit the homeless to enroll in their substance-abuse programs. They provide housing in return — ostensibly so their clients can have a place to stay while they attend treatment programs.

Homeless advocates say the Georgetown Manor apartment complex where they lived was overcrowded, inadequate and essentially substandard.

“What I believe is happening for the people that are in the programs is they don’t charge them rent going in because there’s some kind of kickback scheme going on between the so-called legitimate organization and the housing people,” said Brett Byerly, the director of the Greensboro Housing Coalition.

If not for the power outage, city officials wouldn’t have been aware of the alleged scheme.

They first found out late Thursday afternoon when the Greensboro Housing Coalition got a call from one of the Georgetown tenants that power had gone out in apartments at 3818 and 3820 Overland Heights.