The report comes on the heels of - and supports - the internal investigative audit released Aug. 16 by the Utah Higher Education Assistance Authority (UHEAA). That audit found that college savings-plan deputy executive director Dale C. Hatch made a "complex series of transactions involving 49 accounts, which resulted in funds amounting to $505,976 being paid in 16 of the 49 accounts without authorization."
UHEAA is the financial arm of the state Board of Regents. "None of the money deposited by individual investors was appropriated - no investor was harmed," according to Mark Spencer, UHEAA interim executive director. The money came from administrative funds.
Of the $505,976 in unauthorized funds, $420,476 remains in the 16 accounts, the report said. The remaining $85,500 was paid to Hatch and is "considered stolen," the report said.
The report found that Hatch, an attorney and certified public accountant, performed legal and tax work for clients in addition to managing the tax-deferred savings-plan for college-bound students. The UESP has $740 million in 48,000 individual accounts.
Spencer said employees in the saving-plan program came forward when they noticed some irregularities. UHEAA was then able to "take quick action to address this unfortunate situation," Spencer said in a statement that accompanied the report.
On July 1, Hatch was suspended with pay pending an investigation. Spencer fired him six days later.
According to the audit, Hatch had set up 25 college-saving accounts in his own name in 2002 for a client for whom he acted as trustee. In a letter to his client, dated June 17, 2002, Hatch indicated the accounts were set up in that manner because he did not have the required signatures from the client and the children.
Instead of billing the client, Hatch made this proposal: "If you will allow me to keep my name on the accounts of the grandchildren until January [2003], I will be able to take the state tax deduction. That will be sufficient to offset my billing (and do your next year's tax return without cost)," he wrote in the letter.
If he took the tax benefit as admitted, Hatch would have received a deduction of up to $26,790 for funds that belong to his client, the report said. He attempted to pay back a portion of the stolen money after he was suspended, but the $20,000 bank check was returned for "insufficient funds."
In August, he sent a cashier's check for $20,000 to UESP officials with instructions to deposit the money into two accounts from which Hatch had received the allegedly stolen funds.
Hatch did not return a call seeking comment.
The report has been forwarded to Salt Lake County District Attorney David Yocom for possible criminal charges. UHEAA officials also will consider referring information to the State Tax Commission and the Internal Revenue Service for possible action.
When contacted Friday, Yocom said his office "does not discuss pending investigations."
Earlier this week, UHEAA announced that Lynn Ward, Gov. Olene Walker's chief of staff, was chosen as the college savings plan's new director. A CPA and former director of the Governor's Office of Planning and Budget, Ward steps into the job next January, when Walker leaves office.
sykes@sltrib.com
