What to do about DEMA? Sonoma County officials grapple with troubled homeless services contractor’s future

On April 16, Sonoma County supervisors will take up the thorny topic they’ve been discussing since late February: What to do about DEMA?

The homeless services vendor has been under scrutiny since a Press Democrat investigation last July raised questions about both the billing practices and culture of the for-profit company, which continues caring for some of the county’s most vulnerable people even though its last contract extension ran out on March 31.

Now, county officials must decide DEMA Management and Consulting’s future, as the jobs of the company’s caregivers, nurses and paramedics hang in the balance.

“We as a team do everything we possibly can,” one of those health care workers, who left the company just recently, told The Press Democrat last week.

“It’s the people on site that are working in these conditions that are busting our ass,“ the former employee added. ”It has nothing to do with management. We’re going the extra mile.“

She, like other DEMA employees previously interviewed by The Press Democrat, agreed to speak only on the condition of anonymity because she fears retaliation from company CEO and co-founder Michelle Patino.

Potentially complicating matters for county leaders and DEMA employees is a rift between Patino, who staunchly defends DEMA’s work, and the company’s co-founder, who is her spouse. That situation has become public through a message sent to employees, as well as through court and police documents unrelated to the questions about company billings.

Millions of dollars in question

Born amid the chaos of the pandemic, the company went on to bill taxpayers more than $26 million over its first 26 months through no-bid emergency contracts as part of a strategy to keep COVID-19 from running rampant through the county’s homeless population.

On March 26, nearly eight months after the county launched an inquiry into the firm’s billing practices, officials published a report stating DEMA couldn’t account for around 40% of its reviewed billing — an amount that over the past 3.5 years could equate to as much as $11 million, according to the county — because it had not documented the hours of its salaried employees.

The revelation came just five days before the expiration of DEMA’s contract to manage its two remaining homeless housing sites for the county — a managed tent camp off Ventura Avenue in Santa Rosa and Mickey Zane Place, the former Hotel Azura off College Avenue, also in Santa Rosa.

County supervisors have had the report, prepared by Santa Rosa-based accounting firm Pisenti and Brinker, since at least late February. They discussed DEMA during three consecutive closed-door meetings before releasing it.

Patino, who has threatened to sue the county over the probe, has rejected its main findings, contending the work of salaried employees was fully accounted for. And DEMA has subsequently made changes to its timekeeping to document those billed hours as required under its county contract, Patino and county officials say.

It’s against this backdrop that county officials are weighing the company’s future.

Hours after the report’s release, a group of county officials that included Health Services Director Tina Rivera, County Administrator Christina Rivera (the two are not related), Auditor-Controller Erick Roeser and Board of Supervisors Chair David Rabbitt met with Press Democrat journalists and Editorial Board members.

In the wake of the report’s findings, “What are your options today?” local businessman and editorial board member Mick Menendez asked those officials.

Ten long seconds passed.

“Anybody?” Menendez said.

Tina Rivera, the health department director, said she was not yet able to say if she would recommend the county part ways with DEMA. The decision had to be approached “carefully and thoughtfully,” she said. She would present options to the board on April 16, she said.

“We have some very vulnerable clients who do need continuity of services. Who can perform this work?” she said. The residents of Mickey Zane Place, in particular, are people who require high levels of medical care, which DEMA provided as a core tenet of its business model.

Patino, the DEMA CEO, in a March 27 interview told The Press Democrat she has not received word from the county about how long her company will continue staffing the two sites. DEMA’s work in Sonoma County provides jobs for around 70 people, Patino said.

She met with county officials on March 19, ahead of the public release of the Pisenti and Brinker report, to discuss the firm’s findings and offer her rebuttal.

Patino told The Press Democrat that during that meeting, which included a forensic accountant she has hired to make the case that her billing can be supported, county officials told them they were not interested in DEMA conducting its own further internal accounting work. On Saturday, Patino said she’ll continue having the accountant do that work regardless.

County officials have made clear in interviews with The Press Democrat that they want to dig deeper into DEMA’s billing. They’re just not sure how.

“The idea that multiple millions of dollars that we expect to be reimbursed by the Federal Emergency Management Agency (for money paid to DEMA during the pandemic) may be at risk because of this is a huge concern to me,“ Supervisor Chris Coursey said.

Roeser, the county’s auditor-controller, said he hopes to bring supervisors options for further financial investigation, including something more akin to a traditional audit. But, he said, with what Pisenti and Brinker’s report revealed about DEMA’s lack of documentation, he was unsure what “would really shed more light on the issue.”

A FEMA fraud investigator has contacted the county, and some officials expressed hope that the federal agency would get to the bottom of DEMA’s billing issues. FEMA’s reimbursement processes for disasters can drag over years, however, and Sonoma County is only beginning the process of submitting claims for bills during the pandemic.

“This is going to be hanging over our heads for a long time,” Supervisor Susan Gorin said.

A rift and accusations of abuse

Complicating matters further for DEMA is a growing rupture between the company’s founders, Patino and her wife, Mica Pangborn. Though the two are co-owners of the company, Patino fired Pangborn just days before the supervisors released the Pisenti and Brinker report, according to a message Pangborn posted on a company messaging board.

