The Utah Restaurant Association Foundation on Dec. 3 filed a lawsuit against the Utah State Board of Education (USBE), asking for a judge to decide whether the group does, in fact, have to repay $139,335 to the state for “disallowed costs” found through an audit ordered by the state school board.
The Utah Restaurant Association and its Foundation run a school-based culinary curriculum called ProStart, and an associated reality TV program called Teen Chef Pro. The Association describes ProStart as “a nationwide program for high school students that provides training in the culinary arts and food service industry.”
For its school program costs, the USBE reimbursed the Utah Restaurant Association $650,759 between July 2018 and Sept. 2020. Then, in May 2020, the USBE ordered that an audit be conducted on the program’s financial records.
The auditors completed a sort of “spot check” on the Association’s books, and reviewed 786 expenses. In their findings, they found commingling of funds between the Restaurant Foundation and the Restaurant Association, which is problematic, as the two entities operate under two different non-profit designations, meaning they have different tax obligations.
The audit also found that the Association’s invoices were often incomplete, that they improperly calculated per diem travel reimbursements, and lacked official contracts with subcontractors. One expense was also double-billed to both the USBE and the Department of Workforce Services.
These findings echo an investigation by Beyond the Books in 2018, which requested expense receipts from the ProStart program and its Emmy-winning reality TV production, Teen Chef Pro. In that investigation, we found that the Restaurant Association’s bookkeeping did not match its expenses – for instance, the only invoice we received proof of in 2017 was for $83,000 for “editing, photography, etc.” That invoice indicated that Reel People Productions was paid to produce the reality TV show. Reel People Production’s principal owner is Katy Sine, daughter of Melva Sine, the president of the Utah Restaurant Foundation.
In March of 2020, the Utah State Auditor’s Office also conducted an audit of the Utah Restaurant Association Foundation and ProStart, and made similar findings. In addition, they found that reimbursements requested by the Association for a training trip to Flagstaff, Arizona, were “invoiced” using checks as receipts that purportedly went to teachers who spent money out-of-pocket on the trip, and yet were never cashed or processed by a bank. The Association’s director explained to those auditors that she created the “dummy” checks to act as receipts for payments that were actually made through different checks and accounts. The Restaurant Association was unable to come up with five actual checks that would correspond five of the “dummy” checks.
Utah State Auditor John Dougall told Beyond the Books, “Based on my team’s analysis, I would consider this ether the greatest financial incompetence my office has ever investigated or a textbook case of fraud, making false financial representations. Who produces bogus checks for expense reimbursements?”
Through its lawsuit, the Restaurant Association is asking for “judicial review,” asking that the repayment decision be set aside, arguing that it was “not supported by substantial evidence.” The Restaurant Association claims that it did provide supporting documentation for “each and every cost submitted for reimbursement.”
The Restaurant Association is also claiming the USBE breached its contract to the tune of $139,335 (the same amount as the repayment demands) as well as other damages, to be decided by a jury.
Attorneys for the Utah Restaurant Association did not respond to requests for comment, and a representative for the USBE, while acknowledging the lawsuit, declined to comment as well.