A Kiowa County judge has frozen the bank account of a western Kansas community foundation that has been linked to a former Commerce Department employee with a criminal background who suddenly vanished earlier this month.
District Judge Laura Lewis has issued a temporary restraining order that blocks the Mullinville Community Foundation and any of its employees, officers or contractors from withdrawing money from an account with Haviland State Bank.
The Commerce Department asked for the temporary restraining order stemming from a lawsuit it brought against the foundation, demanding repayment of $425,000 in grant funds for failure to properly account for the money.
The Commerce Department filed a lawsuit Aug. 7 against the Mullinville Community Foundation, where at one point the missing man, Jonathan Clayton, had been listed as the secretary/treasurer on the group’s board of directors.
The lawsuit is separate from questions raised in the city of Peabody about how Clayton had accounted for a $740,000 state grant there this year when he served as the town’s interim clerk. He left the Commerce Department in 2023.
The Marion County Record first reported the lawsuit Wednesday.
The newspaper reported that the Kiowa Sheriff’s Office is investigating the theft of $120,000 from the foundation and $70,000 from a local cemetery board.
The sheriff could not be reached for comment by email late Wednesday afternoon.
The Mullinville Community Foundation also shared the same address as a grant-consulting business that Clayton and another Commerce Department employee, Braxton Hutchinson, formed on Aug. 15, 2022, state records show. A company website was disabled.
State records show the business registration was forfeited on July 15, 2024, for failure to file a timely annual report.
The state is demanding the return of $425,398 in grant funding awarded in an agreement signed July 15, 2022, according to the lawsuit. The lawsuit indicates that Commerce believes there is about $211,000 in grant money left.
The money was intended to go toward building improvements for the Mullinville Business Incubator.
The state says in its lawsuit that the foundation violated its grant agreement by failing to request written approval from the state for budget line changes and changes in the scope and nature of the grant project.
It also says the foundation failed to maintain adequate business systems to comply with federal grant requirements and failing to provide quarterly financial and narrative project reports, among other things.
A judge granted the restraining order on Aug. 12, recognizing that the state could suffer irreparable harm if action wasn’t taken.
The temporary order will remain in place until Aug. 28, when a hearing will be held to determine whether a temporary injunction should be issued.
An attempt to reach someone with the foundation was unsuccessful late Wednesday afternoon.
At the point the grant was awarded to Mullinville in 2022, Clayton still worked for the Commerce Department, where he led the recovery office and oversaw millions of dollars in federal grant funds.
Clayton didn’t leave the Commerce Department until Nov. 20, 2023, when he said he was told to resign.
Clayton had worked for the Commerce Department although he had criminal history in which he pleaded guilty in 2018 in Philadelphia to forgery, theft and conspiracy to commit theft.
He was sentenced to five years of probation and house arrest. He was allowed to travel to work and attend church.
He was permitted to attend eight hours of community service on one weekend day until 200 hours of community service were completed.
He also had to pay $210,000 in restitution at a rate of $600 a month. He owed about $195,000 as of June 10.
Commerce officials said they didn’t know that Clayton had a criminal background at the time he worked for the agency.
The Commerce Department couldn’t immediately comment Wednesday on Hutchinson’s status with the agency or what role he had in awarding the grant to the agency.
Hutchinson posted on LinkedIn that he was a program specialist for the state and administered $
Clayton later became the interim clerk for the city of Peabody until Aug. 3, when he mysteriously disappeared as the Commerce Department demanded documentation for how that city’s downtown organization spent $740,000 in grant money.
Clayton had been “pivotal” in administering the grant that was intended to revitalize the city’s downtown.
However in recent months, the state had been pressuring the Peabody Main Street Association to provide records to account for the grant money it received.
Finally, state officials demanded that the group remove Clayton as the grant administrator.
Clayton disappeared Aug. 3, the day he was set to meet with the Peabody Main Street Association to help its board members locate the records they needed to provide to the state.
The state has given the group until Sept. 4 to resolve the issues but has staff in Peabody working directly with the Main Street Association, providing technical assistance and explaining the reporting requirements.
