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A scathing new audit slams an embattled Wasatch County water district, asserting the agency was poorly managed for years, failed to keep required records and may have intentionally obstructed the investigation into alleged malfeasance.

"Given the volume of missing records … we are concerned with the disregard for reasonable record keeping and whether there was a concerted effort to impair our audit," said the auditor's review of the Jordanelle Special Service District.

The district contends it didn't try to obstruct the audit, but feared the auditor's office was being used by area landowners to gather evidence in lawsuits filed against the district in a contentious and long-running turf war along the banks of Jordanelle Reservoir.

The district noted that there is "simply no evidence … of misuse of public funds, self-dealing or fraud," as the lawsuits against the district have alleged. And it said it already has taken steps to address many of the shortcomings identified in the audit.

"We have many years of records we can't find. … It's kind of a sad deal. I think this is just kind of a hit we're going to take and get through," said Mike Kohler, a Wasatch County councilman. The council now oversees the service district. "We've changed. The people who were there then are gone and we've moved on."

But the auditor found the district's cooperation to be lacking.

"The district's response is consistent with the district's approach throughout the audit, which has been to defend inappropriate activity and cloud relevant facts by distorting, deflecting and manipulating facts and information," the audit said. "Essentially, the district defends certain actions simply by throwing mud in a clear pool of water so that the picture becomes cloudy."

The Jordanelle district has been embroiled in multiple lawsuits by wealthy landowners who sought to build luxurious homes along the picturesque reservoir until the housing market collapsed and they were left with worthless dirt.

The district foreclosed on the property and the former landowners. The banks that loaned the district the money to build the water and sewer system accused district officials of a broad range of malfeasance, including engaging in sweetheart deals to unload the foreclosed-upon land and wasting taxpayer money acquiring other properties.

The audit reviewed some of the claims and found little, if any, backing for them, except that the district didn't properly disclose the penalties for not paying fees to reserve water for the future construction.

In one instance, the landowners have alleged in court documents that the district cut a deal with an entity called Fishin' With Bread, where the third party would buy land adjacent to property the district already owned and then flip it, selling it to the district for a $300,000 profit.

The auditor determined the transaction was done at arm's length and the district paid the listing price for the land, which was more suited for the construction of a sewage-treatment plant the district built there.

The audit found other problems, however, with district management.

The district failed to keep even simple minutes of closed meetings, as required by the state's Open and Public Meetings Act, although the district said it has kept such minutes since 2012.

It failed to document a $1.8 million land purchase on behalf of a neighboring district, the North Village Special Service District.

The former director of Jordanelle, Dan Matthews, also happened to act as the director of the North Village district at the time. The reasons for the purchase were unclear from the records.

Matthews retired from the Jordanelle district late last year.

The audit also questions whether Jordanelle Special Service District officials misused their taxpayer credit cards to make thousands of dollars worth of purchases or fuel their private vehicles.

Nearly two-thirds of purchases made with credit cards paid by the district had no receipt or supporting documentation. More than 200 transactions were made at gas stations using the credit cards, rather than the state-issued fuel cards available to state agencies — used so agencies don't have to pay the gas tax ­— leading the auditor to question if officials were using the card to fill up private vehicles, which is prohibited.

The former district manager used his credit card to buy $2,784 worth of goods at Home Depot, a store where the district had a charge account. Of 312 transactions at grocery stores, only 16 were supported with a receipt and half those were for drinks, snacks and magazines.

District employees who were traveling appear to have received a daily allowance for meals and then used their credit cards to buy more than $2,200 worth of meals.

The district acknowledged there may have been shortcomings in tracking credit-card receipts, but noted that a total of $131,531 was spent in all credit-card transactions during the five years reviewed in the audit, a fifth of one percent of the district's $62 million operating budget.

Twitter: @RobertGehrke

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