Board secretary dismissed amidst FBI probe
ST. IGNATIUS — The Federal Bureau of Investigation has launched an investigation into potentially missing public funds within Flathead Joint Board of Control, amidst the recent dismissal of the board’s executive manager and sole paid employee, Johanna Clark.
Members of the irrigation board and Lake County Attorney Steve Eschenbacher confirmed that the federal probe began in mid-May, but declined to comment on whether it is connected to the May 24 ouster of Clark, whose position included managing the board’s finances.
Eschenbacher said in an interview last month that he began looking into the irrigation board’s finances after being contacted by the board’s lawyer, Bruce Fredrickson of Rocky Mountain Law Firm Partners in Kalispell, who expressed concerns with credit card statements he provided to the county.
After reviewing the financial records, Eschenbacher said he contacted a local FBI agent to ask whether they would consider investigating what he described as a potentially significant misappropriation of funds. The county handed off the investigation to the federal agency in mid-May, he said.
“I started looking at it and we said, ‘There’s a problem,’” Eschenbacher told the Inter Lake. “That was when the FBI said they’re very interested.”
The federal agency’s regional headquarters in Salt Lake City declined to provide any details on the probe.
“The FBI can’t confirm or deny an investigation,” agency spokeswoman Sandra Barker said Monday in an email.
Eschenbacher declined to discuss details of the financial records, saying he needed to limit his comments because the case could eventually be handed back down to the county if the FBI declines to prosecute.
But he did note that the potentially misspent funds amounted to a larger sum of money than he’d dealt with in his roughly two-and-a-half years as a county prosecutor, or in his previous 15 years as a criminal defense attorney.
“I’ve never seen one this large,” Eschenbacher said. “The FBI has the resources to do a full forensic evaluation. We knew there was a bit taken, but we didn’t know how much.”
THE FLATHEAD Joint Board of Control represents irrigators in the Flathead, Mission and Jocko irrigation districts served by the Flathead Indian Irrigation Project, who make annual payments of $5 per irrigated acre to their districts. According to the most recent annual financial statement available on the board’s website, the combined districts took in $554,293 in revenue in 2016.
Clark, who worked for the joint board and for its individual irrigation districts since at least 2013, also ran unsuccessfully in 2016 as the Republican nominee for House District 93 in the Montana Legislature.
She responded to requests for comment Wednesday afternoon, but noted her attorney had advised her to limit the scope of any comments provided to the media.
“The public has been asking for this scrutiny for some time, and I have a strong faith in the community and I have a strong faith in my work on the board for years,” Clark told the Inter Lake. “To the best of my awareness, we have always followed what limited existing protocol was available.”
She also indicated that the full story had not yet been provided to the public, adding later, “I think that it is important that when entities are making decisions, that they have been given the opportunity to review all of the information.”
Eschenbacher said that according to the FBI official with whom he spoke, a decision on whether to file charges stemming from the investigation is expected to take at least a year. He declined to name any individuals potentially under investigation in the case.
WHILE THE FBI didn’t acknowledge the investigation, the irrigation board briefly discussed the ongoing probe during its May 24 meeting. Joint board chairman Ray Swenson said the federal investigation formally began May 18.
Swenson also said the board’s insurance policies provide an “avenue to recoup alleged missing funds” up to $600,000. But because the window in which it can file an insurance claim will likely close before the FBI concludes its investigation, the irrigation board voted to hire an independent accounting firm to conduct its own forensic audit of the finances.
Fredrickson recommended that the audit cover the period during which Clark was an employee of the irrigation districts — rather than extending only to cover the time since the board re-formed in 2014, following its dissolution the year before.
“It needs to go back further than the date of reconstitution,” he told the board members during their discussion of the proposed contract. “I don’t know when the first date of employment was, but we can tag it to that. We know we’ve got issues going back potentially to March, which was before the board reconstituted.”
Clark’s dismissal was quickly accepted by a majority of the joint board’s members, following a roughly hour-long closed session at the beginning of the meeting. The board had voted to place her on unpaid administrative leave during a previous meeting, which Fredrickson said came at the end of a three-month period during which Clark had resigned her position, then had been re-hired by the board.
No board members spoke up during the opportunity for discussion following the motion to dismiss Clark.
“On the advice of our attorneys, they’re suggesting that the board terminate our employee for legal reasons,” Swenson said when he introduced the agenda item.
Swenson and Fredrickson declined to discuss the reasons for Clark’s firing following the meeting, stating that personnel issues were confidential. Fredrickson also declined to say why a closed meeting had been held, citing attorney-client privilege.
Clark said she had not been notified of the board’s decision, and had not been provided any reasons for the dismissal.
In an interview Wednesday, Fredrickson also said he had no comment on the status of a Freedom of Information Act request for financial records submitted to the board by an irrigator, which his office is handling.
Reporter Sam Wilson can be reached at 758-4407 or by email at swilson@dailyinterlake.com.