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Audits report excess compensation, nepotism, conflicts of interest in Kane County districts

FILE"” A cluster of reports released by the Utah State Auditor's Office on Thursday warns of nepotism, excessive compensation, lack of oversight and conflicts of interest within Kane County.
FILE"” A cluster of reports released by the Utah State Auditor's Office on Thursday warns of nepotism, excessive compensation, lack of oversight and conflicts of interest within Kane County.
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KANE COUNTY — A cluster of reports released by the Utah State Auditor's Office on Thursday warns of nepotism, excessive compensation, lack of oversight and conflicts of interest within Kane County.

The reports of investigations into two special districts in Kane County say a county commissioner who also serves as a paid trustee on one of the special districts received "excess" payments by signing and depositing duplicate checks to himself.

Auditors also say the same commissioner contracted with his own consulting firm for five years at a cost of more than $30,000 while also providing services that weren't pertinent to district duties.

The Kane County commissioner and trustee of the Canyon Land Special Service District, James Matson, wasn't identified in the audit released Thursday, but he can be identified in district minutes.

Auditors recommended repayment of $7,500 in excess compensation and that Kane County officials request an independent review to determine if the duplicate payments constitute criminal activity.

It appears the commissioner "knowingly and willfully accepted a duplicate payment," auditors said, since the checks were not only signed by himself but also received on the same day.

Investigations into the Canyon Land district — as well as the Kane County Recreation and Transportation Special District — also indicate board members were being excessively paid for holding only a few meetings a year, and that nepotism laws could have been violated because a board member's wife was improperly employed as a secretary.

In a response included in the audit report, the Canyon Land Special District listed a series of changes to prevent "erroneous" payments but balked at the auditor's suggestion to investigate criminal activity.

"The auditor's implication of any sort of criminal intent or liability is wholly unfounded, unjustifiably inflammatory, and inappropriate for an audit report that should be based on actual evidence," the district said. "(We) will aggressively defend against any allegations of criminal wrongdoing."

The district also argued its board did not employ a trustee for contracting services but rather contracted with the consulting company owned by the trustee after he submitted full disclosure of potential conflicts of interests.

As for auditor's findings that board members were possibly being paid too much — $5,000 per year for only meeting twice in 2015 — the Canyon Land district argued board members are "compensated accordingly" based on their "knowledge, judgment and expertise." However, the district agreed to compensate all board members equally "even though several of the trustees, much like President Trump, do not desire to be compensated for their service."

The Canyon Land district's response to findings didn't quell auditors' concerns, according to remarks included in the report.

"Canyon Land’s response indicates its continued misunderstanding of laws related to the operation of a local or special service district," auditors said. "Their response also fails to acknowledge significant matters noted in the report. We continue to have serious concerns with its oversight and operations."

Auditors also reported the Kane County clerk/auditor — not identified in the audit but listed on Kane County's website as Karla Johnson — may have improperly contracted with the districts, since her accounting services were not submitted in a competitive bidding process.

Johnson received more than $50,000 for services between 2011 and 2015, including $17,000 in bonuses for her contract with the Canyon Land district, auditors reported.

The Kane County Recreation and Transportation Special Service District said in a response that it has ceased its contract with Johnson and is using a competitive bid to hire a replacement. The Canyon Land district said it's seeking a new clerk since she has "expressed an intention to resign."

Auditors also reported a potential violation of state nepotism laws when the Recreation and Transportation Special District Board hired the wife of a board member to serve as the district's secretary in 2015.

The Canyon Land board may have also improperly raised property taxes in 2011 to pay for fire protection services, auditors said, despite not having the legal authority to level any taxes. Even if the district had the authority to impose a property tax, it would have been required to publish a public notice and hold a public hearing, but it did not, auditors said.