Thurston County’s attempt to recover $667,990 lost to pandemic fraud has spilled into its latest housing budget talks, as county officials deliberate more cautiously over new contracts with the Community Action Council of Lewis, Mason and Thurston Counties (CACLMT), in light of its ties to a fraud case that resulted in a historic federal repayment demand.
The county has been tagged as the “first county-level and largest in the nation” to be required to repay federal COVID-era assistance funds due to confirmed fraud.
The officials, described by Commissioner Emily Clouse as “stewards of public funds,” made clear that preventing repeat fraud-related losses must shape future contracting decisions.
During the Thurston County Board of County Commissioners’ (BoCC) check-in session on Wednesday, April 23, the board reviewed three funding proposals brought forward by the Regional Housing Council (RHC). The proposals totaled more than $400,000.
The recommendations included $72,700 to support individuals facing housing instability, $328,000 for the Eviction Prevention Rent Assistance Program targeting single adults, seniors and veterans, and $5,000 for diversity, equity and inclusion training.
County Manager Leonard Hernandez immediately flagged the item, revealing when the RHC recommended funding CACLMT again, staff believed it necessary to remind the board about the ongoing recovery of county funds.
“We are working still with the Community Action Council on recuperating the dollars that the county had to pay back,” Hernandez said.
He explained the Prosecuting Attorney’s Office (PAO) is involved because, under CACLMT’s original agreement to become a subrecipient, Thurston County was named as an additional insured party.
According to Hernandez, the county recently received a letter from CACLMT’s insurance carrier stating it does not believe the county’s insurance coverage is triggered by CACLMT’s actions. Because of this, the county’s legal team is reviewing the situation.
“We’re working that through, probably look to have a more detailed briefing once the PAO can take a look at that letter in detail and come advise the board in an executive session,” Hernandez added.
According to check-in meeting packet, the proposals came out of a January 2025 Request for Proposals from Public Health and Social Services (PHSS). The Homeless Services Advisory Board vetted the applications before the RHC approved them on April 9.
Tom Webster, Senior Program Manager in the Office of Housing and Homeless Prevention, said staff are now preparing contracts for board approval at the June 17 meeting.
“We wanted to kind of get your input now at this point. So, if the direction is kind of there's hesitation or reluctance move forward with CAC, it's helpful for us to move know that now so we can allocate those funds to other agencies or and find another provider for the single adult we're in the system population,” Webster said.
Commissioner Carolina Mejia inquired whether the county’s internal auditor had reassessed CACLMT’s “high-risk” tagging.
“I’ll just be very honest, I do have a lot of hesitance with moving forward with these. … I have a lot of concerns. … This was rated as a high-risk organization just by everything that happened. The auditor and the internal auditor put it in that category,” she stated.
Recalling prior negotiations, BoCC Chair Tye Menser said confusion had emerged when CACLMT was formally labeled a “high-risk organization.” He said he opposed including that language but “staff and auditors” insisted that prompted CAC to withdraw.
The concerns stem from the U.S. Department of the Treasury’s demand the county return up to $667,990 in misused federal pandemic rent-assistance funds.
According to two separate notice of recoupments released in August 2024, Thurston County is the first local government ordered to repay pandemic-era assistance funds due to proven fraud.
At least 36 rental assistance claims were found to be improper, resulting in fraudulent payments. The Auditor’s Office flagged the irregularities in 2022, which led to a wider investigation. Staff referred the cases to the Treasury Office of Inspector General and to law enforcement.
BoCC Vice Chair Wayne Fournier bluntly stated his position.
“I’m more than hesitant. … I don’t want to engage in any contract with an organization that we’re still in this legal area with,” Fournier said.
He warned the county should first resolve all outstanding issues before considering any future agreements.
Commissioner Rachel Grant then asked for clarification about the $300,000 funding recommendation linked to CACLMT.
In response, Webster explained the county received applications from Family Support Center and Community Youth Services to serve families and youths. But that for the single adult population, only Partners in Prevention Education (PiPE) had applied.
Webster added both the Homeless Services Advisory Board and staff felt PiPE lacked the “capacity” to continue and did not recommend them.
“I reviewed all of this when it was occurring. … I’m also hesitant to move forward,” Grant stated.
Clouse echoed most of the concerns and acknowledged Mejia’s stand that CAC’s leadership turnover should be considered. She also stressed the risk of “losing eviction support” for seniors and veterans, and asked staff to explore stronger contract terms.
Webster assured the BoCCthe county had “learned a lot” in handling rent assistance programs since the influx of pandemic funds.
