Auditor: $300,000 unaccounted for from Monte Cristo cleanup

MONTE CRISTO — More than $300,000 turned up missing from Department of Ecology records of a 2015 cleanup in the Monte Cristo mining area east of Granite Falls, according to the State Auditor’s Office.

The project sought to rid the historic ghost town, off the Mountain Loop Highway near Barlow Pass, of contaminated mine tailings.

The state audit, released earlier this month, said Ecology didn’t keep thorough enough records to ensure those funds were spent correctly.

The American Smelting and Refining Company ran a gold mining operation in Monte Cristo for nearly 100 years, leaving behind unnaturally high concentrations of arsenic, lead and other heavy toxic metals.

In 2005, the company filed for bankruptcy. As part of the settlement, it paid the state of Washington and the U.S. Forest Service $5.5 million to restore the Monte Cristo town site.

Then in May of 2015, the Department of Ecology paid the forest service its share of the settlement to do on-the-ground cleanup.

But an April 2020 audit revealed the department could not provide documentation for about 15% of the nearly $2.5 million it paid the Forest Service.

“That doesn’t necessarily mean that there was fraud going on,” audit manager Jim Brownell said. “All our report is saying is this $300,000 is in question because of lack of documentation.”

The Forest Service did not provide quarterly progress reports as required by the agency’s agreement with Ecology.

Joseph Gibbens, who managed the cleanup for the Forest service, said there simply wasn’t time to make the reports.

“By the time we got the agreement signed, approved and the money transferred, it was already May (2015) and we went ahead and started work,” he said.

By October 2015, the work was mostly finished.

“I’m it, I don’t have a staff or anything,” Gibbens said. “So when I’m out in the field, I was keeping Ecology informed as invoices came in, but I did not do quarterly reports.”

In lieu of the reports, Gibbens sent Ecology invoices for work performed by the project contractor.

He said those invoices accounted for all the Ecology funds, including over $600,000 that wasn’t spent and was returned to the department in December 2017.

“There was no gap, so I’m not sure how the auditor came up with that,” he said. “On my end, everything matches.”

But during the audit, the state found Ecology didn’t have records for how $374,294 was spent.

“Their monitoring clearly wasn’t adequate,” Brownell said.

Ecology said in a statement that the Forest Service provided summary information accounting for all the funds, including that $300,000.

“Ecology is confident the work was completed within scope and budget,” the statement read.

But the auditor’s office didn’t look into those additional records.

“We did not pursue such records because our responsibility is to audit the Department (of Ecology) and them not having the documents indicated inadequate contract management,” Brownell said.

Work at Monte Cristo is not quite finished — the Forest Service will continue to monitor ground water for contamination for at least another year, Gibbens said.

Pollution began at the historic site during its time as a bustling mining town from 1889 to 1907.

Prospectors scaled mountains looking for the rust-red streaks that marked valuable veins of gold and silver. They mined millions of dollars worth of metals, and in doing so left behind tailings rife with toxins.

Monte Cristo got new life in the 1990s when the Forest Service took over much of the land. It’s a popular hiking, bicycling and camping destination. A nice weekend usually draws up to 300 people.

During the cleanup, the Forest service secured polluted materials in a repository, like an on-site landfill, about a mile away from the town.

Three acres were cleared for the two-tiered structure, which can hold up to 23,000 cubic yards of waste. A foot of compacted material goes on bottom with rock and lime above it to neutralize the metals.

The Forest Service now monitors the groundwater around the repository to make sure it isn’t leaking toxins.

Lynnwood engineer Bill Lider filed a complaint with the state auditor in December 2019 after he said the Forest Service refused to provide him with documents detailing the cleanup’s finances.

“I had my suspicions that the money was not being properly tracked …” he said in an email. “This suspicion was confirmed by the (auditor’s office) when the USFS could not account for over $374,000.”

The state auditor’s office has no enforcement capacity.

“We can’t compel or make an agency do anything,” Brownell said.

But he said the office will continue to monitor Ecology’s work.

Ecology said in a statement it will “ensure the filing and receipt of quarterly reports in future projects.”

Julia-Grace Sanders: 425-339-3439; jgsanders@heraldnet.com; Twitter: @sanders_julia.