LINCOLN — A new audit harshly criticizes the director of a state agency, stating that he took five “questionable” trips that appear to violate laws on the personal use of state vehicles and the filing of false expense reports.

The allegations against Jeff Fassett, who has been director of the Nebraska Department of Natural Resources for the past four years, are being investigated by the Governor’s Office and have been forwarded to the Nebraska Attorney General’s Office for possible prosecution. The 65-page audit covered July 2017 through December 2018.

Fassett, who maintains a home in Cheyenne, Wyoming, and has an apartment in Lincoln, recently reimbursed the state $708 for overpayment of travel expenses that he said were identified in the report.

He declined to comment Monday on why the travel logs and expense reports he filed were inaccurate and instead issued a statement saying that agency officials are “supporting the Governor Office’s review of the audit, and are working with them to put in place the necessary controls to properly manage and pre-audit travel reimbursement.”

Gov. Pete Ricketts, who hired Fassett, also issued a statement through a spokesman saying he took the findings of the State Auditor’s Office “seriously.”

“The governor has ordered a full review of the audit findings,” said Ricketts’ spokesman, Taylor Gage.

Gage added that after Fassett’s wife, who still lives in Cheyenne, was diagnosed with cancer last spring, he was authorized to work remotely from Wyoming so he could support her “as long as it did not impact job performance.”

There was no mention of that in the audit, which said the possible law and policy violations included official misconduct, improper use of a state vehicle, improper use of a state credit card for fuel and food and falsification of a state travel log.

The Department of Natural Resources is a state agency with a $35 million annual budget and more than 100 employees. It manages the use of the state’s surface water, oversees dam safety and compliance with river compacts, and — with the state’s local natural resources districts — helps regulate the use of groundwater. Fassett is paid $152,000 a year.

There were five “questionable” trips by Fassett cited in the audit, which found that he had made 24 trips to Wyoming during an 18-month period.

One trip, for example, was in July 2017, when Fassett claimed to have driven 993 miles in a state vehicle from Lincoln to Kimball, Nebraska, then back to Lincoln. That was about 233 miles in excess of the actual mileage between the two cities, the audit report said.

Fassett, when confronted by auditors, admitted that the travel log was wrong. He said he had instead driven to his home in Cheyenne on July 12, 2017, then to Fort Collins, Colorado, the next day for a personal doctor’s appointment. Then, he said, he drove back to Lincoln. That, the audit said, amounted to about 587 miles in a state car for personal activities.

Fassett said that en route to Kimball, his meeting there had been canceled. But the auditors examined travel logs and concluded that he could not have arrived in Kimball until 8 p.m., which they described as “an unusually late time to start a governmental meeting.” Auditors were also unable to confirm, after talking with a natural resources district official in Kimball, whether any meeting had been set up that day at all.

Fassett’s activities on that trip, the audit said, “give rise to serious concerns regarding apparent violation of both specific departmental policies and state law.”

Personal use of a state-owned vehicle is prohibited, according to state policies, and can result in dismissal.

The audit also criticized the agency for setting up a $15 million water project fund that is managed by a private entity and operates “outside of any meaningful governmental oversight.” Auditors said that state law requires such funds to be held by the State Treasurer’s Office and invested by the state investment officer and that they could find nothing in state law that allowed the private “outside account” to be set up.

The agency, in its formal response to the audit, said auditors had “misunderstood or misinterpreted” the Basin Coalition Fund, which was set up before Fassett’s arrival and is managed by the nonprofit Nebraska Community Foundation.

The audit also asserted that the fund would have realized about five times more in earnings — $837,495 instead of the “comparatively meager” $150,034 — had it been invested by the state investment officer rather than the Community Foundation from 2015 through 2018.

The fund was set up after being reviewed by attorneys, the agency said in its response. The fund is used to pay a contractor, the Central Nebraska Public Power and Irrigation District, to conduct programs to comply with a Platte River recovery plan. It is not “a department account,” the agency said, because it accepts money from several local natural resources districts.

The agency also disputed the audit’s contention that the existence of the fund was not disclosed during the audit or to state legislators via the department’s annual reports but said it would consult again with the Attorney General’s Office about the fund.

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Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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