New OR Chief's Scrutiny of Finances Ignites Massive Criminal Probe

The charges on a credit card issued by a rural fire district just north of Portland had no apparent connection to firefighting.

Bank statements showed $40 spent at Scandalous Hair Design in downtown St. Helens, then $90 at another beauty salon in Scappoose. By the end of the day, charges totaled $265 for what appear to be makeovers to honor a group of senior volunteers and $45 more on groceries and pizza.

In the next months, the card held by the county coordinator of senior volunteers – whose grant-funded job was embedded with the fire department but had no ties to fire service – showed $66.43 charged at a Catherines clothing store in Beaverton, $138 at the local Dollar Tree, $5 at the Wiggle Butz Gourmet Pet Bakery & Gifts shop and $119.95 at another local clothing store, according to bank records obtained by The Oregonian/OregonLive.

Other employees given Columbia River Fire & Rescue credit cards racked up nearly daily charges for fast-food, though the district doesn’t cover daily meals, as well as purchases on Amazon Marketplace, Craigslist and a recurring Apple iTunes charge.

Over seven years, the credit card spending totaled more than $700,000, according to a forensic audit. But the examiners said they found no receipts or purchase orders to determine if they were legitimate.

The Columbia County prosecutor’s office and state police have launched a criminal investigation into the fire department’s past handling of finances, District Attorney Jeff Auxier confirmed. The governing board of the fire district commissioned the forensic audit, set to be released publicly on Friday.

Investigators also have identified eight former non-firefighter employees at the district who were enrolled for years in the state retirement system at a more lucrative rate that is reserved only for paid firefighters, the audit found.

The perk is worth thousands of dollars a year in extra compensation. The total taxpayer hit for the ineligible employees could reach hundreds of thousands of dollars if not clawed back by the fire district and state retirement system, according to the audit and fire officials.

Rampant financial irregularities at the fire district appear to have benefited a small cadre of longtime workers, forensic auditors found. Inattention by past fire chiefs and elected members of the district’s board and a lack of internal controls allowed the spending to go unchecked, auditors said.

The district’s budget for the senior volunteer coordinator and some of her expenses caught the attention of the new fire chief shortly after he was hired in December 2020 from out of state after a national search. The chief hired another outsider and former colleague of his last year to make sense of the budget after the longtime civilian finance manager left.

“They’ve been giving out this money like they were a losing blackjack dealer in Vegas,’’ said Fire Chief Joel Medina.

His new finance chief, Jimmy Sanchez, put it another way: “This was the small town’s slush fund.”

Municipalities are the second most frequent victim of financial abuse behind banks, said Christopher Marquet, an expert on fraud and financial misconduct for Veritas Assurance Partners, a global risk consulting and investigative firm.

“People will take advantage when you don’t have the oversight or controls in place, or one person is in control of all the money,” said Marquet, a senior partner at the firm.

Columbia River Fire & Rescue, the county’s largest fire department covering a slice of a sprawling territory on the edge of the metro area, operates out of St. Helens’ old library, a nondescript brick building off Columbia Boulevard.

It provides firefighting and emergency medical care to over 27,000 people with 35 full-time paid firefighters, 12 volunteers and five non-firefighter paramedics. They’re spread out among seven stations, including in the county seat of St. Helens, Columbia City, Warren, Prescott and Rainier.

The fire district, with a nearly $13 million budget, is financed by annual property taxes. Each year, the district sets the tax rate in an amount equal to its administrative expenses and benefit costs. The tax rate for fiscal 2022-23 was $2.97 per $1,000 of real market value.

The district’s ex- finance manager, Marit Nelson, has denied any wrongdoing, as have other former employees, saying they followed all fire district guidelines.

Nelson, who resigned in 2021 at a salary of $120,873, oversaw the credit cards and the PERS enrollments. Nelson also was enrolled for the higher firefighter retirement benefits even though she doesn’t qualify for them, according to the forensic audit. She said her fire retirement classification was up to the chief who hired her and it should stand.

“You give your life to an agency and you try to do your best for them,” she said. “And this feels really bad and accusatory.”

In a further development, three women who lost their jobs at the fire district sued the agency after they left, alleging sexual harassment by the new fire chief. The three say they were subjected to inappropriate sexual comments and a hostile work environment.

Medina denies the allegations and claims the suit is part of a campaign against him for trying to protect taxpayer dollars. The suit amounts to retaliation and discrimination, said Medina, who is Latino.

‘EXCESSIVE’ CHARGES

Medina and Sanchez found credit cards distributed to at least 11 people involved in the district’s administration, finance management, volunteer recruitment, fire training, emergency medical services and mechanic work, according to the forensic audit and the district’s bank statements.

