(Updated to correct Clayton’s years of employment at Commerce from 2020 to 2023.)
The Kansas Commerce Department is demanding that a small town agency dedicated to fostering downtown revitalization return nearly $750,000 in grant money administered by a city official with a criminal background who has mysteriously vanished.
An attorney for the Commerce Department sent a letter to the Peabody Main Street Association demanding the return of $740,000 in federal grant money because the group failed to provide outstanding financial and narrative project reports as required.
The money was part of a $1.5 million grant that the state awarded to the Peabody Main Street Association on April 25, 2023. The first $740,000 was paid out, but not the second half as questions about documentation started to arise.
The Commerce Department issued a statement Friday in response to the questions about the grant.
“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,” the agency 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. Due to the ongoing investigation, we will have no further comments at this time.”
The grant was administered by the city of Peabody’s interim clerk, Jonathan Clayton, a former Commerce Department employee who disappeared on Aug. 3, rocking this 1.3-square-mile town with 930 people north of Wichita.
In a letter to the state, Clayton was described as one of Peabody’s “newest and well-respected residents” who, along with his husband, have made the community their home where they have been active volunteers.
A member of the Peabody Main Street group characterized Clayton as “gregarious” and “professional” and “organized.”
He disappeared about three weeks after the Marion County Record first reported Clayton’s 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.
Peabody Police Chief Phillip Crom said Clayton’s disappearance is being treated as a missing person case.
He said the Kansas Highway Patrol is examining Clayton’s personal laptop as they try to locate his whereabouts.
He said the case could be turned over to the Kansas Bureau of Investigation
Clayton’s husband, Christopher King, serves on the Peabody City Council. He declined to say much Friday morning about the disappearance.
“All I can say at this time is that we’re still looking for him and hopefully we will find him,” he said. “There is more information that will be coming out soon.”
King said he had been instructed by law enforcement not to say anything more.
Clayton had worked at the Kansas Commerce Department from 2020 to 2023.
The Commerce Department hired Clayton as the southwest regional project manager covering 18 counties in March 2020.
In August 2021, Clayton became director of the recovery office for the Commerce Department where he said he administered hundreds of millions of dollars in COVID-relief funds, according to his LinkedIn profile.
Clayton said in an email to a variety of people that he was forced to resign from Commerce without citing a specific reason. The Commerce Department said it could not comment.
A spokesperson for the Commerce Department said the agency was not aware of Clayton’s background when he was hired in 2020.
Patrick Lowry said the department conducts reference checks, online searches and social media checks for all potential employees being considered for a position.
“No irregular findings were discovered regarding Jonathan Clayton,” he said.
The Peabody grant was part of $100 million in grant funding designated by the executive committee of the panel known as SPARK, short for Strengthening People and Revitalizing Kansas. The funding was approved by the State Finance Council in December 2022 and later disbursed.
The Marion County Record reported that Peabody’s former police chief said that Clayton acknowledged a criminal history when he was initially hired to work as the city’s animal control and health and safety officer.
The chief said he hired Clayton because those jobs didn’t involve handling money, the newspaper reported. The mayor has been previously quoted as saying that Clayton didn’t have access to city funds in his position as interim clerk.
The Main Street group has been grappling with responding to the state’s demands in the aftermath of Clayton’s disappearance.
Peabody Mayor Catherine Weems told the Commerce Department in a letter this week that Clayton had been “pivotal” in administering the grant that was intended to revitalize the city’s downtown.
Weems said Clayton provided guidance on “every step” in order to ensure that the Main Street group complied with the grant’s requirements.
“As you can imagine, Jonathan’s disappearance has sent shock waves through our community and has created further disruption in the (Main Street group’s) ability to provide necessary grant documentation,” Weems said in the letter.
In correspondence with the state, the Main Street group said it was given Clayton’s laptop so it could download its relevant documents need for the Commerce Department.
The letter said the volunteer board logged more than 425 hours to find the documents it needs.
“What we discovered in Jonathan Clayton’s files was shocking,” the letter from the Main Street Group said.
“There are more than 760 accounts requiring passwords and tens of thousands of documents,” the letter said.
“The documents are chaotic, with nothing adequately labeled or filed,” the letter to the state said.
“We have literally had to open each document to determine if it pertains to our…grant. It has been a monumental effort on our part to retrieve and organize these files
in a fashion suitable to send to Commerce.
“As we find and organize, we send them to (Commerce) but it has been very slow. It has been an overwhelmingly tedious process to retrieve and organize the documents from Jonathan’s laptop,” the letter said.
It added, “From what we observe on his computer, it’s evident that he was struggling.
Possibly with some form of mental illness. But, that is only speculation on our part.
“The lack of organization of the files and the fact that most documents are not even named is alarming,” the letter said.
Weems said the Clayton was expected to attend a meeting of the Peabody Main Street Association at 11:30 a.m. Aug. 3, the day of his reported disappearance.
When he didn’t show, Weems said association board members reached out to her to ask if she knew about his whereabouts.
Weems said he tried to find his itinerary for the day and his last known location. She also notified the city’s police chief of the circumstances.
Morgan Marler, a member of the Main Street board, said Clayton’s husband indicated that Jonathan was going to Newton to pick up some pharmacy items and planned to stop at McDonald’s to buy breakfast on the way back to town before he went missing.
While Clayton hadn’t fulfilled the state’s documentation demands, Weems said the Main Street Board is working “tirelessly” to return to compliance.
Weems didn’t return a call seeking comment.
In its letter to the Commerce Department, the city attached an email from Clayton that was automatically sent at 9:01 a.m. Aug. 8 following his “death” or “incapacitation.”
“I have made several mistakes in my past and have most likely paid for them with my life,” Clayton said in the email.
“That is why I have assured a life insurance policy that will hopefully accommodate those errors in judgment,” he wrote.
“An optional life insurance policy through KPERS has been established and all those who feel owed may speak with the trustee of my estate.
“Again, my deepest regrets to those whom I’ve hurt, betrayed, or misled,” he said.
The Peabody Main Street Group had expected to receive a second disbursement of grant money in January or February this year.
But as months progressed, the number of requests for documents increased, until it reached a point where the state wanted Clayton removed as grant administrator.
Marler said Clayton encouraged the Main Street group to be patient because it was a large grant and the state was just doing its due diligence.
“There really were no alerts raised with us with his explanations,” she said.
By the end of June, the group’s members started to get “really frustrated” and asked Clayton what they could do to speed up the process, Marler said.
He once again counseled patience and said he expected the second grant disbursement to be coming soon, she said.
A lawyer for the Commerce Department notified the group at the end of July it had not submitted a large number of documents and wanted Clayton removed as grant administrator, Marler said.
Marler said the group didn’t object to removing Clayton as grants administrator because of the importance of the grant to the community. Clayton didn’t fight the decision, she said.
Marler said the Main Street group has confirmed with its bank that no money was diverted from the account for personal use.
She said Clayton didn’t have access to the accounts containing the grant money.
She said the group reached out to vendors who received payments to confirm they cashed the checks. She said the bank has confirmed there’s no indication of fraud.
She said the group deleted the existing accounts and replaced them with new ones as a preventative measure.
Morgan said the general consensus about Clayton was that he made a mistake and should have a second chance.
“Our community gives second chances to people all the time until they prove to us they can’t be trusted,” Morgan said.
“Overwhelmingly his personality, his demeanor, he and his husband’s interaction with our community, did not raise any eyebrows, any suspicions,” she said.
“They have many, many friends. Everybody loves them,” she said.
“We believed him that this was a one-time screw up.”