He said new fraud prevention procedures were developed with help from Family Support Center, Community Youth Services and Internal Auditor Brandon Webber.
“That doesn't mean it's 100% foolproof but, I would say we've certainly made improvements over the years. As we've been doing this for now four or five years, and we've certainly learned some lessons and have made improvements,” Webster admitted.
Hernandez backed Webster’s claims and suggested creating a full “report” to show the board how the county’s contract management practices had evolved.
“It is the devils in those details, making sure that we are being a responsive provider of funds to set our nonprofits up for success,” said Hernandez, who proposed the presentation be held in a future work session with the internal auditor.
Unconvinced, the commissioners insisted more due diligence was needed.
Menser revealed he was still uneasy because the county’s internal structures had changed, including “shuffles” in the PAO, which meant some institutional memory had been lost. He also recalled that in past monitoring initiatives, CACLMT showed a pattern of noncooperation.
“They said you can’t have that information because our business model is to protect the community … but that’s just not how subrecipient monitoring requirements work,” he shared.
Menser said such refusals were not acceptable under federal monitoring rules, and urged any future contracts must be “crystal clear,” leaving no room for CACLMT to avoid compliance.
He added the board needs more assurance that “all old ambiguities” from prior contracts had been ironed out given that county taxpayers were still out for almost $700,000 from the repayment obligations.
Mejia noted the wider coverage and impact of the fraud.
“It was money that could have been used for families in need,” she said.
Public Health and Social Services Director Dr. Jennifer Freheit warned the funding has strict timelines. She said if the board waits until June to reject the CACLMT contracts, it will cause “significant delays” because the RHC would have to find a new provider from scratch.
She said the reason why they brought the issue forward is to get early direction on whether to move ahead or to alert the RHC immediately.
Even after dissecting the matter, commissioners preferred caution over speed.
Mejia proposed sending the recommendation back to the RHC immediately to allow time for reallocation if needed, and to explore other provider options in case legal and auditing reviews revealed problems later.
Hernandez said if directed, staff would either proceed with contract drafting or return to the RHC and Homeless Services Advisory Board to find alternatives.
Meanwhile, unresolved budget issues were brought up for review.
Fournier flagged emerging risks, particularly concerns about contracts tied to right-of-way acquisitions, where state support might soon vanish.
“If there’s a black hole out there, I would want to pull back some of this money that the RHC is wanting to obligate,” he said.
He was worried the county could be left responsible for obligations without funding and suggested some Home Fund dollars might need to be pulled back if larger financial gaps appear.
To remove doubt, Webster said the RHC manages multiple funding streams, including Home Fund.
Sixty percent of the Home Fund is reserved for capital projects, 30% for services, and other sources include state grants like the Consolidated Homeless Grant, Housing and Essential Needs funds and document recording fees, Webster outlined.
Framing the next step and reiterating the board’s position, Menser requested before any contracts with CACLMT move forward, he wanted to see side-by-side comparisons of old and revised contract language with reviews directly from the PAO and internal auditors.
“I’d like to have (Internal Auditor) Brandon (Webber), and our Prosecuting Attorney (Jon Tunheim) look into the ‘eyeballs,’ and say, 'Changes have been made from what happened in 2021 these provisions of the contract had been altered, tightened,'” Menser said.
The other commissioners agreed.
“I'm like, Tye, I want to see it, hold it, and understand any of the changes that we’ve made,” Grant said.
In the end, the BoCC unanimously gave their “thumbs up” to direct staff to return the three CACLMT-related recommendations to the RHC for reconsideration.
Clouse, who chairs the RHC, pledged to carefully communicate the board’s position to prevent misunderstandings among council members who were not directly involved in the “turmoil” surrounding the 2021 fraud.
In case possible misunderstandings occur, Fournier made clear that any action toward the RHC’s recommendation was not meant to dismiss citizen advisory groups’ work but rather an exercise of BoCC’s fiduciary responsibility.
“That’s us sitting at the table we sit at and having the information we have and using the experience that we're living to make our own advisement,” he said.
For the board to have a perspective of the nonprofit capacity, Grant said various nonprofits often lack the administrative support they need to stay compliant.
She shared an example unfolding in Mason County, where a nonprofit shelter, Community Lifeline, was “shutting down” because it had failed to pay its employment taxes.
“We need to partner with each of these nonprofits to make sure they have the people they need to accept the funding and continue to provide services,” Grant said.
The next RHC meeting is scheduled for the end of May.
