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Spokane terminates Guardians Foundation homeless contracts over fraud concerns

woodward shaw perrine cannon street shelter.jpg
Rebecca White | SPR
Spokane Mayor Nadine Woodward speaks to reporters at a press conference at the Cannon Street shelter in 2021. Behind her, left is Major Ken Perrine of the Salvation Army, and Mike Shaw, director of the Guardians Foundation. His organization previously operated the shelter.

The Spokane City Council has terminated the city’s contract with the operator of two of its shelters after finding several accounting discrepancies and poor financial record keeping.

The contractor, the Guardians Foundation, has a former employee under investigation for embezzlement. It also lost its IRS status as a non-profit after not complying with paperwork requirements.

The contracts for the Cannon Street Shelter, and the Trent Resource and Assistance Center shelter, about $5.6 million together, were awarded to the Salvation Army. The organization already operates one transitional housing project for the city, The Way-Out Shelter. The Salvation Army applied to run the Trent facility initially, but their application ranked lower than the Guardians in the request for proposal process.

Spokane City Administrator Johnnie Perkins said city employees found suspicious accounting activity going back eighteen months at two city owned shelters, as well as a temporary emergency cold weather shelter the city set up in the Spokane Interstate Center for the Arts last year.

“We continue to learn a lot about what was going on, we will continue to improve out systems to ensure taxpayer dollars are protected,” he said. “I think by bringing in the Salvation Army who has a track record and experience of managing and leading these kinds of shelters which transition homeless from transitional housing, to temporary to permanent, you’re going to see a huge difference.”

Perkins said the Salvation Army plans to offer jobs to the Guardians staff members who work directly with homeless residents at the two shelters.

City Council members unanimously approved the contract change, but several, such as Zack Zappone, said they still have concerns.

“There’s been questions about the whole RFP process that originally that got us to the Guardians,” he said. “We've seen red flags throughout this process, such as them not having a 501(c)(3) status, and why weren't these things caught in our process?”

Perkins said the city is still awaiting the outcome of both a criminal investigation and a forensic audit.