Street roots
3
Aug. 1, 2014
Legal limbo: Safety Net of Oregon’s payee trials continue
Clients o f the beleaguered nonprofit say their savings are locked up while the investigation continues
BY JAKE THOMAS
STAFF W RITER
T
I
A
t’s been four months and John Munro
still doesn’t know where his money is or
when he’ll see i t
Munro entrusted a $130,000 inheritance
to Safety Nèt of Oregon, a now shuttered
Portland nonprofit that was tasked with
administering the federal disability and
veterans’ benefits for individuals who need
help managing their money. Some of its
former clients, like Munro, forked over their
savings or inheritance to Safety Net for
safekeeping. In April, Safety Net was shut
down by the Social Security Administration
over concerns it was fraudulently
mismanaging clients’ funds. Now some
clients are .still struggling to find out what
happened with their money.
“I don’t know how much is gone or
whatever,” says Munrè. “I really don’t
know.”
If someone receives federal disability
benefits but is deemed by the Social
Security Administration to he unable to
manage their own funds due to a physical Or
mental impairment, they are assigned a
payed, an individual or an organization
charged with making sure the money is used
to pay the recipient’s rent, bills and other
necessities. Saféty Net was the state’s
largest payee service with about 1,000
clients. Kathy Wilde, litigation director for
Disability Rights Oregon, says that some of
Safety Net’s clients (she’s not sure how
many) came into money from a settlement,
inheritance or trust and handed their money
over to the nonprofit.
In March, agents With the Office of the
Inspector General executed a search
j^utijteast. :
Morrison Street, seizing financial records
and computers. The affidavit in support of
the search warrant states that during a 2013.
review by the Social Security
Administration, Linda Stelling, CEO of
Safety Net, produced records showing that .
thé nonprofit had $1.3 million in conserved
client funds. However, bank statements,
STREET R O O T S P H O T O
John M unro is one o f m ultiple customers o f
the now-shuttered, Safety N et o f Oregon who
wants to know w hathappened to the money
he gave to the organization fo r safe keeping.
according to the affidavit, showed a balance
of approximately $670,000. The affidavit
states that the Social Security
Administration’s review found there, was a
deficiency of more than $600,000 in Safety
Net’s books, which Stelling attributed to a
software problem. Stelling, who is described
as appearing “overwhelmed,” provided
contradictory information during the review,
according to the affidavit.
According to Wilde, the seized computers
might contain information that could
corroborate the amount of money Safety
Net was holding for its clients. However, she
says,they are currently in the poggegsion^of
thé Û.S. Department of Justice^ and she-
doubts that the records are adequate
enough to determine how much money each
client is owed.
7 “It’s kind of a catch-22,” says Wilde.
Wilde says that there are two potential
ways Jor former clients to access funds
Safety Net was holding for them that haven’t
been disbursed. If someone is convicted *of a.
crime iri connection to mismanagement of
funds at Safety Net, then former clients
could get their money through a fund set up
for crime victims, says Wilde. Currently, no
one has been indicted for any Crimes related
to Safety N et The Social Security
Administrationis also responsible for
reimbursing funds that were mismanaged by
a payee, says Wilde. But she doesn’t know
when either option will produce results and
doesn’t expect the situation to be resolved
soon.
“It could be months. Could be a year,”
she says. “I have no idea what’s going to
happen.”
In the meantime, Wilde is circulating
forms to former Safety Net clients so they
can document how much money they are
missing. She’s distributed the forms to local
social service agencies with instructions
that they be forwarded to the U.S.
Attorney’s Office for Oregon.
Helen Cooper, special assistant .U.S.
attorney, says that she has received fewer
than 20 forms claiming varying amounts of
money: She says that the point of these
records is to give Safety Net clients a venue
to communicate any information that the
U.S. Attorney’s Office should have. Citing an
ongoing criminal investigation, Cooper
wouldn’t comment specifically on the time
frame of when clients might get their
money, when an indictment might be’
coming or on the state of Safety Net’s
records. The amount of restitution, she .
noted, will be determined by a court.
“The good news is that there were bank
records,” she says. “And bank records speak
for themselves.”
s> E^n<as>u former client of Safety. Net who
turned in a form, doesn’t want his real name
used because he is worried that “they” will
‘retaliate. By they, he means the array of
government offices he’s contacted trying to
get the $7,000 savings that Safety Net was
holding for him. He says he has gone to the
local Social Security office three times and
contacted the offices of Sen. Ron Wyden
Bust to boon: City Hall sees
green in legalized marijuana
legalization.
“It’s really such a massive topic that we’re
just trying to get our arms around it,” says
or decades, cities have spent untold
Andy Smith, Portland’s state government
sums of money trying to prevent
people from possessing and
relations manager.
consuming drugs. With Oregon potentially Smith says that one of the big issues
Portland will be grappling with if marijuana
poised to legalize marijuana, the state’s
largest city is already taking steps to benefit
is legalized this fall, is how much tax
revenue it will bring in for the city. He
financially from pot being freely sold.
points out that the initiative that will be on
However, there are concerns from Portland
the ballot this fall prohibits local
officials that legal weed still won’t pay off.
governments from taxing marijuana.
