Hello, this is Doug from HomesNOW, Not Later.
 
About 1 month ago, I learned of an incident involving Jim Peterson (Former President of HomesNOW) in which Jim attempted to start a sexual relationship with one of the residents of Unity Village (the tiny home community that our organization manages).
 
Through speaking to other residents, I also found evidence of mistreatment of the residents in general such as verbal abuse involving 3 board members. Residents did not come forward sooner because they were afraid of losing their housing. This discovery caused me to open an internal investigation into misconduct of these 3 board members for various forms of misconduct. The results of this investigation led to the removal of 3 board members from the organization.
 
Throughout the process of this investigation, I inadvertently discovered evidence of financial fraud committed by the former President of HomesNOW (Jim Peterson). I reviewed the bank statements when I was informed about activities involving misspent funds which included trips to the casino and purchasing of tobacco, marijuana, excessive dining, and personal items for Jim (former President of HomesNOW) and Rachel (former Vice-President).
 
The following public statement released last month contains the details of that discovery:
 
In my own internal investigation, I discovered around $8,000 in fraud that I could directly prove (by checking the addresses of ATM machines where cash withdraws were made from). We meet with the chief of police weekly at Unity Village, and I was asked directly if I had discovered any financial improprieties during my investigation, which I had. At this point I turned over the evidence to the chief, at which point the police launched their own investigation, which has been taking place over the last month.
 
The investigation concluded yesterday. Jim Peterson (former President of HomesNOW) has been booked into Whatcom County Jail. The final amount that was stolen is estimated to be around $90,000. One might be wondering how our organization missed a $90,000 discrepancy.
 
1. Information such as receipts and donation records were actively withheld and hidden from the treasurer and the technical director.
 
2. Multiple donor checks were directly cashed by Jim, and did not show up on the bank statements at all.
 
3. Multiple cash donations were not deposited into the bank account.
 
4. Insufficient separation of duties related to financial operations.
 
5. Insufficient approval authority requirements for purchasing.
 
6. Many large donations occurring within a short period of time.
 
7. No obviously visible signs of shortage of funds for items such as construction supplies, insurance, and monthly expenses was observed.
 
8. Decisions were made on behalf of and in the name of the entire board when only 3 board members were making decisions.
 
HomesNOW! started in June of 2017, a little over 2 years ago. In that time we were able to go from nothing to a fully functioning tiny home community (Unity Village), the first Tiny Home Community in Bellingham.
 
Despite the theft committed by Jim and despite inappropriate behavior of multiple board members, the overall model has been a success and continues to be the most affordable and highest standard sheltering option in Bellingham.
 
Throughout this process I was more concerned with the treatment of the residents and their well-being more so than keeping a close eye on every dollar. The fraud was discovered later while investigating resident mistreatment. This incident provides a valuable lesson for any quickly growing organization to avoid ending up in a similar situation.
 
One month ago, when this dramatic set of events occurred I released a public statement in which I explained that since HomesNOW is now under new management and would be undergoing a positive restructuring, we would be implementing policy reforms to our organization to prevent any instances of this type of activity from happening again in the future.
 
These policies apply to every person in our organization regardless of gender, sexual orientation,
level, function, seniority, status or other protected characteristics. We are all obliged to comply
with these policies.
 
Implementation of Sexual Harassment Policies:
 
We do not tolerate sexual harassment from inside or outside of the organization. Volunteers,
investors, contractors, residents, board members, and everyone interacting with our
organization are covered by the present policy which may necessitate third party harassment
policy.
 
Policy Elements:
 
Sexual harassment has many forms of variable seriousness. A person sexually harasses someone when they:
 
1. Insinuate, propose or demand sexual favors of any kind.
 
2. Invade another person’s personal space (e.g. inappropriate touching.)
 
3. Stalk, intimidate, coerce or threaten another person to get them to engage in sexual acts.
 
4. Send or display sexually explicit objects or messages.
 
5. Comment on someone’s looks, dress, sexuality or gender in a derogatory or objectifying manner or a manner that makes them uncomfortable.
 
6. Make obscene comments, jokes or gestures that humiliate or offend someone.
 
7. Pursue or flirt with another person persistently without the other person’s willing participation. Also, flirting with someone at an inappropriate time (e.g. in a team meeting) is considered sexual harassment, even when these advances would have been welcome in a different setting. This is because such actions can harm a person’s professional reputation and expose them to further harassment.
 
