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The Vice Hotel 

One of the largest city-funded Care Not Cash hotels was allegedly run as a home for extortion, drug dealing, and other vices

Wednesday, Oct 10 2007
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Such allegations point toward a possible theft of city taxpayer subsidies, which should trigger an investigation by City Attorney Dennis Herrera. When I asked Herrera's office whether THC had requested such an investigation, a spokeswoman explained the department's policy of neither confirming nor denying the existence of ongoing investigations.

Again, Mendoza himself denies the allegations. He and Gloria Hernandez say that after Mendoza left, Shaw authorized a housing division "shake-up" that involved firing Mendoza's superiors as well as employees who worked alongside him. Others resigned in connection with an internal inquiry into Mendoza's management of the Mission Hotel. People with direct knowledge of this situation, as well as city and nonprofit employees who worked with people who were fired in the shakeup, also said in interviews that allegations about Mendoza's supposed mismanagement led to at least six people recently leaving the organization through firings and resignations. Because these were confidential internal personnel matters at a private nonprofit, I was unable to ascertain precisely how many employees were compelled to leave THC in connection with the Mission Hotel shakeup.

Sources say Mendoza was also involved in loan sharking, in which tenants borrowed money at 1,200 percent interest and lived under the threat of violence in the event of late payments. "If a tenant borrowed $100, on payday he would pay back $100 more," said a source who worked alongside Mendoza, one of three people contacted independently of each other who claimed knowledge of this activity.

Mendoza insists this accusation is outrageous. He said that rather than victimize hotel residents, he went to great lengths to help them, sometimes buying them meals at a nearby restaurant. Again, he says, he has not been contacted directly by THC officials about allegations of criminal activity at the hotel.

Drug dealing is a potential problem in any facility housing people who were previously living on the street. Mendoza says that he did not tolerate it at the hotel, and that he was one of few building managers to have evicted tenants for drug dealing — an assertion confirmed by court records.

Sources with knowledge of the situation at the hotel, however, said drug dealers there were divided among those Mendoza protected, and those he did not.

"Basically we [had] an early warning system," said one source, who claims to have dealt drugs and lent money in the hotel. "The police have to call management before they enter the building. They call Carlos first, and before they come, he contacts me. I know I have to flush it down the toilet."

Sources said the hotel was also used for prostitution. "They were having open acts of prostitution in the hallways in exchange for drugs," said one of several residents who described this problem. "I felt uncomfortable and unsafe."

Mendoza denies all of this.

At the very least, a City Attorney investigation is necessary to determine whether rent-money skimming actually went on at the Mission Hotel, and, if so, whether THC promptly and fully reported this alleged theft of taxpayer subsidies.

What is more, descriptions of violence, drug dealing, prostitution, and a general atmosphere of menace at the Mission Hotel suggests San Francisco has reneged on the Care Not Cash promise of giving homeless people safe housing as an alternative to the violent, drug-ridden streets.

The aforementioned allegations emerged over three weeks as I interviewed San Francisco social service providers who helped place people in THC-run hotels. I interviewed people who worked alongside Mendoza for THC. I spoke several times over the course of two weeks with a man who claims to have been a former loan shark and dealer who worked with Mendoza. I interviewed a crack cocaine user who says he bought rocks from a dealer Mendoza protected. And I interviewed several hotel residents who claim they knew of drug dealing, loan sharking, rent skimming, and extortion involving Mendoza. And I spoke with Mendoza.

All of the hotel residents and THC workers I interviewed, except Oliver — who claims to have seen a crack cocaine transaction in which Mendoza passed rocks to a reputed dealer within the hotel — requested that their names not be used in this article.

That's because they report an atmosphere of fear surrounding the hotel, and around THC. If their names were to appear in print, these Mission Hotel residents, dealers, users, and former THC employees said they feared possible violence from Mendoza or his associates.

Mendoza, for his part, said that they have nothing to fear and denies that he's been involved in threats of violence.

Meanwhile, social service workers and employees of nonprofit agencies are afraid that if they were to speak on the record, they could suffer repercussions from Shaw, who they believe wields considerable power in city political circles. They also believe that Shaw receives favorable treatment from the city agencies that oversee the $15 million in government grants and contract payments that fund THC's management of subsidized hotels.

This view seems to be supported by the fact that, despite several requests, I was unable to obtain interviews with Department of Human Services employees who supervise contracts with THC. Instead, an assistant to department director Trent Rhorer's assistant told me Rhorer said I should "talk to Randy" about the situation at the Mission Hotel.

Former employees were asked to sign confidentiality agreements with the implied promise that they would not speak out about the situation at the Mission Hotel, people with direct knowledge of the situation say.

In this spirit of secrecy, Shaw did not respond directly to e-mail and voicemail requests to be interviewed for this story. He did respond indirectly. Last week, he wrote a column titled "SF Weekly Preparing New Attack on Housing Clinic" for Beyond Chron, a Web site run by his nonprofit.

Defending his organization, Shaw wrote that Mendoza was a competent employee who merely left due to personal problems. "We are extremely proud of our management of the Mission over the years. Rather than wait for Smith to misinform the public, we're setting the record straight," Shaw wrote, in anticipation of this column. "After we hired Carlos Mendoza as general manager in February 2004, the Mission became a much calmer environment."

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Matt Smith

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