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Justice department investigates nonprofit selected for $1.5 million state contract

The Oregon Department of Justice issued a wide-ranging demand to Black Mental Health Oregon for financial documentation
Black Mental Health Oregon was one of three nonprofits selected to open and operate a "peer respite center." The new facilities will offer people in mental health crisis a place to stay for up to two weeks. Most offer residents their own bedrooms. | SHUTTERSTOCK
July 27, 2023
Editor's note: The initial version of this article inadvertently failed to disclose that an advocate quoted in this article had agreed to serve as a volunteer on The Lund Report's new Community Advisory Board. The board helps elevate our journalism with feedback from people with lived experience as well as experience in health care, journalism, community work or some combination thereof. I apologize for the omission; please know The Lund Report will strive to ensure it won't happen again. The board's first meeting was Sept. 7; if you are interested in learning more, email me at [email protected].

The Oregon Department of Justice has opened an investigation into an organization that the Oregon Health Authority selected for a $1.5 million contract to open a new behavioral health center in Portland.

The new development marks the latest setback for a program approved by lawmakers in 2021. It was supposed to launch more than a year ago following successes in other states.

The health authority late last year issued a notice of its intent to award contracts to three organizations to operate mental health respite centers. They will provide people in crisis a short-term stay coupled with support from others who’ve had similar experiences, known as “peers.” 

Two of the three organizations selected for the program raised concerns with some advocates over whether they had sufficient capacity to run the new centers. Now records obtained under Oregon Public Records Law show the Department of Justice is escalating its concerns about one of them, Black Mental Health Oregon. 

The group submitted its nonprofit registration to the Department of Justice after its staff repeatedly reached out to Taunya David, the executive director of Black Mental Health Oregon, warning her she could face “legal action” for not doing so, records show.

However, Elizabeth Grant, who heads the department’s charitable activities section, reached out to the group’s leaders in a July 11 email notifying them that their newly submitted registration materials “raised additional questions about the organization’s compliance with applicable legal requirements.”

“The organization may wish to retain an attorney in connection with this matter,” wrote Grant. “If the organization retains an attorney, please ensure they contact me to let us know they are representing the organization.”

David, who is referred to as Golden-David in other documents, did not respond to requests for comment from The Lund Report. Individuals listed in records as board members or affiliated with the group could not be reached for comment. 

Kevin Fitts, a longtime advocate who lobbied for the new program, had filed a complaint with the justice department over Black Mental Health Oregon’s failure to file financial documentation. He told The Lund Report the investigation reinforces his concerns that the health authority hasn’t done its due diligence on which groups to award contracts to (Fitts is also a volunteer member of The Lund Report’s new Community Advisory Board). 

While he said he was glad the Department of Justice was opening an investigation, he said he wants the organizations selected for the contracts to have the technical support needed to succeed. 

“This isn’t a criticism of contractors that are new to the process,” he said. “Without the necessary support, these projects are going to have some choppy waters.”

Fitts also said he was puzzled why health authority leadership didn’t take action sooner when they became aware that Black Mental Health Oregon hadn’t registered as a nonprofit. 

Health authority spokesperson Tim Heider told The Lund Report in an email that the agency is aware of the justice department investigation into Black Mental Health Oregon. 

Asked whether the authority was moving ahead with the contract, Heider was noncommittal.

“OHA does not yet have a fully executed grant with Black Mental Health Oregon,” he wrote.

Grant wrote in her email to David that the department had opened an investigation. The email included an order equivalent to a subpoena directing the organization to produce a broad range of documents by August 4. 

The order seeks documents covering its board’s membership, minutes, agendas and reports, as well as financial data, bank statements and compensation of employees and contractors. It also seeks documents on loans, reimbursements and other transactions between Black Mental Health Oregon and its board members and officers.  

The department’s order demanded that Black Mental Health Oregon turn over its IRS application for its tax-exempt status and documents used to prepare a financial report known as a 990. 

Oregon nonprofits are required to file 990 forms with the IRS and the state Justice Department. The documents, which are publicly available, provide basic information on each nonprofit’s leadership and finances. 

But state lawyers expressed concern over Black Mental Health Oregon delays in filing a 990 with the Oregon Department of Justice, and it’s unclear if it submitted one to the state in the last few weeks. The justice department told the Lund Report it was withholding some documents requested under records law in light of its pending investigation, but did not specify what was being withheld.

Based in Portland, Black Mental Health Oregon was among the roughly dozen organizations that applied for grants to operate peer respite centers. The group’s application described itself as being “focused on improving health disparities for Black, African, Caribbean, Latino/a/x, and/or Indigenous communities in Multnomah County.”

The application said it incorporated as a nonprofit in 2017 and lists a $1.1 million annual budget drawn from contracts and grants with local, city and state governments, as well as private foundations. 

Previously, Justice Department staff warned the leadership of Black Mental Health Oregon that it is unlawful to solicit or receive state grants or other funding without being properly registered as a nonprofit. 

The Justice Department’s order directs Black Mental Health Oregon to produce reports on its compliance with government grants. It also asks for the organization's brochures, letters and other outreach materials informing potential clients of its services.

The other nonprofits selected for the respite center program are Medford-based Stabbin’ Wagon and Salem-based Project ABLE. 

You can reach Jake Thomas at [email protected] or via Twitter @jakethomas2009.