The state says the House of the Rising Son in Chehalis was supposed to help those in need, but it ended up an epicenter of fraud.
House of the Rising Son closed this spring after zoning problems with local agencies and complaints from neighbors.
The Department of Labor and Industries says there were also troubles with the law.
"That's fraud, and we go after that situation," said the department's Elizabeth Smith.
On Friday, Chafin was charged in Lewis County with one count of theft and 30 counts of forgery. She's accused of filing a total of $90,000 in false claims from the fall of 2006 until just last month.
"While she was telling L and I that she was unable to work and was receiving benefits, she was actually operating halfway houses," Smith said.
Labor and Industries officials say Chafin was charged while already in court for an unrelated drug distribution charge.
Officials say it took nearly seven years to put the case together and get the charges filed, with the taxpayers tab rising through it all.
"Ultimately, what we look for is getting enough evidence to pursue the case and a strong case to move forward with," Smith said.
The theft count carries a maximum penalty of 10 years in prison, and the forgery counts could be an extra five years each.