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Downton Valley: Drama Among the Staff at Idaho's Glitziest Resort Town

Chronicling the scandal in the Sun Valley City government



There is a special kind of politics bred in small towns. Social circles are small; families are tight; ambitions flare and egos bruise easily; and big fights brew from seemingly petty sources.

Since at least October 2011, the posh, old-money resort Mecca of Sun Valley has been gripped by a particularly nasty strain of small-town political drama--one that has brought down a city administrator and a fire chief, as well as members of his family, allegedly engaged in a nepotistic pattern of fraud; led to the resignation of a treasurer and city clerk, both of whom said they felt intimidated after blowing the whistle on perceived misconduct; and spawned numerous state and local investigations, suits and countersuits and cost hundreds of thousands of dollars.

The threads are many and tangled, the players litigious and intertwined. In the middle has been a courageous and tenacious weekly newspaper—the award-winning Idaho Mountain Express—valiantly peeling back the layers.

Boise Weekly poured through the Express' reports, as well as the various investigative documents obtained by the newspaper over the years, to try and piece together a chronological overview of just what's been going on in Idaho's storied playground. The saga, still developing, reads like an N-scale Bonfire of the Vanities.

Take the case of Sharon Hammer. Graduating with a bachelors degree. in business and administration from Southern Illinois University in 1987, she quickly earned a law degree from SIU Law in 1990. She practiced local government law in Illinois for eight years, including in her old university town of Carbondale and at the Chicago law firm Burke Weaver & Prell. By 2001, she earned a master's in public administration from Northern Illinois University. In 2008, she became city administrator for Sun Valley, but that wasn't enough; she also trained as an EMT and responded with the Sun Valley Fire Department.

Her curriculum vitae is proudly posted at, complete with grade point averages, a 2009 U.S. News and World Reports "best of" ranking for her grad school, and photos of herself posing in full firefighter gear.

Nonetheless, three-and-a-half years after becoming city administrator, Hammer was terminated amid multiple investigations alleging timecard fraud, misuse of city funds and misappropriation of city property. In the past year, she has waged a multi-front legal war, along with her attorney-husband, to clear her name and punish those she contends wronged her.

At the same time, Sun Valley Fire Chief Jeff Carnes, a 38-year veteran of the department, was also alleged to have presided over an organization that operated with, as Blaine County Prosecutor Jim Thomas put it in a November 2012 letter to the city, "a profound lack of management."

Specifically, it was alleged that Carnes made numerous personal purchases with city funds and allowed Hammer and his own son, Nick--both of whom worked as part-time EMT/firefighters--to be paid in excess of the hours they actually worked. It was a pattern of allegedly falsified timekeeping facilitated by the fact that his wife, Tina, kept track of hours for the department. All three members of the Carnes family ultimately resigned from their positions in September 2012.

But what led up to all this?

According to reports and investigative documents, it began in October 2011, when then-Treasurer and Finance Manager Michelle Frostenson came to then-Mayor Wayne Willich with concerns--dating almost to the beginning of Hammer's employment with the city--about lax record keeping, inappropriate use of city property and, most damning of all, personal use of a city-issued line of credit. The alleged violations were shared with the Sun Valley City Council on Nov. 11, 2011, after which time Frostenson, Hammer and then-City Clerk Kelly Ek were placed on administrative leave pending an internal investigation.

That's when things started to get serious.

Almost immediately after Frostenson came forward with her allegations, the city contacted the Idaho Counties Risk Management Program, which contracted Boise attorney Patricia Ball, of Management Northwest, to launch an investigation on Nov. 21, 2011.

Released to city officials in late December 2011, Ball's report found evidence of widespread misconduct--some potentially criminal--and urged further investigation.

First, there was the allegation that Hammer had improperly used a city vehicle.

She freely admitted using the 2001 Ford Explorer for personal and business purposes from 2008 to 2011--and numerous witnesses corroborated the fact that Hammer used the SUV for everything from commuting to work to going camping and to football games--but contended that she did so with permission from Willich.

While Willich told Ball that he could not specifically remember giving Hammer the OK for personal use of the SUV, he "might have said that." Regardless, Willich stated he had no objection to Hammer using the vehicle for personal reasons and said he should have just sold her the Explorer for $300.

There is no documented proof that Willich gave Hammer permission to use the city vehicle, but, according to Ball's report, even if he did, "it does not appear he had the authority to do so under Hammer's contract or the [Personnel] Manual."

