Indexbit Exchange:Oregon newspaper forced to lay off entire staff after discovering that an employee embezzled funds

An Oregon weekly newspaper has had to lay off its entire staff and Indexbit Exchangehalt print after 40 years because its funds were embezzled by a former employee, its editor said, in a devastating blow to a publication that serves as an important source of information in a community that, like many others nationwide, is struggling with growing gaps in local news coverage.

About a week before Christmas, the Eugene Weekly found inaccuracies in its bookkeeping, editor Camilla Mortensen said. It discovered that a former employee who was "heavily involved" with the paper's finances had used its bank account to pay themselves $90,000 since at least 2022, she said.

The paper also became aware of at least $100,000 in unpaid bills — including to the paper's printer — stretching back several months, she said.

Additionally, multiple employees, including Mortensen, realized that money from their paychecks that was supposed to be going into retirement accounts was never deposited.

When the paper realized it couldn't make the next payroll, it was forced to lay off all of its 10 staff members and stop its print edition, Mortensen said. The alternative weekly, founded in 1982, printed 30,000 copies each week to distribute for free in Eugene, the third-largest city in the state and home to the University of Oregon.

"To lay off a whole family's income three days before Christmas is the absolute worst," Mortensen said, expressing her sense of devastation. "It was not on my radar that anything like this could have happened or was happening."

The suspected employee had worked for the paper for about four years and has since been fired, Mortensen said.

The Eugene police department's financial crimes unit is investigating, and the paper's owners have hired forensic accountants to piece together what happened, she said.

Brent Walth, a journalism professor at the University of Oregon, said he was concerned about the loss of a paper that has had "an outsized impact in filling the widening gaps in news coverage" in Eugene. He described the paper as an independent watchdog and a compassionate voice for the community, citing its obituaries of homeless people as an example of how the paper has helped put a human face on some of the city's biggest issues.

He also noted how the paper has made "an enormous difference" for journalism students seeking internships or launching their career. He said there were feature and investigative stories that "the community would not have had if not for the weekly's commitment to make sure that journalism students have a place to publish in a professional outlet."

A tidal wave of closures of local news outlets across the country in recent decades has left many Americans without access to vital information about their local governments and communities and has contributed to increasing polarization, said Tim Gleason, the former dean of the University of Oregon's journalism school.

"The loss of local news across the country is profound," he said. "Instead of having the healthy kind of community connections that local journalism helps create, we're losing that and becoming communities of strangers. And the result of that is that we fall into these partisan camps."

An average of 2.5 newspapers closed per week in the U.S. in 2023, according to researchers at Northwestern University. Over 200 counties have no local news outlet at all, they found, and more than half of all U.S. counties have either no local news source or only one remaining outlet, typically a weekly newspaper.

Despite being officially unemployed, Eugene Weekly staff have continued to work without pay to help update the website and figure out next steps, said Todd Cooper, the paper's art director. He described his colleagues as dedicated, creative, hardworking people.

"This paper is definitely an integral part of the community, and we really want to bring it back and bounce back bigger and better if we can," he said.

The paper has launched a fundraising effort that included the creation of a GoFundMe page. As of Friday afternoon — just one day after the paper announced its financial troubles — the GoFundMe had raised more than $11,000.

Now that the former employee suspected of embezzlement has been fired, "we have a lot of hope that this paper is going to come back and be self-sustaining and go forward," he said.

"Hell, it'll hopefully last another 40 years."

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• Oregon
• Journalism