Las Vegas Sun

March 28, 2024

Golf club audit reveals questionable use of funds

An audit of Boulder City's $22 million Boulder Creek Golf Club identified several questionable uses of city money, including a loan to a club employee, double payment for a fence, nepotism and the purchase of a surveillance system that wasn't installed.

City Council members Roger Tobler and Karla Burton said the audit reveals some of the mismanagement they suspected, and Tobler said he feels it also shows that Scott Jones took advantage of the city. Jones headed Triad Golf Management, the private company that ran the course until the city bought out its management contract last month.

But Tobler, Burton and City Attorney Dave Olsen said the audit doesn't show Jones committed fraud or any other criminal act against the city. And all three said they hope this audit will close the chapter on Triad's and Jones' connection to the golf course that divided the city, led to the dismissal of one city manager, and prompted the unsuccessful recall of the mayor and another councilman.

"The audit confirmed to me why we needed to remove Triad," Tobler said. "And I believe the city was taken advantage of by Scott in some areas."

Tobler said the audit showed many problems in Jones' management, including hiring his daughter to work at the golf course, and sending the $120,000 surveillance camera contract to his son-in-law's boss.

Tobler said the independent audit also confirmed his suspicions that Jones' other partners in Triad were not at Boulder Creek as frequently as they were required to be under their $650,000-a-year management contract. The auditor said he could not determine whether the Triad partners were at the course as often as required.

Burton said the audit "revealed to me what I though all along, that it was an incredibly inept company. It showed incredible mismanagement,"

"I just see incompetence, not anything criminal," said Burton, who is an attorney.

Mayor Bob Ferraro said he hasn't seen the audit, which was done by a private accountant.

"I asked if there was any criminal activity and the city manager assured me there wasn't any," Ferraro said.

Jones could not be reached for comment. A message left on a cell phone Jones had recently was not returned, and Jones' home telephone number is unlisted.

The questionable spending identified by audit included:

-- Paying $120,000 to a company I-CamSM, which was apparently put together for the sole purpose of winning the contract to install the surveillance cameras, the audit said. The start-up company was controlled by a boss of Jones' son-in-law, and the work was not finished, the audit said.

-- An interest-free $7,100 loan to the golf course's administrative manager. The money has since been paid back, Olsen said.

-- Paying $17,752 twice for a fence. Olsen said the city has since received a refund so it only paid for the fence once.

The audit also identified several other problems including:

-- Apparently selling a refrigerator bought for the golf club to a local restaurant, but Jones was unable to say how the city was compensated for the transaction, the audit said.

-- Exaggerating the value of equipment stolen from the golf course in November 2002 and then asking the city to seek compensation for the losses through the city's insurance. For example, the audit said, Triad reported that three stolen mowers were worth $6,305 each, but they had been purchased for $2,500 each, the audit said. Although the claim was submitted to the city's insurance company, the city was only reimbursed for one stolen item: a $4,000 sod cutter that belonged to the city's Municipal Golf Course.

-- Jones also claimed that he told "the city" that Boulder Creek would not turn a profit in its initial budget, but "the city" told him to change his projections so they would be in line with other forecasts that predicted the course would make a profit after just six months open.

Former City Manager John Sullard said that while he told Jones to cut expenses from his budget, he didn't tell him to exaggerate revenues or to fabricate the financial projections.

The debate over those optimistic financial projections, and when exactly city officials realized they weren't coming to fruition caused a major stir in Boulder City.

Most city officials, including Ferraro, stuck by those positive projections until a week before the June general election, when an independent audit showed the course had instead lost about $480,000 during its first four months open. Recent city figures show the course has run an operating deficit of about $3 million since it opened.

The financial problems at the golf course were the main issue in that election, which Ferraro won by 18 votes, and again during a recall election earlier this month, which Ferraro won with about 60 percent of the vote.

Tobler said that while there are problems at golf course, the recall election results show that Boulder City residents don't want to give up on the golf course.

Tobler said he struggled with agreeing to buy out Triad's contract for about $500,000 after seeing the audit. But he said he ultimately went along with it, because the city's lawyers told him it was the prudent course to follow. The city had hired the prominent law firm Lionel Sawyer and Collins to represent the city in dealings with Triad.

While the audit was not shared with Jones during the negotiations that led to the buyout, Olsen said the fact that the audit was going on gave the city leverage. Much of the audit is based on interviews with Jones.

Burton said the buyout was a good deal for the city.

"I didn't want to pay them anything, but they had a 10-year contract. They had all the cards," Burton said.

The audit apparently was available to the public a few days before the April 6 recall election, but there was no announcement that it was available.

Tobler said even if the audit was widely publicized immediately he doesn't think the findings would have affected the recall election.

Sandra Reuther, who was a lead volunteer for the recall effort, said she can't tell if the recall would have been affected by an earlier release of the information in the audit.

Reuther, who has read the audit, said that while it is complicated, it left her with at least the impression that city officials should have been more aware of what was, or wasn't going on at Boulder Creek.

"The city should have been more on top of it," she said.

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