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The agency, which is headquartered in Auburn, earlier this month settled a federal lawsuit by a former executive accusing CEO Edward Myers Hayes of subjecting her to a hostile work environment.

In March, the agency was issued a judgment for more than $225,000 in unemployment insurance contributions it owes New York state.

Additionally, the agency has been receiving letters from U.S. Sen. Chuck Grassley, of Iowa, seeking records from its Unaccompanied Children Services program. He cites "significant evidence" of risks to the safety and well-being of children in the program, which has been supported by hundreds of millions of dollars in federal funding. It is the subject of a federal lawsuit alleging harm to children as well.

The agency declined comment on these developments to Ë®¹ûÅÉAV, except to say that it is complying with Grassley's request "in good faith and diligence."

But in a Friday email to Cayuga Centers staff obtained by Ë®¹ûÅÉAV, Associate CEO Lorraine Sánchez acknowledged the agency is "managing a significant deficit" — and "at a critical time in its history."

'A shocking display of hubris'

The first lawsuit was filed in April 2024 by former Vice President of Human Resources Kathryn Nolan Graber, who said Hayes retaliated against her for investigating an age discrimination complaint against him. According to the lawsuit, the complaint came from Cayuga Centers' former Chief Operating Officer Ann Sheedy, and led to Hayes being placed on administrative leave in February 2023.

Nolan Graber was worried investigating Hayes could result in retaliation, the lawsuit said. Those worries were exacerbated by one Cayuga Centers board member saying, during a call, that the agency should investigate Hayes "quickly and internally" and shouldn't suspend him because it would "piss people off." The board member, who is not named, also mocked Sheedy's claims, the lawsuit said. 

The law firm that investigated the complaint declared it unsubstantiated that March, at which point Hayes returned to work. The lawsuit noted that Chief Financial Officer Elizabeth Palin asked the board how it would ensure he did not retaliate against her or Sheedy. But board Chair Faye Hylton "did not take the concern seriously ... and stated 'he returns with full power and authority,'" the lawsuit said.

On his first day back, and in what the lawsuit called "a shocking display of hubris," Hayes emailed Cayuga Centers executives to say the board was requiring him to "insert himself at a greater level in decision-making" after years of distancing himself from day-to-day operations. He also stripped all of them of independent decision-making authority, the lawsuit said, leaving him the only one with it.

As he consolidated power, Hayes received a 21% raise that year to $617,595, the highest salary in the agency, according to . His salary has risen 82% since 2020, when it was $339,867.

"Hayes literally and unilaterally (although, allegedly with some encouragement from the board) removed all checks and balances on, and potential obstacles to, his own power," the lawsuit said.

"He then proceeded to flex this power to the detriment of Ms. Nolan Graber."

In the following days, the lawsuit said, Hayes emailed Palin asking whether Cayuga Centers needed to continue employing Nolan Graber's husband, who was also employed there. He later emailed Nolan Graber, telling her the board asked him to begin a review of the agency's human resources staffing, which the lawsuit said was "no doubt ... intended to intimidate and threaten (her)."

On April 5, Hayes "inappropriately and viciously" blamed Nolan Graber and her department for his leave in front of hundreds of other employees at an all-staff meeting, the lawsuit said. But he refused to speak with her personally and "treated her as if she already did not exist." Much of her authority was transferred to another supervisor, and she began reporting to them instead of Hayes.

"Hayes effectively eliminated Nolan Graber while she was still present. It would be a sardonic understatement to say that 'the writing was on the wall' for Nolan Graber," the lawsuit said.

Nolan Graber then retained counsel, which was contacted on Cayuga Centers' behalf by the same firm that investigated the discrimination complaint against Hayes. Along with suggesting that was a conflict of interest, the lawsuit noted the CEO was not put on leave as a result of this new legal development. Instead, his retaliation against Nolan Graber and her husband increased, the lawsuit said. 

As that happened, Nolan Graber began to experience "extreme physical manifestations in her physical health" that required medical and psychological treatment, the lawsuit said. That July, she took time off under the Family and Medical Leave Act — during which Hayes hired her replacement. When her leave was exhausted in November, she was forced by the circumstances to resign, the lawsuit said.

Nolan Graber filed the lawsuit in U.S. District Court, Northern District of New York, seeking damages for her loss of wages and benefits, as well as pain, suffering, harm to her reputation and more.

Cayuga Centers sought to dismiss the lawsuit, but its most recent motion was denied in January. Mediation was ordered in March, and the settlement followed April 3. Its terms were not disclosed.

Nolan Graber's attorney, Kelly Magnuson of Harding Mazzotti LLP in Albany, did not respond to a request for comment by Ë®¹ûÅÉAV.

Grassley pressing Cayuga Centers for records

It was also in March that Hayes received a from Grassley, chair of the Senate's Judiciary Committee, requesting records from Cayuga Centers' Unaccompanied Children Services program. 

The program, based in New York City, provides foster care to migrant children who arrive in the U.S. without parents. According to the agency's 2023 report, the program transitional foster care to 2,966 children that year, along with long-term foster care to 78. Nationwide, the agency provided home study services to 267 unaccompanied children and post-release services to 3,524.

The program is supported by grant funding from the Department of Health and Human Services' Office of Refugee Resettlement,  $170 million for the years 2023 to 2026. On that basis, Grassley first wrote to Hayes in February, the agency "must provide an accounting to Congress and the American people for its handling of migrant children entrusted to its care." The senator cited "significant evidence that the safety and well-being of unaccompanied children has been compromised by HHS, ORR, and in some cases the contractors and grantees to whom these children were entrusted."

Grassley asked Cayuga Centers for 14 items by March 6, including a list of facilities, intra-agency communications, suspected cases of criminal activity such as human trafficking, details on its policies and procedures, and more. But Hayes apparently did not respond to the senator's liking, as he sent a second request on March 10. Failure to comply with the request, he said, would constitute obstruction. 

The safety and well-being of children in the program is the subject of the other federal lawsuit against Cayuga Centers, this one filed by the parent of a Honduran child who was there for a month in 2018. 

In the 2021 lawsuit, the parent said the agency's staff failed to account for the child's trauma and to provide adequate medical personnel, teachers and trainers to all children. Their child is further traumatized as a result, rarely speaking or showing emotion, and "very fearful" of showers. The parent also accused the agency of threatening families against sharing their stories with the media. 

"Cayuga Centers has built its business model on holding kids against the will of families," the lawsuit said. 

The lawsuit, which was filed against the U.S. government as well, was transferred to Texas Western District Court in February 2023 and remains ongoing. It seeks an unspecified amount of damages.

Judgment follows $3.8M loss

Another sign of Cayuga Centers' "significant deficit" is the March 5 judgment issued to the agency by the New York State Department of Labor. 

According to the judgment, the agency owes $227,413.62 in unemployment insurance contributions from the third and fourth quarters of 2024. The total judgment, with interest, is $233,594.48.

It is the first such judgment against the agency since 2008, when it was found that September to owe the state $19,248.88. The agency satisfied that judgment two weeks later.

According to the agency's , it lost about $3.8 million in 2023. Total revenue was $145 million ($107 in contributions and grants), and total expenses were $149 million.