Lexington council reviews fraud allegations

Crosbie says more work ahead

lblackford@herald-leader.comJuly 2, 2010 

A committee of Urban County Council members has seen the fraud allegations they're investigating, but they are staying mum about them for now.

The investigative committee met behind closed doors for 90 minutes Thursday to discuss fraud allegations made in 2008 and 2009 by Patrick Johnston, the city's director of risk management.

Members would not comment on the particulars of their discussion or the documents themselves, although after reading them, member Julian Beard said it's clear the council made a good decision to form the investigative committee despite charges of politics.

"I think the committee is fully justified," he said after the meeting.

Council member KC Crosbie, who originally asked for the documents in April, said she was also confident in the committee's work.

"What we've learned is that the committee has more work to do," she said.

At issue is whether the allegations are related to the proposed elimination of Johnston's job. A separate series of e-mail messages from 2007 shows that Johnston had concerns about the city's procurement of insurance policies through the Kentucky League of Cities.

KLC was embroiled in a spending scandal in 2009.

Both the city's external auditor, Mountjoy Chilton Medley, and the city's internal auditor, Bruce Sahli, found no evidence that Urban County Government's financial statements were materially misstated due to fraud, the clinical definition of financial fraud.

The committee will make an interim report to the council Tuesday before its summer break. Members will request more documents, then meet again Aug. 9. The committee's work has been postponed by two weeks of legal wrangling over the fraud allegation documents.

However, the committee's final report became an issue after the group came out of executive session. Council member Doug Martin, who stepped down from the committee because he'd donated money to Mayor Jim Newberry, said he objected to being kept out of the executive session. In addition, he said, council rules called for an investigative committee to have a final date for its work.

"Since there is no final date, does the authority (for the committee) exist after Tuesday?" he asked to clearly unresponsive committee members.

Committee chairman George Myers said the council doesn't know when the investigation will be finished. He invited Martin to make his complaints to the full council.

"How could we set a date certain in an investigative process, not knowing what we're going to find?" Beard asked. "We've fiddled for two weeks just to get the documents."

The committee voted to adjourn, but Martin returned to the conference room and directed a string of obscenities at Joe Sonka, author of the Barefoot and Progressive blog who called Martin a "clown" while writing on the social network Twitter during the meeting.

Martin declined to comment about the incident.

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