They each had district-issued U.S. Bank Visa cards and faced few restrictions, and the lack of paperwork made it impossible to evaluate the validity of the spending, according to the audit. The cards were all on auto-pay, so the expenses were automatically withdrawn from the fire department’s bank account.

“I’ve been in municipal government almost my whole adult life. I’ve never seen misappropriation of funds to this level,” Medina said. “Worse, I’ve never seen an organization be so brazen about it.”

The employees spent $709,728 in credit card purchases from 2016 through 2022, according to the audit by Tualatin-based company Merina+Co. Combined, the 11 workers spent an average of $118,288 a year on the credit cards, according to the audit.

Among the charges: $35,574 on meals, $33,365 in “excessive” charges to Amazon and $193,471 for grocery and other incidental purchases in what appeared to be “a pattern of inappropriate credit card use,” the audit said.

The forensic investigators said they uncovered a stunning absence of receipts or purchase orders, making it impossible to trace exactly what people bought, examiners said. They had only the credit card statements.

They also found no evidence of management or board review or approval of the charges, according to the audit.

Under a policy in place since 1989, the fire district’s board is supposed to authorize the fire chief to issue credit or debit cards “on a limited and highly accountable basis.”

“The lack of documentation supporting credit card charges, and the lack of reconciliation of payroll and cash/bank information indicates either a lack of knowledge in these areas, disregard for the requirements or a calculated attempt to conceal misappropriation and wrongdoing,” the audit said.

The district’s bank statements cite credit card charges for what appear to be personal meals at fast-food restaurants, including Taco Bell, Subway, Jimmy Johns, Jack in the Box, coffee at Dutch Bros. and Starbucks, meals at local restaurants and pubs and repeated grocery trips to Costco, Safeway and Walmart, though the district’s policy expressly bars paying for firefighter meals except for special events.

There were also hundreds of dollars for hotel stays out of town and out of state, including at a casino in Las Vegas, with no documentation of the business purpose, according to the audit. Bank statements also showed purchases from the online home furnishings site Wayfair, a local theater, a local thrift store, Craigslist, Bath & Body Works and a Colorado store called Books Are Fun.

Jennifer Motherway, the recruitment and retention coordinator for volunteer firefighters, and Monica Cade, the county’s senior citizen volunteer coordinator, collectively used their fire district credit cards to spend $19,688 on meals from 2016 through 2022, auditors found. Cade’s grant-funded job is housed within the fire district but has no ties to fire services.

“While some purchases of meals for meetings, events and other district business might be expected depending on assignments and staff delegations, the total for these two staff appear excessive,” the audit said.

Both Motherway, through her lawyer, and Cade have denied any wrongdoing.

Nelson, the former finance manager, sometimes made dozens of purchases a month on Amazon Marketplace, the card statements show, but it’s unclear what she bought because auditors said they could find no supporting documentation.

Nelson and Motherway steeply increased their overall spending on the district cards over the years. Nelson, for example, charged $9,638.40 in 2016. By 2019, that had jumped to $42,199.18 and continued at that rate for the next two years, according to the auditors.

Motherway’s purchases rose from $3,995.19 in 2016 to $16,768.97 in 2021, according to the audit. She spent regularly at grocery stores and coffee shops and charged for hotels in Ohio, Texas and Maryland, bank statements show.

The auditors were unable to determine the destinations of four district credit card charges for airfare totaling $2,174.52 from May 2019 to January 2022 because there were no accompanying lodging, meal, parking or local transportation costs, according to the audit.

While the fire district’s five-member board sees all department checks signed each month for purchases, its members never reviewed any of the credit card purchases, board members said in interviews.

The district had “no documented evidence of effective management review or approval of credit card charges either prior to or subsequent to payment of those charges,” the audit said.

Board chair Hans Feige, a member for seven years, said it became clear since Medina started as fire chief that earlier chiefs relied on Nelson and didn’t ask questions like Medina has.

“The financial person was running it and telling the chiefs what to do,” Feige said.

Feige didn’t know who carried district credit cards, he said. The board never got updates on the card purchases, he said.

“There should have been a whole world of documentation and none of that can be found,” Feige said.

‘A WAY OF DOING BUSINESS’

Nelson left the fire district in November 2021 after 13 years.

She effectively operated as the district’s chief executive officer, though her formal title was finance and human resources director, according to board members and former fire chiefs.

Medina said Nelson rebuffed him when he first asked for district spending and payroll records, vendor contracts and budget plans.

He said that at one point, Nelson pushed him to essentially back off, telling him: “Why don’t you just play fireman and let me run the department?”

