Praxis Directors Must Pay Back Thousands

New York, NY —

Attorney General Eliot Spitzer is set to announce an $800,000 settlement today with former directors of an AIDS housing organization, WNYC has learned. WNYC's Andrea Bernstein has more.

Spitzer's investigation found that two directors of the AIDS housing group Praxis took money that was supposed to house poor people with AIDS and put it into their own for-profit housing ventures.

According to the settlement, Sterling Zinsmeyer and Gordon Duggans built up two AIDS hotels -- the Dawn in Harlem and the Park Overlook in the Bronx -- with taxpayer-funded contracts. They then wrongfully converted the hotels to for-profit corporations.

In 2003, WNYC spoke to several former Praxis employees, who charged the two were using the non-profit funds for their own private purposes. WNYC's investigation also fund the group hired a well-connected lobbyist in the Giuliani years, who helped pave the way for the group's meteoric growth.

Under the terms of the settlement, Zinsmeyer, Duggins, and Praxis' attorney will have to pay $790,000 back to the AIDS non-profit. The three are also banned from returning as high-level employees of Praxis or any other non-profit for a ten-year period.