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Sunstone Way, the embattled homeless shelter provider, billed Multnomah County up to $3.6 million in unallowable expenses over a 18-month period.
That’s according to a remarkable letter county officials sent to Sunstone Way’s leaders on June 16, detailing allegations against the nonprofit.
In that letter, county officials say that between July 2024 and February 2026, Sunstone Way billed the county at least $3.6 million in unallowable expenses. That included $2.4 million in wages and salaries, $540,000 for fringe benefits, and $440,000 for indirect expenses associated with the nonprofit’s payroll.
The county also alleges Sunstone Way used county dollars to pay for things like entertainment for staff, including outings to Paddy’s Bar and Grill and TopGolf, alcohol, “personal staff transportation, staff meal expenses, holiday event decorations...and external fundraising activities.” Such activities may not be funded under the county’s contract agreements, county officials wrote.
Also, the county wrote that Sunstone Way had contracted with a limited liability corporation that was “controlled by an executive officer during a prior period of separation from the agency.” Such an expense, the county wrote, would have needed ”specialized documentation to confirm contractual allowability."
The county released the report to all media outlets shortly before 7 pm on Thursday. WW had raised questions about the report and filed a records request for it June 4. The county did not provide the report to WW; instead, the Homeless Services Department released it to all press on the eve of a holiday weekend.
The county’s findings are an alarming cap to a monthslong saga that’s seen one of the county’s largest homeless service providers collapse under scrutiny of its financial practices and ethics.
Sunstone Way, formerly known as All Good Northwest, is in the final stages of going out of business, which first received public attention in February when WW reported that its former finance manager had sued the nonprofit for retaliation after she questioned spending decisions. (Much of the misspending she alleged was corroborated by the county in its report.) Later that month, Sunstone Way announced it would cease operations, laying off all 175 staffers who worked at three pod villages and two homeless shelters it oversaw. The nonprofit would shutter entirely on June 30, it announced in March, citing inadequate government funding and rising costs.
This wasn’t the first of Sunstone’s troubles; it had first tangled with the county in 2022, when County Auditor Jennifer McGuirk found that the provider had overbilled the county by $525,000.
This April, McGuirk said in a damning memo first reported by WW that the county launched the nonprofit as a way to outsource its duties, then ignored her warnings that it needed safeguards to track Sunstone Way’s spending.
Last week, county officials confirmed to WW that they had paused payment for three months of expenses while they completed an ongoing review of the nonprofit’s financials.
County Chair Vega Pederson said in a statement to WW that Sunstone Way was “extremely irresponsible with the public dollars we trusted them with, and failed to meet our expectations for accountability, transparency, and responsible stewardship of public resources.” She added: “I am demanding accountability for these unacceptable practices, in addition to expanding deeper oversight that protects taxpayer dollars.”
Vega Pederson has served as county chair since January 2023.
County Commissioner Julia Brim Edwards, who is one of three candidates seeking Vega Pederson’s seat this November, said the chair should have listened to the auditor’s warnings years ago.
“The public and the Commission should not have to rely on whistleblowers to expose misuses of taxpayers’ dollars to light,” Brim-Edwards said in a statement Thursday night. “When additional allegations of misspent funds were raised, I called for greater transparency and accountability for public funds. The preliminary findings released today points to continued misuse of taxpayers’ dollars over an extended period of time.”
Nathaniel VerGow, director of the county’s Homeless Services Department, said in a statement that the report’s findings were “unacceptable.” He distanced himself from any accountability, however, noting that he was the “very recently appointed director” of the department.
“As the very recently appointed director of this department, I also want to share my commitment, and initial plans, for ensuring the egregious gaps in oversight that led to these findings do not happen again,” VerGow said. “I cannot emphasize enough that, under my leadership, I am committed to improving our oversight and ensuring that public dollars are expended per contract expectations.”
VerGow and the county’s chief financial officer, Eric Arellano, recommended county officials attempt to recoup about $1.6 million of the $3.6 million in unallowed spending.
Sunstone Way has 15 days to respond to the county’s findings, including any rebuttals.
