The Gatesway Foundation, 1217 East College Street, Broken Arrow. DYLAN GOFORTH/The Frontier
On Friday the Gatesway Foundation, a local nonprofit that helps hundreds of intellectually disabled adults, broke its silence following an investigation by The Frontier into the agency’s financial troubles.
The foundation’s initial response on Friday — a press release quoting the son of deceased Gatesway founder Helen Gates — was the first statement by the agency in response to The Frontier’s reporting since it was first made aware of the upcoming story more than a week ago.
In the statement, which was not sent to The Frontier, Gates said that although he had “limited to no involvement” in the Gatesway Foundation, he was granted permission to attend a company board meeting on Thursday, and is “confident the current board of trustees and staff have been and will continue to make prudent decisions to meet my mother’s intended mission.”
Statement from Jack Gates, son of Gatesway founder Helen Gates.
Gates also criticized The Frontier’s reporting, saying the investigation was a “self-serving opportunity to besmirch the character of Gatesway,” and called The Frontier “an internet tabloid magazine.”
Neither Gates nor any member of Gatesway management has identified an inaccuracy in the reporting.
Later on Friday, Frontier reporter Clifton Adcock attempted to speak with interim Gatesway CEO Gloria Morton at her office in Broken Arrow. The Frontier has made multiple unsuccessful attempts in the last 10 days to speak with Morton in person, over the phone and via email.
Jack Gates, son of Gatesway Foundation founder Helen Gates. Courtesy/LinkedIn
Morton told Adcock to “Quit coming back here.” Morton said she “might even talk to one of the other TV stations and we will answer your questions.”
She will not, however, grant an interview with The Frontier.
“No. Not with you,” Morton said.
Frontier investigation
A lengthy investigation by The Frontier released on Wedneday found that the Gatesway Foundation had quickly fallen from what appeared to be steady financial footing and tumbled into debts so unmanageable its leaders began frantically liquidating assets, laying off employees, slashing employee pay and picking off clients they deemed “unprofitable” just to pay its bills and staff.
Current Gatesway Board President Greg Arend, in an internal email he sent to foundation leaders in late April, said Gatesway was down “to a few thousand dollars in the bank.”
“We are down to a few thousand dollars in the bank and the difference between making payroll and/paying (sic) payables can be the timing of asset sales,” Arend wrote.
“Please prioritize this as your top priority!”
In April, adding to the financial woes, the Central Bank of Oklahoma sent Gatesway a past-due notice for $1.75 million on a $1.9 million line of credit that, up until 2016, had mostly been left untouched by the foundation for years, records obtained by The Frontier show.
Last August the bank suspended the line of credit, which is backed by half of Gatesway’s main campus in Broken Arrow, according to documents and interviews with sources who have knowledge of the account.
The difficulties faced by Gatesway were so intense the foundation let go of at least 16 clients it deemed “most unprofitable” and is attempting to make a 20 percent profit margin on all clients, according to records obtained by The Frontier.
Michael “Jim” Pacula, former CEO of Gatesway Foundation. COURTESY
Problems at the agency appear to have been exacerbated by former CEO Jim Pacula, who records show leased himself a Mazda on the company dime, often spent money on dinners, pet food and vet bills on the company credit card, and signed documents that put the lease to the industrial warehouse that housed his manufacturing business under Gatesway’s name, costing the foundation more than $3,000 per month.
When Pacula left Gatesway, the foundation bought off equipment from his now-defunct business, such as a $1,500 forklift employees later complained was inoperable. The foundation purchased several pieces of equipment from Pacula, including a color copier, office furniture and a 2008 Dodge Ram pickup truck with 142,000 miles.
Earlier this week Gatesway announced it was selling off some real estate it owned in an effort to fix its financial puzzle.
Lengthy silence
Prior to Gates’ statement, the silence from Gatesway had been lengthy.
The Frontier first reached out to former and current Gatesway board members on May 21, 10 days before the story published. Many former board members said they could not comment because of prior obligations to Gatesway (such as having previously offered the agency legal advice) or because of non-disclosure agreements they had signed upon leaving.
Current Gatesway Board President Greg Arend was first contacted by reporters on May 23. He responded the following day in a text message, saying he was out of the country, but might be willing to issue a written statement if given a summary of the story.
Arend was then told by reporters that a written statement would not suffice, but he could see some “key points” of the upcoming story and was again asked for an interview. He was told in the text message that the Gatesway investigation would publish on May 30.
Arend then asked for reporters to “coordinate” with Gatesway’s chief of staff, development operations manager and media liaison Christal Pellerin so “facts can be appropriately checked and the context appropriately established.”
Pellerin did not respond to phone calls, emails or in-person interview requests until a May 30 response, when she acknowledged a request for an interview. However, again, no one from Gatesway answered the submitted questions or granted an interview request.
R. Greg Arend, current Gatesway Foundation Board of Trustees President and managing partner of Deloitte in Tulsa. COURTESY
At that point Gatesway had known for a week that May 30 was the publication date of the story.
On May 25, Arend asked for an “advance read of the article in draft form” so “Gatesway management could fact check prior to issuance.”
As a rule, The Frontier does not provide “advance reads” of stories to the subjects of articles. Arend also asked for communication between reporters and Gatesway officials to be channelled to current Gatesway interim CEO Gloria Morton.
Morton did not respond to repeated phone calls, emails and in-person visits.
On Tuesday, the day before the investigation published, Frontier reporters made several visits to Gatesway’s campus in Broken Arrow, as well as to buildings it owns in downtown Broken Arrow.
A receptionist at the Gatesway campus said Morton was in a meeting that would last an unknown amount of time and was unavailable for comment. Arend and Pellerin, she said, had offices out of the downtown Broken Arrow building.
Frontier reporters went to that building and were allowed inside. No one was there.
That morning, Frontier reporters sent a list of three questions to Arend, Morton and Pellerin, attempting to get some formal response from Gatesway management into the story. Gatesway again did not respond.
Hours later, Morton issued a press release on the Gatesway Facebook page saying Gatesway was selling off some real estate properties due to state budget cuts that had continued to plague the foundation’s bottom line.
On Wednesday, The Frontier published two stories — a lengthy investigation into what had led to Gatesway’s troubled financial situation, as well as a look at one long-term Gatesway client who had been let go by the agency because he was too “unprofitable.”
Three hours before the story was published, The Frontier again email Arend, Morton and Pellerin to ask for an interview or statement.
No response was offered.
Abruptly rescheduled board meeting
On Thursday, the Gatesway Foundation Board of Directors had a scheduled meeting at 11 a.m. at Stillwater National Bank, 1500 South Utica Avenue. Frontier reporters arrived at the bank prior to the scheduled meeting, hoping to speak for the first time with Gatesway Board members.
Instead, the meeting ended before its scheduled 11 a.m. start. At 10:45 a.m. at least three people, including former Gatesway CEO Judi Myers, were seen leaving the bank. Myers had a printed copy of The Frontier’s Gatesway investigation tucked into a folder under her arm.
Myers first said that the story was “making a mountain out of a molehill,” then declined to speak further on the record. Asked if the board meeting had been rescheduled to an earlier time, she said she did not know.
Stillwater National Bank officials told reporters from The Frontier and NewsOn6 that they were told the location of the board meeting had been moved “at the last minute” but that Gatesway officials did not tell them the reason for abrupt rescheduling.
It’s unclear if Gatesway will ever officially respond to the interview requests. On Friday Morton told a Frontier reporter, “I’m not going to talk about it anymore.”
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