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SALT LAKE CITY -- A former Layton city grant administrator pleaded not guilty to allegedly misappropriating federal dollars intended for low-income housing projects to pay his own salary.
Seth J. Butterfield, 77, entered the plea in U.S. District Court on Thursday. The U.S. Attorney's Office did not seek to place him in custody. Magistrate Judge Paul Warner ordered Butterfield free on his own recognizance pending a jury trial scheduled for March 14.
Butterfield was indicted 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.
The Ogden man 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 determined how the funds were spent.
In January 2002, Butterfield formed a nonprofit 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 city officials 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.
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