The most extreme form of sexual harassment is sexual assault. This is a serious crime and our
organization will support victims who want to press charges against offenders.
 
Rules on Sexual Harassment:
 
• No one has the right to sexually harass our members. Any person in our organization who is found guilty of serious harassment will be terminated, whether they are board members, volunteers or assistants. If representatives of our contractors or vendors sexually harass any person working within the framework of Homes NOW! Not Later…, they will be reported to the company they work for and Homes NOW! Not Later… will pursue disciplinary action including but not limited to refusing working with this person in the future.
 
• Sexual harassment is never too minor to be dealt with. Any kind of harassment can create a hostile workplace. We will hear every claim and report to proper social and legal channels for repercussions of offenders.
 
• Sexual harassment is about how we make others feel. Many do not consider behaviors like flirting or sexual comments to be sexual harassment, thinking they are too innocent to be labeled harassment. But, if something you do makes your colleagues uncomfortable, or makes them feel unsafe, you must stop.
 
• We assume every sexual harassment claim is legitimate unless proven otherwise. We listen to victims of sexual harassment and always conduct our investigations properly. False reporting does not undermine this principle.
 
• We will not allow further victimization of harassed person. We will fully support any person within the framework of Homes NOW! Not Later… volunteerism, leadership, residency, or interactive participants who may experience sexual harassment and will not take any adverse action against them. We will remain supportive and in defense of their position.
 
• Those who support or overlook sexual harassment are as much at fault as offenders. Management is obliged to prevent sexual harassment and act when they have suspicions or receive reports. Letting this behavior go on or encouraging it will bring about disciplinary action. Anyone who witnesses an incident of sexual harassment or has other kinds of proof should report to HomesNOW management immediately.
 
• No retaliatory actions based on the reporting of sexual harassment. If you report sexual harassment it’s your right to be heard and to have the issue resolved, without fear of losing your housing or losing your position within the organization. No person in a position of authority within the organization can retaliate against reports of sexual harassment.
 
How to Report Sexual Harassment:
If you are being sexually harassed (or suspect another person is being harassed), please report it to any board member or staff member that you feel comfortable with. In serious cases like sexual assault, please call the police and inform management that you plan to press charges.
 
We acknowledge it’s often hard to come forward about these issues, but we need your help to build a fair and safe organization for you and your colleagues.
 
If you want to report sexual harassment within our organization, there are two options:
 
• Ask for an urgent meeting with HomesNOW Management. Once in the meeting, explain the situation in as much detail as possible. If you have any hard evidence
(EX: emails), forward it or bring it with you to the meeting.
 
• Send your complaint via email. If you address it to your supervisor, please cc Management to the email and attach any evidence or information that can be used in the investigation. Management and your supervisor will discuss the issue and contact you as soon as possible.
 
If you need to make a sexual assault report to the police, our organization will provide any possible support until the matter is resolved. We will ensure you are not victimized and that you have access to relevant evidence admissible in court, like security video footage or emails (without revealing confidential information to unauthorized parties.)
 
When management receives a complaint that one person harasses another person, they will:
 
• Ask for as many details and information as possible from the person or people making the complaint.
 
• Keep copies of the report with dates, times and details of incidents and any possible evidence in a confidential file (separate from the personnel file.) Management should update this file with all future actions and conversations regarding this complaint.
 
• Launch an investigation. If the matter is complex, the specific management staff member can defer to a more senior manager.
 
• Check if there have been similar reports on the same person. If there are, management should contact the perpetrator’s additional association(s) to let them know that they may be terminated from their role or position when the investigation is over.
 
• Inform the harassed associate of Homes NOW! Not Later… of all procedures and their options for taking legal action if appropriate.
 
• Take into account the wishes of the harassed person. Some might want the matter to be resolved informally and discreetly, while others might expect more radical actions (e.g. transferring the perpetrator.) Management should consider the circumstances and decide on appropriate action.
 
• Contact the harasser and set up a meeting to explain the complaint and explicitly ask for this behavior to stop, or Arrange for mediation sessions with the two qualified members of Homes NOW! Or a community intervention team to resolve the issue (including both parties of the harassment), if the harassed associate agrees or,
 
• Launch a disciplinary process depending on the severity of the harassment. In cases of sexual assault or coercing someone to sexual favors under threats, Homes NOW! Not Later… will terminate the harasser immediately. We will permanently dismiss associates who are found guilty in a court of law of sexually assaulting another associate, even if Management has not conducted its own investigation.
 
