Updated, 4:50 p.m. Tuesday:
WENATCHEE — Following years of financial and organizational turmoil, United Way of North Central Washington will be dissolved Sunday.
Vice President Carrie Ann Gavin, the nonprofit’s only remaining staff member, and its five remaining board members announced the decision in a letter to community stakeholders Friday.
The organization’s remaining funds will be distributed to other local nonprofits.
"The goal is to give every dollar back to the community, but also to close up shop with all the bills paid," Gavin said in an interview Tuesday.
United Way, a pass-through nonprofit that collects donations and distributes them to other charities, has struggled to meet its funding goals. It was expected to provide $62,000 to four organizations this fiscal year. That’s down from around $225,000 for 12 organizations in the previous two years.
Contributions have also been down. In the 2018-19 fiscal year, total contributions were in the $307,000 range, $240,000 less than the previous year — a 76% drop, then-CEO Charity Bergman said last August.
WENATCHEE — Four United Way of North Central Washington partner agencies will receive a total of about $62,000 this year in grants, a 72% drop from the amount distributed last year.
Bergman was let go from United Way on Nov. 8 and her position wasn’t filled, according to the Friday letter. By the end of that month, Gavin was the lone remaining staff member.
Bergman was hired in September 2018 to replace Alan Walker, who resigned after 11 years on the job. Walker now leads the Chelan Douglas Community Action Council.
The letter from Gavin and current board members outlined what they call “previous incompetence” of the former leadership that led to the organization’s financial struggles.
“As you are aware, prior CEOs grew the organization to an unsustainable size with the hope of doing great things, but the growth was not supported with the funding or financial accountability needed to honorably sustain it,” read part of the letter. “In recent years, financial controls were inadequate, consistent disclosure was not provided to the Board of Directors and its partner agencies.”
The organization’s board of directors has also seen high turnover. In June, eight new board members came aboard, bringing the total to 18, according to the letter. All but five were gone by the end of November.
Citing the operational and financial upheaval, Confluence Health and the Chelan County PUD — two of the region’s largest employers — dropped United Way from their charitable giving payroll deduction programs in September.
“We have been tracking reports over the last two years regarding operations at United Way of NCW. We met with their leadership last year and they committed to significant change. Unfortunately, we have not seen actions that match the promises we heard. This is disturbing as the organizations that United Way of NCW has historically supported have been negatively impacted and, in turn, the many people served by these local nonprofits,” PUD General Manager Steve Wright said at the time. “At this time, we do not believe United Way of NCW’s operations reflect the values of our organization.”
United Way’s financial struggles have been compounded by repeated accounting issues.
“The board and staff worked diligently to internally audit the financials and continued to discover numerous errors and poor donor tracking,” read part of the Friday letter. “Board and staff made it their mission to honor every pledge received and ensure it made it to its intended destination. Board members and staff had to manually track down the information by looking at emails, paper pledges and check stubs.”
WENATCHEE — Charity Bergman has been named president and CEO of the newly reconfigured United Way of North Central Washington, which now encompasses Chelan, Douglas and Okanogan counties.
Those issues stretch back to at least 2018, when an accounting firm was brought in to review past financial statements and update policies, then-Board Chairman Jeremy Bonner said at the time.
“When you have bookkeeping that doesn’t make sense, it leaves you a little bit blind. We can look at things and think we know, but we don’t know. We don’t have the definitive numbers yet,” he said of the funding available that year.
Since the turmoil in November, Gavin and the board have been trying to right the ship, she said.
"Ever since November, every month and every day has been like 'What should we do? What’s the right thing to do?'" she said.
They first discussed the possibility of dissolving the organization in March.
"It was just time," Gavin said.
United Way of North Central Washington has transitioned through several name and mission changes since it began as the Wenatchee Welfare Federation, according to its website. The organization turned 81 years old in April.
"It’s disappointing that it's been around for nearly 100 years and now I think it’s going to leave a hole in this community," Gavin said. "But I think this community will find ways to take care of each other."
This story has been updated with comment from Carrie Ann Gavin.
LEAVENWORTH — During the governor’s stay at home order, East Wenatchee residents James and Erika Conner have been restricting their outdoor activity.
“The Washington Trails Association said stick to the local trails, and that’s what we’ve been doing — staying around just Wenatchee, near the Columbia River,” James Conner said. “There’s dirt trails by our house, so we’ve been going around that and our neighborhood.”