For now, the board stands firm in their position to flag unresolved risks before moving forward with any new contracts.
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curtzt
I'm glad that some local news organization is covering events like this!
Monday, April 28 Report this
Bobwubbena
Thank you for the summary of the discussion. It appears to me that the County Commissioners are taking their assignment as expected/ and defined. Thank you! Keep the pressure on any NGO that is paid to deliver services. I would challenge the integrity of CALCMT based on the information provided. An NGO with integrity does not defer from transparency on reporting both their budget and what they did for the money. Otherwise, they are a "viper and user". of the good will system and not a true advocate to help others. We elected five commissioners to upgrade the non "bipartisan" into an intentional management leadership. That is your assignment. Do it well. Get rid of those that don't want to do it right the first time--- a majority vote gives you the authority. That is the reason for a five-commission county council.
Monday, April 28 Report this
Bobwubbena
Thank you for the summary of the discussion. It appears to me that the County Commissioners are taking their assignment as expected/ and defined. Thank you! Keep the pressure on any NGO that is paid to deliver services. I would challenge the integrity of CALCMT based on the information provided. An NGO with integrity does not defer from transparency on reporting both their budget and what they did for the money. Otherwise, they are a "viper and user". of the good will system and not a true advocate to help others. We elected five commissioners to upgrade the non "bipartisan" into an intentional management leadership. That is your assignment. Do it well. Get rid of those that don't want to do it right the first time--- a majority vote gives you the authority. That is the reason for a five-commission county council.
Monday, April 28 Report this
BobB
Having Emily Clouse lead a discussion about being "stewards of public funds" made me throw up in my mouth a little bit.
Monday, April 28 Report this
HappyOlympian
Agreed, Clouse talking about ethics and fraud a terrific example of "chutzpah". Aside from that, please prevent fraud and hold those responsible accountable.
Tuesday, April 29 Report this
ViaLocal
We listen to Trump talk all the time and he's a rapist and a predator, a known affiliate of Jeffery Epstein. It's Emily Clouse's job to talk about ethics.
Tuesday, April 29 Report this
nhc
One detail that I wish was clearer about this situation is the nature of the fraud allegation levied against CAC. My understanding is that during COVID they issued subsidy payments to property owners who claimed to be renting out residential units to low-income community members, but failed to do due diligence and confirm that all of the payment claims were legitimate. This was a failure on their part and a breach of their contract with the County, full stop, and it seems entirely appropriate to question their capacity to faithfully execute future contracts. However, it's not as though the nonprofit was embezzling the money to enrich itself or its own staff. The theft of the public funds was by landlords submitting fraudulent claims and inappropriately collecting checks issued by CAC. If there is a known dollar amount of fraud, then the relevant authorities must have identified which payments were legitimate and which were not. How is there not investigation into the parties that fraudulently submitted claims to be paid, and restitution demanded from them?
Tuesday, April 29 Report this
MrCommonSense
Until the money is recovered from CAC and/or their or the county's insurer, there should be no further contracts with them. Thurston County should pursue all legal remedies to force repayment and recover legal costs, too.Maybe in the future, vet some of these organizations better and have iron clad contracts with them?
If the county's attorneys are sloppy reviewing and ensuring contracts have proper safeguards, maybe there needs to be some review of the legal staff, too?
Tuesday, April 29 Report this
Peacebaby
Unfortunately the 2 main players responsible for the oversight of the housing programs in question at CAC are no longer with the agency. Created chaos and ran.
Wednesday, April 30 Report this
OlyBlues
There is NO way CACLMT should even be considered for another housing grant! This is totally insane to even consider them. They have proven they do not have the proper internal controls to prevent fraud, waste, and abuse. They cost us taxpayers hundreds of thousands of dollars WE are paying back. At the same time the fraud was discovered, instead of acting in a responsible manner, CACLMT chose to battle the county Auditor, refuse to cooperate and show records, and were defiant and uncooperative. That is EXACTLY the kind of organization that does not deserve grant funding ever again from the county. The BOCC should have just said NO and declined to fund it instead of sending it back to this uneducated housing board that appears to have little insight into proper fiscal practices. And where is the county Prosecutor's Office? Sounds like again lots of turnover affecting legal review. More messes at the county, let's avoid another one.
Wednesday, April 30 Report this
ChuckCross
NHC seems to be hitting the nail on the head. To hang the CAC for improper handling of funds, sounds appropriate. Charging those who fraudulently applied for funds seems to be falling by the wayside. Why is that???
Thursday, May 1 Report this