In regards to the finances, something to take note of is that between the months of May to September of 2019, HomesNOW took in roughly 4x the amount of money than it did in the previous 2 years combined.
 
Something to keep in mind as well is that HomesNOW has no paid staff. HomesNOW is run entirely by volunteers, and all of the duties of HomesNOW including the accounting system has been conducted by volunteers, including the co-founders of the organization. This situation caught us all off guard and we were not paying close enough attention to the finances.
 
As an organization and where the volunteer energy was mostly focused was with the day to day operations of getting people off the streets, homeless advocacy, running Unity Village/Safe Haven/Winter Haven, winter outreach, homeless summits and building housing. It all appeared to be working smoothly and the members of the organization placed too much trust in the hands of a few individuals who ended up abusing their authority. One of the board members who was removed was a former tax accountant and the assumption was made that very basic financial safeguards were in place.
 
As for myself I am one of the original co-founders of HomesNOW and I did have access to the bank account, but I was not in charge of managing the money. I was Technical Director, basically the computer, website and graphics guy. Carol is the treasurer, and did perform her duties properly, but information was actively withheld from her which resulted in much of this fraud going unnoticed. The information I discovered in my investigation was also not obvious to me either until I knew what to look for, based on testimony from the residents.
 
Implementation of Financial Internal Control Policies:
 
The following control procedures are a separation of duties, access controls, physical audits,
standardized documentation, trial balances, periodic reconciliations, and approval authority.
 
1. Separation of Duties:
 
Separation of duties involves splitting responsibility for bookkeeping, deposits, reporting and
auditing. The further duties are separated, the less chance any single board member has of
committing fraudulent acts. For small businesses with only a few accounting members, sharing
responsibilities between two or more people or requiring critical tasks to be reviewed by co-
workers can serve the same purpose. Avoiding conflict of interest from shared accounts or
partnerships is essential.
 
2. Accounting System Access Controls:
 
Controlling access to different parts of an accounting system via passwords, lockouts and
electronic access logs can keep unauthorized users out of the system while providing a way to
audit the usage of the system to identify the source of errors or discrepancies. Robust access
tracking can also serve to deter attempts at fraudulent access in the first place.
 
3. Physical Audits of Assets:
 
Physical audits include hand-counting cash and any physical assets tracked in the accounting
system, such as inventory, materials and tools. Physical counting can reveal well-hidden
discrepancies in account balances by bypassing electronic records altogether. Counting cash in
sales outlets can be done daily or even several times per day. Larger projects, such as hand
counting inventory, should be performed less frequently, perhaps on an annual or quarterly
basis
 
4. Standardized Financial Documentation:
 
Standardizing documents used for financial transactions, such as invoices, internal materials
requests, inventory receipts and travel expense reports, can help to maintain consistency in
record keeping over time. Using standard document formats can make it easier to review past
records when searching for the source of a discrepancy in the system. A lack of standardization
can cause items to be overlooked or misinterpreted in such a review.
 
5. Daily or Weekly Trial Balances:
 
Using a double-entry accounting system adds reliability by ensuring that the books are always
balanced. Even so, it is still possible for errors to bring a double-entry system out of balance at any given time. Calculating daily or weekly trial balances can provide regular insight into the state of the system, allowing Homes NOW! Not Later… to discover and investigate discrepancies as early as possible.
 
6. Periodic Reconciliations in Accounting Systems:
 
Occasional accounting reconciliations can ensure that balances in Homes NOW! Not
Later…accounting system match up with balances in accounts held by other entities, including
banks, suppliers and credit customers. For example, a bank reconciliation involves comparing
cash balances and records of deposits and receipts between accounting system and bank
statements. Differences between these types of complementary accounts can reveal errors or
discrepancies in Homes NOW! Not Later…accounts, or the errors may originate with the other
entities.
 
7. Approval Authority Requirements:
 
Requiring specific managers to authorize certain types of transactions can add a layer of
responsibility to accounting records by proving that transactions have been seen, analyzed and
approved by assigned authorities. Requiring approval for large payments and expenses can
prevent unscrupulous associates from making large fraudulent transactions with organization
funds, for example.
 