But on Friday, the U.S. Forest Service began a phased reopening of trailheads and day-use areas in the Okanogan-Wenatchee National Forest. Icicle Road near Leavenworth also reopened Friday, having been closed since March 27.
So, the Conners headed out to Icicle Gorge on Saturday.
The couple said they were excited to get out of the house and have something to do.
“You can actually social distance yourself” on the trail, Erika Conner said. “It’s worth it, too, coming out here and seeing the beautiful scenes.”
Vehicles lined parts of Icicle Road on Saturday and the Icicle Gorge trailhead parking lot saw a steady stream of visitors.
Among them were Tumwater residents Sara Smith and Colin Sullivan. They said they’re taking advantage of the outdoors, having moved to Washington from Chicago about a year and a half ago.
Smith said she was “ecstatic” about the trailheads reopening.
“I think they should have stayed open,” she said. “There are so many options in Washington, and you’re never really that close to anyone when you’re hiking unless you’re doing something in town.”
She said she believes camping should have stayed open as well. For now, campgrounds, some restrooms, and rental facilities like cabins and fire lookouts are still closed, and no dispersed camping is allowed between the road and Icicle Creek.
Smith and Sullivan said they wanted to hike the Eightmile Lake trail, but the road there is closed for construction. They were still glad to get into a mountainous area and said they might also go kayaking in Lake Wenatchee.
Wenatchee resident Andrea Simon started walking up Icicle Road from the bus stop at Highway 2 and said she’d go as far as she could. She said she also runs, hikes and bikes and is thrilled the road has reopened.
Simon said being in nature makes her less worried about COVID-19 and she uses it as an escape from all the news about the virus.
“I understand if you’re in a crowded city, but out here?” she said. “If you have 20 or 30 people together and you’re all walking, I can understand the concern. But we’re few and far between. ... I love it up here. I come up here and it’s all too clear, it’s all too beautiful. This is what it’s about — not a virus.”
OLYMPIA — Earlier this spring, as Washington began to pay out enhanced unemployment benefits to tens of thousands of laid-off and furloughed workers, a criminal organization halfway around the world spied an enormous opportunity.
A Nigerian fraud ring, dubbed “Scattered Canary” by security researchers, would soon begin siphoning off the benefits, notably the extra $600 a week Congress had added to unemployment checks.
Hiding behind a tsunami of legitimate claims, and using personal information likely stolen in past consumer data breaches, the ring and other criminals filed thousands of bogus applications with the state’s Employment Security Department (ESD). By the time the fraud was recognized, scammers had made off with “hundreds of millions of dollars,” ESD Commissioner Suzi LeVine acknowledged Thursday.
Exactly how much was carted off by Scattered Canary, as well as other bad actors, hasn’t been determined. But federal and state officials have pointed to sophisticated Nigerian cyber-fraudsters as key players who exploited a once-in-a-generation opportunity, abetted by a chaotic economic crisis and political pressure to swiftly payout checks to distressed workers without the usual scrutiny. Since the start of the pandemic, the state has paid out nearly $3.8 billion in benefits.
Washington’s unemployment system also missed potential red flags, including payments to out-of-state banks and the use of suspicious email accounts, according to security experts. All of that happened despite a $44 million software upgrade at ESD that was supposed to help detect such fraud.
The monumental pilfering of public dollars has left Washington as the largest known victim of the fraud that also has hit at least six other states, according to a May 14 U.S. Secret Service bulletin. The federal Department of Justice is investigating.
It also may have political recriminations: Republicans are already citing the losses to slam Gov. Jay Inslee’s record of managing state government as he seeks a third term this fall.
But the biggest victims may be the innumerable Washingtonians who now have had their legitimate and urgently needed claims for jobless benefits delayed as the state tries belatedly to halt the fraud. Others who have already received money say their claims are being investigated for “possible overpayment.”
Seattle resident Silvia Muhammad and her husband were both receiving unemployment benefits when they got ESD notices demanding more verification, or else “he’s going to have to pay back all the money that they’ve given him.”
Like many workers, Muhammad said she has struggled to get answers from the state ESD, which has been overwhelmed with fraud reports. Without the benefits, Muhammad said she and her husband are struggling to pay basic expenses, including rent.
“We’ve never been faced with this predicament,” she said, in tears. “The Nigerians are getting paid but the people that are owed money are not getting paid. I mean, like, really?”
To some degree, Washington and its workers are the latest casualties in an era of rising identity theft. Filing for unemployment insurance in Washington and many states requires the sort of personal information — Social Security numbers, birth dates, addresses — that is depressingly easy to steal or buy on the dark web, thanks to massive data breaches such as the 2017 attack on credit reporting agency Equifax that allowed access to records of more than 145 million individuals.
