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SALT LAKE CITY -- A former Layton City grant administrator faces fraud charges for allegedly misappropriating federal dollars to pay his own salary.
Seth J. Butterfield was indicted Wednesday in U.S. District Court on two counts each of wire fraud, money laundering and theft from a program receiving federal funds. According to the indictment, he violated federal, state and local conflict of interest statutes in authorizing payments of Community Development Block Grant funds to himself totaling more than $100,000 over two years.
Butterfield, of Ogden, worked as the CDBG administrator for Layton from June 2000 to July 2006. The program administered by the U.S. Department of Housing and Urban Development provides affordable housing for poor people. State and local governments apply annually for CDBG funds, 70 percent of which must be used to benefit low- and moderate-income residents. In his job, Butterfield was responsible for deciding how CDBG funds were spent.
In January 2002, Butterfield formed a non-profit company called Affordable Land Lease Homes Inc., or ALLH, and recruited two others to serve with him on the board of directors. He told the city the position was voluntary and unpaid, according to the indictment. Later that year, he resigned from the board and became the executive director, telling the city the job was temporary and without compensation. Layton subsequently granted him a written waiver of conflict of interest.
While working as grant administrator, Butterfield authorized three contracts between the city and his company to build low-income housing using CDBG money. According to the indictment, Butterfield used $116,064 of the grant to cover a portion of his $279,000 salary as ALLH executive director from September 2004 to May 2006.
The indictment says Butterfield "falsely and fraudulently concealed from HUD and Layton City that he was being paid by an entity (ALLH) to which he authorized CDBG funding."
Butterfield is scheduled to appear in court Dec. 29.