SALT LAKE CITY — Personal trips around Las Vegas in state-issued cars. Improperly upgraded hotel rooms and airplane seats. Duplicated reimbursements. Questionable overtime charges.

Those are a few of the concerns detailed in a scathing state audit released Wednesday of the Utah Department of Agriculture and Food, which found “questionable” travel expenses and payroll practices, “inappropriate” reimbursements as well as concerns of possible bias in the cannabis grower selection process under the leadership of former Commissioner Kerry Gibson.

The report comes after Utah State Auditor John Dougall’s office conducted an investigation into the department after receiving several reports of concerns about its management between April 2019 and January 2020.

Gibson was appointed by Gov. Gary Herbert to the post in April 2019 but resigned to run for Utah’s 1st Congressional District. Gibson lost to now Rep.-elect Blake Moore.

The audit details a slew of concerns with Gibson and two of his staff: Natalie Callahan, former director of operations and agriculture programs; and Sasha Seegmiller Clark, former public information officer.

Alliance for a Better Utah, a left-leaning advocacy group, issued a statement expressing concerns about the audit’s findings and applauding Herbert and state auditors for their work.

“While this is a tough example of how an individual’s — or group of individuals’ — worst impulses can rob the public of both resources and trust, it’s also a great example of a functioning government rooting out corruption within its own ranks,” said Katie Matheson, the alliance’s communications director.

Reached Wednesday, an angry Gibson declined to talk to the Deseret News for this story.

Conflicts of interest, overtime charges

Together, Callahan and Clark ran a Salt Lake City-based public relations firm called Dicio Group that focused on political campaigns and government before and during their employment at the state department.

Auditors reported Callahan and Clark did not submit any conflict of interest disclosure statements while working for the agency. The review detailed concerns of a “line blurred” between their work for the department and the PR firm, noting four instances when Callahan and Clark reported time worked for the state when they also appeared to be working for their own firm.

That included during a weeklong conference when Callahan claimed 93 hours of agriculture department work and Clark clocked 32 hours. That’s even though their private client had “paid the travel expenditures for both individuals and believed they were attending the conference on behalf of the client,” auditors wrote. Callahan also charged a total of 33 work hours to the department during at least three other events where she was representing that client, according to the report.

Callahan also submitted “significant overtime charges” — 427 hours — during her nine months working for the state, according to the report. In one two-week pay period, she charged 179 total work hours. That was the same pay period as a conference in Las Vegas and a weeklong conference in Hawaii, auditors wrote.

The governor’s office ordered Gibson to either terminate Callahan and Clark or have them “sever ties with their PR firm, cease unnecessary or publicized travel, cease improper vehicle usage, and be cautious of any activities that could be perceived as political campaigning using government resources,” according to the report.

Due to noncompliance with those orders, the governor’s office placed Gibson on administrative leave. In January, he resigned.

In a prepared statement issued Wednesday, attorneys for Callahan and Clark said their clients made themselves and documents available to auditors over the last six months, but the audit report didn’t include their explanations.

“They gave full and complete answers to questions put to them. The report fails to include the substance of their responses or the responses themselves,” attorneys Rick Van Wagoner and Sam Alba said. “Our clients’ responses to the written questions fully refute the report’s findings as to our clients. Our clients believe they are being used to carry out others’ political agendas.”

Their attorneys also said Callahan and Clark “notified HR at least twice that they had an outside company and inquired what, if any information, must be disclosed.”

“They were told no each time. During their time at UDAF, our clients did not have a single client under UDAF regulation, and none that won a cannabis license,” the prepared statement said. “All of our clients’ time was approved by their supervisor. Their sick leave was also fully approved. Unfortunately, the report suggests otherwise and smacks of gender bias.”

The attorneys also alleged that the audit itself was a potential conflict of interest, saying it was conducted “under the direction of the senior auditor who failed to disclose his previous relationship with one of our clients, a relationship that ended poorly. Ironically, the auditor investigated and the report makes findings concerning others’ possible conflicts of interest.”

Dougall’s office issued a prepared statement in response calling that claim “unfounded,” saying the “referenced auditor disclosed his background and experience with two of the former UDAF employees.”

“That was reviewed and determined not to rise to the level of a conflict of interest,” the statement said. “Upon completion of the audit, the office again reviewed the issue at the request of their attorney and saw no indication of bias. As such, the claim is unfounded. I’m troubled that these individuals would drag this auditor through the mud and attempt to tarnish his integrity in an attempt to deflect attention from their documented improprieties.”

‘Inappropriate’ vehicle use

The governor’s office approved Gibson’s request he be given a state vehicle to take home “on the condition that he would be leaving directly from home the next day to travel for a work-related purpose,” auditors wrote. In a review of the vehicle’s geotracking device, auditors found Gibson used that vehicle “improperly on multiple occasions,” resulting in a loss of at least $4,419, according to auditors.

Those included two occasions when Gibson took the state-issued vehicle to Bear Lake on weekends.

“The former commissioner stated he had a meeting with a local official on one of the trips,” auditors wrote. “However, due to the location of the vehicle, the timing of the trips and the lack of any evidence indicating that this trip related to official (department) business, this travel appeared to be personal.”

On five occasions, Gibson’s state-issued vehicle was used for “various personal activities” including travel in Las Vegas, auditors wrote. “His assigned state vehicle was driven approximately 30 miles to a strip mall in Henderson, Nevada. The remaining instances included visiting a sports complex on a weekend, running errands, and visiting a church.”

‘Questionable’ travel, ‘improper’ reimbursements

Under Gibson and Callahan’s tenure, “numerous errors and problems occurred related to their travel expenditures and reimbursements,” auditors wrote, resulting in an estimated loss of $1,245.

