Former HomesNOW! president arrested for allegedly embezzling more than $75K
A month after the Bellingham Police Department announced it was investigating managing members of HomesNOW! for misappropriating funds, former president and co-founder James Lee Peterson has been arrested for embezzling more than $75,000 from the organization.
Peterson, 62, of Bellingham, was arrested Nov. 1 on suspicion of first-degree theft. Peterson’s arraignment is scheduled for 9 a.m. Friday, Nov. 8.
He was released from Whatcom County Jail Nov. 4 shortly before noon on $10,000 bail, according to jail records.
Whatcom County Deputy Prosecuting Attorney Jonathan Richardson said formal charges are expected to be filed within the next several days.
HomesNOW! is a nonprofit organization that operates a tiny home encampment for the homeless, called Unity Village, in the city-owned parking lot at 210 McKenzie Ave., near the Post Point Water Treatment Plant in the Fairhaven neighborhood. The tiny home encampment, which can house up to 28 people, is permitted to operate at its current location through April 2020.
On Sept. 30, Bellingham police announced they had opened an investigation into managing members misappropriating funds. Doug Gustafson, who is a co-founder of HomesNOW!, said he came forward with the allegations after noticing discrepancies with the nonprofit’s funds.
Investigators with Bellingham police reviewed banking records received from a search warrant to determine whether the funds being used by Peterson were for business or personal purposes, Bellingham Police Lt. Claudia Murphy told The Bellingham Herald. Many individual transactions were deemed to have been for Peterson’s personal use, Murphy said.
Peterson is suspected of embezzling more than $75,000 in total — a conservative estimate, Murphy said. He allegedly stole the money from the organization’s business checking account, Murphy said.
Murphy said there was a “multitude” of daily expenses at fast-food restaurants, which had no legitimate business purpose, that totaled more than $12,000. Transactions were also made at 2020 Solutions (a marijuana dispensary), a tobacco and liquor store, both Silver Reef and Skagit casinos, and multiple coffee shops. The cost of those transactions are estimated to be around $8,700, Murphy said.
More than $17,000 was spent at Fred Meyer for fuel and other purchases, she said.
Peterson allegedly made roughly $41,000 worth of ATM cash withdrawals, and another $28,000 in withdrawals inside banks, according to Murphy.
Murphy said the majority of what the ATM cash withdrawals were spent on is unaccounted for, but the remaining HomesNOW! board members told the detective they were likely personal cash withdrawals made by Peterson.
Surveillance footage obtained from some of the businesses show Peterson using the ATMs and making purchases, Murphy said.
Peterson was contacted by police Friday afternoon and arrested and booked into Whatcom County Jail without incident, Murphy said.
The investigation is still ongoing, and it’s unknown if further charges will be filed against any other HomesNOW! members, Murphy said.
Since the investigation started, three managing members have been removed from the nonprofit’s board, and new policies were being put into place to prevent future misconduct, Gustafson previously told The Herald.
Bellingham’s planning department also put things on hold with HomesNOW! and barred the organization from admitting more residents to Unity Village in light of the allegations.
The organization had to update its policies and procedures, repopulate its board and the criminal investigation had to end before discussions could take place, according to Rick Sepler, Planning and Community Development Director for Bellingham.
Sepler told The Herald Nov. 4 that the temporary shelter permit remains valid and can continue to be used provided that the conditions of approval are met. Sepler said HomesNOW! is not in compliance with several administrative requirements of the permit, but that the city is working with the organization to address the outstanding issues.
The residents at Unity Village said that while the allegations of embezzlement hurt them all deeply, the tiny home model works for pulling people out of homelessness.
This story was originally published November 4, 2019 at 1:38 PM.
