The former co-founder and president of a Bellingham nonprofit that helps unhoused people will pay nearly $50,000 back to the organization after he pleaded guilty to embezzling the funds over a multi-year period.

James “Jim” Lee Peterson, 67, of Bellingham, pleaded guilty June 3 in Whatcom County Superior Court to one count of first-degree theft, a felony. He was sentenced to 60 days in jail, with the ability to serve that time on work release or work crew, according to court records.

Prosecutors agreed to drop aggravating factors on the theft charge — which stated the crime was a major economic offense and that Peterson had used his position of trust, confidence or fiduciary responsibility to facilitate the crime — in exchange for his guilty plea, court records show.

Peterson was approved to serve his 60-day sentence on out-of-custody work crew and has already served several days.

Peterson is a co-founder and former president of HomesNOW! Not Later, a Bellingham nonprofit that operates tiny home communities for unhoused people and is dedicated to ending homelessness. HomesNOW! currently operates two tiny home villages, Unity Village and Swift Haven, which are located on city-owned land in Bellingham.

Peterson helped start the organization in May 2017.

Peterson was arrested Nov. 1, 2019, following a monthlong investigation by the Bellingham Police Department. He has been out of custody since Nov. 4, 2019, after posting a $10,000 cash bail.

He was accused of embezzling more than $75,000 from HomesNOW! between June 2017 and September 2019, according to court records. Peterson reportedly withdrew funds from the nonprofit’s business banking account for personal use and spent the money at casinos in Whatcom and Skagit counties, and at several local businesses. Peterson withdrew the majority of the funds in cash from ATMs across Whatcom County. He also made additional withdrawals inside banks. Court records state the withdrawals had no legitimate business purposes.

Peterson is required to pay $47,000 in restitution back to the nonprofit. Payments of no less than $40 a month are expected to begin July 1. Court documents state that funds will be disbursed to the nonprofit as they are received by the court.

“The HomesNOW board is relieved that Mr. Peterson’s case has finally been resolved after a prolonged period,” Doug Gustafson, chairman of HomesNOW!, said in a June 25 statement to The Herald.

Neither Peterson or his defense attorney were available to comment by the time of this article’s publication.

Five years to resolution

Peterson’s guilty plea and sentencing come four years and seven months after charges were originally filed against him. His court case was continued 27 times, including during the period when jury trials were shut down due to the COVID-19 pandemic.

“We want the public to know that the situation involving Jim Peterson occurred nearly five years ago. The crimes he recently pled guilty to were uncovered internally by the HomesNOW! Board during an investigation into allegations of sexual harassment and inappropriate conduct, such as verbal abuse, towards village residents,” Gustafson told The Herald. “During this internal investigation, we discovered financial crimes, which were promptly reported to law enforcement and the public transparently.”

Court records show multiple judges who heard various status hearings on the case expressed concern for the length of time the case had been pending in the system. Part of the delay was due to issues with forensic accounting conducted by law enforcement, as well as the retirement of the lead detective with Bellingham police who was handling the case, according to court records.

“The resolution in this case was a product of lengthy negotiations between Mr. Peterson, the State and the Bellingham Police Department. The primary issue was less about whether Mr. Peterson was guilty of the offense conduct, but rather the amount of restitution that Mr. Peterson would ultimately be forced to repay to the Nonprofit,” Ben Pratt, the senior deputy prosecuting attorney who handled the case, said.

Forensic accounting records compiled by law enforcement showed that theft of $47,000 was easily verifiable and “could be clearly proved,” Pratt told The Herald.

Peterson was accused of embezzling roughly $28,000 in additional money from the nonprofit, but Peterson argued those were legitimate expenses used for purposes of the organization, Pratt said.

“Ultimately, the parties agreed that if Mr. Peterson accepted guilt for his conduct, he would be sentenced within the presumptive standard range as dictated by the Washington Sentencing Reform Act (0-90 days), and the State would not stretch to hold him to account for the unverifiable monies in the total restitution owed,” Pratt said. “He was sentenced to 60 days on whatever alternatives he would qualify for from within the jail.”

Change in policies

Shortly after Peterson’s arrest in 2019, Gustafson, the chairman of HomesNOW!, told The Herald the organization was putting new policies in place.

Multiple HomesNOW! board members now review the nonprofit’s bank accounts regularly to detect any potential irregularities, all transactions are verified and documented with receipts, and the organization publishes quarterly financial reports that are accessible to the public “ensuring transparency,” Gustafson said in his June 25 responses to The Herald.

The board has also adopted a policy that prohibits ATM withdrawals to make sure all transactions are properly tracked and documented. Gustafson said exceptions are made for specific situations, such as purchasing used appliances, but said that those transactions are noted in the organization’s financial records.

Gustafson said HomesNOW! has been successfully operating two tiny home villages for several years, sheltering around 50 people. Unity Village, which is located in the city-owned parking lot at 210 McKenzie Ave., near the Post Point Water Treatment Plant in Fairhaven, has operated since September 2019. The organization has also operated Swift Haven, located in the parking lot of the Frank Geri Fields ballpark in the Puget neighborhood, since December 2020. Both currently operate on temporary permits, which requires the villages to move later this year.

In April, the city spent $1.2 million to purchase land in the 3300 block of Northwest Avenue in the Birchwood neighborhood where both tiny home villages will be relocating, The Herald previously reported. The new village will be called North Haven. HomesNOW! submitted its application for North Haven on May 31 and held an informal neighborhood meeting June 13, according to the city’s and HomesNOW!’s websites.

The city has said it expects the property will be ready for residents to move in in September. If the permit is approved, the village can remain at the location for up to five years under current city code, according to the city’s website.

“Our unique model is entirely volunteer-driven with no paid staff. The villages are managed and operated by residents who work collaboratively with their neighbors to transition out of homelessness and achieve long-term stable housing,” Gustafson said. “We boast a 52% success rate between both of our villages (Unity Village 58%/Swift Haven 45%) in helping residents find permanent housing. This success rate continues to improve over time as the villages remain in operation.”

Homelessness in Bellingham and Whatcom County increased substantially in 2023, reaching an all-time high and topping 1,000 people for the first time. The figures were reported as part of an annual survey of people without a place to live, The Herald previously reported.

Peterson said Whatcom County needs more tiny homes, which have historically shown a high rate of rehousing among residents.

“These villages provide a crucial stepping stone out of homelessness, offering a more equitable and supportive environment than congregate shelters. They help individuals move beyond survival mode, allowing them to focus on their future and take steps towards stable, long-term housing,” Gustafson said. “We are enthusiastic about the future and remain committed to helping end homelessness, one person at a time.”