‘Throwaway kids’: Allegations of human trafficking, mistreatment at Ont. group home chain

Cassidy Franck stares into her cellphone camera, eyes exhausted, unblinking.

The screams of an 11-year-old girl being violently restrained echo in the background of the video.

For months in early 2021, this was her life inside a group home for girls run by Hatts Off – a for-profit company that is the second-largest operator of group homes for youth in Ontario.

Located on the outskirts of Hamilton, the house she was assigned to was a hostile environment that consisted of harsh physical restraints, few or no activities, and awful food, according to Franck. One former worker said when they worked a shift at the home, all they saw in the fridge were “a couple of carrots and three chicken fingers in a box.”

“We were all scared,” Franck said. “The girls felt that nobody cared.”

So when a staff member at the group home offered her the chance to live with her in her downtown Hamilton apartment, Franck jumped at the opportunity.

“I wanted out, and this is my only way,” she said.

Weeks after moving, detectives with Hamilton Police Service’s human trafficking division would rescue her from the apartment, according to Franck. She described it as a drug den, with older men coming and going.

Franck’s harrowing allegations are part of a shocking portrait of what some kids face inside Ontario’s child-welfare system, which had more than 12,000 kids — 17 years old or younger — in its care, according to the latest data from 2019. These homes take in children and youth who’ve experienced abuse, have complex mental health needs or, in some cases, are orphaned.

A months-long investigation into Hatts Off spoke with 70 staff and youth who have worked or lived at the homes. Global News combed through hundreds of pages of ministry inspections, analyzed four years’ worth of missing-kids reports, traced the financial roots of 60 properties and obtained a secret government draft report flagging issues at the company years ago.

The findings were bleak: allegations of human trafficking that went ignored, underqualified staff and violent physical restraints that could involve a worker pinning a child to the ground.

Of the 70 people interviewed, 23 raised concerns about the physical condition of the company’s homes, 19 brought up the quality of the food served to youth and another 17 expressed concerns over a lack of outings and activities.

Workers said conditions varied significantly across Hatts Off’s vast operations, which span nearly 40 group and foster homes. Some locations felt “family-like,” with hearty home-cooked meals, holiday decorations and staff who attended parent-teacher meetings. Others reported seeing little food in the fridge and staff members who spent much of their time surfing on their phones, according to former workers.

Among the more heartbreaking allegations were those of a staff member holding a girl on the floor over pieces of broken glass and another spitting at a child’s face as he was restrained.

At one home in the Hamilton area, an autistic boy was contained with such force that his head left an imprint in the drywall, according to two former staff members who say they witnessed the incident.

Hatts Off is one of nearly a hundred Ontario companies that profit from caring for kids.

The company receives a publicly funded per-diem rate for each child in its group homes. According to documents obtained by Global News, rates varied between $240 and $360 a day, though workers say kids who had higher needs could fetch upwards of $1,000 daily.

Despite the substantial sums of money flowing from public coffers, Hatts Off paid minimum wage or slightly above, according to current and former workers. The company said that as of October 2022, “no group home employee in Ontario would make less than $19.50,” which includes a $3-an-hour pandemic pay bump provided by the government that was made permanent in April.

Low salaries made attracting top talent difficult, former employees said. The company would hire workers straight out of school or with no prior training in child and youth care, according to former staff. Among those working with vulnerable youth: employees who previously had jobs in hair styling, car sales and even international students.

The consequence: kids received inadequate care to help them deal with trauma or complex behavioural issues, according to staff and youth.

“These are throwaway kids that many people, in a general sense,  just don’t care about,” said Grant Charles, an associate professor with the School of Social Work at the University of British Columbia. Ontario’s child-welfare system, according to Charles, has moved “past the point of no repair.”

“We’re dealing with often some of the most difficult kids in terms of behaviour, and we’re funding them the least,” Charles said.

“It’s a system that’s not working.”

Hatts Off declined repeated requests for an interview.

In a written response to a lengthy list of questions, the company’s chief operating officer, Bronwyn Naylor – daughter of the company’s founder, Gordon Naylor – stated that many of the allegations shared by Global News “are not consistent with our documentation” and that the company cannot “comment on the specifics of any one case,” citing confidentiality reasons.

To protect the children’s privacy, Global News is not disclosing the locations of Hatts Off’s homes.

On Manitoulin Island, living in the small community of Gore Bay, Franck is calm, poised. She is now 17.

Shoulder-length blond hair rests on her favourite grey sweatshirt, hands crossed on her knee.