Nelson wouldn’t comment on the chief’s characterization of their conversation, saying only, “We all have a role that we play in our jobs.’’ She said she answered Medina’s questions and provided him with financial statements when asked.

Nelson said she regularly shared financial information with her fellow supervisors and attended budget committee meetings. “It’s not as if I managed in a silo,” she said.

Nelson told The Oregonian/OregonLive that she wasn’t aware of any credit card abuse and that she received receipts for employee credit card purchases but doesn’t know where they’re currently kept.

She said food purchases were made for open house events or internal meetings and she bought office supplies and other equipment for the district on an Amazon Marketplace business account that also was used by various divisions within the district.

“You can find all sorts of things on Amazon,” she said.

During the pandemic, she said, the district bought N95 masks and personal protective equipment for emergency medical workers on Amazon Marketplace, as well as batteries for firefighters’ self-contained breathing equipment.

“It became a way of doing business — the ability to do business electronically, that’s how you get stuff done,” Nelson said. “Sometimes the charges would be $10,000 for the month or higher, or if there’s a lot of travel or if we’re sponsoring an event.”

Sometimes people didn’t turn in receipts, she acknowledged, “but that wasn’t something that happened all the time. We had a process and procedure to double check that. Some people turned in receipts late, absolutely.”

Nelson said annual audits would randomly examine three or four monthly credit card statements.

“We had internal control processes and double checks,” she said.

However, the last three annual audits by a Tigard-based firm don’t reference credit card expenses.

The current fire chief, finance chief and administrative services director for the district said they can’t access the Amazon Marketplace business account that Nelson said she opened for the district.

Nelson said she can’t understand why that is. She left a list of her passwords and other information to help the people who followed her.

Dennis Hoke, the fire chief from 2019 to 2020, said he was surprised 11 people would have had the district credit cards. The U.S. Bank records from 2016 through 2022 don’t show him as one of them.

But Hoke wasn’t surprised by the district’s credit card expenses, recalling the fire department bought “most things on credit card, noting it was quicker than using purchase orders and invoices and having checks signed by two board members.”

“You just pay it off every month, so you don’t have any interest charges,” Hoke said, though he noted paying for personal meals would violate district policy.

JOBS ELIMINATED

Medina said he eliminated the two volunteer coordinator jobs after finding their salaries and benefits exceeded the federal grants awarded to cover their jobs, not to mention their credit card charges.

Several fire board members said they were told that both posts were set up as administrative “pass-throughs” that weren’t supposed to cost the fire department anything beyond incidental office space and supplies.

Medina first got rid of Cade’s position last year. Cade ended up retiring last July 1 after she ran the senior volunteer program for more than nine years. The job was attached to the fire district for more than two decades. Cade helped find volunteer positions for people 55 and older throughout the county, whether at food banks, senior centers or schools, for example.

She was the one who charged expenses at the beauty salons, clothing stores and pet shop, according to the audit and bank statements. She also is among the former employees who were improperly enrolled for firefighter retirement benefits, the audit said.

AmeriCorps provided $76,434 for Cade’s annual salary, but the fire district incurred about $110,000 in costs beyond that for her health insurance, sick time and vacation and retirement benefits, according to Medina and Sanchez. That didn’t include credit card expenses, according to fire district officials.

Managers of the AmeriCorps grant are now pressing the fire district for an accounting of Cade’s program spending.

AmeriCorps records show a total $157,868 authorized most recently for the program for three years from July 2020 through this June 30. It had distributed $109,547 to the district, with a provision that the district would provide a 33% match, according to AmeriCorps documents.

Auditors and district chiefs said they couldn’t find records to show if Cade used the money from the grant to cover purchases on the district credit card, including $785.50 to rent out the downtown St. Helens Columbia Theatre in 2021. The theater’s owner said it was for a private movie showing of “Jungle Cruise’ and snacks for senior volunteers.

Nelson said Cade sought reimbursement for volunteer recognition expenses from the grant and paid back the fire district. Cade also received donations, she said.

“She beat the street and made sure other agencies stepped up,” Nelson said.

The grant provisions say costs for recognizing volunteers must be within “sound business practices,” be “reasonable and prudent” and within a sponsor’s budget.

Cade declined to discuss specific credit card items charged but said, “Everything I did was approved.”

“I just don’t want to get into any details with you about that,” she said.

Nelson said Cade didn’t require approval for expenses up to $500 because she held a position akin to a fire district director.

The Federal Emergency Management Agency funded the volunteer firefighter coordinator position for Motherway, who worked for the district for more than 10 years until this past February.

Motherway also served as the fire district’s spokesperson and was improperly enrolled by the district as a recipient of firefighter retirement benefits, according to the audit.

