Audit: Former Utah lawmaker may have taken fraudulent payouts
A former state lawmaker may have taken more than $88,000 in fraudulent payouts from a pair of Utah nonprofits that he ran or advised, a new state audit found.
Released on Friday, the audit also alleges that former Rep. Duane Bourdeaux, D-Salt Lake City, attempted to thwart the Office of the State Auditor's investigation into the financial practices of the agencies Colors of Success and the Center for Family Development (CFD).
Bourdeaux is the CEO of Colors and the former executive director of the center, according to the audit, which reviewed the financial records for the two agencies between January 2011 and Aug. 15, 2012.
A Democrat who served in the Utah House of Representatives for five terms, Bourdeaux denies any wrongdoing in a Dec. 4 written response to the auditors' findings.
The audit also questions more than $86,000 in costs charged to federal grants by both agencies and says Colors gave questionable loans totaling nearly $40,000 to the CFD, which will not likely be repaid.
Additionally, the audit found payouts of more than $81,000 made to Marcia Raso, who formerly served as the director of both the CFD and Colors, which may also have been fraudulent or inappropriate. Her employment was terminated in June, the audit states.
According to the audit, a lack of internal controls, including poor documentation, improper bank reconciliations and other lax procedures "allowed the improper disbursements to occur and go undetected."
Auditors say the questionable disbursements could result in legal actions against Colors and the loss of the agency's nonprofit status.
The audit recommends Colors adopt better internal financial controls, but makes no recommendations for the CFD, which has closed.
Founded in 1989 at a Utah high school, Colors is an intervention and prevention program that seeks to curb gang problems and high drop out rates among youth of color by improving attendance and academic achievement. The CFD was a counseling center, which, according to the audit, closed in June 2012 with significant debts remaining on its books.
The two agencies had a business relationship that consisted of referrals for CFD counseling services, which were made by Colors staff, according to a letter included in the audit.
The audit was conducted after complaints were made to the Utah Commission on Criminal and Juvenile Justice. The state has the authority to conduct the audits because both agencies got federal, state and local grant funding and other public money.
According to the audit, Bourdeaux got more than $37,000 from the CFD and more than $50,000 from Colors. Auditors said financial records for both agencies either lacked documentation for the payouts or had conflicting documentation.
Payouts to Raso totaled $69,649 from the CFD and $11,834 from Colors, some of which was in cash withdrawals made by Raso herself, the audit found. Auditors said they could not determine the propriety of some disbursements and that some transactions were incorrectly recorded.
The audit also found that the CFD never received a financial audit while it was in operation and that Colors had not undergone a full audit since 2007.
In his written response, Bourdeaux denied failing to cooperate with the auditor's office. Bourdeaux said he resigned as the CFD's director in 2006 and "lacked the authority" to respond to requests for information about the CFD because he was only working as a consultant.
Bourdeaux also claims others from the agency "stamped" his name on tax documents and state contracts without his permission.
Responses from multiple board members support Boudeaux's position and explain some of the payments as repayment of money loaned to the CFD by the former legislator or as payments toward his annual $60,000 salary. Other discrepancies were accounted for by the CFD, board members said.
The audit contends that despite resigning as the CFD director in 2006, Bourdeaux remained listed as the CFD's registered agent on more recent documents on file with the Department of Commerce and on tax filings, and therefore remains responsible for the agency's financial practices.
The state contends that responses from the agencies fail to adequately address the audit's findings.
See more about comments here.