- A newspaper in Oregon said it learned in December that a former employee had embezzled its funds.
- Eugene Weekly said in a statement that the situation "has left our finances in shambles."
- More than half of all US counties already have insufficient access to reliable local news sources.
Last January, Andrew Kalloch, president of the Eugene, Oregon, nonprofit community group the City Club of Eugene, held an event highlighting the work of Eugene Weekly, a local newspaper that had recently celebrated 40 years of publishing.
Newspapers, he said, define a city just as much as sports teams or local industries. "Our beloved newspapers and alt-weeklies both define and are defined by the communities in which they operate," said Kalloch. "Forty years after its first run, Eugene Weekly continues to thrive, even as a series of challenges has roiled print media."
A year later, the Weekly is facing an unprecedented challenge. The newspaper's staff said in a statement on its website on December 28 titled "Where's the Damn Paper?" that it had recently learned "someone we once trusted" embezzled "thousands upon thousands" of funds that belonged to the Weekly, which prints about 30,000 free copies each week.
The paper learned that vendors it works with hadn't been paid in months. It had to lay off its entire 10-person staff three days before Christmas, the statement said, and its printer will publish the paper again only if they pay for it upfront. "EW employees who thought they were paying into retirement accounts have learned the money never arrived at its destination," staff members James Bateman, Todd Cooper, Camilla Mortensen, and Rob Weiss wrote.
They reported the theft to the local police, and a team of private forensic accountants is examining the paper's books, according to the statement.
'Finances in shambles'
"The theft of EW's funds remained hidden for years and has left our finances in shambles," they said. A spokesperson for the Eugene Police Department told OregonLive that the Weekly filed a theft report on December 19 and declined to disclose details due to the active investigation.
"We are amazed and encouraged by the support we are getting from the community and across the country," Mortensen told Business Insider on Monday. "The loss of a community weekly paper is a pretty big hit not only to the small staff but to folks who love local independent journalism."
She said the paper discovered that it was a former employee who was "heavily involved" with the Weekly's finances had used the paper's bank account to pay themselves $90,000 since at least 2022, the Associated Press reported on Sunday. Mortensen learned at least $100,000 of bills had gone unpaid for several months, the Associated Press reported.
"This is a tragic situation for the Eugene Weekly, its staff, and the community," Tim Franklin, senior associate dean at Northwestern University's Medill School of Journalism, Media, Integrated Marketing Communications, said in a statement to Business Insider.
"While this is an exceedingly rare circumstance, the Eugene Weekly's dire situation illustrates how many local news outlets these days are operating with little room for error," said Franklin, who directs the Medill Local News Initiative. More than half of all US counties have insufficient access to reliable local news sources, according to a November report by the initiative, which tracks the state of local journalism. Some 2,900 newspapers in the US have closed since 2005, the initiative said in its report.
In 2023, many local news organizations' advertising revenue was squeezed while expenses rose, Franklin said, and "the ability to absorb any kind of one-time financial hit like this is lessened."
Eugene Weekly has been fundraising to help cushion the blow, and an effort on GoFundMe raised nearly $46,000 as of Monday morning.
"We hope the Eugene Weekly can recover, that the community will support it through this challenging moment, and that it will find a sustainable business model to do their vital work," Sarabeth Berman, chief executive of the American Journalism Project, which makes grants to non-profit US local news organizations, said in a statement to Business Insider.
At the City Club of Eugene's meeting last January, Mortensen stepped up to the podium to speak and smiled, holding up a copy of the Weekly. She joined the Weekly in 2007 with little experience in journalism, she said during her remarks in January 2023, remembering only learning the meaning of the "nut graf" — a paragraph in a news article that summarizes the heart of the story and gives readers a clear idea of why a story matters, where it's going — once she was on the job. She rose to editor-in-chief of the paper.
"So, where is this going? That's the question these days," said Mortensen, who has won journalism awards for her investigative work, including a report on rape allegations against college basketball players at the University of Oregon.
There has been a decline in newspapers, and financial support for the industry has flagged, even as the desire for accurate news is strong, she said. "I can only help we will continue to create more journalists, good journalism, and more good in the world," Mortensen said.