Kansas Governor Laura Kelly said Wednesday that an outside investigation is examining the allocation of federal pandemic aid after a now-deceased former state Department of Commerce official alleged he helped rig the process.

The Democratic governor also called for a change in state law to allow for expanded criminal background checks. Previously, newspapers The Kansas City Star and The Wichita Eagle reported that the Kansas Department of Commerce hired former official Jonathan L. Clayton without conducting a statewide criminal background check, and failed to reveal that he had committed several financial crimes in Pennsylvania.

Clayton, who left Commerce in 2023 after serving as economic recovery director there, had been working as Peabody’s interim city clerk. He went missing on Aug. 3 and his husband, Christopher King, said he was found dead Sunday after their truck went off the road near Newton and struck a tree.

On August 8, an email purporting to be from Clayton was sent to officials and journalists. The message, with the subject line “Message from Jonathan Clayton following his death or incapacitation,” claimed that Lieutenant Governor David Toland, who heads the Department of Commerce, used a “scheme” to change the recipients of the first round of the Building a Stronger Economy (BASE) grant. Clayton wrote that, at Toland’s direction, he helped change the scores of applicants for the grant, which will launch in 2022.

When asked whether she was confident that the BASE grants had been properly awarded, the governor replied on Wednesday: “We are currently investigating this to make sure that was the case.”

“I know there were some concerns when the BASE grants were first awarded, not necessarily about the specific grants, but about the geographic distribution of the grants,” Kelly told reporters after an unrelated incident in Olathe. “So we took that into account in future BASE allocations, but as far as the reliability of the grants themselves, we think that was fine, but we want to make sure.”

Kelly said “independent investigators” would look into the grants. The governor said she did not know who was conducting the investigation, but they were independent of Commerce and Kansas as a whole.

Clayton’s email alleged that the Kansas Department of Commerce, under Toland’s direction, “hatched a plan to alter the results of the BASE grant program” by changing the evaluation of applications to direct grants to the constituencies of the Speaker of the House and the President of the Senate. Those legislative leaders were then-Speaker of the House 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 “excessive 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%) of the funding for the entire state. Kansas’ other 103 counties competed for the remaining 52.2% of the funds in BASE 1.0.

Of the 440 applicants for the more than $100 million in grants, 35 projects were funded in the first round.

Clayton said in his email that he was ultimately forced to resign after refusing to change the results of the second round, which included an additional $50 million in grants. In that round of funding, projects in Johnson County received just 8% of the funds, while not a single project in Butler County received BASE grants. Projects in Sedgwick County, home to the state’s largest city and Republican Dan Hawkins, who was House Speaker in the second round, received 25% of the funds in BASE 2.0 after receiving less than 5% of BASE 1.0 grants.

Spokesmen for Hawkins and Masterson did not immediately respond to a request for comment. Ryckman could not immediately be reached.

Commerce 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 government service” – a reference to Clayton, who is suspected of embezzling pandemic aid while working for local clubs in Peabody and Mullinville.

“We are reviewing the matter to determine what impact, if any, the alleged activity may have on the agency or community partners,” Lowry said. “We are also assisting state and federal law enforcement as appropriate.”

Lowry said the agency would not provide further comment 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 state’s history – $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.

Changes to background checks

Clayton, 42, disappeared in early August after his criminal record in Pennsylvania became more widely known following a report by the Peabody Gazette-Bulletin. He and King were also served with a debt collection lawsuit the day he disappeared.

Clayton had previously pleaded guilty in Pennsylvania to theft and forgery for misusing an employer’s credit cards to finance his husband’s and himself’s fledgling theater company, which eventually closed. He was sentenced to five years’ probation in 2018 and ordered to pay $210,000 in restitution.

However, the Commerce Department said the agency was unaware of his 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 the agency’s economic recovery programs funded with federal funds to combat the pandemic.

The Kansas Department of Administration, which handles some human resources functions for state agencies, said Commerce was unable to conduct a national criminal background check. State law requires certain positions to request a national FBI background check — the positions held by Clayton were not on the list.

Kelly stated that she believes the state’s laws need to be changed.

“I think the process has been business as usual,” Kelly said. “But I think we’ve now figured out that we need to follow some legal provisions that allow us to do more comprehensive background checks.”

Clayton was also on probation when he moved from Pennsylvania to Kansas and got a job in the state’s Department of Commerce.

Normally, after Clayton moved, his parole officer or another agency in Pennsylvania would have transferred him to a parole office in Kansas to take responsibility for his care. Clayton’s husband told The Eagle that Clayton continued to be in contact with his parole officer in Philadelphia by phone while working at Commerce.

Kansas Department of Corrections officials said Clayton was never under their supervision and they do not know how he “fell through the cracks.”