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Everett, Wash.

Published: Sunday, May 17, 2009

Pasado's Safe Haven: Charity is a force for animals but critics question tactics, finances
By Scott North and Jackson Holtz
Herald Writers
© Copyright 2009, The Daily Herald Co.

MONROE -- Susan Michaels and Mark Steinway shared a dream.

On a timbered patch of land in east Snohomish County, the husband and wife team dedicated a decade of their lives to creating an animal rescue sanctuary. Pasado's Safe Haven has become a place of respite for legions of abused and injured cats, dogs and farm animals.

Pasado's uses the compassion and tax-free donations of supporters as a force for improving animal welfare. The charity is named in memory of a donkey tortured and killed by teenage boys at a Bellevue park in 1992.

The good done for animals at Pasado's has attracted national attention and support from celebrities including Oprah Winfrey and actor Will Smith.

That's the narrative most often connected with the nonprofit. There is another story, too.

It's a story about blurred boundaries between the founders' personal lives and operations of the nonprofit corporation they helped establish. It's about strained relationships that Pasado's has with a number of officials in the region who enforce animal protection laws. And it's about fundraising efforts that in 2007 alone brought in more than $2 million.

Pasado's has nothing to hide, Michaels said during recent interviews.

"I gave up my life for this organization," she said. "It is worth it. It is worth every moment of my time."

Over the past two years, Pasado's has been embroiled in a legal dispute playing out in Snohomish and King counties. It was triggered by Steinway's decision to leave Michaels after 26 years of marriage and concluded with a divorce settlement in March.

The legal wrangling focused largely on a 2003 decision by the Pasado's board of directors to help pay part of the more than $530,000 the couple spent building the custom home that Michaels and Steinway shared on the sanctuary grounds.

The 2,400-square-foot house was completed using $170,000 of the nonprofit's funds, court records show. When the deal was approved, Michaels was president of Pasado's board and Steinway was the board's secretary-treasurer.

All parties involved agree that the couple always intended for Pasado's to ultimately wind up owning the home and the 24-acre lot where it is located. Moreover, they made sure it happened without Michaels and Steinway making a profit on the real estate transaction.

Recollections vary sharply, however, on exactly how the deal was supposed to unfold. Pasado's and its founders didn't create a public records paper trail typical of transactions involving real estate.

The dispute morphed into a legal tangle that wound up in court. Allegations in the litigation, and concerns about Pasado's future, prompted roughly a dozen people with intimate knowledge of the organization to contact The Herald.

There is no story, Michaels said. She said any questions about Pasado's would be "based on allegations by individuals who are less than credible or who are twisting information to damage" the nonprofit's reputation.

Steinway took a similar position in 2002 when, acting on behalf of Pasado's, he sent the newspaper a letter threatening a lawsuit. Pasado's had learned that reporters were then examining the group's handling of animal cruelty cases and exploring whether donor money was being spent to develop the sanctuary on land then still owned by Michaels and Steinway.

Steinway, who has since moved to Louisiana, now says concerns about how Pasado's operates are well founded.

The nonprofit has functioned for most of its existence without strong governance by a board of directors to maintain adequate separation between the charity's mission and the founders' personal business, he said.

"Susan and I ran the place," he said. "We consulted with people but we did what we wanted."

'Nothing is hidden'

Attempts to interview Michaels for this story were challenging.

When initially approached for an interview, she responded by inviting reporters to the sanctuary. When they arrived the next morning, she then attempted to videotape the meeting and demanded questions be submitted in writing.

Michaels said the three voting members of Pasado's board -- comprised of herself, a friend from college who lives in California, and a Seattle veterinarian -- decided as a group that all responses to The Herald's inquiries would be in writing. She said this was necessary to make sure the newspaper's report was accurate.

"Our board would like to provide everything in writing and everything that you are asking has been fully reviewed by the board, by attorneys, is public record; you know, nothing is hidden," she said.

Michaels then sent the newspaper more than 20 e-mails containing 66 separate attachments. Some of what she supplied directly answered questions put by reporters (Her current salary? Now $120,000, but it may be reduced if Pasado's hires others to share duties she now shoulders).

