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SALT LAKE CITY — Several state criminal justice agencies, including the Utah Attorney General’s Office, falsely obtained multiple millions of dollars in federal stimulus money earmarked for states struggling in the wake of the 2008 economic crisis, according to a recently unsealed lawsuit.
The complaint filed in U.S. District Court claims 37 current and former state workers applied for and received Bureau of Justice Assistance funds using a “mosaic” of false statements, fraudulent grant applications and certifications from 2009 to 2013.
“In 2008, while the rest of the country lost jobs due to the economic recession, Utah officials throughout the law enforcement sector were conspiring to defraud the United States of tens of millions of dollars in BJA grant funding,” according to the 103-page lawsuit that U.S. District Judge Robert Shelby unsealed last week.
The attorney general’s office, Utah Administrative Office of the Courts, Utah Department of Public Safety, state Division of Juvenile Justice and the Utah Department of Corrections all lost jobs due to budget cuts. But in each case, the agency had a budget surplus or cuts were restored before the grant funds expired.
The Commission on Criminal and Juvenile Justice also obtained justice assistance funds, which it awarded to other state agencies, according to the suit.
“Defendants were engaging in several interlocking conspiracies to obtain millions of dollars in federal funds which the Utah state agencies were not entitled to receive,” the lawsuit says.
The lawsuit seeks to recover damages amounting to at least $50 million and $11,000 for each violation of the federal False Claims Act totaling more than $1.2 million.
Utah prison inmate Reginald Williams filed the lawsuit as a whistleblower under seal with private attorneys in 2015, leading the U.S. Department of Justice to launch an investigation.
Williams, 59, who is serving a life sentence for aggravated sexual assault and aggravated robbery, became aware of the fraudulent conduct while working in the prison print shop and observing corrections employees, paid with grant funds, violating terms of the grant awards, the lawsuit says.
They are upstanding public servants of Utah. Mistakes may have been made in the grant process, but the notion that these individuals and their agencies were all involved in some massive predatory and prolonged conspiracy to defraud the federal government is not only far-fetched but simply wrong.
–Attorney General Sean Reyes
The U.S. Attorney’s Office in Salt Lake City filed a notice to take over the case. It has 60 days from Feb. 11 to file a new complaint.
Bill Schmidt, a Fresno, California, attorney for Williams, said the federal government intervening means the case has “absolute merit.”
“They don’t do this unless there is strong evidence of wrongdoing, of fraud against the United States government,” he said. “The activity that’s alleged in the complaint seems to be a way of doing business within those agencies.”
Attorney General Sean Reyes said although the alleged wrongdoing occurred before he took office, he looks forward to “vigorously” defending the state agencies and the “people who protect Utah.”
“They are upstanding public servants of Utah. Mistakes may have been made in the grant process, but the notion that these individuals and their agencies were all involved in some massive predatory and prolonged conspiracy to defraud the federal government is not only far-fetched but simply wrong,” Reyes said in a prepared statement.
Among the 37 defendants are corrections executive director Mike Haddon, Utah Highway Patrol Col. Mike Rapich and former criminal and juvenile justice commission director Ron Gordon, who now works as Gov. Gary Herbert’s general counsel.
The federal government has substantive legal problems and more serious procedural issues to overcome in the case, Reyes said.
Under the American Recovery Reinvestment Act of 2009, Congress funded grants to save criminal justice jobs that would have been slashed and to create jobs that were desperately needed for states facing budget shortfalls, according to Schmidt.
Utah allegedly took the money despite facing no risk of losing criminal justice jobs, and despite surpluses that would have funded additional jobs, the lawsuit says.
In 2012, Williams reported through the prison grievance process that corrections officials had conspired to fraudulently obtain and use justice assistance funding, according to the lawsuit. As a result, the suit says, prison supervisors fired him from the print shop in retaliation, causing him to lose $2,500 a year in wages.
Williams stands to receive some compensation if the government wins the lawsuit, according to Schmidt.
The U.S. Department of Justice launched an investigation into whether the state supplanted or used federal funds to replace money the state had already appropriated for the same purpose in January 2015.
The probe came to light in a court filing by the DOJ Office of Inspector General last summer asking a federal judge to force the state to turn over records it has refused to provide. The DOJ had served a subpoena on an assistant Utah attorney general last April, but the state did not comply.
The subpoena sought job creation and retention records, personnel records for workers funded by the grants, documents on hiring and employee transfers, and communications regarding complaints, objections and inquiries regarding job creation retention.
Federal investigators contacted the attorney general’s office “numerous” times by phone and email. The requests were met with promises to produce documents, but no documents have ever been produced, according to the July court filing.
The attorney general’s office “repeatedly” told investigators that various employees were gathering the documents but for some reason were not able to finish the task.
Reyes said his office provided thousands of documents, made dozens of witnesses available for interviews, cooperated during the entire process, and was negotiating a settlement when those talks broke down “from the other side.”
“Any attempt to characterize our actions otherwise is absolutely inaccurate,” he said.