In the heart of Yonkers, N.Y., Ivan Arroyo, a dedicated veteran, found himself entangled in a web of unfulfilled promises. The narrative of Arroyo, who since the 1980s had lived in public housing, unfolds as a poignant example of hope turned sour. Initially celebrated in the media as a triumphant step towards homeownership, his journey with Habitat for Humanity of Westchester Inc. took a disheartening turn.
Instead of a deed to a home built with his own sweat and labor, Arroyo was presented with a lease agreement, a stark deviation from his understanding of the deal. This discrepancy marked the beginning of a complex legal battle against the very organization that promised to help Arroyo and other veterans achieve the American dream. The recent developments have raised questions about accountability and transparency within the organization, previously esteemed for its dedication to providing affordable housing to those in need.
Delving into court documents, interviews, and various legal and business materials has revealed the complex details surrounding the ongoing lawsuits now faced by Habitat for Humanity.
The Contradiction of Mission and Practice
Habitat for Humanity International is a global nonprofit organization focused on providing affordable housing to those in need. Its mission emphasizes collaboration with individuals and families to build strength, stability and self-reliance through housing partnerships. The organization operates through affiliates across nearly 1,400 communities in the U.S. and in 70 countries worldwide. A central aspect of Habitat‘s approach is the sweat equity program, which involves participants working on the renovation and construction of their future homes. Participants, selected based on criteria like financial standing and need, contribute labor in exchange for the promise of homeownership.
However, Habitat for Humanity of Westchester Inc., once led by James Killoran, deviated from this mission. Despite investing hundreds of hours of labor, as required by the sweat equity program, and the understanding that he was working towards homeownership, Arroyo was instead presented with a rental contract.
The Unanticipated Rental Agreement
In 2013, after returning from his military service in Afghanistan, Arroyo began working with Killoran as a landscaper at the group before embarking on his journey to build his own home.
Arroyo applied for the sweat equity program and was chosen based on criteria that included his need, commitment to partnership, and ability to repay. He embraced this partnership by dedicating over 500 hours of sweat equity work, which also saw volunteer labor contributions from fellow veterans and even family members traveling from across the country to assist him. The program was explicitly promoted and structured with homeownership as its primary objective.
When January 2016 arrived, and it was time for Arroyo to move into his newly constructed home situated at at Purser Place, Yonkers—a property that had already been widely publicized as his own—a surprising turn of events awaited him.
“Killoran and Wayne Vogell arrived at my house and presented me with a lease,” said Arroyo in a complaint filed in this lawsuit. “Neither Killoran nor Vogel had ever before mentioned that I would be leasing rather than owning this house and it came as a complete surprise.”
Killoran assured him that the lease was a temporary situation of approximately six months. Arroyo vividly recounts the situation he found himself in, saying, “At that point, I had no choice. I got my family out of the other apartment. We already started putting boxes in here. As they wrote I have to sign this but I got nowhere else to go. I didn’t want to cause any legal difficulties for my family.”
Arroyo frequently asked Killoran about the absence of a purchase agreement for their property, but he said Killoran evaded the question with excuses. Over two years passed without resolution, causing concern as Arroyo, due for deployment to the Middle East in early 2017, worried about leaving his family in a home with uncertain ownership. Consequently, Arroyo ceased paying rent, hoping to expedite the transition to an ownership contract.
After he stopped paying rent, Killoran eventually made contact with Arroyo, allegedly ignoring Arroyo’s calls until then. In the meeting, he asked, “So what about the five-six years that I’ve been paying rent? That money goes towards my house, right? He said to me, no, you’re paying my bills. That’s what he said to me.” The Arroyos expressed their belief that, at the very least, the money should have been placed into an escrow account.
It was during his deployment that Killoran initiated eviction proceedings against his family. Mrs. Arroyo vividly recalls her experience, saying, “I started to get all these letters under the door… ‘if you don’t pay you have to get out.’ He deliberately waited till Ivan left to harass me.”