The newspaper pored over all materials she sent, including billings from those who built her home or landscaped the grounds; documents detailing the job performance of an employee fired from Pasado's; health records for a pig; and Michaels' opinions on the credibility of those who may have concerns about Pasado's, including her ex-husband.

"Nothing is nefarious and we're going to get you everything and then some, to make sure you know," Michaels said. "I was very happy to fight for everything that would end up being Pasado's in my will. I'm sorry I had to do that with my husband. That I will go on record as saying. But, I just want the animals to win."

Michaels said the two other voting board members would be happy to answer questions. Neither responded to the newspaper's inquiries.

Some uneasy

Several people, some who work at the sanctuary, said Pasado's is a good idea that serves an important function in protecting vulnerable animals. But changes are needed to ensure the organization's survival, they said, speaking on condition that their names not be published out of fear of reprisal.

Others felt so strongly about that goal they wanted to speak out despite threats of litigation made by Pasado's attorneys.

"It's all a facade," said Susan Burk, who was strategic operations manager at Pasado's in 2007, but resigned after seven months.

Burk was recruited for the Pasado's job from a corporate career in the software industry. She agreed to help because she's passionate about animal welfare. She since has returned to the corporate world and no longer donates time or money to the group.

"The reason I left is because I couldn't continue with an organization that didn't stick to the values that it portrays," Burk said. "I just felt too many unethical things were going on and I didn't want my name to be associated with that."

Fundraising at Pasado's incorporates tactics that make some uneasy, Burk and others said.

For example, visitors to the sanctuary often are told that all of the animals there have been rescued, but actually some animals, such as turkeys, are purchased and brought on site so the pens appear full when visitors tour the grounds, Burk and others said.

There are seven cabins on the sanctuary grounds, used as homes for geriatric dogs. Steinway said each cabin was paid for with a $5,000 sponsorship from donors who each were promised plaques on the buildings. The plaques would let them name their structure in memory of a departed pet.

More sponsorships were sold than cabins were built, but donors weren't told, Steinway said.

That's common knowledge on the sanctuary grounds, said one volunteer, who showed the newspaper photographs, taken in April, revealing unused sponsorship plaques stowed away in a barn. Among those were sponsorship plaques that said "Daisy's House," "Harley's House" and "Jupiter McPooch House."

The plaques on the cabins are switched when the sponsor visits the sanctuary, said the volunteer and others familiar with operations at Pasado's.

Fundraising approach

Pasado's Web site makes it easy for people to use credit cards to donate in support of a particular outreach effort, or to sponsor a particular animal Pasado's says was rescued and living at the sanctuary.

Donors get a photo and a card featuring the animal's life story and are promised visitation privileges. The Web-site pitch assures donors that their money will "help provide the feed and veterinary care needed to make these animals whole again."

Pasado's places many of the "sponsored" animals into adoptive homes. However, Michaels acknowledged the charity continues to collect donations, in some cases for months or years after they have left. That happens most when the animal is eye-catching, Burk and others said.

Two examples on the Pasado's Web page early this month were a dog named Tulip, reportedly rescued near starvation on the Tulalip Indian Reservation, and a one-eyed cat named Pumpkin. Neither animal now receives care at the sanctuary-- the dog was placed in an adoptive home in 2007, and the cat was adopted last summer. Pumpkin recently was removed from Pasado's Web site.

Michaels acknowledged the dog and cat now live elsewhere and that money raised online by sponsoring them didn't directly go toward their care. She said donors aren't being misled.

"People understand that if they give us $25 for a cow, it may not be going for that cow," she said.

Raising money using animals no longer kept at Pasado's can't be avoided because sponsorship cards are prepared only once a year, Michaels said. She provided the newspaper with an e-mail showing that in September she'd directed that the Tulalip dog and a number of other "sponsored" animals still on the Web page be replaced with more up-to-date choices.

That same e-mail dealt with fundraising around two llamas at Pasado's. One of the animals attracted national news coverage after a television network learned he had been dubbed "Barack O'Llama."

When Barack O'Llama died the morning of a photo shoot, Pasado's presented another llama as Barack O'Llama. That llama was a female they'd previously named "Llama Turner," sources said.

In the September e-mail, a Pasado's worker sought Michaels' direction on how to handle the llama identity switch: "Need new Barack O'Llama cards with Llama Turner's photo."

"YETH(sic)," Michaels replied.