Indeed, officials at ESD and at WaTech, the agency that manages the system the state uses to authenticate users for ESD and other state agencies, have repeatedly insisted that when thieves have enough personal information, it’s difficult to stop people from filing fraudulent claims without also obstructing legitimate filers.
The state considered a more stringent authentication system that was included with the upgraded software, but discovered it created headaches for people trying to file claims, and even a less stringent gateway caused “an increased number of phone calls to the agency,” according to a 2017 assessment of the new Unemployment Tax and Benefit system (UTAB).
The net result, it now seems, was an unemployment system that was easier for legitimate users — but also for bad actors, who, once inside, could both file bogus claims and set preferences for how they wanted to be contacted and paid.
“Once you’ve authenticated yourself, you’re free to update your contact information, your direct deposit information, you know, a lot of different things,” said ESD spokesperson Nick Demerice. Attempts to change certain account information would be flagged for review by the ESD’s fraud team, which has recently expanded.
Under ordinary circumstances, with 5,000 to 7,000 new, or “initial,” claims filed a week, the ESD system appeared to have been sufficient to detect and stop suspicious claims.
But starting in March, as the coronavirus response shut down the economy, those numbers skyrocketed to a peak of 181,975 initial claims in a single week. By late April, the state had taken in around 860,000 initial claims, paralyzing its website and call center.
At the same time, across the nation, federal and state officials pushed to expedite benefits payments, even if it meant losing some security. Washington and other states dropped the usual waiting period between when a claim is filed and paid, so ESD didn’t always have enough time to verify claims before sending payment.
It was a situation ripe for exploitation. And, according to security experts, actors like Scattered Canary did just that.
Scattered Canary began as a one-man shop running Craigslist scams, but has grown over more than a decade into a criminal syndicate targeting businesses, governments, as well as individuals with a variety of cons, according to Agari, the California cybersecurity company that first discovered and named the organization in early 2019.
The group and others like it are “behind a lot of the fraud that’s taking place,” said Armen Najarian, chief identity officer for Agari, which he said works with law enforcement agencies and has briefed the Secret Service on the group. Some slice of fraud may also be coming from domestic sources, and there are always the run-of-the-mill efforts by individuals to game the system.
Najarian said Scattered Canary appears to use some software automation tools, but it mainly employs dozens, or perhaps hundreds, of individuals who tap out their schemes on computer keyboards. While the group adopts “a bit of a Robin Hood mentality” to spend some of the ill-gotten cash to help African communities, he said some ringleaders also live large, lavish lifestyles including first-class flights, expensive Champagne and gold jewelry.
Marcus Fowler, director of strategic threat at Darktrace, a cybersecurity firm, said the fraud scenario reported by Agari is feasible, but identifying specific actors in cyber fraud can be extremely difficult. Artificial intelligence could improve fraud detection but that technology is not mature enough to stem the tide of unemployment cresting with the federal pandemic bailout, he said.
Washington’s unwelcomed role as the top target so far may not have been the result of any unique security flaw. But the state was one of the earliest to start paying out the extra $600, which, on top of Washington’s already-generous unemployment benefits, meant that the thieves could potentially steal $1,390 a week per claim.
“It is clear this is not just a Washington state problem,” said a statement from Gov. Jay Inslee’s office Thursday. “This is a national and international criminal conspiracy. We were among the first states hit by these fraudsters but we will not be the last.”
But Caleb Heimlich, chairman of the Washington State Republican Party, said responsibility for the massive swindle rests with Inslee. “No other state was susceptible to this level of fraud. Inslee and his hand-picked department heads continually mismanage our state. All of these failures are Inslee’s to own,” he said in a statement Friday.
On May 14, the ESD acknowledged a sharp rise in suspected fraud and abruptly suspended benefits payments for two days. By then it was too late.
But experts say that, even before then, there were some clues that should’ve raised alarms about fraud. Some Washingtonians said they found their ESD accounts redirected to an email service called Yopmail, which provides “disposable” email addresses that require no password. Scattered Canary also used so-called “google.dot” accounts, that is, variations of the same Gmail address that can be used to set up a separate ESD account but, which all deliver to a single Gmail email address, according to Agari.
Then there was the payment system. In order to actually receive the fraudulent benefits, Scattered Canary and other groups often use “mules” — people who knowingly or unknowingly help launder money by opening bank accounts or online debit card accounts.
