Palm Springs LGBTQ+ group's CEO accused of stealing nearly $1 million in public funds

The CEO of an LGBTQ+ organization in Palm Springs, Calif., has been charged with stealing $940,000 from the city, Riverside County, and other entities.

A Riverside County grand jury indicted Queer Works CEO Jacob Rostovsky on 53 felony counts, which include grand theft, misappropriation of public funds, insurance fraud, perjury, and money laundering, the Desert Sun reports. The indictment came down a week ago and was announced by the Riverside County District Attorney’s Office Wednesday. Rostovsky has posted $944,000 bail and pleaded not guilty to all charges.

Rostovsky is the founder of Queer Works, established to provide mental health services to transgender and nonbinary people in Palm Springs and the surrounding area. The city and region, located in the Southern California desert, have a large LGBTQ+ population.

“In March 2022, the City of Palm Springs agreed to provide Queer Works with $200,000 to develop a universal basic income pilot program,” says a press release from DA Mike Hestrin’s office. “In July 2022, the Palm Springs City Council approved a request for an additional $500,000 in matching funds for a universal basic income grant that Queer Works intended to pursue with the State of California. The universal basic income program was supposed to provide 180 participants with monthly stipends of $800.” Riverside County also provided funds. Early reporting indicated the universal basic income program would focus on trans residents.

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But some of the funds went into Rostovsky’s personal checking account, according to the DA. The investigation by the DA’s office found 89 instances in which Rostovsky made false statements and submitted forged documents to the county government and the city of Palm Springs to obtain more than $840,000 in all, funds that were supposed to go to the basic income program and housing assistance. Rostovsky used some of this money for personal expenses, including purchases at Disney, Burberry, and the Beverly Garland Hotel in Los Angeles, the DA alleges.

He collected another $90,000 “by impersonating a Queer Works client and filing a fraudulent insurance claim against Queer Works” and “then negotiated a settlement with Queer Works’ insurance carrier, Philadelphia Insurance, the proceeds of which were ultimately directed to Rostovsky himself,” the press release says. Further, he “engaged in multiple acts of money laundering in relation to the allegedly ill-gotten funds,” according to the DA.

The Palm Springs city government released a statement on the charges. “The City of Palm Springs fully supports the Riverside County District Attorney’s efforts in investigating and indicting Mr. Jacob Rostovsky for allegedly defrauding the taxpayers of our city, our county and state out of hundreds of thousands of dollars,” it reads. “The 53-felony count indictment includes fraud, grand theft, and misappropriation of public funds. While the City recognizes that all criminal defendants are presumed innocent until proven otherwise, we are deeply concerned by these charges, particularly the misuse of taxpayer dollars, and will cooperate fully with the investigation to ensure accountability.

“While the indictment includes allegations involving various government entities, including Riverside County and the State of California, we recognize that six of the felony counts explicitly refer to the City of Palm Springs’ Universal Basic Income Pilot Program. The City is committed to ensuring full accountability for public funds and has already taken significant steps to prevent such incidents from occurring in the future.”

These steps include eliminating lump-sum payments when grants exceed $75,000; requiring independent audits of groups that receive grants of this size; mandating regular reporting from organizations that receive city funds; improving the vetting process; designating oversight from city staffers; and providing training for these staffers.

Also, the California Department of Public Health agreed last year to a $500,000 grant to Queer Works for gender-affirming care, the Desert Sun reports. It disbursed about $150,000 of the grant in February but cut off further funding and ended the grant agreement this summer upon learning of the Riverside County investigation. It appears so far that none of the money was misused, but the department is determining whether additional actions are needed.