Commerce department insists on eviction of Peabody business
Peabody Main Street loses second half of grant money
Staff writer
Concern over handling of a $1.5 million grant to rejuvenate downtown Peabody has expanded to include eviction of one business, loss of half the grant money, and sharp criticism of state hiring practices.
The Kansas Department of Commerce approved the grant a year ago, but soon afterward the grant’s handling by a former state employee was brought into question.
Now, the former employee’s husband has been told he must move his business, CK Vintage, from a building renovated with the grant, and Commerce has been roundly criticized by state auditors for hiring the man’s husband, a convicted financial felon, in the first place.
Grant recipient Peabody Main Street Association posted on social media Monday that it would not receive the second half of the grant money and that the first installment must be repaid.
That turned out to be only partly true. Main Street was not told to repay the first installment.
Commerce spokesman Pat Lowry said Peabody would not be given the second half but would keep the first half.
“Commerce has worked to ensure that the community is not additionally damaged by the actions of former Commerce employee Jonathan Clayton,” Lowry said.
Commerce fired Clayton Nov. 20, 2023. He later was hired as a dogcatcher and safety officer for Peabody, then was promoted to interim city clerk.
Lowry said Commerce and risk management company Witt O’Brien’s worked diligently with Main Street but were unable to get the grant into compliance.
Commerce’s decision to terminate it was based on:
- Ongoing compliance issues.
- Main Street’s lack of capacity to administer a complex federal grant.
- Ongoing appearance of conflicts of interest.
- Lingering damage done by Clayton in the administration of this grantee’s application.
“It is important to realize that $740,000 has been invested renovating historic buildings on Peabody’s Main Street that, thanks to these investments, can now be utilized for new businesses,” Lowry said. “This is a massive investment in a town of 920 people that will provide new long-term economic opportunities. We are grateful that this work could be done, but believe it is in the best interest of the state and the community moving forward that this project end with only Phase 1 being completed.”
Commerce was excoriated Monday by state auditors over its hiring practices for not doing criminal background checks on job candidates.
Clayton, who oversaw more than $100 million in state infrastructure and economic development money for Commerce, was hired in 2020 while still on probation from a 2016 conviction of forgery, theft, and conspiracy to commit theft in Pennsylvania. He was sentenced in 2018 to five years’ probation, placed under house arrest, and ordered to pay $210,000 restitution.
Only part of his restitution was paid.
While Clayton worked for Commerce, Peabody Main Street was awarded its $1.5 million grant. Mullinville Community Foundation in Clayton’s hometown was awarded $425,398.
Clayton and his husband, Christopher King, lived in Mullinville before moving to Peabody. The Mullinville grant was used to start a business incubator where Clayton and King opened a gift shop, CK Vintage.
Then, Clayton and King moved to Peabody.
Clayton was responsible for submitting ongoing documentation to Commerce.
Part of the money was used to repair a Main Street-owned building for CK Vintage.
The roof was replaced but still leaked enough that King had to close the store when it rained.
After Clayton was fired by Commerce Nov. 20, 2023, Peabody hired him as dogcatcher and safety officer and later made him interim city clerk.
He disappeared Aug. 3 and later was found dead in his wrecked pickup near Newton. That crash remains under investigation.
Clayton’s conduct was scrutinized by Commerce before he was terminated. Public scrutiny of Commerce’s hiring practices arose after the Marion County Record reported on Clayton’s Pennsylvania convictions.
Commerce had sent Main Street a letter July 25 warning that required paperwork had not been filed. Main Street board members began working to bring the grant into compliance but failed to notify affected businesses.
On Aug. 5, Commerce sent Main Street a letter demanding return of $740,000 — the first installment of grant money.
Commerce later extended its repayment deadline and began working with Main Street to correct problems.
Main Street officials said they were told in September that King’s lease must be terminated or Commerce would not pay the second installment of the grant.
Earlier this month, Commerce sent Main Street additional stipulations on what needed to be done. One was that King be evicted by Friday or the first half of the grant money would have to be repaid.
King has announced that CK Vintage will close Christmas Eve. That date is four days after Commerce’s deadline.
Main Street officials say they have hired a lawyer to help.
Kansas Legislative Post Audit agency issued a report Monday faulting Commerce’s hiring practices.
Officials for Commerce contended they were forbidden from conducting a criminal background check before hiring Clayton. Commerce claimed only candidates for state boxing commissioner could be subjected to criminal background checks.
“Commerce’s hiring policies and procedures were not adequate to mitigate their risks associated with hiring applicants with a criminal history,” the Legislative Post Audit department said. “It doesn’t include any criminal history check or even ask about relevant criminal history during the interview. Best practices recommend criminal history checks for certain high-risk jobs. In Kansas, state law identifies certain jobs that need a national criminal history check, but it appears agencies may have discretion for all other unclassified jobs.”
Commerce told the auditors that it relied on reference checks, social media, search engine data, and honesty on the part of applicants.
In its report, the auditors recommended legislators clarify when and how executive agencies could obtain criminal history information about prospective job applicants.
Commerce notified Mullinville Community Foundation in June and July that it was not in compliance with grant requirements because required documentation had not been submitted.
Commerce filed suit Aug. 7 against Mullinville Community Foundation seeking return of $211,251.67 believed unexpended from the original grant money. That lawsuit remains pending.
Some editions of this week’s Marion County Record included incorrect information from Peabody Main Street Association. This version corrects that information and adds comment from Kansas Department of Commerce.