Whistleblower lawsuit targets Portland-area shelter contractor Sunstone Way, alleging retaliation and misuse of public funds

Former finance director seeks $4.5 million in Multnomah County Circuit Court

A former Sunstone Way finance executive has filed a whistleblower lawsuit in Multnomah County Circuit Court seeking $4.5 million, alleging the Portland-area shelter provider mismanaged finances, spent excessively on overhead and retreats, and retaliated after she raised concerns about spending and reporting practices.

The plaintiff, Kate Fulton, joined the organization on Oct. 2, 2023, and later became director of finance. The complaint alleges that by July 2024, Sunstone Way was under severe cash-flow strain and nearly missed payroll, avoiding default only after negotiations with its bank. The suit claims Fulton’s attempts to flag spending and accounting problems led to her being excluded from board meetings and constrained in what she could report, before her employment ended on Feb. 21, 2025, while she was receiving medical treatment.

Allegations focus on office costs, consulting payments, and vendor overbilling

The complaint describes several categories of spending it characterizes as imprudent or improperly managed, including a mid-2024 move from lower-cost office space at a repurposed school building to a more expensive location on Naito Parkway while the earlier lease had not expired. The lawsuit alleges the new office cost roughly $20,000 more per month than the prior space.

The filing also alleges that Sunstone Way issued consulting payments tied to individuals and entities with connections to the nonprofit shelter sector, and that Fulton questioned these expenditures. Another allegation involves overbilling connected to shelter food services: the complaint says Fulton identified roughly $210,000 in overbilling by a food provider and was told not to report the overpayment to government funders because leadership had made a separate arrangement with the vendor.

• Claimed near-payroll failure and cash-flow crisis in mid-2024
• Disputed move to higher-cost office space while paying overlapping leases
• Consulting invoices and related-party concerns raised internally
• Alleged vendor overbilling and instructions not to disclose to funders

Public contracting context: shelter operations and prior billing findings

Sunstone Way operates multiple shelter programs in Multnomah and Clackamas counties, including congregate and motel-shelter models. In June 2025, county officials announced the opening of the Delta Park Motel Shelter in North Portland, a former Motel 6 converted to provide 60 private units and capacity for up to 70 people, with on-site services.

The lawsuit arrives amid prior scrutiny of the organization’s billing practices under its former name, All Good Northwest. In 2022, the Multnomah County Auditor’s Office reported that unallowable expenses totaling $525,000 had been approved and paid, including more than $330,000 tied to duplicated payroll expenses billed across separate invoices. The county said the overpayments were recouped through future invoice corrections.

Next steps and responses

Sunstone Way leadership has not publicly addressed the specific allegations in the complaint. County and city shelter contracts can involve reimbursement rules, invoice documentation, and oversight requirements; the lawsuit’s claims are expected to be tested through court filings, potential motions, and any discovery ordered by the court.

The allegations in the lawsuit remain unproven and will be resolved through the legal process.

Sunstone Way’s role as a government-funded shelter operator means the case could draw attention from contracting agencies and auditors concerned with cost controls, documentation, and disclosure practices tied to public funds.