Money saved

Jenny Mathison worked at the sanctuary from February 2006 until she was fired in July 2008. She said Michaels at times made her job caring for animals impossible, alternately managing the minutia of projects and ignoring Mathison's entreaties to spend money on what she considered basic animal needs, including providing enough people to keep the animals comfortable and clean.

There was no money, Mathison said she was told, even as Pasado's reported more than $5 million in assets by early 2008, and cash reserves totaling hundreds of thousands of dollars.

Pasado's Safe Haven Nonprofit Tax Reports
Year	Contributions	Savings	Cash	Land	Total Revenue	Total Expenses	Net Assets
2007	$2,135,120	$3,302,549	$709,294	$1,708,074	$2,314,191	$1,366,685	$5,319,026
2006	$1,684,914	$2,728,553	$573,410	$1,430,588	$1,927,859	$904,587	$4,347,527
2005	$1,887,625	$2,204,586	$194,320	$1,289,718	$2,124,980	$791,734	$3,324,525
2004	$835,258	$973,107	$117,659	$1,201,220	$1,030,657	$689,251	$1,991,279
1999	$347,176	$22,823	$138,789	$83,861	$348,153	$50,655	$329,811
Click on any year to see the 990 tax forms filed with the IRS.

Pasado's spent about half the money it raised between 2005 and 2007, according to federal tax records filed by the charity. In contrast, tax records show other Snohomish County animal rescue groups spent nearly all the money they raised during the same period.

Michaels said that she and Pasado's other leaders have been good stewards of supporters' donations. Unspent money is being set aside to create an endowment to provide the nonprofit with interest earnings to guarantee it can operate even in bad economic times, she said.

Complaints about Pasado's are coming from people Michaels called "off-the-deep end" animal rights activists who don't see humane killing as an option to end an animal's suffering.

Mathison said she was fired by Pasado's after she objected to the use of poison bait to kill an infestation of rats in barns where rescued animals lived.

She said fundraising often took her away from making certain the animals' basic needs were met. She said Michaels insisted she put off chores and instead write sympathetic stories about animals to be used on Pasado's Web site.

"Every single story was changed to make it a little bit better, or worse, than it was, to bring in more money," Mathison said.

Michaels said Mathison was fired for other reasons. Although The Herald did not request it, Michaels sent the newspaper "operations notes" from a termination, and what appeared to be part of a personnel file. The worker was said to have engaged in the "spreading of rumors and inaccurate information, creating a toxic work-place environment." Although Mathison's name had been redacted from the document, Michaels had earlier told reporters Mathison was the employee who was terminated.

Claudia Moore served for more than a year on Pasado's board before resigning, she said, over concerns about the organization's ethics.

Moore, who now lives in Texas, said Michaels is a charismatic and gifted fundraiser. She also described the former Seattle TV personality as someone who is not open to questions about her methods -- including questions from other board members.

"Susan's philosophy was, 'Be on my board but stay out of my business,' " Moore said.

Lafcadio Darling is a Seattle attorney who long has volunteered legal advice to Pasado's. He recently stepped down from the board in part, he said, to have more time for family.

Darling said the board he served on asked questions and got answers.

"My personal opinion is Mark and Susan started this as a personal project of theirs and they have had to transition to a more professional model. I think they have made that transition, but it is a hard transition to make," he said.

Public efforts

Animal control officers in Snohomish, King and Pierce counties draw a clear distinction between their mission and the role Pasado's plays in animal cruelty cases.

Michaels often, and publicly, criticizes animal control officers for not being aggressive enough in pursuing justice in abuse cases. She also is no fan of the countywide animal shelter in Everett. She said that's because it euthanizes cats and dogs instead of placing them in adoptive homes.

"When an animal suffers, we don't, we can't turn our backs," Michaels said.

Pasado's in recent weeks has been urging its supporters to show up in force at Pierce County court hearings for two Graham teenagers and a man who are charged with shooting and killing a goat with arrows.

Pasado's sent its own investigators to the goat-killing scene.

Before Pierce County officials arrived, Pasado's personnel combed the crime scene for evidence. They took possession of arrows and brought the goat's body to a veterinarian for a necropsy, according to court papers.

Pasado's says on its Web site that its animal cruelty investigator "made this case happen!"