“My time with DEMA has come to an end … as I have been terminated by Michelle Patino,” Pangborn wrote in the message, a screenshot of which was obtained by The Press Democrat. “I know things have been challenging on many levels but I truly believe in the work and mission we are all working for,” she wrote.

Patino later told The Press Democrat she had undone Pangborn’s termination. Pangborn’s status with the company, and even whether she could be fired, remained unclear.

Days before her firing, on March 19, Pangborn secured a domestic violence restraining order against Patino, telling a Sonoma County judge she feared for her safety amid the couple’s ongoing separation.

On Monday, April 1, Santa Rosa police arrested Patino at her house and took her to jail on suspicion of violating that restraining order. She was released the same day. The Sonoma County District Attorney has yet to file any charges related to that arrest.

Patino on Saturday said the arrest stemmed from her thinking she could contact Pangborn about DEMA business, saying the situation amounted to “a misunderstanding.”

In her request to a judge for the restraining order, Pangborn described a history of physical, emotional and financial abuse, in which she alleged Patino choked her, vandalized their home and controlled her access to money — including credit cards and DEMA company accounts when they fought.

Pangborn served as the company’s chief financial officer and was in charge of accounting and payroll, according to her court filing. But it was Patino who filled out forms for FEMA documenting her employees’ daily activity.

Patino says those forms support her billing for her salaried employees, whose time is otherwise unaccounted for in paperwork, according to the county-ordered review. But the accountants at Pisenti and Brinker rejected that form of documentation because all the forms were created by Patino.

County officials told The Press Democrat Patino had informed Department of Health Services management of the restraining order.

The Press Democrat does not normally name victims of reported domestic violence, but is doing so in this case because the accusations were about a key county contractor and because Pangborn has been previously identified in Press Democrat reports as Patino’s wife and DEMA’s co-founder.

Pangborn declined to speak to The Press Democrat.

In her request for a restraining order, Pangborn reported abuse that went back more than four years. She filed a series of screenshots of text messages with the court that included photographs of guns and threats of violence.

In her March 27 interview with The Press Democrat, Patino denied allegations of abuse and said she did not own guns. Some of her text messages were misinterpreted by voice-to-text transcription, she said.

County officials couched the restraining order from Pangborn as a personal matter between the two women.

“It’s an allegation,” Rabbitt said in response to questions about how the county would handle such an accusation against the CEO of one of its principle service providers. He had not read the court filings, he said.

The temporary restraining order and the request from Pangborn that details the abuse allegations is a public court record.

Camp could wind down

Another factor in the supervisors’ coming decision on DEMA is the ongoing shift in where the county will house homeless residents, as sites have opened and closed in recent years.

At the DEMA-run emergency shelter site at the county’s administrative complex, county officials and a nonprofit working with DEMA staff have made progress over the last nine months moving people out of tents and into more permanent housing. By the middle of April, Sonoma County Homeless Services Director Dave Kiff told The Press Democrat, 28 people from that site will have permanent housing.

The tent camp has taken in 124 people since it was opened in March 2023, according to numbers Kiff provided on Friday. One hundred and three people left the camp over time, including the 28 that will have found better, permanent housing by mid April. County officials did not immediately have available a breakdown on where the rest of the residents who exited ended up, but said many left for unknown destinations.

The majority of the 28 successful placements will have come through the work of SHARE Sonoma, a nonprofit that rents individual homes from landlords and places formerly homeless people into them as roommates. Last year, around the time DEMA first came under county scrutiny following a Press Democrat investigation, the county received a $4.6 million grant from the state’s Encampment Resolution Fund.

That money was used to help SHARE Sonoma lease homes for 13 people from the DEMA-run camp site, according to that organization’s founder, Amy Appleton. Another four people are scheduled to move into a SHARE house this month, Kiff said.

“Without the SHARE program (and the state grant), we would not have been this successful,” Kiff wrote in an email.

Meanwhile, the county has been working to renovate two former dorms for juveniles near Los Guilicos Village, a housing shelter site in Sonoma Valley currently managed by nonprofit St. Vincent de Paul. Authorized by the supervisors last September, that construction project remains ongoing, county spokesperson Matt Brown said.

That facility will be able to house 80 people if the rooms are kept as single occupancy, Brown said, and as many as 120 or more if they use bunk beds in some rooms — spaces that should allow for the closure of the tent camp.

Brown said the county was unable to provide even a rough timeline for completion.

Known as Eliza’s Village, the dorm renovation project is emerging as the county’s largest hub for homeless housing.

The process of selecting a provider to manage Eliza’s Village has already raised controversy. Jack Tibbetts, executive director of St. Vincent de Paul Sonoma County, last year accused health department staff of excluding his organization from the bidding process.

With St. Vincent out of the running, the bidding came down to two organizations. One was HomeFirst, an established Bay Area homeless services nonprofit. The other was DEMA.

But Rivera’s department never submitted its choice to the supervisors for approval, choosing instead to wait for the end of the Pisenti and Brinker investigation. Now, supervisors may push for an entirely new competitive bidding process, depending on what options Tina Rivera presents on April 16.

Gorin, whose district includes Sonoma Valley, said she was unlikely to support any move to award management of that site to DEMA.

“I’m going to be pretty firm in saying we need to reopen the contracts and look far and wide for new operators,“ she said.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. Follow him on X (Twitter) @AndrewGraham88