CORA sheds light on missing funds, but questions remain

RBC | “I’m trying to thread a needle here, while having an upset public, without screwing up a process — a legal process and investigation,” said Alden Vanden Brink, director of the Rio Blanco Water Conservancy District (RBWCD). He spoke to the HT regarding the ongoing FBI investigation into the loss of a “significant portion” of the $4 million CCITF grant distribution from Rio Blanco County Commissioners in 2022. He expressed frustration about public perceptions surrounding the district’s responsibility for the loss of funds and general transparency practices.

According to Vanden Brink, district staff and board members have been advised by counsel not to release certain information about the matter to avoid compromising the federal investigation or creating further risk to the district. “We got robbed once, it’s not going to happen again,” said Vanden Brink, adding “and we got robbed for none of our doing,” a point he repeated in various statements to the HT.

COLOTRUST INVESTMENT

In an effort to answer questions about the district’s management of CCITF funds, The HT made Colorado Open Records Act (CORA) requests to Rio Blanco County, the Rio Blanco Water Conservancy District and ColoTrust, a public investment fund “intended solely for the use of Colorado local governments.”

Based on documents from the county and conservancy district, on Oct. 13, 2022, RBWCD invested $3.8 million of the $4 million CCITF grant in a ColoTrust “PLUS+” investment account designated for the Wolf Creek Reservoir Project, also known as the White River Regional Water Supply Project. The money was intended to accumulate dividends for reinvestment. An account statement sent by the district indicates that those funds sat in the investment account through Dec. 31, 2022, accumulating $32,391.22 during that period.

As a requirement of a “CCITF agreement” with Rio Blanco County, RBWCD also shared regular financial reports regarding the use of CCITF funds. A review of documents and correspondence in those monthly reports show the conservancy district reported the same information about their investments to the county.

The HT asked ColoTrust for documentation showing proof of existing accounts and transactions/deposits made by the district in 2022. They declined to provide account information that could corroborate county/district documents, stating, “We are unable to provide additional commentary or any participant specific information until the authorities have concluded their investigation.”

CCITF AMENDMENT

Correspondence between county and district staff also shows the two entities had to draft a revised agreement to include interest earnings. In an email sent Dec. 29, 2022, RBC Budget and Finance Director Janae Stanworth stated, “When we first gave the funds, we did not think they would be invested. Due to earning interest, we will need to address any interest earned from the investment.” Stanworth clarified in later communications, “we wanted to make sure any interest earned off of the $4,000,000 would be spent for the same purpose as the grant guidelines.” Vanden Brink responded, stating, “that is exactly what we had planned on,” and “all money earned will stay in the WRSP (Wolf Creek) account within ColoTrust.”

UNANSWERED QUESTIONS

After multiple interviews and extensive review of timelines, past reporting, and public documents, a few key questions remain unanswered regarding the missing district funds, among them:

• On what date(s) were the funds stolen?
• How did the theft occur?
• Who is responsible, and to what extent?
• How much money was lost/stolen from RBWCD?

TIMELINE DISCREPANCIES

Based on Vanden Brink’s statements and CORA documents reviewed by the HT, the fund theft occurred sometime after it was transferred to ColoTrust. The exact date is not clear, but if district financial statements are accurate the $3.8 million transferred to ColoTrust on Oct. 13, 2022. remained in the district’s PLUS+ investment account through at least Jan. 31, 2023. This date raises some questions about the accuracy of RBWCD’s financial reports to the county, since their February update lists investment earnings of $6,244.97 “through Jan. 31,” the same day that Rio Blanco County released a press release stating some grant funds had been “lost in an apparent wire transfer fraud scam.”

It is not clear when/if Rio Blanco County learned the amount of money that was stolen from the conservancy district. In their February report detailing account information through the month of January, RBWCD did not include a balance sheet for their ColoTrust accounts. An email exchange beginning Feb. 23 shows Stanworth seeking this information. Stanworth’s final email on March 1 states “pursuant to the Water Conservancy’s Agreement with RBC, we require an accurate accounting of the actual balances of all CCITF grant funded accounts,” and “If we do not receive this information by March 15, we may consider possible legal action.” There were no additional emails or other documents about the subject after March 1 included in the CORA documentation. The Board of County Commissioners and Rio Blanco Water Conservancy District board/staff held a joint executive session “regarding CCITF” on March 14 for the purpose of “determining positions relative to matters that may be subject to negotiations.”

SECURITY CONCERNS

Regardless of specific dates, if money was stolen after being transferred to ColoTrust, it would suggest that loss of funds was not a result of actions taken by RBWCD staff. Vanden Brink noted that the district has specific policies in place to prevent unauthorized or otherwise unsafe fund transfers. Specifically, district by-laws state “only Directors shall be authorized to sign District checks. Two (2) signatures shall be required on all District checks.”

Vanden Brink reiterated district staff are not able to make fund transfers, noting “that was a policy that we adopted years ago, because we’re a small district, it adds checks and balances to our system.”

A suspected loss of funds within ColoTrust could also have broader implications about the security of other public investments. According to ColoTrust’s website, more than 1,500 local Colorado governments have money invested in the public trust.

“I’m not saying there is, but I believe there’s reasons the special districts do have to question ColoTrust,” said Vanden Brink, expressing concern about the amount of funds public entities in RBC have vested in similar accounts. He noted that apart from earning dividends, RBWCD investments have been “frozen” since January, and said the district now has increased security requirements for any transfers/actions within those accounts.

ColoTrust responded to our inquiries about the subject, stating, “unfortunately, cyberattacks leading directly to fraudulent activity are becoming more prevalent, sophisticated and exploitive — threatening financial institutions and local government entities alike. Public Trust Advisors, in its capacity as the Fund Administrator and Investment Advisor for COLOTRUST, is a fiduciary and is committed to protecting the safety of funds invested in COLOTRUST.”

TRANSPARENCY

RBWCD Director Alden Vanden Brink spoke with us extensively in our efforts to clarify questions surrounding the loss of CCITF funds. He also complied with our public information requests, though he would not share board directors’ contact information. “That’s not open for the public and that’s the way it is on other boards as well,” said Vanden Brink. Reiterating past statements, he said

• The district is unable to make board minutes/agendas available online.
• They don’t plan to accommodate remote meeting attendance via Zoom, phone call or otherwise.
• Board meetings remain open to the public for in-person attendance on the last Wednesday of each month at 6:30 p.m. at the district’s office.