City reaches agreement to settle litigation in fraud investigation

October 7, 2010 

An agreement has been reached to settle litigation between the Lexington city council investigative committee and the city government's internal audit board, according to a news release from the city Thursday.

The committee had issued subpoenas to the audit board as part of its inquiry into allegations of fraud by Patrick Johnston, the city's director of risk management, who questioned the way some city insurance was switched to the Kentucky League of Cities in 2007.

The city's internal auditor, Bruce Sahli, had refused to provide some documents to council over concerns about confidentiality. When the investigative committee issued a subpoena for the documents, Sahli sued to block it.

Council voted Tuesday to withdraw the subpoenas and ask lawyers on both sides to drop the issue. The litigation will be dropped if that resolution is adopted, and if the Internal Audit Board approves the agreement at a special meeting Oct. 12.

The argument has cost taxpayers at least $51,000 in legal bills.

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