DA investigating guaranteed income program in Palm Springs over alleged misappropriation

The city of Palm Springs cannot account for potentially hundreds of thousands of dollars meant to fund a guaranteed income program initially proposed in 2022. A criminal investigation into the potential misuse of funds comes as executive compensation at one of the nonprofits tasked by the city of managing the program skyrocketed.

The Riverside County District Attorney's Office, in coordination with the Palm Springs Police Department, have initiated a criminal investigation, according to Palm Springs City Councilmember Lisa Middleton.

Meant to provide regular $800 payments to low-income residents over 18 months, the program has instead become mired in controversy when the city realized a nonprofit contracted to manage and develop the system could not provide sufficient evidence for where the money went.

The city allocated $700,000 to DAP Health and Queer Works, a nonprofit that describes itself as offering free mental health services to transgender and gender-diverse individuals. At first, the basic income program was meant only for such individuals, but a nationwide backlash resulted in the city removing that requirement.

Fact check: Palm Springs stipends include transgender residents, but not exclusively

DAP Health, which was not the subject of the city's inquiry, has taken over sole management of the program.

In a statement on Friday, city spokesperson Amy Blaisdell said when city leaders learned of the alleged misappropriation of funds, they performed a full audit.

Preliminary reports revealed Queer Works could not provide sufficient evidence for where the funding went, and the city demanded that any remaining funds be returned to the city, Blaisdell continued in the statement.

"The City of Palm Springs recognizes that as stewards of taxpayer funds, it is of critical importance that steps are taken to ensure these dollars are spent responsibly and in alignment with the expectations of our community," she said.

It is unclear when the city learned of problems with the guaranteed income program. The city's statement did not include a timeline of events, or say how much money was misappropriated or even if any had been returned. The city did not immediately respond to follow-up questions from The Desert Sun.

Queer Works tax filings give some indication of how the nonprofit's activity over the last two years. The nonprofit earned around $723,000 in 2023, up from $176,000 in 2022, according to the filings.

CEO Jacob Rostovsky saw a large increase in compensation in 2023, earning $191,000 compared to the $16,485 he earned the year before.

A total of $217,543 was spent on executive compensation in 2023, the filings say. Another $266,411 was classified as being spent on "other salaries and wages," although it is unclear what exactly the term means. When added together, the 2023 executive compensation and salaries equal 81.5% of all revenue received by Queer Works.

Rostovsky did not immediately respond to questions about Queer Works finances or the potential misappropriation of funds. When contacted earlier this week about Queer Works, he said the nonprofit has moved to a virtual presence in Palm Springs.

Palm Springs resident David Vignolo said he first started looking into the program in the fall of 2023 after becoming interested in how it was going. Vignolo, who serves on the Palm Springs Human Rights Commission, but stressed his research into the guaranteed income program was done as a private citizen, said he didn't receive much of a response from city officials or Queer Works, so he requested records from the city.

"My only question has always been, what did the city receive for its 700,000 dollars? And what lessons did we learn to make sure that what we’re approving money for is actually handled appropriately?" he said. "It’s great to put pieces of words on paper, but if you don’t have any oversight, and actually enable people to follow through, then word is eventually going to get out to third parties that, 'I can pretty much do whatever I want when I get the money.'"

The records he received, which have been obtained by The Desert Sun, show Queer Works charged the city tens of thousands of dollars to design the program and engage in community outreach. Rostovsky typically earned $100 per hour over dozens of hours, according to an analysis of the invoices done by Vignolo and his husband.

"If you look at these progress reports, they are pretty sketchy on the details," Vignolo said.

He reached out to his councilmember, Middleton, who requested in December the city manager conduct an audit of the program's finances.

Middleton has been opposed to the project from the beginning, she said, partly because she believes guaranteed basic income programs cannot be scaled up to address issues of poverty in California.

"I’m deeply disturbed by their alleged wrongdoing," she said in a statement. "Individuals who misappropriate taxpayer money not only violate the law; they violate the public’s trust in government and our ability to help people who need it most."

DAP Health took over program in July

DAP Health took sole control of the basic income program on July 12, according to a press release released on Friday by the nonprofit. In the release, the nonprofit said 14 individuals have been receiving the payments since March of this year.

“Consistent with DAP Health’s 40-year history of protecting and expanding access to care not only for members of the LGBTQ+ community but for all people,” CEO David Brinkman said in the release, “DAP Health is proud to assume this role so that there is no disruption to the participants of this Universal Basic Income pilot program."

Sam Morgen covers the city of Palm Springs for The Desert Sun. Reach him at smorgen@gannett.com.

This article originally appeared on Palm Springs Desert Sun: DA investigating guaranteed income program in Palm Springs over alleged misappropriation