In July, the Oregon Secretary of State’s
The way the initiative is written, the
office announced that an initiative seeking
OLCC is responsible for collecting taxes,
to legalize marijuana had qualified for the
which will run $35 per ounce on all
November ballot Sponsored by a well-
“marijuana flowers,” $10 per ounce of all
funded group called New Approach Oregon,
“marijuana leaves” and $5 per “immature
the initiative would legalize recreational
plant” The money collected by the OLCC
sales of pot, assigning the Oregon Liquor
will be passed along to the state treasurer.
Control Commission, OLGC, a regulatory
From there, 40 percent will go the Common
role.
School Fund, 20 percent will go to mental
Portland Mayor Charlie Hales is already
health and addictions treatment, 15 percent
preparing for legalization. According to Josh
to: the state police to assist local law
Alpert, director of strategic initiatives for
enforcement to help out with its new duties
the mayor’s office, Hales has assembled a
and 10 percent shall go to the cities. And
task force of 20 and growing City Hall
that’s where things get tricky.
staffers encompassing a wide range of
The initiative lays out a complicated
bureaus and offices, including police,
formula for calculating how much of that 10
revenue, neighborhood involvement,
percent each city gets, which is calculated
development services and others. Alpert
by population and the number of pot
says that the task force was initially formed
retailers.
in response to d new state law that allows
“It’s really hard to estimate what the
for medical marijuana dispensaries, but was
broadened to examine the effects e t outright
BY JAKE THOMAS
STAFF WRITER
8
dollar distribution is,” says Scott Karter,
audit and accounting division manager at
the Portland Revenue Bureau. “The revenue
picture is very unclear at this point.”
Although Colorado and Washington have
legalized pot, he says that it’s hard to look
to those states to see how things could play
out in Oregon because their legalizing
initiatives are so different. One key way they
differ is that the Colorado and Washington
laws allow local governments to tax pot
sales.
Earlier this year, Gresham, Fairview and
Clackamas County all passed one year bans
on medical marijuana dispensaries. The
legalization initiative allows local
governments to ban pot shops from opening
and Rep. Earl Blumenauer, in addition to
the U.S. Attorney’s Office, all to no avail.
Francis says he wants to move, but he can’t
because he can’t access his savings to pay
for it.
“If it were the other way around, they
would downright get their money,” says
Francis, who feels he is being punished for
his thrift
Ann Mohageri, spokesperson for the
Social Security Administration’s office in
Seattle, told Street Roots that hér agency
recognizes that this is a challenging
situation and wants towork with former
Safety Nétclients and their new payees to
make sure that their needs aré being m et
She says that if a client has an urgent need,
the Social Security Administration will
review its records to see if it can pay out any
money owed.
The Share & Care House, a social
services nonprofit based in Puyallup, Wash.,
with an officé in Tigard, became the payee
for about 400 former clients of Safety Net,
according to Charlene Hamblen, the group’s
executive director. Hamblen didn’t comment
on what happened to the savings accounts
of former Safety Net clients.
When Safety Net was forced to shut its
doors, it threw many of its clients into
financial turmoil. Many of them suffer from
severe disabilities that made negotiating for
á new payee difficult. With their payee going
oút of business, some clients faced the very
real possibility of-being unable to pay their
rent or other necessities. In response,
Disability Rights Oregon and the Oregon
Law Center sued the Social Security
Administration over its handling.
situation, which led to ,a federal judge , ,
ordering that the agency automatically
assign Safety Net clients a new payee.
“If this situation ever arises again, the
sooner they blow the whistle the better,”
says Wilde, who notes that at last count the
number of people who are still without a
payee was down to 20.
in their jurisdictions. If these cities ban
retailers, Karter says it’s possible that more
shops will open in Portland, which will bring
in more revenue for the city.
In July, economic consulting firm
ECONorthwest released a study that found
that if Oregon voters legalize pot this fall, it
could generate $38.5 million in excise tax
revenue during the first fiscal year and
$78.7 million in the first full biennium of tax
receipts. However, the study does not
examine how legalization might affect
courts, police and jails.
The initiative assigns most of the
regulatory authority to the OLCC, and, if
approved,: will give local governments few
tools to regulate marijuana retailers. Smith
says the city has faced a similar scenario
with alcohol.
“We’ve had challenges on the alcohol
side, where bars and clubs can go and how
they lose their license,” he says. “If they are
bad actors, we don’t have a lot of control
over that.”
Portland has a “Time, Place and Manner”
ordinance in place that allows it to place
some restrictions oh problem bars and
require them to go through an abatement
plan. However, the OLCC retains much of
the licensing power over bars. Alpert says
the city might adopt a similar ordinance to
regulate legal marijuana facilities.
Smith points out one key way that
Portland’s challenges with regulating alcohol
might differ from regulating pot.
“Historically on the alcohol side, the
costs are higher than what we get in
revenue,” he says. “I don’t know if it’s fair to
say that’s going to be the same with
marijuana.”