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Jeffery D. Allred, Deseret News
Unified Fire Authority Fire Chief Michael Jensen speaks to members of the media at the Emergency Operations Center and Unified Fire Authority Headquarters in Salt Lake City on Friday, May 10, 2013.

SALT LAKE CITY — Former Unified Fire Authority Chief Michael Jensen — who was re-elected last year as a Salt Lake County councilman — and his former deputy could be facing felony charges in the wake of a scathing audit released Wednesday.

Utah State Auditor John Dougall is recommending criminal investigations of Jensen and his former deputy, Gaylord Scott, after finding at least 17 potential violations of the Utah Public Officers' and Employees' Ethics Act and possible "misuse of public funds," according to the 53-page audit.

While Scott could not be reached for comment Wednesday, Jensen said the audit's findings were "inaccurate," "imbalanced" and "unfair," and that its findings were taken "out of context" because the auditor didn't ask him follow-up or clarifying questions after his first interview in the investigation process. He was also concerned he couldn't provide a written response within the audit like the Unified board did, or even see it before it was released to the public.

"There distortions, mischaracterizations, things that are very harming and damning to me at a personal and professional level. It's definitely and absolutely unrepresentative of my work at UFA" Jensen said. "It's so unfortunate that as the primary focus of the audit, I didn't have the opportunity to respond to the findings in the same way the (Unified) board did. The board got it a week ago. I have to read it when it gets published."

When asked for examples, the former chief said he "won't be able to go into specifics" until he has time to review the entire audit, but indicated past interviews with the Deseret News for reasons for certain expenditures and incentives.

"There are reasonable explanations for everything in the audit," he said.

Yet Dougall is recommending Unified officials attempt to recover about $370,000 — which the audit states Jensen improperly approved as "incentive awards" to himself, Scott and two other former fire administrators over the past four years without full Unified Fire Authority board approval — as well as tens of thousands of more dollars in "excessive" and "questionable" travel expenditures spent by Jensen and Scott, the audit states.

Jensen and Scott put their personal interests over organization interests, the audit states, but their actions were not stopped because board members placed too much trust in the former chief and "failed to provide proper oversight."

Dougall said he's seen similar cases, but rarely the number of concerns that presented themselves during the five-month audit, which was launched in August following media reports of controversy over incentive pay and complaints alleging misuse of public funds.

Amid the controversy, Jensen and Scott both left their positions, though Jensen would not say whether his resignation was directly tied to the investigations.

The other two administrators who benefited from the incentive awards have also left Unified Fire Authority: Karl Hendrickson, former legal counsel, left in October and former chief financial officer Shirley Perkins was replaced last January.

Of particular concern to Dougall was an apparent "culture of excess and entitlement" on the part of Jensen and Scott.

"The tone at the top was a sense of entitlement and the sense that, 'I can do whatever I want to,'" Dougall said. "That's a very concerning culture within an organization.

"The way they used the organization to steer incentive awards improperly toward themselves without board oversight or approval, the fact that they manipulated the budget to effectively try to hide things from board oversight, the fact that they took trips (and) overbilled UFA," Dougall said. "There are quite a few issues we've identified."

Findings

In addition to "improperly justifying" their acceptance of incentive awards that were "hidden" from board oversight, the audit states, Jensen and Scott overspent Unified dollars on travel. Examples included a weeklong "baseball spring training junket" in Arizona and an extended trip to Anaheim that appeared to have little department work.

The audit also stated Jensen and Scott possibly violated nepotism law by hiring family members. While Scott had three nephews working under his command, Jensen had two sons, two brothers-in-law and a cousin, the audit said.

To add to its findings, the audit also stated Scott and Jensen used Unified dollars to purchase "excessive technology assets for themselves."

Between 2011 and mid-2016, Scott spent more than $23,000, with nearly $15,000 spent at Apple using his Unified purchase card, the audit said. During that same time period, Jensen spent $1,600 on technology purchases.

Dougall said Jensen and Scott each had two, 27-inch iMacs purchased with Unified dollars, which were kept at both their homes and in their offices. Jensen and Scott each also had a Macbook Pro, an iPad Pro, an iPad 2 and an Apple Watch, according to the audit. Scott also had a GoPro camera, two Nikon DSLR cameras with seven lenses and a Canon XA20 video camera.

"(Jensen and Scott) had more technology equipment (and more expensive technology equipment) than necessary for their jobs," the audit states.

Upon leaving Unified, both Jensen and Scott returned most of the equipment, but the audit also found the former chief and deputy used the devices "primarily for personal purposes or unallowable uses."