The Secret Service, in its May 14 bulletin, noted Washington had sent automated payments to persons outside the state “all in different individuals’ names with no connection to the account holder.”
The out-of-state bank accounts should have been “a huge red flag” for ESD to scrutinize payments, said the senior fraud officer at an East Coast bank that received at least five electronic deposits from “UI Benefit WA ST.”
“Given our location, we don’t have a lot of people who are employed in the state of Washington,” said the banker, speaking on condition of anonymity to avoid disclosing his bank’s fraud prevention measures.
In the wake of the fraud, ESD is assessing and adjusting the “flags and checkpoints in the system,” Demerice said. “And part of figuring it out ... for fraud claims that have made it through, what are the gates and checkpoints that would have caught those?”
But “we really can’t talk about the things we are going to put in place, the additional safeguards,” he said.
WENATCHEE — Chelan County Superior Court Judge Kristin Ferrera tested positive for COVID-19 on Friday. She’s the first known public official in Chelan and Douglas counties to contract the coronavirus.
She was in good spirits when reached by phone Friday evening.
“I feel OK. I don’t have any severe symptoms yet,” Ferrera said. “I will have to just kind of see how things go.”
Ferrera is one of the county’s three superior court judges, along with Judge Lesley Allan and Judge Travis Brandt, and heads its drug court. She took the bench in 2018 after she was appointed to replace retired judge Alicia Nakata and then retained her position later that year in the general election.
Ferrera, 40, was tested Thursday evening after she began developing a dry cough and received the results Friday. She did not enter the Chelan County Courthouse on Friday.
She said she intends to follow her doctor’s recommendations and won’t return to work until it’s safe to do so, which will depend on how her symptoms develop. At the very minimum, she’ll be out for a week, she said.
She expects everyone who works in her office to be tested, although some people in the office have been working one week on, one week off as a precautionary measure, and might not have been exposed. She’s not sure how she contracted the virus.
“I’ve been very careful and I’ve been taking all the precautions,” Ferrera said.
Attorney John Brangwin has been disappointed by preventative measures taken by the superior court.
“Chelan County Superior Court has taken COVID the least seriously of all the courts in NCW,” Brangwin said in an email. “So, I’m not surprised.”
On Saturday, Allan said Ferrera has been, “particularly cautious about everything she has done, in court and in chambers” to follow all of the the Centers for Disease Control and Prevention guidelines and that she wasn’t coughing in the courtroom.
Allan defended the measures taken in the courts.
“Certainly, we’re taking this seriously and continue the many precautions we’ve had in place for the last two months or so,” Allan said.
The court put much of its caseload on hold in March after Gov. Jay Inslee issued a state of emergency order. Most civil hearings have been conducted by phone or video chat service, Zoom. Defendants on the criminal calendar are also encouraged to appear remotely.
“Our staff has been proactively reaching out to people to have them appear remotely,” Allan said. “We believe we have been taking appropriate measures while still giving access to justice.”
Allan contacted Confluence Health after learning of Ferrera’s positive test and was provided protocols for hospital staffers considered at medium or high risk.
However, the court employees are not at medium or high risk, as previously reported. Allan said she also contacted an employee with EvergreenHealth in Kirkland, located in the epicenter of Washington’s COVID-19 outbreak, who, after hearing the court’s conditions, believed they’re likely a low risk.
The measures taken by the court have been corrected in this story.
WENATCHEE — Twenty-five out of 60 people from a specialty packaging line crew at Stemilt Growers’ Olds Station facility recently tested positive for COVID-19.
The precautionary test was conducted Friday and Stemilt received the results Saturday, according to a company news release. Those who tested positive will be isolated before returning to work.
Stemilt was notified May 19 about three positive test results from crew members on the specialty packaging line and shut down that line, the release said. Since then, the company learned about 13 additional positive tests from the line and decided to test the remaining crew members and those supporting the crew on Friday.
“The safety and well-being of our team members has been and remains our top priority as we operate as an essential business during this pandemic,” said West Mathison, Stemilt president, in the release. “We will be praying for the quick recovery of our Stemilt team members and will follow up with each person frequently to monitor their progress.”
NCW — Two thirds of Stemilt agricultural workers in an East Wenatchee housing unit have now tested positive for COVID-19, an increase from earlier reports showing about half the workers tested positive.
According to the release, the company has increased sanitation, implemented social distancing and installed barriers in areas where remaining six feet apart isn’t possible. It also requires employees to wear masks.