The second allegation against Hammer was that she used a city-issued credit card to make fuel purchases for personal use. According to the report, Frostenson pointed out to the mayor and City Council that Hammer had put about $1,700 in fuel purchases on the card from October 2010 through October 2011. The audit confirmed that estimate, and added that because some credit card statements and receipts were missing, the actual figure was most likely higher.

Hammer steadfastly maintained that purchases with the city-issued card were only made to gas up the city vehicle, and provided the investigation with a record of fuel charges from her personal credit card from 2009 through 2011. But, because she kept no mileage log or other documentation specifically separating personal from city use--or even a license plate number to identify what vehicle was being fueled--her claims could not be verified.

The report was critical of Hammer's record keeping, especially considering that as city administrator, it was her responsibility to handle complaints about misuse of city-issued lines of credit.

"[I]t is reasonable to conclude that she is aware of her obligations when using a city card," read the report. "The policy states that 'City credit cards may not be used for personal purchases or personal use.'"

What's more, evidence presented in the report seemed to suggest that Hammer was muddying the waters by submitting fuel expenses to the generic "Admin CC charges" category, rather than applying the purchases to a specific business trip. At least once, according to the investigation, Hammer stated in supporting documentation that, "I can't tell if this is the city cc or my personal cc," with reference to fuel purchased on Hammer's city-issued card, which was reimbursed to her.

In one particular instance, records show Hammer alternating between her city-issued card and personal card: She gassed up with the city card in Hailey on the morning of April 5, 2011, and, later that day, logged purchases on her own credit card at Costco and Target, in Twin Falls. The next day, she again used the city card to buy fuel in the morning in Hailey, and later made purchases on her personal card at Boise Co-op. Another fuel stop was paid for with the city card that afternoon in Mountain Home.

All three gas purchases, over two days, were reported for "Boise Administration," a claim that the report found was "not accurate."

Based on the evidence, the report concluded that, "Hammer's use of the city credit card for personal fuel consumption and her failure to track personal and business use of fuel was in complete disregard of her responsibilities as a public servant."

Nonetheless, Hammer countered, all her purchases were approved by city officials who could have raised a red flag at any time, but didn't.

Finally, Hammer found herself in hot water over her time-off reporting. It was Frostenson's belief that she improperly reporting her vacation and sick leave in order to be reimbursed for time off and maintaining accrued benefits that she wasn't entitled to.

The audit could not find sufficient evidence to suggest Hammer was improperly reporting her sick leave, but did find irregularities with her vacation reporting. First, and most basically, no documentation could be found to suggest that Hammer ever even formally reported or tracked her time off on any city time record. Rather, her vacation hours were reported in emails to Frostenson.

In her defense, Hammer submitted a detailed accounting of her earned time off and added that as with her use of the city vehicle, Willich had agreed to alter the terms of her vacation and sick leave plan to allow her use of flex time to make up for work she performed outside the normal office hours.

According to the arrangement, Hammer maintained that she'd earned flex time, "which was never officially accrued as part of my vacation time pursuant to my agreement with Mayor Willich." Furthermore, she claimed to have only used some of that time accrued between 2008 and 2011. Other time off, Hammer said, was authorized by Willich--specifically, time to study for the bar exam, undertake EMT training and respond to EMT and fire department calls during the day.

When asked about Hammer's time-off accrual and work schedule, Willich told Ball that he had no problem giving Hammer leave to work on the bar exam or for Fire and EMT-related duties, and that he allowed employees who work late to come in late the next day. He also stated he was fine with Hammer working from home. But when it came to Hammer's contention that she had arranged with the mayor to use "flex time" instead of vacation, Willich told the auditor that he was "totally unaware of that."

As with her use of the city-issued credit card, the report recommended an independent, outside audit and investigation to determine the extent of the falsification. And, like her use of the city vehicle, the report also found that even if Willich had approved altering Hammer's vacation benefits, he likely didn't have the legal authority to do so.

"Employees are granted a salary and benefits, which encompasses their compensation packages. They are not authorized to make their own rules," the audit stated. "Hammer's attempt to claim some sort of compensatory time off (referred by her as 'flex time') either reveals a completion [sic] lack of understanding of wage and hour laws or an abuse of her power as city administrator."

