- A Utah nonprofit head misused public funds for vacations and political donations, according to a state audit.
- The executive also transferred $2.1 million to a for-profit corporation he owned a majority stake in, the audit says.
- Auditors criticized state agencies for inadequate oversight, recommending potential law enforcement involvement.
SALT LAKE CITY — The former head of a Utah nonprofit used public funds to pay for vacations and give to political campaigns, according to a report from the state auditor released on Tuesday.
The same executive also gave up to $2.1 million in grant funds to a for-profit corporation where he was the majority shareholder, according to the report, which recommended that the issue be turned over to law enforcement.
The report also said a lack of oversight from Utah agencies allowed the misuse of public funds to occur.
"People think that nonprofit means nobody profits, and that is not how this works, and I think that's illustrated with this," Auditor Tina Cannon told KSL.com. "We are starting to see this happen very often. And our oversight as the state auditor is easier done within government entities, but when the money is given to a third party, then it becomes more tricky. ... The oversight must be in place by these entities who give out the money."
The office began investigating Impact Utah, a nonprofit corporation that offers training and other services to Utah manufacturers, after receiving a hotline tip in January, Cannon said. Around the same time, the president, whose name was not disclosed in the report, resigned from the company.
Impact Utah received funds through the federal Manufacturing Extension Partnership program, a decades-old effort to boost American manufacturing, according to the report. Federal funds were administered through the University of Utah, while Utah's Governor's Office of Economic Opportunity granted matching funds through Utah State University.
Auditors said all state agencies failed to provide "adequate oversight" of the funds, "which allowed Impact Utah to misuse project funds and related program income without detection for several years."
"That's the most disturbing part about this is that nobody checked," Cannon said. "There were several layers of oversight that should have been happening."
The company also lacked a functioning board of directors, the report said, which auditors believe allowed the president to use public funds for personal benefit.
At the time, Impact Utah's president was the majority shareholder of Vereo Impact Inc., and auditors said they identified multiple instances of money transfers to Vereo Impact, totaling up to $2.1 million, some of which was used by Vereo to purchase another company.
He received "exorbitant" bonuses, making his average compensation from 2022 to 2024 more than $500,000 annually, "which is more than double the average total compensation received by executives in similarly sized (nonprofit) entities we reviewed," auditors wrote.
The president also used his corporate credit card to pay for vacations with his wife in 2023 and 2024, totaling at least $35,715.
"Vacations included trips to Hawaii, Las Vegas, Florida and other destinations," the report states. Expenses allegedly included airfare, meals, lodging, transportation and a variety of activities: a helicopter tour, snorkel cruise, luaus and Las Vegas shows.
"We could see no legitimate business purpose for these trips," the report adds.
Another $2,500 was allegedly spent on other personal expenses, including massages, subscriptions, online purchases and a haircut, while nearly $10,000 of that money was donated to one federal campaign and three state campaigns in 2023 and 2024.
Auditors also said Impact Utah did not comply with reporting requirements and that Utah State University and the University of Utah failed to notify auditors after they disbursed at least $25,000 to Impact Utah, something required by Utah law.
"State agencies and partner institutions are entrusted with the responsibility to manage public funds with care and accountability," Cannon said. "This case underscores the urgent need to fulfill statutory duties and implement effective oversight controls to prevent the misuse of taxpayer dollars."
Impact Utah did not respond to a request for comment.
The report recommended that all state agencies take steps to ensure that proper oversight and accountability is performed, consider referring the issue to law enforcement and see if it is "appropriate or feasible" to try to recover any of the misused funds.
All three agencies accepted the recommendations, though the Governor's Office of Economic Opportunity noted in its response that the agency has "historically had limited legal authority to place requirements on pass-through funds." It added that it would increase its oversight of recipients of pass-through grants.
Utah State University said it would work with the Utah Attorney General's Office to see if it would be possible to recover the funds, and the University of Utah said Impact Utah was issued a stop-work order in March, after the university consulted with a federal compliance officer.
Cannon said her primary recommendation would be for lawmakers to end the practice of direct grant appropriations, but she said the idea has received pushback before, and the recommendation was not in her report. Instead, she said she would prefer to see all grants awarded after a competitive bidding process with tighter controls to ensure recipients are properly using the funds and meeting the desired outcomes.
"Once the money is out, it is very hard to get it back," she said. "The oversight should be there as part of the built-in process."