Financial Affirmative Action & Procedures:
 
1. Keep business and personal finances separate. Never allow business and personal
finances to become intertwined. If you do make a loan to your business or take a loan from your business, document it
appropriately with a promissory note specifying repayment terms.
 
2. Conduct background checks before hiring. This is especially important for members whose
job duties involve finances, such as bookkeeping, accounting, payroll or handling cash.
 
3. Create monthly cash flow projections. If actual cash flow falls short of projections,
investigate to find out why.
 
4. Review your business’s monthly bank statements in detail. Have bank statements sent
directly to personal email or home address.
 
5. Review all credit and debit card statements for accuracy. Using payment cards for business
expenses can simplify accounting and tax preparation. However, the more company credit
cards, the greater the chance of fraud. Document all business expenses with detailed receipts.
 
6. Set up inventory control systems. Inventory is often damaged, stolen or lost. Inspect and
count incoming inventory to make sure orders were filled accurately. Designate who can sign
for incoming inventory or release outgoing inventory. Conduct regular inventory of products or
materials.
 
7. Don’t put one person in charge of petty cash. Require a second associate to authorize all
petty cash transactions. Record all transactions, and balance the petty cash once a week.
 
8. Review all outgoing payments. Compare payments to invoices. Watch for duplicate invoices,
new vendors or multiple invoices from the same vendor in a short time. Members who
embezzle often use these tactics to pay themselves.
 
9. Require vendors to submit detailed invoices. Avoid vague language on invoices.
 
10. Sign checks yourself. Require all outgoing checks and payments to be signed or authorized
by the authorized associate.
 
11. Delegate financial duties to multiple associates. If one person is in charge of all
organization’s financials, such as bookkeeping, payments and payroll, it’s easy for them to make
errors or steal.
 
12. Check up on associates involved with organization’s finances. Require all financial
associates take leaves of absence and rotate alternative associates to handle duties. Errors
and/or embezzlement is often discovered this way.
 
13. Monitor organization’s use of debt. An accountant can help set a maximum debt-to-equity
ratio and a minimum debt-to-cash flow ratio. Stay within these bounds to keep the organization
from becoming over-leveraged.
 
14. Plan ahead for business financing. A sudden cash flow crunch, or opportunity that requires
a cash outlay, will require fiscal responsibility. Know the financial health of the organization and
all capital sources. Maintain a frugal stance with donors and funds to avoid overspending.
 
15. Don’t be predictable. Watch for associate misconduct by performing financial reviews and
audits at random times.
 
These policies have the goal of preventing any previous wrongdoing from happening again, as well as providing a strong foundation for HomesNOW to make progress and grow as an organization into the future. If anybody else has any ideas or suggestions about how to improve these policies, please feel free to send us a message or comment on this thread.
 
As a final note on this subject, I wanted to read a letter, written by the residents of Unity Village regarding the situation.
 
“We the Residents of Unity Village would like it known that we discovered the initial impropriety by Homes Now staff in our own diligence to run this community that we helped build; Our community.
 
The first instance of wrongdoing was brought to the attention of the board as soon as possible and an investigation by board members was begun. We were all very active in this investigation and the continued successful running of the program. We feel as a community that the investigation and decisions of the board were fair, justified and in line with what is best for us, The Residents.
 
We would also like to add that we have never felt more unified and stronger as a community. There is a renewed vitality and spirit of inclusion in the camp and we are still more than confident that this model works and can be run successfully. We feel that we have a voice that is heard now and that we have greater input and participation in this incredible program. Thank you to our continued supporters, board members and volunteers. We know that together we can make this amazing community better than ever.
 
Signed in Solidarity by:
The Residents of Unity Village
 
Now for some good news. Since the police investigation has been concluded, we have been authorized to allow new residents into Unity Village. We will be launching our second round of interviews next week for our top 10 people who were picked during the first round of interviews. We will be notifying these individuals shortly. If you were not selected in this round of interviews, that’s OK. We will be doing these interviews quarterly and whether you’ve applied on our website before or only recently, all of you will be notified.
 
If you have applied with us before, and your contact information has changed, please apply again with the updated contact information. One of the biggest challenges we face when trying to find new residents is actually getting in contact with them (for example when phone numbers change).
 
Thank You,
Doug Gustafson – Chairman