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An accounting error exposed improper and excessive pay for two government employees working to assist an ultraluxury resort, leading to the latest scandal for Kane County.
The Internal Revenue Service audited the county over the payments tied to a special service district providing sewer service for the Amangiri resort and that has since escalated into a highly critical state audit and now a criminal investigation into County Commissioner Jim Matson, county officials unveiled last week.
This is on top of the jail sentence for its former treasurer who pleaded guilty to charges stemming from her sending tens of thousands of dollars to her personal bank account.
"It has been a hard year," said Rob Van Dyke, the county's attorney. "It has been a really hard year."
Van Dyke said the IRS audit was "triggered by their internal systems because there was a W2 and a 1099 for the same employee."
The payments included the Kane County tax identification number, when the Canyon Land Improvement District should have listed its own, Van Dyke said. The county was forced to pay taxes and a penalty that Van Dyke said was about $500.
He said Utah Auditor John Dougall's employees began investigating former Treasurer Georgia Baca's office around the same time the IRS was auditing the county, and it began to look into the special service districts.
Matson allegedly signed two checks made out to himself in July 2014 that Dougall recommended an independent prosecutor look into. Washington County Attorney Brock Belnap has agreed to investigate.
Trust issue • Residents attended a commission meeting this week to ask Matson and the county's clerk/auditor, who also did side work for Canyon Land, to step aside until the investigation is over. They also demanded the county explain how so many issues could fly under the radar.
"One thing I can't understand at all [is] why does anyone write their own checks in this county?" Joan Thatcher asked the county commission at its meeting May 8. "Doesn't that just seem wrong on the face of it?"
Thatcher and another man asked Matson to step down, at least temporarily, until Belnap completes his investigation. Matson declined.
"What I'm looking for is something to clear me, my mind, and my reputation. I understand your angst and your anger, but you've only heard one indictment in the newspaper," Matson said. "There's a back story in everything. I encourage you to give me that patience and time. I'm not going to be challenged, Joan. That's my statement."
Matson told The Salt Lake Tribune he welcomes Belnap's investigation.
Matson worked for the resort's developers before becoming a county commissioner, and once elected, the audit showed he also continued getting paid by Amangiri as a contractor while simultaneously helping manage the daily operations as a paid member of the three-person Canyon Land board. The audit said he received $7,500 for his board service, when the state maximum is $5,000.
Before building the resort, state Department of Environmental Quality rules required Amangiri developers to obtain the "sponsorship" of a government entity. The sponsorship rules are in place to ensure wastewater treatment systems are maintained indefinitely, even if a development were to tank.
"They wanted to be able to sell some lots, and I believe they did," said John Mackey, engineering section director at DEQ. "We required they form a subdivision of the state, they went to the county and the county assisted them with that."
The county created the Canyon Land Improvement District. The district has been run by Matson and two executives at the California-based Canyon Equity, which developed the resort.
Karla Johnson, who remains the Kane County clerk/auditor, also worked as the improvement district's clerk. She effectively operated as an accountant who was paid more than $400 per transaction, Dougall wrote in his audit. The audit said the pay Johnson received "appears excessive," which he attributed to a lack of a competitive bidding process.
Dougall said the position should have been filled through a request for proposals. The county has since moved to pass a procurement policy that districts must follow.
The district's new clerk is Jennifer Johnson, Karla Johnson's daughter-in-law and the clerk of Big Water. District minutes indicate Jennifer Johnson was the only person to respond to the job posting.
Dougall said the arrangement is fine so long as Johnson was selected through a competitive bid process, although his office seeks multiple bidders when it puts out a contract. The Southern Utah News confirmed a posting advertising the position.
Moving ahead • County leaders hope the investigation and recent policy changes will help it move past the latest scandals and alleged improprieties.
A group of elected officials that included the county sheriff, assessor, recorder, treasurer, Van Dyke and the other two county commissioners penned a public letter in which they condemned any illegal activity or perceived corruption among public officials. Matson was not a signatory.
"We refuse to accept or condone any illegal, unethical, or criminal behavior by any volunteer, employee or elected official in Kane County," the officials wrote. "Many of the actions taken by the districts in question have been unintentional mistakes, which can and should be corrected easily."
"Other issues have not been so simple," they wrote.
Van Dyke said the leaders felt the letter was necessary to help regain the public's trust.