Those included improperly upgraded hotel rooms and a flight for a conference in Hawaii. Gibson’s flight was not booked through the State Travel Office, in violation of state policy, and included an upgraded seat.

“Both claimed that a (department) administrative assistant booked the hotel rooms. We note the hotel indicated that the cheaper conference rooms had been available at the time of the conference,” auditors said.

Gibson had requested a “one-time exception” for his flight and the hotel, which the state’s finances department granted “on the grounds that he was unaware of the policy, and that the policy was unclear on whether employees would be reimbursed the costs of upgraded rooms,” the report states. However, Callahan never received an exemption, and she wasn’t required to reimburse the state.

“Neither individual should have received those upgrades,” auditors wrote.

Auditors also found Gibson and Callahan were “improperly” given reimbursements for travel expenses that were already purchased using a state-issued credit card.

Had one reimbursement Callahan submitted for conference lodging expenses not been detected by the state’s finance department, “she would have been over-reimbursed $2,090,” auditors wrote.

Gibson also submitted duplicate reimbursement for three Uber rides, according to the report.

Family farm loan

Auditors noted Gibson’s family farm had a $500,000 loan with the department he ran, with over $300,000 of principal still outstanding during his tenure as commissioner.

“Although (Gibson) appeared to relinquish his ownership of the farm prior to his tenure at (the agriculture department), the farm was still owned by immediate family members,” auditors wrote. “As one of the original signers on the loan, (Gibson) was aware of the loan but did not submit a conflict of interest disclosure statement, and therefore did not disclose this loan.”

Under Gibson’s tenure, the department extended that loan by 10 years and waived over $3,000 in late fees, according to the report. The agency doesn’t have a written policy or standard practice for loan extensions or fee cancellations, auditors wrote, leaving those decisions “to the judgment of the employee handling the loan.”

“Allegations arose that the former commissioner abused his position and authority to secure preferential treatment for this loan. While it appears that the loan treatment was consistent with that of other loans, it gave the appearance of a conflict of interest,” auditors wrote, concluding the situation “rose to the level of requiring disclosure.”

‘Concerning’ bonuses

Although Gibson was ordered to terminate Callahan and Clark unless they severed ties with their private firm and update the state in October, neither woman left the firm nor left their jobs with the state until early December 2019, auditors concluded.  

“The governor’s office chief of staff indicated that they assumed immediate resolution of the matter,” auditors wrote. “(Gibson) indicated he was under the impression that he had until the end of the (calendar) year to resolve the employment issue. We believe the directive implies a rapid resolution of the matter.”

During an Oct. 18 pay period, Gibson gave both Callahan and Clark $4,000 bonuses, according to auditors. He then gave another $4,000 bonus to Callahan in December.

“Although the former commissioner had the authority to award bonuses, we noted that there was no detailed written justification for the bonuses as required by (agriculture department) policy,” auditors wrote.

Cannabis grower awards

Auditors also detailed concerns with the process to award licenses to eight cannabis growers, finding there was “bias in favor of senior management preferences.”

The audit states a six-person evaluation committee evaluated about 80 applications for cannabis grower licenses — a process auditors pointed out was not “blind,” meaning evaluation committee members knew applicants’ identities. In analyzing the process that led the committee to grant licenses, auditors noted “concerns about certain factors and conditions that call into question the independence of the process.”

Two committee members’ raw scores in the process (Callahan and a deputy) were “highly correlated,” auditors wrote. Among their top 10 scoring applicants, they both ranked the same seven applicants in similar order.

“Based on comparison to the score correlations of the UDOH process, as well as discussions with Department of Administrative Services Division of Purchasing officials, it appears that the correlation of scores between certain (agriculture department) evaluation committee members could indicate scoring collaboration,” auditors wrote.

Later in the process, auditors said it appears the evaluation committee “required resolution of significant differences in raw scores among committee members.” No significant changes were made to Callahan’s or the deputy’s scores, “however, significant adjustments were made to the raw score of other ... staff serving as committee members, resulting in their final scores being more aligned with those of senior management,” auditors wrote. As a result, three applicants were awarded licenses who otherwise would not have been.

“While modifying raw scores is not unusual, the number of changes, the magnitude of changes ... and the bias in favor of senior management preferences are considered unusual and could indicate an attempt by senior management to influence other evaluation committee members,” auditors wrote.

Recommendations and response

Throughout their report, auditors recommended the Utah Department of Agriculture and Food’s current leadership implement procedures to minimize risk of noncompliance and misuse of public funds, implement blind cannabis grower evaluations, reassess the licenses awarded, review all vehicle usage, implement more controls around travel and reimbursements, require all employees to submit annual conflict of interest disclosures, review policies around bonuses, and seek reimbursement for inappropriate expenses.

In a written response, the department’s new commissioner, Logan Wilde, said he and his staff “have worked hard to identify issues, including executive branch and employee concerns, and reestablish compliance with policies and procedures in effect prior to the former commissioner’s tenure.”

In a statement issued Wednesday, Wilde said the Utah Department of Agriculture “takes the concerns raised in the auditor’s report and the department’s responsibility to address these concerns seriously.”

As for the cannabis grower licenses, Wilde said the department “will be considering whether or not the license of each current cannabis cultivator shall be renewed,” and will be holding a public meeting “to consider the operations of each licensee and will not renew any license unless the requirements of Utah law and department rules are being strictly followed. Additionally, the department has asked a third party to review processes for potential irregularities.”  

Wilde in his written response to auditors also noted the agriculture department is “open to seeking reimbursement from the appropriate parties who used state funds” for inappropriate or personal travel,” but “we will require assistance from the auditor’s office to determine which damages were incurred by each party.”