Whistleblower Files Lawsuit Claiming Gross Mismanagement and Waste of Public Funds at Portland Homeless Nonprofit
PORTLAND, Ore. — A former executive of one of the largest homeless service providers in Multnomah County has filed a $4.5 million lawsuit for unfair dismissal for attempting to disclose alleged gross mismanagement by top executives of the nonprofit organization.
Kate Fulton, the former financial director of Sunstone Way in Portland, alleges whistleblower retaliation in the lawsuit filed in the Multnomah County Circuit Court on Thursday. In the lawsuit, Fulton alleges gross mismanagement by top executives and a waste of public dollars.
She Became Suspicious Shortly After Starting Her Job
According to the lawsuit, Fulton began to suspect financial mismanagement soon after starting her job. She was appointed as the financial director shortly after a hotline tip uncovered overbilling by the nonprofit of Multnomah County in the amount of $525,228. This amount included $193,675 uncovered as inappropriate administrative overheads.
Source: Multnomah County Auditor tip report on unallowable Joint Office expenses / overbilling and indirect costs totals
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In the lawsuit, Fulton also claims that Goebel promoted Hovanas to chief systems officer while they were involved in a personal relationship.
The promotion came with a $20,000 to $30,000 raise, despite the fact that Hovanas was allegedly unqualified for the job. The two allegedly spent a night together, which was allegedly paid for with money from the nonprofit.
The lawsuit also claims that Hovanas instructed her to allocate $10,000 for new office furniture at the time the nonprofit was preparing for layoffs because of financial restraints.
Fulton’s suspicions grew when the nonprofit was almost financially unable to pay its employees one month into the 2024 fiscal year.
The Nonprofit was Moved to More Expensive Premises While Still Holding the Lease to its Former Offices
It was also during this time that Goebel moved the nonprofit into new premises, while there was an existing lease on its previous rental space. Sunstone Way then became liable for double rent payments amounting to $226,000.
Here are the specific dollar figures cited in the complaint as reported publicly so far:
| Allegation | Amount cited | What it refers to |
|---|---|---|
| Office move cost increase | About $20,000 per month | New office space allegedly cost more while prior lease had not expired |
| Consulting fee invoice | $10,000 | Invoice labeled consulting fee payable to Affordable Housing Initiative |
| Additional consulting fees | $20,000 | Payment cited to Narwhal Nonprofit Consulting |
| Shelter food service overbilling flagged | $210,000 | Overbilling amount cited involving Our Streets PDX |
The lawsuit alleges that new premises cost the organization about $20,000 more every month.
Further allegations by Fulton include a consulting fee payment of $30,000 under instruction from Goebel to Chris Aiosa.
Fulton alleges that Aiosa was a close personal friend of Goebel’s and was employed at the Clackamas County Department of Housing and Urban Development. Shortly after this incident, the nonprofit was awarded a contract to manage a housing complex in Clackamas County.
The third defendant named in the lawsuit is Scott Takemoto, a former Chief Financial Officer at Sunstone Way.
When Fulton was fired, she was asked to sign a non-disparagement agreement to receive a severance package. She refused.