Arroyo visited Habitat for Humanity chapters in Rockland County and Orlando, Fla., to understand the typical process after a home’s construction. He learned that closing on a house usually happens within six weeks of moving in and approval. Reflecting on this, Arroyo remarked, “I’ve been here for six years, and still to this day no closing.”
The complaint filed states, “Habitat was obviously looking to increase its profit on this transaction while Plaintiff was paying rent and suffering the anxiety of when he would be offered a purchase agreement and become a homeowner as promised by Defendants.”
Despite numerous attempts, both Killoran and his attorney have remained unresponsive to requests for comments or interviews.
As previously mentioned, Arroyo’s situation is not an isolated incident. Alvin Thomas, a disabled veteran, also found himself in a similar situation where he had been promised home ownership through the sweat equity program but ended up facing profound frustration. In his lawsuit, Thomas is taking legal action against Killoran and other defendants due to their failure to transfer ownership of the property located on High Street, Yonkers.
When his sweat equity hours were completed, instead of offering Thomas the promised purchase agreement, Killoran requested that he sign a month-to-month lease. Killoran explained that this was a customary temporary measure while financing for the purchase was being arranged. Thomas reluctantly signed the lease on December 18, 2017, and began paying $1,300 in monthly rent to Habitat. To the best of Thomas’s knowledge, Killoran did not make any effort to secure financing for the purchase of the property.
Throughout 2017, Thomas repeatedly inquired about the lack of a purchase agreement. According to the court document, Killoran provided vague excuses and failed to give a satisfactory answer. When asked about the destination of the rent payments, Killoran informed Thomas that the payments were covering Habitat’s expenses.
In 2018, when Habitat still did not proceed with the closing of title, Thomas also stopped making rent payments. In response, Habitat initiated eviction proceedings against him in Yonkers City Court.
Thomas, after voicing complaints to Habitat International, was referred to attorney John C. Wirth Jr., who was representing Arroyo. Wirth revealed he has copies of deeds for numerous properties, suggesting widespread issues of a similar nature tied to Habitat for Humanity of Westchester Inc.
Arroyo validated these claims, describing his discussions with neighbors enduring comparable mistreatment: “I’ve spoken to my neighbors, who are in the same kind of situation. So every house that he’s putting up, he’s taken three, four or five years of rent from them and it’s not going towards the house.”
Now, as we approach the upcoming trial, almost seven years have passed since Killoran’s public celebration of Arroyo becoming the owner of the home where he currently still resides under a lease arrangement. “I felt we did everything that was supposed to have been done to have a home” expressed Mrs. Arroyo during a recent interview. Mr. Arroyo chimed in, stating, “I went above and beyond for him. I worked holidays, I took my vacation time to work on houses. I went out of my way, friend, and this is what you do to me?”
Financial Mismanagement and Organizational Scrutiny
When Habitat for Humanity International was contacted about the Arroyos, Erika Bowditch, Senior Director of Public Engagement, stated that each affiliate operates independently and makes its own decisions. However, it appears that Killoran and his CFO, Wayne Vogel, faced scrutiny by Habitat for Humanity International for their mismanagement of the Westchester group.
An official audit of Habitat for Humanity of Westchester Inc., conducted independently of the lawsuit, led to Habitat’s disaffiliation in August 2018. The audit unearthed a series of troubling findings, particularly regarding financial mismanagement and non-compliance with organizational standards. It also mentioned the housing program was misrepresented and that participants were misled.
The audit revealed that the organization had deviated significantly from Habitat’s guidelines, especially in its “Rent-to-Own” program. This program was found to be non-compliant as it did not appropriately qualify families for homeownership, leading to indefinite renting rather than transitioning to ownership. The marketing of the program as “homeownership” was misleading, and the lease agreements lacked commitment to a specific closing date, with discretionary rent credits adding to the ambiguity. This misrepresentation was a stark deviation from Habitat’s mission of empowering families through actual homeownership.
Further scrutiny during the audit brought to light suspicious financial practices within the organization. Killoran, the Executive Director, and Vogel, the CFO, were found to have made questionable expenditures. The audit report noted several alarming expenses, including “403 transactions at a restaurant totaling $17,028” and “$563 spent on a gym membership for the CFO.”