The bucolic town, where deer slowly wander the residential streets at sunrise, is a stark change from her previous group-home life hours away in southern Ontario.

“I think of it as a movie,” Franck said, a nervous smile breaking through her quiet demeanour. “I can’t find a way to make sense of it.”

In May 2021, Franck had escaped the “toxic” group home and had just arrived at the ground-floor apartment that belonged to Shadia Yusuf, who was hired by Hatts Off without training, in downtown Hamilton.

Within minutes of arriving at Yusuf’s home, Franck felt something was off. She alleged Yusuf demanded that she sell drugs.

“We show up at this random apartment, and this old dude comes out. (Yusuf) hands me this bag of white crystal stuff,” said Franck, who believes it was crack cocaine.

“She tells me to go sell it,” she recalled. “‘Go get my $200.’”

Later that same day, Franck said she watched as Yusuf was rushed to hospital after “tripping out” from ingesting too many magic mushrooms.

Franck said she had trusted Yusuf. After all, she was hired by a group home that the government licensed and that had been selected by her children’s aid worker.

“I got my hopes up so high,” she said, adding there was the promise of help finding a job working with cars and a permanent escape from group-home life.

As she was 16 at the time, Franck said she needed permission from a Hatts Off supervisor and her children’s aid worker to move into Yusuf’s apartment, which was granted.

Now alone in the apartment, Franck said things spiralled further out of control.

Strange men would visit the apartment, cook crack cocaine and warn her she could be sold for sex, she said.

“I was freaking out. I was like, ‘OK, like, what do I do?’” Franck recalled.

In its response to questions from Global News, Hatts Off said it hires qualified staff and all of its employees undergo “rigorous background checks,” and all partake in “intensive training and continued education” once on the job. Hatts Off also said it pairs less experienced employees with more experienced staff to ensure they are trained properly without resident care being affected.

In a short phone interview with Global News, Yusuf confirmed Franck lived in her apartment for a brief period but denied any connection or knowledge of how to traffic women, selling or consuming drugs. She also denied that drug use led to her hospitalization, saying instead that followed a “breakdown” from too much stress.

Two weeks after Franck moved into the apartment, she said undercover detectives with the Hamilton Police Service’s human-trafficking division knocked on the door.

“They gave me a card. It was for a (beauty) salon, but it had their number on it,” she said.

When she was alone, she made the call, Franck said.

Officers would later drive her seven hours back to her mother on Manitoulin Island, she said.

No charges were laid, police said.

On July 2, 2021, only weeks after Franck said she was rescued, Hatts Off sent an email to staff stating it was closing the children’s residence where she lived. The company said it was “due to staffing shortages related to the pandemic and the remote location of the program.”

Hatts Off still operates nine other youth group homes across southern Ontario.

In an email to Global News, the company said staff can’t legally stop a child from leaving.

“Some of these (care) agreements, which we are bound by the CAS to adhere to, may allow the individual to sign themselves in and out of care on their own volition,” Hatts Off COO Naylor said.

She would not say whether Yusuf was fired – but said more generally that “in any case where staff have failed to protect a child or youth, their employment is immediately terminated.” Yusuf said she quit.

Trafficking wasn’t only a problem at the home where Franck was living, it was allegedly happening elsewhere.

Staff who previously worked at another Hatts Off group home between 2010 and 2020 in the Kitchener-Waterloo area said strangers would pick up girls in the middle of the night. Some of them were as young as 12, according to staff.

The same cars would often be seen waiting in front of the homes, said staff, who would hurriedly write down licence plates and descriptions of the vehicles and drivers to keep track of them.

“Group homes and residential treatment centres are magnets for exploiters,” said Charles, who has closely studied the child-welfare system and at-risk youth.

Girls who’ve experienced sexual abuse or other trauma make easy targets, he said.

“There’s a vulnerability there, a promise made to these young people often that life will get better,” Charles said. “The exploiter, the pimp will give them the love that they want and the connection that they want. Everything they want.”

A former worker, whom Global News is not identifying for fear of reprisal, described an insidious cycle where one girl would recruit another.

The new arrival – still in contact with a suspected trafficker – would entice other girls to leave at night by promising money or an escape from the group home.

“She’s fresh off the streets.… That’s all it takes for the whole thing to come falling apart,” the worker said.

“When (the girls) come back with needle holes in their arms, that makes it even worse.”

Runaway kids are an unfortunate reality in group homes. But the frequency at Hatts Off homes shocked staff.

