SPOKANE COUNTY, Wash. — Two Spokane City Council members are calling for a criminal investigation into the Housing and Homeless system after the council members reportedly received information about potential fraud. Additionally, the Guardians Foundation is conducting an internal investigation into a former employee who allegedly embezzled money.
According to a press release, the Spokane city administration recently informed several city council members of a possible financial fraud within the city-funded homeless service provider network, later determined to be the Guardians Foundation.
Council members Lori Kinnear and Karen Stratton are calling for an immediate criminal investigation due to the nature of the potential fraud.
“The administration has known about this information and apparently has a copy of the police report,” Stratton said in a written statement. “Before going any further, Council needs to see the police report to formulate our next course of action.”
Council members reportedly began receiving information on late Friday and additional information on Monday morning. According to the city, council members have heard varying amounts of potential fraud ranging from $100,000 to $1 million.
“Because of different funding sources, this could potentially become a federal investigation,” Council Member Kinnear said in a written statement. “This is why we’re adamant about receiving information via a criminal investigation. The City of Spokane is already in a fragile homeless situation; to add fraudulent activity weakens our progression and frankly is unacceptable.”
Guardians Foundation CEO Mike Shaw told KREM 2 they are currently conducting an internal investigation into a former employee for potentially mishandling funds. He added the investigation started based on information discovered during an internal audit.
The investigation has shown that some monies were transferred into personal accounts," Shaw said. "It was enough to make me decide that I needed to file criminal charges."
Shaw said the amount of money taken by the former employee is "significant," but is not close to what city council previously estimated.
Julie Humphreys with the Spokane Police Department told KREM 2 that someone affiliated with the Guardians Foundation called Crime Check on Sept. 29. SPD said they do not know what was discussed in that Crime Check report, but they are initiating an investigation.
Shaw said he has been in briefings with the city and the mayor was in an executive session.
Council member Michael Cathcart sent KREM 2 the following statement regarding the investigation:
I was just notified early Saturday morning of what’s going on. I’m expecting an executive session today with admin and council to discuss. There is a forensic audit underway and is supposed to conclude by 10/31. We need to hold anyone and everyone accountable who may be absconding with any tax payer dollars and in this case it’s potentially even more egregious in that these dollars are earmarked to providing services to those dealing with homelessness.
City spokesperson Kirstin Davis issued the following statement on behalf of Mayor Woodward regarding the investigation:
The Guardians Foundation has notified the City that it filed a police report about concerns with an employee’s handling of funds within the organization. Mayor Nadine Woodward has ordered an internal audit of invoices submitted to the City by the Guardians and payments made to the organization. That fact-finding inquiry is underway and the City will provide any evidence of irregularities to law enforcement. Any additional comment will come once the fact-finding process is complete.
KREM 2 reached out to the Spokane County Sheriff's Office, Council Member Betsy Wilkerson, Council President Breann Beggs, Council member Kinnear and Council member Stratton and the Spokane Regional Emergency Communications for comment. KREM 2 has not yet received a response.
This is a developing story. Check back for updates.
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