Demand to repay $740,000 grant linked to clerk’s disappearance
Staff writer
Convicted financial felon Jonathan Clayton, promoted from dogcatcher to interim city clerk amid a spate of firings and resignations in Peabody, disappeared the same weekend as a state lawyer demanded almost immediate return of $740,000 in COVID aid that Clayton had helped obtain, the Record learned Wednesday.
Before the demand became known publicly, city officials repeatedly suggested there had been no financial wrongdoing in the Aug. 3 disappearance of Clayton, whose husband is a city council member.
On Tuesday, Mayor Catherine Weems responded to a question from the Record by saying: “Citizens need to be reassured and confident that our city funds have not been compromised. All appears to be in order here.”
Asked Monday whether anything was amiss at grant recipient Peabody Main Street, a private group operating out of city hall, Police Chief Philip Crom said he was unaware of any problems with that group and reiterated that no city money had been reported as missing.
Jonathan Clayton
Peabody Main Street, for its part, sent an email to its members Monday saying only that a second installment of a $1.5 million grant might not be made because necessary paperwork had not been submitted by Clayton.
A Department of Commerce letter, obtained Wednesday night by the Record, indicates otherwise. The letter states that the state wants the first part of that grant back, has questioned Clayton’s stewardship of it, and has set a deadline of next Wednesday for reimbursement to be received.
The letter, dated Aug. 5 and addressed to Peabody Main Street at city hall, states that the Kansas Department of Commerce notified the group on July 25 that it had terminated the grant for failure to provide required financial and project reports.
Clayton was responsible for making those reports.
“Despite assurances from your organization that it would immediately remedy its noncompliance, Peabody has yet to provide substantial documentation,” the letter states.
The letter, signed by Department of Commerce attorney Amber Cabrera, goes on to demand return of $740,000 no later than Aug. 21.
If repayment is not received by then, the letters states, “Commerce will pursue any and all legal alternatives to collect outstanding amounts due and associated costs, including payment for legal fees and expenses.”
Grant recipient responds
Reached Wednesday night after the Record obtained the letter, Peabody Main Street board member Morgan Marler admitted the association knew about the termination and should have been more forthcoming about it in its email Monday.
She said Main Street regretted not telling people that the grant program, and thus the community, was at risk.
Monday’s email was written before board members knew the full scope of the problem, Marler said.
Someone else on the board was tasked with sending out the email, which was intended to reassure grant recipients that everything possible was being done to salvage the grant.
“Then we got the termination letter from the state,” she said.
It’s unclear why the letter, addressed to the association, might have been delayed.
She said she was sure that Commerce learning about Clayton’s felony record factored into the decision to terminate the grant.
“We’re a private organization and we are trying to rectify the situation,” Marler said. “We’re doing everything we can. We’re reaching out to people in the field. We have been communicating with Commerce.”
When state troopers investigating Clayton’s disappearance called her, she was cooperative and told them what she could, she said.
“I was very happy to see somebody was here investigating and moving forward trying to figure out the facts,” she said.
Main Street board members are working to gather information Commerce wanted, she said.
“We are not aware of any misappropriation of funds in our grant,” she said. “We’ve sent that documentation to the Department of Commerce.”
Clayton only organized files and managed paperwork for the grant, Marler said, but Commerce wants proof that he did nothing more.
“We’ve gotten confirmation in writing from the bank that we did provide to the Department of Commerce,” she said. “Everybody is trying to do due diligence.”
Marler said the situation was emotionally hard on everyone involved.
“We’re doing our due diligence to get the documentation to the Department of Commerce,” she said. “I’m sure it’s going to take some time to come to a good conclusion. I know there are a huge number of people working, putting in lots of time trying to put this together and save this project.”
Marler thinks the same thing could happen to any small town without a capacity to hire a grant administrator.
“We were blindsided by it,” she said. “You trust the people that you’re working with, like Jonathan Clayton, who had worked for the Department of Commerce. We would have never guessed we would be in this position.”
Lack of transparency wasn’t purposeful, she said.
“For our organization, we are going to our jobs and plugging away to try and salvage our community and the grant,” she said. “We regret doing that. I’m sure that the next time we face this we’ll jump right out and make some press statements.
“I admit we made mistakes about not notifying our recipients earlier. None of us have ever been through something like that before. We’re doing the best we can do to move our community forward.”
Attempts were made to contact Weems and Crom, but calls were not returned.
Clayton was responsible for submitting paperwork for a $1.5 million grant given to Peabody Main Street in April, 2023.
Commence Department’s comments
The Commerce Department sent Main Street the first half of the grant money June 15, 2023.
Commerce spokesman Pat Lowry was clear that termination of the grant was related to alleged misconduct by Clayton, a former Commerce Department employee, and that the department, along with state and federal law enforcement officials, were investigating the matter.
“The Kansas Department of Commerce has been made aware of allegations of misconduct against a former employee in connection to activity that occurred after they left state employment,” Lowry said. “We are reviewing the matter to determine what, if any, impact the alleged activity may have to the agency or community partners. We are also assisting state and federal law enforcement, as appropriate.”
Commerce doesn’t know how many Peabody businesses were affected by terminating the Building a Stronger Economy (BASE) grant, awarded under the American Rescue Plan Act from what is known as the State Fiscal Recovery Fund.
In its email Monday, Peabody Main Street stated that property owners had used grant money to make various improvements.
“Property owners,” the email states, “received new roofs, updated electrical work, foundation repair, repair and stabilization of limestone load-bearing walls, doors replaced, HVAC systems upgraded or installed for the first time, installation of an oil burner heating system, asbestos removal, and property purchase.”
