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The Utah state auditor's office has painted a damning picture of lax oversight, nepotism, illegal taxation and self-dealing possibly of a criminal nature by Kane County elected and appointed officials.
Audits of special districts created by the Kane County Commission said Commissioner Jim L. Matson also served as a paid trustee on one such board and not only took excessive compensation but then contracted with a consulting firm he owned to the tune of tens of thousands of dollars, in several cases for services that had nothing to do with district responsibilities.
Matson isn't named in the audit released Thursday, but The Tribune identified him through special district records.
The commissioner said in a phone interview Thursday he was "absolutely ignorant" of any possible wrongdoing related to his positions.
"I had no idea that that could be a problem," Matson said. "So we've taken steps since this issue has come up to make sure that we follow state statute and regulation and do it to the letter."
Matson allegedly wrote duplicate checks from the district to himself in the same amounts on the same day in 2014 signed only by himself and deposited within a short period, indicating, auditors said, that he "knowingly and willfully" made the dual payments.
Auditors recommended repayment of the full $7,500 more than state law allows in annual compensation for such a board member and "that the Kane County attorney request an independent review to determine if the duplicate payment constitutes criminal activity."
Auditors also recommended Matson's consulting firm repay $33,352 allegedly improperly paid to it by the district, also with district checks signed only by the commissioner.
'Unjustifiably inflammatory' • The Canyon Land Special Service District pushed back in its written response, calling the suggestion of any criminal activity "wholly unfounded, unjustifiably inflammatory, and inappropriate for an audit report that should be based on actual evidence." The district said it "will aggressively defend against any allegations of criminal wrongdoing."
Created in 2009 to provide drinking water, sewer services and fire protection for a private development, the district went on to assert that the board members are appointed by the county commission for their "knowledge, judgment and expertise." But it said it will review compensation and pay all members equally "even though several of the Trustees, much like President [Donald] Trump, do not desire to be compensated for their service." Matson, it added, has forgone $5,000 in ongoing trustee compensation to offset what it called "inadvertent overpayment."
The district rebutted auditors' criticism of its contract with Matson's consulting company, saying the deal was "completely legal" and aboveboard. Nonetheless, it said, the board has "discontinued the arrangement at the urging of the state auditor."
It also reviewed payments to the consulting company, but determined the company should repay just $4,500 of the $33,352 auditors identified, adding, "The company in question has agreed to do so."
Matson told The Tribune he would await the findings of any investigation before he may repay money determined to be improper.
"Whatever it takes to take care of the situation correctly and adequately, you bet," he said.
Another slam on the district by the audit was that it has, since 2009, illegally imposed property taxes as a source of revenue. The district has no authority to levy taxes and the amount it charges is beyond the legal limit obstacles auditors said the board got around when it "decided to call the rate a fee." The district did not acknowledge wrongdoing but said it will change collection methods to avoid the fees "being misconstrued as a property tax."
The state auditor's office was not satisfied with the district's response.
"Canyon Land's response indicates its continued misunderstanding of laws related to the operation of a local or special service district. Their response also fails to acknowledge significant matters noted in the report. We continue to have serious concerns with its oversight and operations."
A third audit squarely blamed the many violations on failed oversight by the Kane County Commission, which it said could have and should have stepped in to prevent these problems.
"If a district is running off the rails," state Auditor John Dougall said in an interview, "we're looking for the county or parent entity to hold them accountable."
Questionable accounting • This and a separate audit released at the same time said County Clerk/Auditor Karla Johnson who is also not named in the report is accused of improper, excessive payment for accounting services for the two special service districts for minimal work. Auditors say the contracts were not put out for competitive bidding and represent a potential conflict of interest.
Johnson received $50,000 from the Canyon Land district from 2011-2015, including $17,000 in bonuses, according to the audit.
The clerk/auditor did not return messages Thursday from The Tribune requesting comment.
Matson said Johnson no longer works for the Canyon Land district and was replaced by a person hired through an open procurement process.
Johnson received $14,400 for accounting services between 2013 and 2015 for the Kane County Recreation and Transportation Special Service, auditors said. It also hired the spouse of one board member as a paid secretary. The district said in response to the audit it has ceased its employment with Johnson and the trustee's spouse, and now follows state procurement rules.