Lawsuit Claims Portland Homeless Service Provider Grossly Mismanaged Public Funds
A former Sunstone Way finance executive has filed a $4.5 million lawsuit against the nonprofit and three of its Portland and Multnomah County leaders, alleging whistleblower retaliation. The lawsuit, filed in Multnomah County Circuit Court, names Kate Fulton, Sunstone Way's former finance director, as plaintiff against Sunstone Way, CEO Andy Goebel, former CFO Scott Takemoto, and Chief Systems Officer Alicia Hovanas.
Sunstone Way operates a series of homeless shelters across the greater Portland Metro area, with more than 90 percent of its operating budget funded by taxpayer money through the Multnomah County Joint Office of Homeless Services (JOHS). A 2022 county audit found the organization had overbilled Multnomah County by $525,228, including $193,675 in inappropriate administrative overhead expenses.
Fulton was hired as Finance Manager in October 2023 and was promoted to Director of Finance in early 2024, and later to Interim Senior Director of Finance in December 2024. According to the lawsuit, she repeatedly raised concerns internally about financial mismanagement at the organization, including that Sunstone Way was being overbilled by approximately $210,000 by a vendor, Our Streets PDX, and that CEO Andy Goebel instructed her not to seek a refund or alert JOHS because he had "made a deal" with the vendor.
The lawsuit further alleges that Sunstone Way paid tens of thousands of dollars in consulting fees to businesses run by a close personal friend of Goebel's, who at the time was employed by the U.S. Department of Housing and Urban Development at the Housing Authority of Clackamas County, while Sunstone Way was separately seeking government housing contracts in that same county.
According to the complaint, Sunstone Way relocated its administrative offices to a more expensive building while still under lease at its prior location, a decision Fulton says wasted approximately $226,000 in taxpayer money and cost the organization roughly $20,000 more per month going forward. The lawsuit also alleges that administrative overhead, including office rent, was improperly billed to the county as "shelter operations" in order to evade budget oversight from JOHS.
Fulton's suit states that after she raised these issues, she was discouraged from attending Board meetings, told to be vague in her financial reports, and ultimately terminated on February 21, 2025, for supposedly "undermining the executive team." She refused to sign a severance agreement containing a non-disparagement clause. The complaint brings claims for whistleblower retaliation under ORS 659A.203 and ORS 659A.199, nonprofit whistleblower interference, and aider and abettor liability against the individual defendants.
Smith Foster King represents Kate Fulton in this litigation. The case remains pending in Multnomah County Circuit Court.
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