It was unclear Wednesday night how money already spent could be recovered. Nor was it clear what deficiencies in financial reporting were involved.
Disclosure of the grant’s termination and apparent attempts to cover it up are the latest in a series of bizarre developments in Clayton’s disappearance.
Clayton’s background
City council members promoted Clayton to interim city clerk June 3 after firing Jylle Wilson. His term recently was extended after a woman hired to fill the vacancy changed her mind about taking the job.
Clayton was convicted in 2016 in Pennsylvania of forgery, theft, and conspiracy to commit theft and is late in making court-ordered restitution in that case.
He was sentenced March 13, 2018, to five years’ probation, placed under house arrest, and ordered to pay $210,000 at $600 a month. As of last month, he still owed $195,712.50.
After a special closed-door council meeting Friday, Weems told an out-of-county reporter that the city was aware of Clayton’s criminal background and had taken steps to ensure he had no access to city money.
However, the agenda packet for Monday’s regular council meeting, which also included another closed-door session, indicates otherwise. Included in it was an invoice from St. Luke Hospital paid with a city credit card bearing Clayton’s name.
Separate investigation disclosed
It also was disclosed this week that Clayton faces a separate investigation by authorities in Kiowa County, where he and King lived before moving to Peabody in 2023 and opening a store, CK Vintage, in a building listed on appraisal records as being owned by Peabody Main Street.
Kiowa County Sheriff Kendal Lothman told the Record his department was looking into an undisclosed matter not related to Clayton’s disappearance.
“We’re working on an investigation,” Lothman said. “I can’t tell you more because it’s just an investigation.”
At the time the couple moved to Peabody, Clayton was working for the Commerce Department. He transferred from a Dodge City office to Topeka and planned to commute after moving.
“We were not aware of aware of any his convictions,” Lowry said.
Clayton was hired Feb. 23, 2020, by Commerce as an economic development representative. He was promoted to a director Aug. 22, 2021. His last day with the department was Nov. 20, 2023.
Not a typical missing person case
From the start, law enforcement officials did not treat Clayton’s disappearance as a typical missing person case even as officials gave no indication it was anything other than that.
Although his description was placed on a Kansas Bureau of Investigation website for missing persons and a missing persons report was filed, no description of his vehicle, clothing, or other items typically included in such notices was provided.
Bizarre email received
The façade that Clayton was missing, and that dogs and airplanes might be brought in to search for him was punctured Aug. 7, four days after he went missing, when an email purporting to be from him was sent to townsfolk.
It stated that if he disappeared or died, the Kansas Department of Commerce and its director, Lieutenant Governor Dave Toland, were among people who should “be looked at.”
In Peabody, Clayton also operated a business called Clutch Professionals, which according to its website offered “customized, unique strategies” for community economic development.
Before termination of the grant was publicly revealed, Crom told the Record that the case was being investigated by a new unit of the Kansas Highway Patrol, Troop O, which works to “gather evidence surrounding complex criminal cases in preparation for prosecution.”
City computers used by Clayton will be forensically examined by KHP, Crom said. KHP also has reviewed video from roadside cameras that read license tags but has found no sign of Clayton.
A spokesman for Troop O acknowledged the investigation but provided no details.
Closed-door meetings
Clayton’s disappearance appears to have been discussed behind closed doors in two city council meetings in the past week. King was absent from both meetings.
Council members Friday opened the meeting, called for a half-hour executive session to discuss “personnel matters,” then came out of the secret session and announced that no action had been taken.
The council then adjourned but closed the door after spectators left and continued talking for several minutes.
With a quorum of four members present during the after-meeting discussion, any comments made about Clayton or any other city business would have been a violation of state open meetings laws.
“The council members owe the public an explanation as to what they discussed when they continued talking after the audience left the meeting last week,” Kansas Press Association legal consultant Max Kautsch said. “If those discussions involved public business, they needed to be had in public or in executive session subject to a valid motion to recess. Discussing the public’s business as a majority of the body in any other forum violates open meetings laws.”
During the open portion of the meeting, no clerk or treasurer was present to take notes. Instead, council member Julia Ensminger had a spiral notebook in front of her.
“Although public bodies are not required to take minutes generally, they are required to take minutes of motions and rationale before recessing to executive session,” Kautsch said. “If the only means for documenting the meeting is one person with a spiral notebook, the public is right to wonder whether such motions will be accurately reflected in the minutes. Taking notes this way is particularly puzzling when the technology for documenting the meeting is readily available to public bodies in 2024.”
Initial disclosure Clayton was missing
The first confirmation that Clayton was missing came Aug. 8 from city treasurer Rayna Crawford, who confirmed that Clayton hadn’t been in the office “for a couple days.”
Asked whether his city computer had been checked to see whether any money was missing, she said she would refer the Record to Clayton’s supervisor.
Asked for the name of the supervisor, Crawford said she did not know.
Pressed, she put a reporter on hold, then returned to the line and said she had nothing further to say.
Callers to the Record have suggested that the password on Clayton’s computer was changed, and other officials could not access it.
Clayton and King’s store, CK Vintage, had been advertising a clearance sale the week Clayton disappeared but on Aug. 3 posted on social media that the store would be closed “due to illness.”
Undersheriff Larry Starkey said the sheriff’s office was notified Aug. 3 that Clayton had failed to return as expected from a trip to Newton, but that Peabody police were investigating. Hillsboro police also may have been involved as there is an alternative report that the meeting Clayton was supposed to attend was to have happened in Hillsboro.