Thurston County suspends contract with Community Action Council after auditor’s report
Thurston County suspended its contracts with the Community Action Council of Lewis, Mason and Thurston Counties on Thursday, citing suspected fraud in its rental assistance payments.
CAC is the regional non-profit that has been dispersing rental and utility assistance during the COVID-19 pandemic. The county has been passing federal and state funds to CAC to support these services.
During a Wednesday executive session, the Board of County Commissioners voted to authorize County Manager Ramiro Chavez to suspend the contracts, according to a Thursday news release.
Chavez notified CAC Thursday, per the release, and the county has reported the suspected fraud to the Washington state Auditor’s Office. With this move, the county hopes to determine the extent of the potential fraud and recover funds.
Following the county’s announcement, CAC released a response calling the county’s accusations “inaccurate and defaming.”
“The irreparable harm done by this mis-portrayal of our operations and the decision of contract suspension jeopardizes our organization’s ability to provide services to clients and harms vulnerable community members who are eligible for this critical funding,” CAC’s response says.
The county Auditor’s Office discovered a sample of four applications suspected of fraud totaling more than $86,000 during regular subrecipient monitoring, the county’s release says. CAC also has paused work on two other applications while it requests more information.
“We have strong internal controls that caught these questioned payments in the course of regular subrecipient monitoring,” said Thurston County Auditor Mary Hall in the release. “This is an example of the audit process working.”
The release notes Hall chairs the county’s Internal Audit Committee. Other members include Chavez and County Treasurer Jeff Gadman.
“We take fraud seriously,” Gadman said. “Protecting public resources is the highest priority for Thurston County and is why we develop robust internal controls.”
Chavez acknowledged the suspensions may disrupt the flow of assistance funds to residents in need.
“While this may cause a brief delay in rental and utility assistance funds for our community members, we are working as quickly as we can to have a system in place to continue to provide services to those in need,” he said.
CAC says the suspension puts about 1,269 eligible households at risk of eviction and impedes their ability to spend about $8 million in remaining funds.
As the rent assistance organization for Thurston County, CAC says the suspensions also froze their implementation of the Eviction Resolution Pilot Program.
This legislated program created by Senate Bill 5160 connects tenants and landlords with trained mediators so they can resolve rent disputes before resorting to evictions.
CAC says they continue to uphold “ethics, professionalism and transparency” in distributing funding to the community. Despite their disagreement with the county, CAC says they intend to continue working with them to resolve the situation.
The auditing process and suspected fraud
The Community Action Council publicly shared documents detailing their interactions with the county prior to the suspension. It includes a letter from Thurston County Internal Auditor Brandon Weber and a report detailing the conclusions of its subrecipient monitoring.
In summary, the report concludes CAC’s Emergency Rental Assistance Programs are “generally operating in accordance with state and federal guidelines.”
However, the reports also include scenarios of suspected fraud and recommendations for ways to enhance fraud prevention procedures and internal controls.
During the December review period, the county found six out of 14 sampled applications raised “red flags,” according to the report. Two of the six applications had been placed on hold by CAC “pending requests for more information.”
The report identifies five scenarios suspected of fraudulent payments:
- One check was mailed to an address provided by a landlord. However, the resident who lived there did not know the payee and returned the check.
- One payment was sent to an address where the renter and landlord indicated they lived in different units of a duplex. However, the Assessor’s website indicated the property address was a manufactured home without separate units.
- One payment was sent to a house that was rented in 2020, yet the Assessor’s website indicated the home was not built until 2021. Additionally, this landlord previously received payments from other rental assistance applications.
- One payment was made for a property address that could not be located on the County Assessor’s website or an internet search.
- One payment was made to a landlord who did not have a documented connection to the property. Also, the applicant had no income and did not request utilities or any other housing assistance. Furthermore, the applicant’s lease was from 2016 and there was no other documentation that tied the applicant to the address.
The county’s report indicates they informed the Community Action Council of these red flags but had not received additional information by an exit meeting on Jan. 4 or at the time of the Jan. 24 letter.
Despite these instances of suspected fraud being included in the county’s report, CAC claims in their response that “no findings of fraud or suspected fraud” were made.
After additional research, CAC claims they determined no payments were made to anyone without proper eligibility documentation.
Furthermore, CAC took issue with the county’s recommendations. In a Feb. 14 letter, CAC Chief Executive Officer Kristen York said each recommendation contradicted previous guidance and assistance from Thurston County staff, including their county program manager.
As a result, York asked the county to agree on all policy changes at the county-level and put them in a written contract amendment for the sake of clarity and transparency.
In response to their request, CAC says the county suspended its contracts with no advance notice and no plan to continue services to households in need.
