Fresh off its report on exploitation in nail salonsstill resonating in the halls of power more than three weeks later—the Times has published an investigation this weekend that delves into the seedy world of three-quarter housing.

The business is government-funded, but essentially unregulated, and allows landlords to treat drug addicts and homeless and disabled people as walking ATMs. The basis of the arrangement is the $215 monthly "shelter allowance" the city gives to people on public assistance, which the owners of companies with names like "Freedom House" collect by cramming tenants into slum housing.

The report focuses on a particularly scummy variation on this hustle, allegedly perpetrated by a Brighton Beach man named Yury Baumblit, who runs a company called Back on Track. Tenants report that Baumblit buses people to clinics for batteries of unnecessary tests so he can collect Medicaid kickbacks, has residents on disability sign over their monthly government check to him, and most outrageously of all, threatens addicts who have cleaned up with eviction if they don't relapse and go back to rehab programs that then give him a cut.

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Yury Baumblit's mansion half a block from the ocean in Brighton Beach. (Google Maps)

In one of many anecdotes supporting the article's findings, an addict recounts Baumblit giving him $20 to go get high. "He'd give you money and say, 'Do what you do,'" the man said.

The article is long and packed with appalling details. Here are some of the basics.

  • Baumblit moved to Brooklyn from Russia in 1981 and still lives there, in a five-bedroom house with a black Mercedes in the driveway.
  • Upon arriving, he opened a deli, but the enterprise fell apart and his partner accused him in a lawsuit of slapping her and forging her signature on checks.
  • In 2005, then-attorney general Eliot Spitzer prosecuted Baumblit and his wife, Rimma, for using medical clinics they owned to fraudulently collect insurance money with bogus injury claims. They pleaded guilty to felonies and served three months and nine days in prison, respectively.
  • The city's rent money, its crowded, violent shelter system, and its lack of other alternatives to homelessness makes three-quarter housing possible, but no one in government knows how many three-quarter housing facilities there are. A state official testified that there are more than 600 in Brooklyn alone.
  • The housing tends to pop up in poor neighborhoods in the Bronx, Queens, and Brooklyn. In recent years, Baumblit's biggest collection of slum housing was on New Lots Avenue in East New York, where he fit 120 people into six two-family buildings, 10 to a three-bedroom.
  • Mold, rodents, roaches, blocked fire exits, broken sinks, and other problems are commonly reported by tenants, but building inspectors rarely get inside to check them out. When they do, fines, including $145,000 to the owner of the New Lots buildings, often go uncollected.
  • Supposedly reputable hospitals and advocacy organizations, as well as homeless shelters, are recommending people get housing through Back on Track. JoAnne Page, president of the Fortune Society, which aims to help people recently released from prison, acknowledges that three-quarter housing is atrocious, but says, "They are better than what else is out there, so we use them reluctantly."
  • Back on Track has had some tenants on disability sign over their checks (around $700 per month) to house managers, who then dole out a daily allowance ($5 or $10 a day). Others, who aren't collecting disability, it has steered to psychiatrists and lawyers to get help signing up.
  • Tenants are subjected to strict rules, threatened in one case for using the thermostat, and threatened with eviction from New Lots if spotted outside a nearby gas station or beauty salon. House managers serve as Baumblit's foot soldiers, packing tenants' things and putting them on the street at a moment's notice, waking everybody up to go to rehab, even if they're not drug addicts, and collecting slips daily to prove that they attended, so that Baumblit can collect his kickbacks.
  • Several rehab programs run by the same group of people appear to be central to Baumblit's moneymaking endeavors. One subject of the story, Horace Bush, 65, has gone through four programs in the last two and a half years to keep his spot in a bunk-bed at New Lots. Sober at the end of each program, he said Baumblit gave him the choice of relapsing or getting the boot. "Oh, my demons—I fight and I fight and I fight and I lose," Mr. Bush said. "And Mr. Yury takes advantage of it. This whole three-quarter system does. It's made for us to fail."
  • Some Back on Track houses, because they are populated with drug addicts who are encouraged to use, are drug dens. "My brother said you could get more drugs in there than on the street," said the sister of one resident who relapsed shortly after moving into New Lots, and subsequently died of an overdose.
  • The residents of New Lots began being evicted last December after Baumblit stopped paying rent on the buildings. He was still collecting checks from the city for 65 people there at the end of February, even though nearly everyone was gone.
  • Many tenants were forced to get a series of expensive medical exams, covered by Medicaid, in order to secure a bed. The tests included brain ultrasounds and checks for wandering eye disorder. One man reported racking up $1,700 in medical bills from a visit, even though he had just been thoroughly examined following a bicycle accident.
  • The Fire Department and Bill de Blasio, when he was a councilman, have both pushed for crackdowns on the three-quarter housing system. None has happened, though the state recently shut down one Baumblit-affiliated rehab program for over-billing, and charged executives at another program he recommended with giving kickbacks to operators of their own three-quarter housing.
  • Baumblit has been collecting federal disability at least since 2012 (according to his lawyer) and possibly since 2000 (according to a doctor's note in a court filing). The article doesn't mention it, but it is illegal to work for pay while on disability.
  • A lawyer for Baumblit denied that Back on Track has done anything illegal.