Hammer, of course, was not the only city official accused of abuse of power. During the course of the investigation into Hammer's activities, additional allegations of misconduct were also leveled at then-Sun Valley Fire Chief Jeff Carnes, his wife, Tina, and their son, Nick.

The first allegation centered on falsified timecards for Nick, an accusation supported by no less than 15-year SVFD veteran and longtime Cpt. Mal Prior, who told Ball that he witnessed Tina add hours to her son's time report that he did not work--on one occasion, including up to 79 hours on his time sheet. Further, Prior reported that he had known about the padded time reports for two years--especially since he regularly saw the fire and EMS payroll files--but did not report the discrepancies because he feared losing his job. Then-Assistant Fire Chief Ray Franco backed up Prior's allegations in the report, though stated that he refused on numerous occasions to approve Nick' time reports because he knew them to be false.

According to the report, when approached by Prior, Franco and Frostenson about the issue of the falsified timecards, Hammer refused to take any action. In fact, according to Ball's report, Hammer's hours working as an EMT were also vaguely recorded--or not recorded at all.

As in Hammer's case, credit card purchases by the elder Carnes came under scrutiny, including hefty gas expenses and thousands spent on items such as a $400 snowmobile helmet (for use by Nick), $2,500 on snowmobile parts (for Nick's snowmobile) and other expenditures for items such as boots (which Franco maintained were purchased online for personal use by Carnes and Nick). Costco purchases, clothing and restaurant charges were also questioned.

By the time the results of Ball's investigation were released in December 2011, Willich had been replaced as mayor by Dewayne Briscoe in the November election. The accusations and findings in the report were enough to prompt two more investigations: one by the Idaho Attorney General's Office, and launched at the request of Blaine County Prosecutor Jim Thomas; the other a forensic audit commissioned by the City of Sun Valley to be performed by Boise-based law firm Moffatt Thomas Barrett Rock & Fields. Moffatt Thomas contracted with accounting firm Hagen Streiff Newton & Oshiro to undertake a forensic audit of each department in the city

From January 2012 through October 2012, the AG parsed through Ball's report, interviewed key players in the drama and, once it was completed in August 2012, the HSNO audit as well.

Taken together, both the AG and HSNO reports paint a similar picture: the City of Sun Valley was being run with such a severe lack of procedure and oversight that it was hard to determine just exactly what was going on and who, if anyone, was guilty of wrongdoing aside from gross administrative incompetence.

With regards to the Fire Department, the AG's report stated that its investigation, like Ball's, found "a total lack of organization and supervisory review."

The timecard system was in such disarray that investigators in many cases found it impossible to find documentation to determine time that was worked. What was clear, according to the HSNO audit, was that timecards were missing, specifically for Hammer, Nick Carnes and his mother, Tina, who told investigators that oftentimes Nick would forget to fill out his time sheet, so she would complete it for him.

At some point during the AG's investigation, in February and possibly early March 2012, two separate break-ins may have occurred at the SVFD Elkhorn Station, in which emails and personnel files were deleted or otherwise removed, further complicating the review. No suspects were ever identified.

In the investigation of Hammer's activities as city administrator, neither report could determine whether her credit card use was improper because of lack of documentation. However, $23,494 in purchases made by the Fire Department were found by HSNO to be inappropriate.

Regarding the other allegations made against Hammer, her use of the city vehicle was found to be in violation of city policy but authorized by then-Mayor Willich. Her vacation-leave reporting was also found to be in violation of city policy, but, again, as a result of shoddy management.

Recommendations in the HSNO audit could be summed up simply: Sun Valley needed to clean up its act, and that's what Briscoe vowed to do.

Though Hammer's contract was terminated in January 2012, shortly after the beginning of the AG's investigation, her replacement wasn't hired until November 2012--the month after the HSNO audit was completed. However, starting in June 2012, the city has been barraged with lawsuits and countersuits.

Frostenson and Ek both settled tort claims that they had been intimidated and harassed in the wake of their complaints and stepped down from their positions in June 2012. That same month saw the dismissal of a defamation suit filed by Councilman Nils Ribi--who took issue with statements by Hammer's attorney/husband Jim Donoval calling into question Ribi's mental stability--and a $3 million claim against the city by Hammer over unlawful termination and demanding her old job back. In July 2012, Hammer sued Ek for defamation, stemming from comments she made to the Idaho Mountain Express in two articles published by the paper that month.

Though former employees were still bitterly fighting it out in court, the Mountain Express reported that Briscoe said the city adopted a "new tone" of compliance with regulations, and later articles went on to laud the improved mood at City Hall.

