A six-month-long New York Times investigation has found that New York City’s system of “three-quarter houses” preys on those it ostensibly exists to help—recovering addicts and alcoholics. One sober-housing operator reportedly told residents to relapse and return to certain outpatient treatment programs, so he could receive Medicaid-fee kickback. If they refused, he would evict them.

In New York City, hospitals, treatment programs, homeless shelters, and the Department of Corrections all send people to three-quarter houses—called such because they exist somewhere between more heavily regulated halfway houses and private homes. A 2013 Johns Hopkins study estimated that as many as 10,000 New Yorkers currently reside in three-quarter housing—a reflection, in part, of a broader, city-wide housing crisis.

The people who operate such housing receive $215/month for many of their tenants from the city’s Human Resources Administration, the Times reports, and Medicaid subsidies from the state’s Office of Alcoholism and Substance Abuse Services reach into the millions.

But, apparently, nobody is tracking that money. “The system, such as it is, dooms tenants to a perpetual cycle of treatment and relapse, of shuttling between programs and three-quarter houses,” writes Times reporter Kim Barker.

“Three-quarter houses are, in my opinion, the frying pan for people who are in the fire,” JoAnne Page, president of the Fortune Society, an organization that helps rehabilitate convicts, said. “Many of them are firetraps, many are very dangerous and many are brutally exploitive. They crowd people beyond anything they could justify. But they are better than what else is out there, so we use them reluctantly.”

Barker’s investigation focuses on two men: Yury Baumblit, a Russian immigrant and two-time felon who operates a series of sober houses, many in East New York, under the name “Back on Track”—and who was previously the subject of a 2013 ProPublica investigation—and Horace Bush, a 62-year-old homeless addict trying to get and stay sober:

Mr. Baumblit first sent Mr. Bush to an outpatient program called New York Service Network. Within five months, he was given a letter that said he was doing well, with “consistent negative toxicology results.” Medicaid paid out almost $13,000 for Mr. Bush to attend the program an average of four times a week, records show.

Joseph LaBarbera, New York Service Network’s lawyer, denied allegations that the program paid Mr. Baumblit money for clients.

No one at Back on Track helped Mr. Bush with permanent housing, and by the time he was supposed to graduate from New York Service Network in August 2013, he had no place to go.

Bush told Barker that, once he had completed the outpatient program, Baumblit told him to relapse, so that he could return to another program. “‘Do what you do’—that’s what he told me,” Bush said:

“Either Mr. Ed will come and tell you or Mr. Yury will come and tell you, ‘You know that your time is almost up, and we’ll have to move you out, or put you someplace else. And to get someplace else, you have to have a relapse, maybe even go into detox,’” Mr. Bush recalled. “And then they’ll put you back into a program, and they’ll get your Medicaid authorization back up. And they work on you from there. And you just keep going around and around.”

Medicaid paid a total of almost $20,000 for Bush’s treatment at three different three programs, the Times reports. In 2014, the city’s Human Resource Administration paid Back on Track $148,000 in housing assistance.

Since August 2010, inspectors from the Department of Buildings have fined the owner of six Back on Track buildings—Baumblit leases—more than $145,000 for 22 violations, 18 of which were considered “immediately hazardous.” According to the Times, none of that money has been paid, and no changes have been made to the buildings.

In 2013, Baumblit stopped paying his rent, which amounted to $300,000 by last summer:

Last June, Back on Track agreed in court that it would move out by Halloween and “make best efforts to relocate the occupants” to other three-quarter homes.

But none of the residents were told. Eviction notices were thrown away, and Mr. Baumblit kept moving in new tenants.

On Dec. 17, the city marshals showed up. They locked up six of the 12 apartments, giving the few residents who were not at group 15 minutes to grab what they could. On the streets, tenants huddled, wondering whether this was really happening. The week before Christmas, 60 people were suddenly homeless.

The story is long, complex, and worth reading both for the detail it provides of the city, state, and federal government’s utter failure to take responsibility for policies that leave the most desperate people even more vulnerable than they already are and for the portrait it draws of a man who exploited that desperation and vulnerability for his own gain.

Image via Leonel Ponce/Flickr. Contact the author of this post: brendan.oconnor@gawker.com.