“It’s an overt cry for help,” said another worker, whom Global News isn’t identifying as they still work in the child-welfare sector.

Hatts Off filed 1,170 incident reports for kids who went missing or absent from a home between January 2017 and December 2020. The data, filed to the province, was obtained by Global News through a freedom of information request.

That number of reports is the highest in the province and the fifth-highest per bed.

One of Hatts Off’s group homes in Kitchener submitted 397 reports of missing youth, the most reports in Ontario on a per-bed basis.

The group home where Franck once lived filed 183 such reports in that same four-year period.

“It’s as if they’re saying, ‘I don’t want to be here,’” the former worker said.

Hatts Off said that missing-kids reports are filed for a number of reasons, including when a child is late for curfew. The company added that “human trafficking victims often played a role.”

“Despite a massive effort to train staff on treating human trafficking victims and developing safety plans in collaboration with police and other community resources, Ministry policy ultimately makes it impossible to prevent a child or youth from leaving our homes,” Naylor said.

Hatts Off also said staff made every effort to keep residents safe by passing information to the police and going to locations where they believed residents were to attempt to bring them home. Hatts Off added that if human trafficking is suspected, it conducts a thorough investigation and notifies the children’s aid society and the ministry.

But when workers reported trafficking concerns, they say little was done.

“It makes me feel sick,” the same former staff member said. “Our concerns – it was almost as if they were falling on deaf ears.”

The former staff member said she contacted Hatts Off management, police, various children’s aid societies, the ombudsman – even the Ministry of Children, Community and Social Services.

The responsibility for investigating complaints gets caught in a tangled web of group-home operators, children’s aid societies, police and the province.

Experts say this reveals significant gaps in oversight.

The Ministry of Children, Community and Social Services declined to respond to questions about trafficking in group homes. London, Waterloo, Hamilton and Toronto children’s aid societies also sidestepped queries from Global News.

“We are reviewing these allegations through our internal review process,” a spokesperson for the Children’s Aid Society of Toronto said.

Hatts Off has been a key player in Ontario’s child-welfare system for more than four decades.

Gordon Naylor and his wife Ellen founded the company in 1985 with a single, four-bed group home.

Global News has learned that a related company, Hatts Off Specialized Services, filed for bankruptcy in 2013 with $8.7 million in total debt, which included close to $3 million owed to the Canada Revenue Agency for unpaid employees’ income tax, Canada Pension Plan and Employment Insurance contributions.

A few years prior, the Naylor family incorporated another company, Hatts Off Inc., and began applying for foster and group-home licences under the new name. The company operates nine children’s residences and has at least 16 foster homes as of Oct. 2, 2022, according to data obtained through a freedom of information request. Hatts Off also cares for adults in 34 different residences.

And as the business grew over the decades, so did the Naylors’ wealth and real-estate portfolio.

Referencing property records, tax assessments and market-value estimates, Global News gauged the residential properties used by Hatts Off as foster, mentor or group homes for youth or adults to be worth $26.7 million. The properties are owned by members of the Naylor family or two companies linked to the family, Naylor Nine Holdings Limited and ECN Inc.

“They buy all the homes, and then they just put the kids there,” said a former staff member. “Buying as many homes as you can, letting the value increase over the years – it’s really just about real estate.”

When asked to respond to questions about its real estate, Hatts Off pushed back, saying it was “nearly impossible to find landlords willing to rent properties to be used as group homes.”

“The only practical way to open programs to serve vulnerable and underserved populations has been to purchase homes, often through personal debt, and to rent those homes to Hatts Off,” Naylor, Hatts Off COO, wrote in response to Global News’s written questions.

The Naylor family – Gordon and four of his children who have ties to Hatts Off, or companies linked to them – owns another $28.2 million in real-estate holdings.

Among them are a waterfront vacation home in the Florida Keys owned by Gordon Naylor that’s valued at $1.76 million and a lodge and event space in Ontario’s Simcoe region valued at $3.3 million.

“We will not be commenting on the value of the Naylor family’s private real estate assets, as there are multiple private sources of income that have no relation to Hatts Off,” Naylor said.

Tisheena Burnette lived in a Hatts Off group home outside Brantford, Ont., when she was 12.

Twelve years later, she said she grapples with both emotional and physical scars from her time there.

She said the marks above her knee and on her arm are constant reminders of a restraint by workers, where she said she was pinned down on top of a broken mason jar for refusing to go to her room.

