Midvale mayor resigns as trustee on embattled mystery fund

Midvale mayor resigns as trustee on embattled mystery fund

(Scott G Winterton, Deseret News)


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SALT LAKE CITY — Amid concerns of a mysterious trust fund connected to the recently audited Utah League of Cities and Towns, Midvale Mayor JoAnn Seghini resigned from her position Friday as a trustee of that fund.

Seghini said she made the decision to resign when she realized the other trustees weren't going to act immediately to dissolve the trust — called the Utah Municipal Cooperative II — and return its funds to the league.

Her announcement comes amid State Auditor John Dougall's ongoing investigations into the fund — with lingering questions about whether it's been used appropriately since its inception in 1993 and whether it's private or publicly funded.

The fund contained more than $500,000 as of June last year, according to the trust's most recent financial statements obtained by the Deseret News.

The league's former director Ken Bullock and former chief financial officer Michelle Reilly — who both stepped down from their positions before a state audit revealed tens of thousands of dollars in questionable credit card charges — currently help manage the fund.

Seghini also resigned from her position as the league board's treasurer shortly before that audit was released last month.

"From the beginning of my involvement with the Utah Municipal Cooperative II trust, I relied on others in administrative positions who stated that the trust's money was private money. I recently discovered that the origin of the trust's money was, in fact, public money," Seghini said in a prepared statement.

"Upon this discovery, it has been and continues to be my belief this money should be immediately turned over to the (league,)" she said. "When it became apparent that the other trustees were not going to act immediately to dissolve the trust and return the money, I made the decision to resign."

Bullock and Reilly could not be reached for comment Friday.

Financial reports obtained by the Deseret News show Bullock and Reilly received checks from the fund totaling more than $40,000 each between 2012 and 2016.

According to the state audit of the league published last month, Bullock has claimed the fund is private. But Dougall recently recommended to league board president Steve Hiatt (who is also the mayor of Kaysville) to begin pursuing legal options to claim the funds.

In a rare move Thursday, the Utah Legislature also rushed a bill to Gov. Gary Herbert's desk to allow Dougall to temporarily seize a fund when an ongoing audit reveals concerns that its money isn't being properly used. The bill appears to target the league's fund.

"I appreciate Mayor Seghini's candor and her willingness to shine as much sunlight on this situation as possible," Hiatt said after he heard of her resignation. "I'm appreciative of her straightforward approach to getting this resolved, and I hope other trustees will follow her example."

Although trustees met with their attorneys Thursday, there has been no word of what they will be doing with the fund.

Trustee and former Salt Lake City Councilman Tom Godfrey said Thursday they're still "working on a solution." He did not immediately respond to requests for comment Friday.

Hiatt acknowledged he is concerned that Seghini's resignation could complicate matters since she now has no influence on the trust.

"I'm sad to see her influence leave the co-op as we try to come a resolution," he said.

Asked about Seghini's comments that the fund does indeed contain public funds, Hiatt said he looks forward to see what the state auditor concludes, but said Seghini's statement "seems consistent with what we have felt and interpreted."

"Her feedback is the most candid we've received from anybody that's been involved in this cooperative," Hiatt said. Email: kmckellar@deseretnews.com Twitter: KatieMcKellar1

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