Deadline passes to get fraud allegations

City employee who made them seeks more time to ponder release request

vhoneycutt@herald-leader.comJune 26, 2010 

The city's external auditors did not meet a 2 p.m. Friday deadline to provide an Urban County Council committee with fraud allegations made by a city employee.

Michael Mountjoy, a partner with Mountjoy Chilton Medley, said he was willing to release the documents to the investigative committee, but the firm's professional ethics code requires it to have the consent of city employee Patrick Johnston, who made the allegations.

The auditors sought permission Thursday from Mayor Jim Newberry and Johnston to release the fraud allegations.

Newberry delivered his signed consent to the auditors Friday morning, said Shaye Rabold, chief of staff for Newberry.

In an e-mail message to Newberry on Friday morning, Johnston's attorney, Patrick Nash, asked for more time to review the consent request.

In the message, Nash wrote that he did not receive Newberry's request to return the consent signed or unsigned by 9 a.m. Friday until 4:30 p.m. Thursday and needed more time to review it. Nash asked that Johnston be given until Wednesday to make a decision.

"Mr. Johnston is not refusing to sign this document, but is only asking for an adequate amount of time to determine if his signature on the document is necessary and appropriate," Nash wrote in the e-mail message.

After Nash asked for more time, Urban County Government attorney Keith Horn e-mailed a response to Nash, saying Nash should make his request for an extension directly to Mountjoy Chilton Medley.

Michael Mountjoy said Friday that he would wait for Johnston's decision.

Johnston declined to comment Friday. Nash was out of town.

The Code of Professional Conduct of the American Institute of Certified Public Accountants says that a member in public practice shall not disclose any confidential client information without the specific consent of the client or a subpoena.

Nash has said the city, with Newberry as its representative, is the client, not Johnston.

The council committee has considered issuing a subpoena for the documents but has asked its attorney to first research the committee's legal powers.

The committee wants to see the fraud allegations Johnston made in surveys — routine questionnaires filled out by city employees as part of audits. In surveys taken during recent years, Johnston made allegations that external and internal auditors found to have no foundation.

Additionally, in a series of e-mail messages in 2007 between Johnston and his superior, Johnston questioned the ethics and business practices of the Kentucky League of Cities' insurance division as his superior pushed to consider hiring the group.

Since then, Johnston's job has been marked for elimination as part of a proposed reorganization. The council committee wants to know whether the two issues are related.

Committee chairman George Myers declined to comment about Friday's events. The committee is scheduled to meet Tuesday.

State Auditor Crit Luallen also is auditing Johnston's allegations and the city's insurance-procurement process.

Reach Valarie Honeycutt Spears at (859) 231-3409 or 1-800-950-6397, ext. 3409.

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