Kansas Gov. Laura Kelly said Wednesday that an outside investigation is underway into the allocation of federal pandemic aid after a now-deceased former state Commerce Department official alleged he manipulated the process.
The Democratic governor also said state law should be changed to allow for more extensive background checks after The Kansas City Star and The Wichita Eagle reported that the Kansas Department of Commerce hired the former official, Jonathan L. Clayton, without a national background check — and failed to discover that he had committed multiple financial crimes in Pennsylvania.
Clayton, who left Commerce in 2023 after serving as economic recovery director, had been serving as Peabody’s interim city clerk. He disappeared Aug. 3, and his husband, Christopher King, said he was found dead Sunday after his truck veered off the road near Newton and struck a tree.
On August 8, an email purporting to be from Clayton was sent to government officials and journalists. The message, with the subject line “Message from Jonathan Clayton following his death or incapacity,” alleged that Lt. Gov. David Toland, who heads Commerce, had used a “scheme” to change the recipients of the first round of the Building a Stronger Economy, or BASE, grant. Clayton wrote that at Toland’s direction, he had helped change the scores of applicants for the grant, which is set to begin in 2022.
When asked Wednesday whether she was confident the BASE grants had been awarded appropriately, the governor replied, “We are currently looking into this to make sure that is the case.”
“I know when the BASE grants were initially being awarded, there was some concern, not necessarily about the specific grants, but about the geographic distribution of the grants,” Kelly told reporters after an unrelated event in Olathe. “So we’ve addressed that in future BASE awards, but as far as the reliability of the grants themselves, we think that was OK, but we want to make sure.”
Kelly said “independent investigators” were looking into the grants. The governor said she did not know who was conducting the investigation, but that they are independent of Commerce and Kansas as a whole.
Clayton alleged in his email that the Kansas Department of Commerce, under Toland’s leadership, “devised a plan to alter the results of the BASE Grant program” by altering application scores to steer grants to the districts of the Speaker of the House and the President of the Senate. Those legislative leaders were then-House Speaker Ron Ryckman, a Republican from Johnson County, and Senate President Ty Masterson, a Republican from Butler County.
Clayton said the first round of BASE funding included an “inordinate number” of projects awarded in Butler and Johnson Counties. The two counties — which together have less than a quarter of the state’s population — received nearly half (47.8 percent) of the statewide funding awarded. The other 103 Kansas counties competed for the remaining 52.2 percent of the funding in BASE 1.0.
Of the 440 applicants for the more than $100 million in grants, 35 projects were approved in the first round.
Clayton said in his email that he was ultimately forced to resign after he refused to change the results in the runoff, an additional $50 million in grant money. In that round of funding, projects in Johnson County received just 8 percent of the funding, while no projects in Butler County received BASE grants. Projects in Sedgwick County, home to the state’s largest city and Republican Dan Hawkins, who was Speaker of the House during the runoff, received 25 percent of the funding in BASE 2.0 after receiving less than 5 percent of BASE 1.0 awards.
Spokespeople for Hawkins and Masterson did not immediately respond to a request for comment. Ryckman could not immediately be reached.
Commerce Department spokesman Patrick Lowry said last week in response to questions about Clayton’s allegations that the agency was aware of allegations of misconduct against a former employee “related to activities that occurred after he left state service” — a reference to Clayton, who is suspected of embezzling pandemic aid while working for local associations in Peabody and Mullinville.
“We are investigating the matter to determine what impact, if any, the alleged activity may have on the agency or its community partners,” Lowry said. “We are also assisting state and federal law enforcement as appropriate.”
Lowry said the agency would not comment further at this time. He did not respond to questions this week.
Kelly said Wednesday that she “of course” supports Toland.
“David Toland is an absolutely phenomenal Secretary of Commerce who has led the largest capital investment in the history of the state — $20 billion in new capital investment — and that is thanks to the hard work of the Secretary and his people at the Department of Commerce,” she said.
Background Check Changes
Clayton, 42, disappeared in early August after his criminal record in Pennsylvania became increasingly known in the region after the Peabody Gazette-Bulletin reported on it. He and King were also summoned in a debt collection case the day he disappeared.
Clayton previously pleaded guilty to theft and forgery in Pennsylvania, stemming from his misuse of an employer’s credit cards to support his and his husband’s fledgling theater company, which eventually closed. He was sentenced to five years’ probation in 2018 and ordered to pay $210,000 in restitution.
But Commerce has said the agency was unaware of the criminal record when it hired him in 2020 — first as a regional project manager in southwest Kansas and then as director of economic recovery, where he oversaw economic recovery programs within the agency funded with federal pandemic relief dollars.
The Kansas Department of Administration, which handles some human resources functions for state agencies, said Commerce could not conduct a national background check. State law must authorize specific positions to request national FBI checks — the positions Clayton held were not on the list.
Kelly indicated that she believes the state law should be changed.
“I think the process went as the process usually goes,” Kelly said. “I think we’ve now discovered that we have some statutory language that we need to address so that we can do more comprehensive background checks.”
Clayton was also on probation when he moved from Pennsylvania to Kansas and took a job with the state Department of Commerce.
Normally, his probation officer or other authority in Pennsylvania would have transferred Clayton to a probation office in Kansas to take over responsibility for his supervision when he moved. Clayton’s husband, Christopher King, told The Eagle that Clayton continued to report to his probation officer in Philadelphia via phone calls while he was working at Commerce.
Kansas prison officials said Clayton has never been under their supervision and they don’t know how he “fell through the cracks.”
