The Oregon Department of Justice is reviewing the activities of a nonprofit that provides care to adults with developmental disabilities following reporting by The Oregonian/OregonLive.

The scope of the review is unclear, but it could last several months.

Action by the state comes after The Oregonian/OregonLive spotlighted an interweaving of family and financial interests within Alternative Services-Oregon. Five relatives of Alternative Services’ executive director have worked for or contracted with the nonprofit, and two board members personally own properties that they lease to the nonprofit.

Alternative Services-Oregon has previously said its board ensured the interested parties were walled off from decisions that affected them, and that its conflict-of-interest policies were followed.

Kristina Edmunson, a spokeswoman for the Department of Justice, said the agency is “now taking a more formal look” at issues involving Alternative Services-Oregon. She declined further comment Friday, saying “our review is ongoing.”

Pat Allen-Sleeman, Alternative Services’ executive director, said the nonprofit has not been notified of any investigation by the Department of Justice. Thomas D’Luge, the board secretary for Alternative Services-Oregon, said he was not aware of any request for information from authorities.

Alternative Services-Oregon receives about $17 million a year from the Department of Human Services to operate 37 group homes across the state for adults with developmental disabilities. A spokeswoman for the Department of Human Services said the agency was not notified that state attorneys are conducting a more formal review of Alternative Services-Oregon.

According to tax filings, Alternative Services-Oregon paid a total of $2.4 million over five years to family members of Allen-Sleeman, the executive director.

Meanwhile, the board president, Arthur Mack, owns three homes that are leased to the nonprofit while the board secretary, D’Luge, owns one. They declined to release financial terms. But tax records from 2012 show payments that year totaling $101,805 from the nonprofit to Mack and D’Luge.

A top official for Oregon’s Department of Human Services issued a statement May 4 saying that the Department of Justice Charitable Activities Section had “reviewed arrangements of the provider in the story and did not indicate any specific concerns.”

Sherryll Hoar, a spokeswoman for the Department of Human Services, declined to answer questions about that statement other than to say the agency contacted its general counsel lawyer for input April 25.

Edmunson, the Department of Justice spokeswoman, declined to say if the Department of Human Services’ statement was accurate.

On Wednesday, Edmunson said the agency’s Charitable Activities Section “has not yet initiated an inquiry, but may do so in connection with information contained in your story” and in the organization’s financial statements.

On Thursday, Edmunson said attorneys are “now taking a more formal look at this.”

Typically, Edmunson said, the Department of Justice reviews public documents before determining to proceed with a more extensive investigation and before seeking additional information from a charity.

State law gives the Department of Justice authority to investigate transactions and relationships of charitable organizations, including whether fiduciary responsibilities have been breached. Attorneys have the power to demand documents and financial records.

Alternative Services-Oregon is part of a network of nonprofits founded by Mack, who lives in Michigan. Tax filings show related organizations exist in Michigan, Maine, Connecticut, North Carolina and Oregon.

The other Oregon-based nonprofits are: Community Living Case Management, which provides oversight of group homes in Coos, Curry, Douglas and Josephine counties; and Carpe Diem Foundation, which owns some of Alternative Services-Oregon’s group homes.

-- Brad Schmidt

bschmidt@oregonian.com

503-294-7628

@_brad_schmidt