The latest four-year FEMA grant covered $45,000 a year for Motherway’s salary. Yet the district’s records show Motherway’s salary grew from $58,273 in 2019 to $70,980 in 2022, according to payroll and W-2 forms cited in a memo written by Sanchez, the new finance chief. The district has paid for the gap – more than $78,000, according to Sanchez.

The district also paid for about $10,000 more a year than the grant set aside for Motherway’s benefits, Sanchez wrote.

It’s not clear from records reviewed by The Oregonian/OregonLive if the grant covered Motherway’s expenses.

Motherway referred questions to her attorney, Rebecca Cambreleng, who also represents Cade in the civil suit they filed against the district.

“My clients did what they were supposed to do, handed in receipts and purchase order documents,” the lawyer said.

Cambreleng said Cade’s charges were largely for volunteer appreciation gifts and she got approval either before a purchase or the purchases had historically been approved. She said she didn’t know who gave Cade approval.

LOCKED IN CABINET

Medina said he couldn’t get straight answers from Nelson and turned to his former colleague from Florida, convincing Sanchez to move his family to Oregon and serve as a division chief in charge of finances to help figure out where the district’s money was going.

Sanchez has a master’s degree in emergency management and managed a $4 million fire department budget at the village of Tequesta, where he worked with Medina.

Medina, Sanchez and Eric Smythe, deputy fire chief, all told authorities that they couldn’t find receipts for the credit card expenses in either the district’s electronic or paper records and had to request the credit card statements from the bank. But the bank records went back to only 2016, Sanchez said.

Smythe, who had one of the district’s credit cards, said he routinely handed in purchasing orders and receipts for his charges to Nelson. “I’d get chastised if I didn’t get a receipt to Marit,” he said.

When he occasionally asked to look at a past payment, Nelson would open a file cabinet with papers divided by month and year, he said.

Smythe said Nelson told him she needed to “do a purge” of district records several months before she resigned.

The forensic audit said a finance manager should have a “working knowledge of the requirements of State of Oregon records retention” and recognize the need for documentation to support expenses.

Nelson said she logged journal entries on district spending and maintained billing documents under a set retention schedule.

The district headquarters underwent construction about a year ago, Nelson said. “They moved all the files,” she said. “They would know where they are.”

Fire officials said they held onto all records during the renovation.

Medina and Sanchez have reined in the spending, taking back all the credit cards and issuing only one in Medina’s name – it’s locked in a filing cabinet and used only upon approval by either the chief, Sanchez or Smythe.

Sanchez drafted a credit card policy that places new limits on expenditures, forbids spending on personal meals, except for light refreshments for training, seminars and special incidents, and requires receipts be turned in within three business days with an explanation of the charges.

The policy comes with new credit limits based on an employee rank, setting a $500 limit, for example, for the fire chief’s administrative assistant and up to $9,999 for the fire chief.

From August 2022 through June 12 of this year, the district charged a total of $29,324.11 on the single credit card issued in Medina’s name for purchases sought by nine district employees, district records show.

‘NOTHING BUT PROBLEMS’

In the background of the financial turmoil, the fire district faces a lawsuit filed in April by Motherway, Cade and a former finance assistant, Anika Todd, in addition to management-union strife.

The women allege a hostile work environment and what they say is Medina’s financial mismanagement.

Medina told the women that they dressed “like construction workers,” showed them pictures of scantily clad women, made inappropriate sexual comments and treated the department as his own “personal fiefdom,” according to the suit in Columbia County Circuit Court.

“They’re hoping to shed light on what Chief Medina has done to hurt the fire district,” said Cambreleng, the women’s lawyer.

Medina “manufactured the reasons” for eliminating the grant-funded jobs, Cambreleng said.

Medina denied wrongdoing and said he found the grants weren’t properly administered and cost the district more than what had been represented.

In the same month as the lawsuit, the president of the firefighters union led a no confidence vote in Medina and called Medina and Sanchez’s allegations of financial improprieties a “distraction” from the district’s other issues.

Aaron Schrotzberger, a fire lieutenant who works for Medina and leads the St. Helens Professional Fire Fighters Association, said Medina has prompted experienced firefighters to leave and demonstrated “confrontational and hostile” behavior toward union members. The union and the district board are also headed to arbitration next month over a dispute on negotiated pay increases and stipends for firefighters who also work as paramedics.

Three union-backed candidates won election to the fire district board in May, ousting three supporters of Medina’s who ordered the audit. The new members take office this Saturday.

Medina said he expects that his job will be on the line. If that happens, he said he’ll file a whistleblower complaint and sue to get it back.

— Maxine Bernstein

Email [email protected]; 503-221-8212

Follow on Twitter @maxoregonian

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