Nonprofit that helped felons get a second chance may have improperly funded Jay and his businesses, state says.

TRIBUNE FILE PHOTO - The Oregon Department of Justice is investigating Project Clean Slate, which may have improperly funded Roy Jay and his businesses.State investigators are probing whether prominent Portland businessman Roy Jay has unlawfully profited from two nonprofits he headed, including payments that may have gone for clothing and cars as well as supported condos in Sunriver and Puerto Vallarta, Mexico.

At the center of the investigation, court documents show, is a widely acclaimed initiative, Project Clean Slate, which has received at least $1.8 million in government funding and more than $400,000 in other funds from other nonprofits as well as felons seeking to have their records expunged. The project, a focus of a nonprofit set up by Jay, has been hailed for helping thousands of people get a second chance after prison, increasing their ability to find housing and work.

Jay, through an employee, declined to comment, referring questions to his attorney, Charles Paternoster, who denied any wrongdoing by his client.

“We disagree that there was any inappropriate use of funds, I want to be clear on that,” said Paternoster.

Jay, a gregarious man known as an activist as well as an entrepreneur, is a Spirit of Portland award winner and has regularly been discussed as a potential mayoral candidate.

He set up the Independent Development Enterprise Alliance in 1994 and it soon received tax-exempt status. It is the umbrella organization for Jay’s African American Chamber of Commerce, Project Clean Slate and Ride Connection’s senior shuttle program.

The state’s investigation, first reported by the Portland Tribune in May, focuses on IDEA and the chamber. It began in the fall of 2014 and targets potential violations of the Oregon Nonprofit Corporations Act and the Oregon Charitable Trust and Corporations Act.

Jay went to court to block the state’s attempt to obtain records from personal accounts. In the filing, Paternoster called the state’s demands "unreasonable and oppressive.”

On Tuesday, however, the state called for a judge to support its document requests saying IDEA and the chamber had withheld numerous documents improperly. It filed detailed documents outlining the breadth of its investigation, referring to Jay by his given name, Roy J. Harris. According to past media accounts, Jay dropped his family name as a young man.

According to a Jan. 5 declaration by state justice department investigator Laurie Conforth, records show expenses by the nonprofit IDEA and the chamber that include:

  • More than $160,000 of expenditures characterized as “an unusual pattern of payments to for-profit entities controlled by [Jay] or to individuals associated with those entities,” such as $92,500 to IDEA Works, an event planning company Jay headed.
  • “Numerous online banking transfers totaling over $199,000 from the corporations’ accounts to unknown bank accounts… believed to be personal accounts held by” Jay or his for-profit businesses.
  • More than $35,000 in expenses for cars that don’t appear to be owned by IDEA or the chamber.
  • More than $18,000 in “payments to clothing stores or for other charges of a personal nature.” That included $4,583 to Rocky’s Customs Clothes, a custom tailor in Sherman Oak, Calif., “the website of which features a photograph of [Jay] as one of their customers.”
  • At least $33,000 for airfare, car rentals, hotels, restaurants and other travel expenses in locations such as Las Vegas, Puerto Vallarta, Florida, Hawaii, Trinidad/Tobago, the Bahamas, Puerto Rico, and British Columbia.
  • Payments totaling $15,603 to timeshare and vacation companies, including Timeshare Travel and the Hilton Grand Vacation Club.
  • Lease payments by IDEA totaling $137,785, apparently for Northeast Portland warehouse space used by several for-profit limousine companies. “Records show that [Jay] has operated several for-profit limousine companies,” noted Conforth.
  • Click here for Conforth Declaration

    According to the state, Jay owns condos in Sunriver and the LaCima resort in Puerto Vallarta, and a bank account held by IDEA was labeled “IDEA Lacima account” or “Lacima/Sunriver.” Funds deposited in the account came from vacation rental companies in Sunriver and Puerto Vallarta as well as $43,000 from another IDEA account.

    The account was used for $57,284 in mortgage payments to Washington Mutual, $11,473 in payments to utility and service companies in the Sunriver, Oregon area, and $2,600 in payments to an executive of the Puerto Vallarta rental company, Conforth wrote. From another IDEA account, an additional $20,210 went to the Puerto Vallarta rental executive. Records also showed almost $17,000 in additional payments to utilities and companies in the Bend/Sunriver area, although IDEA operated primarily in Multnomah County.

    "One of the purposes of the Department’s investigation is to determine whether [Jay] used charitable funds for personal financial gain," said one state filing, citing "substantial expenditures from the corporations’ accounts that do not appear reasonably related to the purpose of the corporations."

    The state also laid out possible discrepancies in Jay's reported income. Conforth wrote that records show Jay received about $581,000 in salary from IDEA and Project Clean Slate between 2008 and 2013, a period in which his W-2 forms showed gross income of $459,200.

    Jay’s attorney declined to address the specific allegations individually.

    “We disagree with the Department of Justice's claims and contentions,” Paternoster said. “At the same time, we recognize that we have a duty to cooperate with said investigation and we are going to continue to do so.

    Jay's personal Facebook page says he lives in New York City now. Court documents show Jay's representatives told the state the nonprofits are being shut down and Project Clean Slate transferred to another agency. The automated phone greeting for Roy Jay Enterprises continues to list Project Clean Slate as having an extension there.

    By Nick Budnick
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