Thousands of pornographic images were found on Scott's computer, according to the audit.

In addition, one of Jensen's computers allegedly contained files soliciting campaign donations and possibly other campaign activities, which is prohibited by Utah law.

"In addition to inappropriate personal use, we found significant personal use of the in-home and laptop computers," the audit states. "Specifically, the in-home computers appeared to be primarily for personal and family use."

The audit also concluded the Unified Fire Authority board "failed to provide proper oversight" of the former chief, and the organization "experienced operational weakness."

Among the audit's other findings: former board leaders "illegally approved incentive awards without full board authorization"; the board ratified the incentive awards "despite serious breaches of contract"; and the board awarded nearly $135,000 in severance payments to the former chief and deputy "despite suspicions of fraudulent activity."

In addition, the audit concluded that the board violated the open and public meetings act when it approved those severance payments and that "board culture impaired employees' and board members' willingness to communicate questionable activity to the board.”

Jensen and Scott's activity and the Unified Fire Authority board's treatment of the issues impacted employees' morale, creating fears of retaliation or loss of their jobs if they reported any concerns, Dougall said.

Jensen, Scott, board members and other Unified officials, he said, were cooperative during the audit, but one assistant chief refused to cooperate.

Fallout

Dougall said it will be up to criminal investigators to determine whether Scott and Jensen will face any charges. He noted, however, that typically cases involving misuse of public funds exceeding $5,000 can lead to felony charges.

"Probably the biggest concern is the reputation of the organization and the impact on (public trust)," Dougall said. "When someone abuses their position of trust and they work for the taxpayers, it clearly creates concern."

In a response letter attached to the audit, Unified Fire Authority board members said: "We are deeply troubled and disappointed with not only the volume of findings, but also the specific actions and behaviors of the executive leadership as detailed within the report."

The board said its "trust was not only misplaced, but taken advantage of" by Jensen and Scott, a finding that board Chairman Christopher Pengra said was particularly troubling.

"In light of what has been indicated by the audit and what was actually concealed by former leadership, in those instances I don't know that any degree of strong policy would change the circumstances," Pengra said — but added that steps have already been taken to prevent any similar situations in the future.

The board plans to consult with attorneys about recommended criminal investigations and recovery of funds, Pengra said, while also completing a comprehensive review of all relevant policies.

"One thing that's important is we have strong leadership, with a new legal officer, new financial officer and a new fire chief," Pengra said. "I strongly believe that we have the people in place now who have a proven track record of impeccable integrity."

As for Jensen and Scott's future, Dougall said it's not yet clear what agency might conduct a criminal investigation.

There's potential that a neighboring county or the Utah Attorney General's Office may pick up the investigation because of potential conflict of interest concerns in Salt Lake County, but Salt Lake County District Attorney Sim Gill said his office is reviewing the audit and will take the allegations "seriously."

"Whenever there are allegations of criminal wrongdoing in Salt Lake County, that's something we take an interest in and is our responsibility to do so," Gill said.

Certain misdemeanors and felonies can potentially cause legal ground for removal from public office, state law states.

When asked if he plans on retaining an attorney, Jensen said he's "looking at all my options." In response to questions about how the audit might impact his role on the County Council, Jensen said: "I love the council. I love doing the work, so we're going to keep doing the things we do."

In wake of the state audit, however, investigations into Jensen's business on the County Council are already slated to begin.

Salt Lake County Auditor Scott Tingley said the audit's findings naturally present questions about Jensen's use of county resources, so he plans to launch a "deep dive" audit into his expenses.

"Obviously the severity of the audit's findings is alarming to me," the county auditor said. "My main concern would be things like travel expenditures that the county may have reimbursed to Councilman Jensen and if they were also paid by (Unified). If there are any instances of double dipping, we definitely want to look at that."

Tingley noted his office had already conducted an "initial, cursory review" when media reports of the chiefs' spending first surfaced, but he refrained from conducting a more in-depth investigation as to not hamper the state's audit while it was still in the works.

That initial review presented no "red flags," Tingley said, but his "main concern" is possible crossover between Unified and Salt Lake County budgets.

Salt Lake County Chairman Steve DeBry said Wednesday he hadn't had time to review the state's audit in depth but welcomed a "due process" to determine Jensen's future with the council.

"It's an unfortunate situation that's occurring, but we have to let these things get vetted out the right way at the right time," DeBry said. "Michael is a friend. He does a great job on the council, but these recommendations are concerning and we need to address them in the appropriate way — and we will do so."