After a lifetime of abusing drugs, Horace Bush decided at age 62 that getting clean had become a matter of life or death. So Mr. Bush, a homeless man who still tucked in his T-shirts and ironed his jeans, moved to a flophouse in Brooklyn that was supposed to help people like him, cramming into a bedroom the size of a parking space with three other men.

Mr. Bush signed up for a drug-treatment program and emerged nine months later determined to stay sober. But the man who ran the house, Yury Baumblit, a longtime hustler and two-time felon, had other ideas.

Mr. Baumblit got kickbacks on the Medicaid fees paid to the outpatient treatment programs that he forced all his tenants to attend, residents and former employees said. So he gave Mr. Bush a choice: If he wanted to stay, he would have to relapse and enroll in another program. Otherwise, his bed would be given away.

“‘Do what you do’ — that’s what he told me,” Mr. Bush recalled.

Mr. Bush, rail-thin with sad eyes, wanted to avoid the streets and homeless shelters at all costs. He turned to his self-medication of choice: beer, with a chaser of heroin and crack cocaine. Then he enrolled in a new program chosen by Mr. Baumblit.

In the past two and a half years, Mr. Bush has gone through four programs, just to hold onto his upper bunk bed.

Mr. Bush had fallen into a housing netherworld in New York City, joining thousands of other single men and women recovering from addiction or with nowhere to go. The homes are known as “three-quarter” houses, because they are seen as somewhere between regulated halfway houses and actual homes.

Virtually unnoticed and effectively unregulated, the homes have multiplied over the past decade, driven by a push to reduce shelter rolls, a lack of affordable housing and unscrupulous operators.

One government official estimated recently that there could be 600 three-quarter houses in Brooklyn alone. But precise numbers are elusive. The houses open and close all the time, dotting poor neighborhoods mostly in the Bronx, Brooklyn and Queens.

The homes, often decrepit and infested with vermin, overflow with bunk beds and people. Exits are blocked and fire escapes nonexistent. The homes are considered illegal because they violate building codes on overcrowding. Many have become drug dens, where people seem almost as likely to die of overdoses as they are to move on to a home of their own.

Opportunistic businessmen like Mr. Baumblit have rushed to open new homes, turning them into vehicles for fleecing the government, an investigation by The New York Times found. The target is easy: vulnerable residents whose rents and treatments are paid for with taxpayer money.

Yet three-quarter homes are tolerated and even tacitly encouraged, pointing to a systemic failure by government agencies and institutions responsible for helping addicts and the poor.

Reputable hospitals, treatment programs and shelters regularly send people to the homes. So does the state’s Department of Corrections and Community Supervision. The city’s Human Resources Administration pays operators the $215 monthly rent, known as a “shelter allowance,” for many tenants. The state’s Office of Alcoholism and Substance Abuse Services hands out millions in Medicaid money for their treatment.

But for years none have paid attention to what happens inside. There are no regular inspections. No requirements. No registry. The city’s Department of Buildings, overwhelmed and ineffectual, often fines the landlords, but the city does little to collect.

The system, such as it is, dooms tenants to a perpetual cycle of treatment and relapse, of shuttling between programs and three-quarter houses.

“The city knows it’s happening,” said Paulette Soltani, who works at theThree-Quarter House Tenant Organizing Project, which advocates better housing conditions. “The city is sending people to these homes, but the city is not regulating these homes.” Read more…