FAYETTE, Sanpete County — Elected leaders of a tiny town awash in financial disarray, including a clerk who went to jail for stealing more than $200,000, should resign, the state auditor's office said Wednesday.
And if replacements for the Fayette Town Council members who were in office before Jan. 1, 2018, aren't found, the town should disincorporate, according to a new state audit.
"One of the biggest takeaways from the audit was that town officials were basically asleep at the wheel," said State Auditor John Dougall. "If you can't comply and perform the basic functions, then it does lead to the question of why does the town exist. We do expect them to either shape up or say, 'Hey we don’t want to be a town.'"
Settled in 1861 and named after Fayette, New York, where The Church of Jesus Christ of Latter-day Saints was founded, the town of about 250 residents incorporated in 1948.
After finding irregularities in the town’s accounting records last year, newly elected Mayor Brenda Leifson reported a possible misappropriation of funds by the town clerk to the Sanpete County sheriff. The sheriff’s office asked the state auditor to help with the investigation.
Last October, former town clerk Tracy Kay Mellor, 63, was convicted of embezzling more than $229,000 over a nine-year period. She was sentenced to 45 days in jail and ordered to repay $153,390.
The audit released Wednesday found Mellor stole $303,000 from 2009 to 2018, amounting to about 13 percent of the town's annual revenue.
Mellor, who worked as both clerk and treasurer, wrote checks to herself and to a business, R&T Repair, she and her husband owned, covered the name with a legitimate vendor on the canceled check, made a photocopy and placed it in a file, Dougall said. She also altered bank reconciliations and forged the mayor's and council members' signatures on checks, according to the audit.
Dougall called it a "very, very simplistic theft" that town leaders could have easily detected and quickly remedied had they tried.
"The lack of oversight was caused by multiple town officials’ failure to take an active interest in financial matters and understand certain laws applicable to the operation of the town," the audit says.
Utah towns with budgets under $1 million are not required to undergo annual outside financial audits, according to Dougall.
Leifson said she believes Fayette, which she describes as "more or less broke," can fix itself.
"It's going to take time and energy, and I think a lot of participation from the council," she said. "Hopefully, the citizens will come around and help us rebuild because I don’t think anybody wants to see us have to unincorporate over something like this."
Leifson said it's been tough as the town tries to move forward. Some residents, she said, were happy she found the theft, while others are "still in doubt." She said the council didn't want to pursue an investigation until she showed members how much money went missing.
"The ex-clerk and her husband did a lot for this town. She just made a wrong choice," Leifson said.1 comment on this story
In a letter to the auditor, the five-member Fayette Town Council said it is working on complying with the law and being more transparent. Only one of its members served in the prior administration and he helped correct the financial malfeasance, according to the letter.
The town has contracted with a Richfield accounting firm to "assist us in getting our books in order" and validate monthly checks.
"We also recognized that numerous ordinances were out of date and not properly passed," the council wrote. "We are going to attempt to write or redraft past procedures for fiscal matters."
The audit emphasized that should include separating clerk and treasurer duties.
Contributing: Alex Cabrero