Audit finds 'illegal incentives,' mishandled public money within Unified Fire Authority

(KUTV) — A state auditor’s report released Wednesday slams the Unified Fire Service Area and the Unified Fire Authority for a lack of internal control and what state auditors call “illegal incentives” paid to department employees and administrators, among other internal problems.

The audit has been going on for the last six months after allegations surfaced that top department administrators were paying out illegal bonuses.

The audit found that $81,000 in incentives were paid to the former chief of Unified Fire by two board members who were not authorized to make payments on behalf of Unified Fire Authority. Those payments were made without the knowledge of a “majority” of the UFA board, according to the audit.

The audit also claims $22,000 in incentive awards were paid to a former clerk.

The UFA's previous fire chief, Michael Jensen who resigned in August, was heavily criticized after it was revealed that he and three members of his administrative team had been paid more than $400,000 over a five-year period in "incentive pay."

Other concerns include:

• Illegal actions lead to improper incentive payments
• Top department officials failed to inform the board of ongoing concerns
• The department neglected to retain important documents
• Public resources were used for electioneering purposes
• Assets were used for personal use

The internal review from the Utah State Auditor’s Office of the Unified Fire Service Area’s practices states employees with Unified Fire Authority could be criminally prosecuted.

The audit of the nine-city service area which includes Eagle Mountain, Herriman, Midvale, Riverton, Taylorsville, Alta, Cottonwood Heights, Draper and Holladay, and the unincorporated part of Salt Lake County, focuses on allegations of improper compensation to certain employees in the. misuse of purchase cards, and other potential misuse of public funds. The UFSA is a local district created under Utah law as a special purpose local government. It is also a member of the UFA. Funding for UFSA is primarily generated by property taxes.

A statement from the 9-member UFSA board states it agrees with the finding of the audit.

“Since becoming aware of management deficiencies, the UFSA Board has acted promptly and aggressively to restructure the administration,” the board wrote in a statement on Jan. 17. “The Board recognizes its deficiencies in lacking sufficient oversight to have prevented these problems. We are deeply disappointed in the abuse of the public trust that occurred and the attempts by dishonest persons to circumvent established controls and law.”

Law enforcement investigators will review the UFSA audit to determine if criminal charges will be filed. It could fall under the jurisdiction of the State Attorney General’s Office or the District Attorney of Salt Lake County. The audit has not been reviewed yet by law enforcement, according to State Auditor’s Public Information Officer Nicole Davis.

UFSA’s board stated it has made corrections and will continue to follow recommendations made by the Office of the State Auditor to “regain public trust.” It also plans to work with authorities through investigations to recover misused public funds and resources.

Names aren’t listed in the report, but previous top brass at UFA have been:

Chief Michael Jensen (mutually split with UFA in August)

Deputy Chief Gaylord Scott

Legal Counsel Karl Hendrickson

CFO Shirley Perkins

UFSA board member Chris Pengra confirmed all of them have been removed from the department.

The 12-point findings and recommendations from the audit are as follows:

1. Lack of Clear Contractual Arrangement existed between UFSA and UFA. Before May 2016 there was not a written agreement between UFSA and UFA about what each entities’ duties were. This led to a “significant blurring of the lines of responsibility” and resulted in a number of issues, including the former UFA Chief making unauthorized payments to himself, improper payments to the former clerk. The confusion about the roles of the two organizations led to questions if actions were completed by UFA employees, should the same actions be billed to UFSA.
2. Current Memorandum of Understanding contains weaknesses that fail to adequately clarify the UFA/UFSA arrangement. In May 2016, both organizations adopted a MOU to clarify “the sharing of resources between UFA and UFSA,” according to the audit. The problem is the MOU failed to address any significant risks or ways to protect possible conflicts that could arise from the UFSA/UFA agreement.
3. Illegal actions resulted in improper incentive award payments. Between Jan. 2011 to Dec. 2015, two former board chairs unilaterally “approved” $81,000 in incentives for the former UFA Chief, who was not an employee of UFSA, according to the audit.
4. Illegal incentives paid to former clerk.
   Recommendations from Auditors office: The former clerk or former UFA Chief should repay these illegal payments. The board should properly oversee employee compensation. UFSA and UFA respect the boundaries between the two organizations.
5. Former UFA CFO and former UFA CLO failed to adequately inform the board of ongoing concerns.
6. Failure to ensure retention of documents may have resulted in violation of record retention laws.
7. Public resources improperly used for electioneering
8. Excessive UFSA assets assigned to former clerk
9. Some assets appear to have been used primarily for personal purposes
10. Construction of the Taylorsville Fire Station did not follow state procurement laws.
11. Gratuities have the appearance of influencing procurement decision
12. Former board chair deferred setting board agenda to former UFA Chief.

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