McKEE — Jackson County Sheriff Denny Peyman arrested Judge-Executive William O. Smith during a fiscal court meeting Tuesday on charges that included forgery and engaging in organized crime.
It was the latest development in their rancorous relationship, in which Smith and the fiscal court earlier took control of finances at the sheriff's office and set up an alternate county police force.
Peyman, who was accused last year of mismanaging his office's finances by the state auditor, also arrested county treasurer Beth Sallee.
Smith and county magistrates were discussing items such as paying the county's bills at a meeting Tuesday morning. When Smith called for a closed session to discuss a confidential issue, Peyman approached him at the head of the meeting table.
"I'm gonna arrest you today," he told Smith.
"Can't do it right now," Smith replied, indicating he planned to continue the meeting. Smith then asked county Attorney George Hays whether Peyman could arrest him, and Hays told him to go with the sheriff.
Peyman did not tell Smith in the meeting room what he was charged with.
After Peyman handcuffed Smith and followed him out of the room, leaving magistrates wondering what was going on, Hays indicated he didn't think much of the sheriff's actions.
"Judge Smith's probably got him a good federal lawsuit," Hays said as he walked out.
Once outside, Peyman said Smith described the arrest as "all just a show."
"If you get sentenced to 20 years, it's gonna be one helluva show," Peyman said he replied.
The fiscal court meeting ended with the arrest.
"We had to adjourn 'cause there was no one to run the meeting," County Clerk Donald "Duck" Moore said with a laugh. "I know it's not funny, but still ..."
Smith declined to comment later at the Jackson County Detention Center, which has a sign on the front wall acknowledging his leadership when it was built in 2010.
Smith and Sallee were released later in the afternoon on their own recognizance, meaning they didn't have to post any money.
Several people at the meeting said Peyman abused his authority for political reasons, but Peyman insisted his only motivation is to clean up local government.
"There's nothing political about doing what's right," he said.
Peyman charged Smith and Sallee with several felonies: tampering with public records; second-degree forgery; falsifying business records; criminal facilitation; abuse of public trust; and taking part in organized crime through extortion or coercion.
He filed the charges on his own initiative, without an indictment or a warrant signed by a judicial officer.
Peyman said he didn't want to go into great detail about how Smith and Sallee allegedly broke the laws, in part because he expects to arrest more people. But Peyman said the charges grew from an audit of the fiscal court for the 2011 fiscal year, which ended June 30, 2011.
The audit listed a number of problems with how the fiscal court handled county finances.
Those included failing to pay employee payroll and retirement withholding on time; coding receipts in the wrong categories; and failing to spend coal-severance tax receipts as required by state law.
Peyman said he looked into the issues and found additional information.
Smith said in his response to the audit that the county had gotten into a financial bind because of declining coal-severance revenue and because Peyman had not repaid money that the fiscal court had advanced him.
The fiscal court planned to fix the problems, Smith told auditors.
Among other things, the court had forced Peyman to begin pooling his fee revenue with other county offices to make sure the county got paid and to monitor his expenses, Smith said.
Peyman contends he has repaid the county.
Peyman has little money with which to operate. He has only one deputy and patrols in a beat-up Ford Mustang that has no security screen to separate him from people in the back seat.
The fiscal court ultimately raised the county's occupational tax in 2012 to shore up revenue, which caused protest in the generally poor county.
A separate audit released in March 2013 noted several problems in Peyman's office as well, including that he had not adequately monitored fuel purchases and had exceeded his salary cap.
The audit said Peyman had a deficit of more than $112,000 in 2012 and also owed the county fiscal court more than $277,000 it gave him to pay salaries after he took office in January 2011.
At the time, Smith called it "the worst audit I've ever seen of a county office."
Peyman gained some notoriety last year when he said he would not enforce any new gun-control laws he considered unconstitutional. That was during the debate over new legislation after a gunman killed 20 students and six staff members at a Connecticut elementary school.
"American citizens already have given up too much power over guns," Peyman said at the time.
Bill Estep: (606) 678-4655. Twitter: @billestep1