Update, Wednesday, 2:30 p.m.: Fairbanks Police Chief Randall Aragon has been placed on leave, as the city continues to investigate conflict-of-interest allegations tied to Aragon's private security business.

City of Fairbanks human resources chief Angela Foster-Snow, who is heading the investigation, announced the decision effective immediately in a statement on Wednesday afternoon.

"Deputy Chief Brad Johnson will be acting chief of police in (Aragon's) absence," Foster-Snow wrote.

Foster-Snow wasn't immediately available to answer questions about Aragon's status or whether he would be paid while on leave.

Aragon came under investigation after a former police chief alleged Aragon told a business owner requesting a security sweep of her firm that police were too busy to properly conduct the sweep, but that his privately owned security business could do so for $600.

Original story: Fairbanks Police Chief Randall Aragon is under investigation after a former chief alleged he used his position to boost his personal security business.

Angela Foster-Snow, human resources director for the city of Fairbanks, confirmed that a personnel investigation was opened 1 p.m. Monday in regard to the "alleged conflict of interest complaint implicating (Aragon)."

Foster-Snow is leading the investigation, but several Fairbanks City Council members took issue with her appointment during Monday night's council meeting because she was part of the administration.

A letter sent to council members by former police chief Dan Hoffman called for the investigation. In the letter, Hoffman said he was "literally sickened" to get a report about Aragon committing "highly unethical activity."

A business owner told the former chief she called the Fairbanks Police Department and asked to discuss property-crime concerns with Aragon. She requested officers conduct a walk-through of her business and suggest security improvements, according to the letter.

The business owner alleged, according to the letter, that Aragon responded by explaining the police department was understaffed and officers sent on such a detail would likely perform a very brief job of little value.

"She was then somewhat shocked and taken aback when the Chief then offered to do a 'much more thorough job' himself, acting in a private-contractor capacity as a 'Federally Certified Protection Professional,' " the letter says. Aragon allegedly said it would take several hours to evaluate the property and produce a report with recommendations.

Aragon told the business owner his services would cost $600, payable to him directly by check, according to the letter.

State records show Aragon as the sole proprietor of Certified Security Services, a private security business. He could not be reached for comment. He is currently out of Alaska training at the FBI academy, said Fairbanks Mayor John Eberhart. Aragon will return to work Monday, Eberhart said.

Hoffman said in his letter that Aragon should have immediately recognized the impropriety of selling his services on the job. He argued that the business endeavor would be no different than Fairbanks' public works director telling a resident whose neighborhood streets weren't being plowed to hire his personal plowing business to perform the work "after hours."

Hoffman demanded an investigation centered on several questions: Does Aragon have the proper business licenses? Was the mayor consulted, and were such activities approved? How long had Aragon been performing security assessments in the community? What are the rules for city officials who run businesses in line with their official positions?

"If these allegations are borne-out, I would further expect that the Mayor — at the direction of the Council — should ask for and accept the immediate resignation of Chief Aragon," the letter said.

Mayor Eberhart said in an email he was assured the chief of police has not engaged in competition with any service the city provides. Aragon has done a handful of security surveys, some at no cost, on his own time, Eberhart said.

The city's personnel code does not contain a prohibition on employees moonlighting on their own time, the mayor said. Additionally, the City Council did not require Aragon to have an employment contract, so there is no contract containing such a provision, he said.

"Even if there were a conflict of interest, the only thing required is that Chief Aragon seek authorization to conduct the security surveys.  He sought that authorization and I recall telling him that he needed to obtain City and State of Alaska business licenses, which he said he obtained," Eberhart wrote.

The City Council may address the issue by amending the personnel code, but Eberhart said council members should proceed with caution as other police officers and city employees may hold second jobs.

During Monday night's City Council meeting, council members expressed concerns with the allegations; at least two members said more needed to be done to investigate the matter.

Council member Bernard Gatewood called the allegations "very serious" and advised the city personnel matter be handled with care. Similar matters are handled generally behind closed doors, according to council members.

"What has been described … is certainly not the kind of behavior that is acceptable to (me) in this town for a city employee, certainly not for a city employee of that magnitude," Gatewood could be heard saying on a recording of the meeting.

The council member most fervently opposed to an investigation led by Foster-Snow was Jim Matherly, who is running against Eberhart in the city's mayoral race. Matherly said he was infuriated by the allegations, repeating the words, "This is the chief of police" during his comments.

He said an independent body should look into the allegations.

"If he's going to do things on the side, not acceptable," Matherly said.

Matherly said he spoke with the business owner who set up an appointment with Aragon. According to the council member, she canceled her appointment after Alaska State Troopers came to her business and did a walk-through for free.