Michaels said Pasado's has received thanks from Pierce County prosecutors.

On Friday, one of the three defendants, 20, pleaded guilty to one count of first-degree animal cruelty, Pierce County deputy prosecutor Michelle Hyer said.

The man was sentenced to community service and ordered to pay restitution to Pasado's for the cost of the necropsy and disposal of the goat, she said.

Trials for the two juveniles are pending.

Despite Friday's guilty plea, Pasado's actions may have weakened the remaining criminal cases, said Lisa Drury, animal services manager for Pierce County. That's because a defense attorney may be able to challenge the chain of custody.

"We're assuming that when this goes to trial, the evidence will probably be thrown out," Drury said.

There is a way animal advocate groups can help in these types of investigations, she said. They can call authorities and guard the evidence until officials arrive.

Pete Mazzone is an Everett defense attorney known for vigorously challenging the work of police and prosecutors. The Herald asked him how he'd approach a case built on evidence gathered by a group such as Pasado's.

"I'd tear them apart," he said.

Not only would Mazzone challenge how the evidence was handled and protected, he'd also urge jurors to be skeptical of any investigation spearheaded not by police, but instead by a private group that places such an emphasis on punishing a particular type of misconduct, in this case animal cruelty.

"When you have a biased group doing their thing without all (the) checks and balances in place you can never trust what they've done because they'd have a vested interest," Mazzone said.

King County doesn't engage Pasado's to assist in investigations, King County Sheriff's Office spokesman Sgt. John Urquhart said.

"We don't use outside animal organizations when we investigate animal cruelty," he said.

Give and take

Snohomish County Animal Control manager Vicki Lubrin takes the same position.

Her department has a file on Pasado's stuffed with back-and-forth correspondence between Michaels and county animal control officers regarding the nonprofit's desire to play an active role in cruelty investigations.

Last year, for example, a representative of the nonprofit showed up at night, unannounced, at a Stanwood dairy farm, asking to buy sick cows that were being kept in a field, public records show.

County investigators determined the cows were recovering from foot injuries caused by trimming their hooves or slipping on concrete, and that the animals were under a veterinarian's care.

Michaels, however, demanded blood tests, telling authorities that the livestock might have been infected with mad cow disease.

Rebuffed, Pasado's set up surveillance, according to records.

When the farmer moved the cows to another location on the property, Michaels accused him of violating a state law that prohibits transporting "downer" livestock suspected of being infected with disease.

County investigators determined the farmer broke no laws.

Pasado's jumped into action again earlier this year when officials in Snohomish and Skagit counties raided two suspected puppy mills, rescuing around 600 animals.

Pasado's sent a message to its e-mail list, urging donors from across the country to open their wallets.

"Dogs rescued -- we're helping!" the message said.

The group also launched a campaign to pressure investigators to turn over the puppy mill dogs to Pasado's care.

On its Web site and in e-mails, it encouraged supporters to write officials and local media and demand that Pasado's be allowed to participate in the rescue effort, including providing veterinary care.

The messages claimed that other dogs likely were being killed at shelters to make room for the hundreds of puppy mill animals, which was not true.

Harried officials found themselves trying to convince outraged animal lovers that the dogs in their care were being handled appropriately, and that none was being killed to make room for the rescued puppy mill dogs.

Lubrin and others already had told Pasado's that the nonprofit's sanctuary wasn't an appropriate place for the puppy mill dogs because the animals were evidence, public records show. At that stage of the case, custody needed to be controlled by the county's investigators, who anticipate testifying under oath.

The only help accepted from Pasado's was to drive a few of the dogs seized in Skagit County to a certified shelter. Pasado's got publicity for the event.

Steinway said he's certain Pasado's knew its help wasn't needed in the puppy mill case.

"It's all about the photo opportunities, because photo opportunities bring in the money," he said.

Michaels said Pasado's involvement raised $16,000 in support of the puppy mill dogs. The money was offered to another Snohomish County animal rescue agency that did play a direct role in the dogs' care, she said.

"All I can say is we are very proud of what we accomplish," Michaels said.

Scott North: 425-339-3431, north@heraldnet.com.

Jackson Holtz: 425-339-3439, jholtz@heraldnet.com.

© 2009The Daily Herald Co., Everett, WA