Kane County officials under investigation for involvement in district for luxury resort

Two top officials in Kane County are being investigated for their involvement in running a service district that state auditors said overpaid them and should be reviewed for possible criminal charges.

Washington County Attorney Brock Belnap has agreed to investigate Kane County Commissioner Jim Matson and Clerk/Auditor Karla Johnson less than a month after the audit said they benefited from the district that exists for a luxury resort near the Utah-Arizona border.

"I've told [Kane County Attorney] Rob Van Dyke that I will do it, but I am still working on lining up investigative resources," Belnap wrote in an email. "The scope of the investigation will include any issues raised by the state auditor's findings."

The Canyon Land Improvement District board has three members, Matson and two executives from the California-based group that runs the Amangiri resort, where suites go for anywhere from $2,400 to $5,600 per night.

The audit, released in April, found the board had issues with procuring contracts and hired consultants to perform work that apparently had nothing to do with the district. Matson owned one of those consulting companies and received a contract that allowed him to make thousands of dollars.

The audit also said Matson received a $7,500 salary, more than the state limit of $5,000 for board member salaries. He wrote the district checks to himself on the same day with no signature by another board member, according to the audit. He also signed the checks to his consulting company — $33,000 worth auditors said should be repaid.

Matson said he was unaware he or the board did anything wrong.

"I have not heard from [investigators], but, man, I would welcome that investigation and have it timely and take care of the question just overall so the overhang isn't hanging over me," Matson said Friday.

He referred all other questions to the district's attorney, Craig Smith, who said he was surprised when the audit called for a criminal investigation. Smith is also the attorney for Canyon Equity, LLC, which runs Amangiri.

Smith said the district consists only of the land owned by Amangiri resort. It was created because a state water regulation requires private entities to receive a government sponsor for sewer services before receiving a permit to build, he said.

Smith said Johnson and Matson were the district's only paid employees because the other board members own the Amangiri.

"They'd be paying themselves," Smith said.

The audit also took issue with the way the district collects money to pay for fire and sewer services. It said the way the district generated money amounted to a property tax, which it would not be allowed to assess.

Smith contends it's actually a fee that's paid only by the resort's owners.

State Auditor John Dougall said the district should have bid for services of a treasurer, rather than simply hire Johnson. Dougall said Johnson's pay was excessive for the amount of work she did as the board's accountant.

The board held its first meeting since the audit April 27, when it was set to vote on reappointing Matson as a trustee.

tanderson@sltrib.com

Twitter: @TaylorWAnderson