Additionally, there were $4,035 in expenses that appeared to be personal, including trips and gift shop purchases, as well as substantial expenses at grocery stores and general retailers amounting to $7,902. These financial irregularities raised serious concerns about the management of the organization’s funds, casting doubt on the leadership’s commitment to Habitat’s core values and mission. The discovery of these irregularities led to the disaffiliation of Habitat for Humanity of Westchester Inc. from International.
It was uncertain what direction Killoran’s involvement in supporting disadvantaged and lower-income communities in the greater New York City area would take following the closure of Habitat for Humanity Westchester Inc. in August 2018. Shortly after this organization’s disaffiliation from International, Killoran changed the name from Habitat to The Fuller Center for Housing of Greater New York City and took on the role as its CEO and Director, with Vogel serving as CFO.
The lawsuits filed by Arroyo and Thomas allege that Habitat for Humanity of Westchester Inc., led by Killoran, engaged in deceptive practices. They allege that Killoran and Vogel breached fiduciary duty to Arroyo and Thomas, emphasizing that the organization made commitments it failed to honor, causing significant harm to them.
The crux of the lawsuit is the accusation that Habitat’s Westchester group had promised Arroyo and Thomas homeownership in return for their active participation in the sweat equity program and their considerable personal involvement. They invested their time, effort, and labor with the expectation that, in return, they would have ownership of the properties they worked on.
When the properties were ready for occupancy, instead of purchase agreements, they were required to sign lease agreements. The legal filing highlights a fundamental breach of trust and a failure to deliver on the core promise of the program.
In response, Killoran and his legal team filed a countersuit against Arroyo and Thomas for not paying rent. They argue that since Arroyo and Thomas continued residing in the properties without paying rent, they owe use and occupancy payments, the amount of which is yet to be determined.
Killoran’s legal team has responded to the allegations with considerable ambiguity. In their counter-claims document, they have stated, “deny knowledge or information sufficient to form a belief,” which suggests an absence of a definitive stance or acknowledgement of the accusations leveled against them.
The situation is further complicated by the possibility that misunderstandings and inexperience on the part of Arroyo and Thomas might have contributed to the dispute, alongside any alleged deliberate misrepresentations of the program by Killoran and his team.
As the case is set for a jury trial in early 2024, the full details and nuances of the dispute remain unresolved, leaving significant room for speculation and interpretation.
Vulnerability in the Face of Housing Challenges
Some similarly impacted individuals have opted not to participate in the upcoming trial involving Killoran and other defendants. Local sources have expressed their hesitancy to voice their concerns, fearing legal action might lead to the loss of their rented homes, especially considering their financial vulnerability. Consequently, most choose to remain silent and continue as tenants, bearing the required rental fees. Additionally, one source emphasized the poor maintenance of many properties managed by Killoran, stating, “The property is deteriorating, nobody takes care of it.”
Together, Killoran and Arroyo made public appearances, such as on a radio station, advocating for housing initiatives dedicated to veterans and encouraging public contributions to this essential cause. Reflecting on their collaborative efforts, Arroyo felt overwhelmed with a sense of betrayal, saying, “He took advantage of us… I broke my back for him building other houses. How much money he raised under that pretense, he said the money was helping us veterans.”
Mrs. Arroyo underscored the dangers of targeting vulnerable communities. She noted, “He has a lot of people that pretty much look up to him, that think that he’s actually doing the right thing. Especially for minorities, they are very vulnerable to wanting to have something that they can call their own. And you just don’t stop, you still pay and pay and pay. And I think he has taken advantage, and continues to take advantage, of that.”
In excerpts from Killoran’s deposition, dated October 12, 2021, Killoran asserts, “Our goal is not to delay homeownership. The goal is to have every family own that can.”
The final decision of the jury in these combined lawsuits is still pending, leaving the resolution of these allegations, and their broader implications for housing justice, yet to be determined.