Pasado’s agrees to changes by state

Published 7:51 pm Friday, October 29, 2010

MONROE — A high-profile animal-welfare charity has agreed to reform its fundraising and business practices as part of a settlement reached to close a 16-month investigation by the state attorney general’s office.

Pasado’s Safe Haven must comply with court orders barring it from misrepresenting how it will use money raised to help animals, including during natural disasters. The nonprofit also agreed to restructure its accounting practices and to get training for its leaders. The agreement also specifically bars Susan Michaels, one of Pasado’s founding members, from serving on the board or working in executive management, roles that she had held for years.

All of the changes are designed to ensure that a well-meaning charity that aims to help animals will stand a good chance of avoiding problems moving forward, said Shannon Smith, the assistant state attorney general who handled the case.

“Nothing about the management of the organization has ever indicated that Pasado’s doesn’t intend to do good, and Pasado’s is very different from some of the other charitable organizations that we’ve investigated,” Smith said.

The eight-page agreement was filed late this week as a consent decree in Snohomish County Superior Court. It specifies oversight and accounting improvements and warns that Pasado’s risks civil fines of up to $25,000 a day should it violate the agreement.

The state began investigating Pasado’s in May 2009. That was the same month The Herald published results of an investigation that focused on questions about fundraising and business practices at the nonprofit, which has over the years raised millions of dollars for animal welfare and poured substantial sums into building barns and kennels on a large, wooded lot outside Monroe.

Pasado’s already has made changes in its record- and bookkeeping practices and is moving forward, John Jenkel, an attorney for the organization said Friday.

Michaels is no longer on the Pasado’s board nor is she employed by the nonprofit, the organization’s new Chief Executive Officer Matt McNaughton, said in a prepared statement. He said Pasado’s is not acknowledging wrongdoing or impropriety.

“The consent decree is forward looking,” he wrote. “By this, we mean that the Attorney General has agreed that there are actions to be taken going forward to improve Pasado’s recordkeeping and internal procedures. There are no fines, or penalties, for any past conduct by Pasado’s Safe Haven.”

Pasado’s agreed to pay $70,000 to cover the state’s costs and attorneys fees, documents show.

The investigation took so long, in part, because Pasado’s underwent changes in management and leadership on its board after the attorney general began examining consumer complaints, Smith said.

Those changes caused investigators to “re-evaluate the proper way to resolve this case,” Smith said, particularly after investigators heard from vocal critics that Pasado’s was a good idea in need of reforms.

Susan Burk was strategic operations manager at Pasado’s in 2007 but resigned after seven months. She was among those who brought complaints to the attorney general.

In court papers, state attorneys said that from 2005 to 2009, evidence shows Pasado’s failed to keep separate the nonprofit’s finances from the personal business of some employees, and that the mixing involved credit card use, bank accounts and even real estate. The state said Pasado’s also took money while misrepresenting its ability to assist in natural disasters and misled by promising care for specific animals.

Those actions violated state laws involving charitable solicitations and consumer protection, state attorneys alleged.

Burk said the changes Pasado’s has agreed to embrace are good news for people who care about the organization and the animals it helps.

“That’s really what I wanted all along. I think that the attorney general’s office investigation uncovered the things I’d talked about. It did force a change of behavior and ultimately what benefits is the nonprofit and the animals that will be saved.”

Herald writer Diana Hefley contributed to this report.

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