On Nov. 21, 2012, Prosecutor Thomas stated in a letter to Sun Valley city officials that because of the lack of hard evidence, he would not pursue criminal charges against any past or current employees in connection with the allegations of the previous year.

However, Thomas did chide the city in his concluding paragraph.

"Although no criminal charges will be forthcoming, the investigations revealed serious failures at multiple levels of management and supervision within the City of Sun Valley," he wrote. "These failures in oversight contributed to a culture of entitlement where certain employees took advantage of the City's mismanagement, and led to a breach of the public trust and damage to the City's professional reputation. I trust that the City of Sun Valley will institute the necessary actions to make sure the mistakes of the past are not repeated in the future."

Timeline of the Breakdown

October 2011: Treasurer and Finance Manager Michelle Frostenson makes known her concerns about alleged misuse of city funds and property, and falsification of timecards, by various city employees.

November-December 2011: Boise-based attorney Patricia Ball conducts a wide-ranging audit of the city's finances regarding the activities of city employees including then-City Administrator Sharon Hammer and several members of the Sun Valley Fire Department. The audit finds evidence to support instances of misconduct and violation of city policies, and recommends further investigation.

January-October 2012: At the request of Blaine County Prosecuting Attorney Jim Thomas, Idaho Attorney General Lawrence Wasden's office conducts an investigation of alleged time-sheet fraud and misuse of city funds and property by then-City Administrator Sharon Hammer and then-Sun Valley Fire Chief Jeff Carnes.

Jan. 19, 2012: Hammer's contract as city administrator with the city of Sun Valley is terminated without stated cause.

March 2012: Sun Valley police receive reports of as many as two separate break-ins at the Sun Valley fire station, where burglars—apparently with inside access to the building—deleted and otherwise removed emails and personnel files in February and, possibly, early March.

April-August 2012: The city of Sun Valley asks Boise-based law firm Moffatt Thomas Barrett Rock & Fields to conduct its own investigation of alleged misconduct by Hammer and Carnes, as well as Carnes' wife, who handled Sun Valley Fire Department timekeeping and his son, a Sun Valley firefighter. Moffatt Thomas then contracts with accounting firm Hagen Streiff Newton & Oshiro to undertake a forensic audit of each department in the city.

April 19, 2012: Newly elected Sun Valley Mayor Dewayne Briscoe goes public with news of the apparent break-ins at the Elkhorn Fire Station at a meeting of the Sun Valley City Council.

June 2012: Frostenson and City Clerk Kelly Ek leave their jobs with the city after settling tort claims against the city alleging they were retaliated against for exposing the alleged instances of misconduct by Hammer, Carnes and others.

June 25, 2012: A defamation suit filed by Sun Valley City Councilman Nils Ribi against Hammer's attorney—and husband—Jim Donoval is thrown out by a district judge. Soon after, Ribi's wife files her own complaint against Donoval.

June 27, 2012: Hammer files a $3 million lawsuit against the city, claiming she was assaulted, defamed and wrongfully terminated. On June 29, 2012 she files another suit demanding her old job back.

July 13, 2012: Hammer files a lawsuit against Ek for alleged defamation in two separate stories published in the Idaho Mountain Express newspaper.

Aug. 20, 2012: Hammer's attorney Donoval files suit against the city and the Idaho Attorney General's Office seeking original documents pertaining to bills paid by the city and expenses authorized during the period covered by the forensic audit. The suit claims documents were altered or destroyed to implicate Hammer and to whitewash the role that Briscoe—then a City Council member—played in alleged financial mismangement of the city.

Sept. 21, 2012: Carnes and his family members resign from their various city positions, after Carnes—a 38-year veteran of the department—had been on administrative leave for several months.

Nov. 21, 2012: Blaine County Prosecutor Thomas writes in a letter to Briscoe that there isn't enough evidence to justify filing criminal charges against city employees for alleged misconduct.

December 2012: A report by the Idaho Attorney General on break-ins at the Sun Valley fire station, where emails and personnel records were deleted, finds that the city's

police department did not fully investigate the incident.

January 2013: A judge in the Fifth District orders that Hammer's attorney Donoval can file no more subpoenas in a defamation suit brought against him in December 2011. The ruling follows months of legal back-and-forth, during which time Donoval filed several subpoenas demanding access to Ball's 2011 report.

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