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News / Northwest

Where did the money go? Tacoma LGBTQ center sues county AIDS agency over missing $200K

By Becca Most, The News Tribune
Published: October 12, 2023, 7:25am

TACOMA — An LGBTQ youth center in Tacoma has filed a lawsuit against Pierce County AIDS Foundation, alleging PCAF misappropriated more than $200,000 from the nonprofit in a breach of contract.

The Oasis Youth Center is a community organization that serves about 430 LGBTQ youth in Tacoma and served over 1,000 pre-pandemic. Oasis offers weekly youth programs, advocacy work, mental health and housing referrals, emergency financial assistance and peer and adult support, among other services, according to its website.

The lawsuit filed Monday in Pierce County Superior Court comes on the heels of the Washington Department of Health last week canceling two contracts with PCAF, citing financial and administrative issues. A week prior The News Tribune reported that PCAF placed its CEO on paid administrative leave “as the Board conducts an inquiry into personnel matters.”

In August The News Tribune reported PCAF was having issues receiving funding from the Department of Heath for a variety of services it offers to residents living with HIV/AIDS in the South Sound region. Later that month four employees told The News Tribune they believe they were fired in retaliation for expressing concerns about financial mismanagement and a toxic workplace to nonprofit leadership and PCAF’s board.

“Oasis Youth Center is deeply heartbroken to learn that our now-former fiscal sponsor, PCAF, used nearly all of our reserve funds, currently believed to be at least $200,000, without our authorization or knowledge to cover its own expenses,” Oasis executive director Matthew Wilson told The News Tribune in an email Wednesday. “These actions directly breach the 2013 Fiscal Sponsorship Agreement between Oasis and PCAF, in which PCAF agreed to hold Oasis’s funds separately and use them solely for Oasis’s benefit. We are currently attempting to conduct an outside audit of the final amount that has gone missing.”

Wilson said as LGBTQ+ youth continue to “face attacks on their humanity and access to services,” Oasis’s work is “essential to making Pierce County safer for LGBTQ+ youth.” He said Wednesday Oasis is still open.

In an email to Oasis supporters Monday obtained by The News Tribune, Wilson said Oasis founded an independent nonprofit Sept. 22 and has been talking with a few community foundations to provide bridge funding to “help stabilize our finances.”

“In the future, we will need to embark on a community fundraising drive to sustain our services and support to queer and questioning youth,” Wilson wrote.

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PCAF’s interim director jill frey, who signs her name in lowercase letters due to personal preference, told The News Tribune Wednesday that former CEO Ace Robinson was on paid administrative leave and she could not comment further on any administrative or legal issues.

“Over the years we have enjoyed a cooperative and collaborative relationship with Oasis,” frey said. “We deeply respect their mission, programming and services and the impact that they have on our community.”

frey said it has been an honor for PCAF to serve as Oasis’ fiscal sponsor, “and we wish them much success as an independent nonprofit.”

Oasis alleges money went to fill PCAF shortfalls

According to the lawsuit, Oasis alleges PCAF breached its contract by using Oasis’s funds for purposes other than for the benefit of Oasis and its mission, instead “appropriating the funds to itself.”

Upon terminating the contract, Oasis said PCAF failed to turn over all Oasis’ funds and also failed to transfer all the records supporting the receipt and disbursement of funds PCAF made on Oasis’s behalf while serving as its fiscal sponsor. That resulted in actual and punitive damages to Oasis “in an amount to be proven at trial,” according to the lawsuit.

Oasis alleges breach of contract, misappropriation of assets, breach of fiduciary duties, violation of the Washington Criminal Profiteering Act as well as accounting misappropriations. The organization also asked for a temporary restraining order and injunctions restricting PCAF from acting on Oasis’s behalf and accessing or retaining control of Oasis’s assets, according to the lawsuit.

“Oasis has a well-grounded fear that if PCAF is not restrained in a manner consistent with this Motion, it will continue to misappropriate Oasis’s funds,” the organization said in a motion for temporary restraining order filed in Pierce County Superior Court on Monday.

PCAF became Oasis’s fiscal sponsor in June 2013, according to the lawsuit. Under that agreement Oasis operated as a quasi-independent agency, and PCAF agreed to provide a variety of services including financial management, administrative assistance, compliance and risk management as well as some fundraising oversight, the suit said.

PCAF was responsible for retaining control of Oasis funds, but Oasis’s budget was to be “an independent organizational budget, not connected with PCAF’s agency budget,” according to the Fiscal Sponsorship Agreement included in the lawsuit filings.

The IRS required PCAF to “exercise control over the financial resources it receives on behalf of Oasis” and “ensure that funds are spent only for the purposes for which they are given,” the lawsuit said. Under the agreement, Oasis agreed to pay PCAF a percentage of its annual revenue sufficient to cover the costs of PCAF administrative support.

In September, Wilson notified Robinson that Oasis would likely be terminating the Fiscal Sponsorship Agreement after having “significant concerns about PCAF’s management of Oasis’s funds,” including concerns on whether PCAF had breached the contract, according to the lawsuit. Wilson later learned PCAF might have opened a new bank account for Oasis without authorization from Oasis or PCAF’s Board of Directors, the suit said.

Oasis alleges PCAF did not honor its requests to provide an accounting of Oasis’s funds, deliver a check for the full amount of Oasis’s funds or transfer any funds held in a bank account opened in its name by Sept. 25.

During a joint meeting Sept. 26 with PCAF and Oasis — a meeting which Oasis claims Robinson declined to participate in — PCAF allegedly “acknowledged that Robinson ignored advice from PCAF employees earlier in the year to freeze hiring and implement cost cutting measures, and instead chose to fill the funding shortfall with Oasis’s funds … processing payments outside of PCAF’s finance workflow, creating risks for the organization,” according to the lawsuit.

PCAF paid Oasis $100,000, but Oasis alleges in the suit “if PCAF had abided by the duties it accepted in the Agreement, it should have been able to write a check immediately for the full amount owed to Oasis (i.e. more than $300,000).”

Upon learning the state Department of Health terminated two funding contracts with PCAF earlier this month, Oasis said in the lawsuit “on information and belief, it is unlikely that PCAF will be able to continue operations in the absence of these funds.”

PCAF board president Will Wayburn previously told The News Tribune the Department of Health is one of PCAF’s main funders.

Concern about impacts on local LGBTQ community

Pat McIntyre, founder and co-chair of nonprofit group Tacoma Older LGBT, said she couldn’t speak on behalf of her organization but said personally she’s been “just kind of in shock about all this.”

“We work with the older LGBT and there are people living with HIV AIDS still to this day from back in the ‘80s and ‘70s. So, yeah, it definitely will have an impact on the whole community,” she said. “That just hit me like a lead balloon.”

McIntyre said Tacoma Older LGBT would sometimes collaborate with PCAF and use its facilities for meetings and social events pre-pandemic. McIntyre said PCAF has always had a reputation for being welcoming and doing good work in the community.

“I’m very glad that jill frey is at least acting as interim director, because she’s been around for a long time and very trustworthy,” she said. “Hopefully they can turn that around.”