“It shattered and (staff) dropped me in the glass,” she said. “You can’t really breathe. You’re in hysterics.”

Hatts Off says physical restraints are only used as a last resort when the safety of a child or other person is at immediate risk and after “lesser intrusive measures – like de-escalation techniques – have been attempted.”

Burnette said money was always at the centre of her care – and it was always scarce.

Whether it was little food in the fridge or no activities, she said Hatts Off tried to save money everywhere it could. She said she slept on a mattress with springs sticking out.

“They put the least amount of money into groceries, into clothing … and then they pocket the rest,” she said.

“It’s sickening.”

Ministry inspection reports echoed these concerns.

In 2020, ministry inspectors found that, for a time, kids were eating meals that relied on food donations from a local church.

One girl said her bed was uncomfortable and her bedding was “disgusting,” so she got a new sheet by “dumpster diving” at another of the company’s group homes, according to the inspector’s report.

In response to questions about the inspection reports, Hatts Off said the church donations have ended, the youth in question was provided with new bedding and towels, and takes issue with the allegation about dumpster diving.

“Despite inadequate government funded per-diems, our budgets provide separate allowances for food, travel, and clothing, each of which are equal to or exceed what an average Canadian household of comparable size would spend,” Naylor said. It would not specify what source it was referring to.

Shortly before publication, Global News also received an unsolicited email from Hatts Off containing roughly 40 letters of endorsement from workers, written at the request of Hatts Off’s CEO, Gordon Naylor. Approximately half were anonymous.

The letters provided a drastically different view of life at their facilities.

They described dedicated workers planning special Christmas events for kids in their care and trips to Toronto Blue Jays games or Niagara Falls.

Many of the letters said Hatts Off spared no expense for the kids in its care. Some employees sent letters with their names attached, but Hatts Off would not make some of the current or former employees available for an interview and verification.

“Everyone can see firsthand that the clients are not underfed, lack clothing, nor are the houses in disrepair,” wrote Kim Milani, a manager with 29 years of experience at Hatts Off.

Some staff also pushed back against “distressing allegations” of human trafficking.

“I do know there was a program that housed victims who had been involved in human trafficking,” wrote Jay Wilson. “I am also aware that (the) regional police services worked closely with the staff at that program and expressed nothing but gratitude for the work the staff there did.”

Another former youth who lived at Hatts Off roughly 17 years ago contacted Global News to speak about the success of the company in caring for some of the “hardest cases.”

“I have lived in six well-known group-homes throughout the province and have lived with hundreds of kids over the years, and the numbers don’t lie,” said Roxanne Williams. “Hatts Off has more success stories than any place I have lived.”

Ontario isn’t alone: Child-welfare systems across the country are in a state of crisis.

B.C., Alberta and Manitoba are facing urgent calls for governments to confront glaring problems in foster and group homes that disproportionately affect kids who are Indigenous and black.

Ontario’s Ministry of Children, Community and Social Services declined to answer a detailed list of questions for this story.

A spokesperson said the province is working on redesigning child welfare to improve “oversight and compliance mechanisms for residential licensees who are responsible for providing children and youth with the quality of care they deserve.”

New regulatory changes are scheduled to take effect in Ontario in July 2023. They will require new hires to have a degree, diploma or certificate in a relevant field or experience and skills relevant to their duties. The changes stop short of calling for a degree or diploma in child and youth care, specifically.

But experts say the glacial pace at which changes are being implemented is reflective of the fact the children caught up in the child-welfare system are “almost invisible at a political level.”

“Only when something goes wrong, and there’s an inquiry does the government start to pay attention, but that often doesn’t last long,” said Charles, a professor who has studied both Ontario’s and other provinces’ child-welfare systems.

Back in Gore Bay on Manitoulin Island, Franck spends her time long-boarding next to the town’s marina, where a cool wind blows in off Lake Huron’s North Channel.

She is finishing high school and said she’s planning to apply to college to become a personal support worker in long-term care, like her mother.

Despite her tranquil surroundings, Franck said she still has nightmares where she hears the piercing screams of the 11-year-old.

Asked about what she wanted the government to do about Hatts Off, she had three words: “Shut it down.”

—with files from Mikail Malik

Update: Since publication, Global News has received new data through a freedom of information request showing that Hatts Off operates at least 16 foster homes as of Oct. 2, 2022, not 24 as previously reported. The document also indicates Hatts Off has adults placed in 34 different residences. The story has been updated to reflect the new details.

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