Judge dismisses criminal charges against Jackson County judge-executive, treasurer

bestep@herald-leader.comFebruary 6, 2014 

MCKEE — The attorney for Jackson County Judge-Executive William O. Smith didn't have to say a word during a court hearing Thursday to get the criminal charges against her client dismissed.

When District Judge Renee Muncy called the case, it was special prosecutor Jackie Steele who told Muncy he wanted the charges dismissed.

Last month, Sheriff Denny Peyman said he had a good case when he interrupted a fiscal court meeting to arrest the judge-executive and the longtime county treasurer, Beth Sallee, on forgery and other charges.

But Steele said that after reviewing the case and talking with Peyman for more than two hours, he found a lack of evidence to support the criminal charges.

Given that belief, Steele said, he had an ethical obligation not to prosecute the case.

So, the latest flare-up in the political conflict between Peyman and Smith was over after about a minute in court.

Smith and Sallee later declined to comment, but their attorney, Sharon Allen, said Peyman's charges were worse than flimsy.

"Obviously, we were aware all along that there was no evidence to support these charges," Allen said.

Peyman said after the hearing that he plans to ask a grand jury to reinstate the charges.

"It's like a ballgame. I got up and struck out one time. I'll be back," Peyman said.

And, as he did earlier, Peyman said he expects to arrest more people in his investigation of alleged corruption in the county.

Problems began some time ago between the judge-executive, who heads the fiscal court, and the sheriff, who in addition to his law-enforcement role collects taxes for the fiscal court and other agencies.

The fiscal court claimed in a lawsuit that it advanced Peyman a total of more than $600,000 in 2011 and 2012 to cover his payroll, and that Peyman has not repaid more than $277,000 from the loans.

The lawsuit blamed Peyman for malfeasance, neglect and mismanagement.

Peyman denied the claims and said several of the fiscal court's payments to his office were not properly authorized; that the fiscal court failed to pay him some money it owed; and that the county added employees to his payroll without budgeting money for the costs, putting him in the hole.

Smith blamed the unpaid loans to Peyman — along with rising costs and a cut in coal-severance tax revenue — for helping put the largely poor, rural county in a financial bind.

The fiscal court ultimately took control of Peyman's finances and set up an alternate county police force.

Peyman now has only one employee besides himself and patrols in a beat-up Ford Mustang.

The deficit figured into a decision by the fiscal court to raise the county's occupational tax. That decision didn't sit well in the county, where a third of the people are below the federal poverty line and the median household income from 2008 through 2012 averaged less than half the national level.

Peyman interrupted Smith during a fiscal court meeting last month and took him out in handcuffs, charging him and Sallee with tampering with public records, 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 getting a warrant from a judge or an indictment from a grand jury.

Peyman said the charges were based on findings from a 2011 audit.

The audit listed a number of problems with how the fiscal court handled county finances, including failing to pay employee payroll and retirement withholding on time; coding receipts in the wrong categories; and failing to spend some money as required by law.

On Thursday, Steele said that he reviewed the audit, and that it did appear there were bookkeeping problems. However, he said, "auditing deficiencies don't necessarily mean criminal acts."

Steele is the commonwealth's attorney for Laurel and Knox counties. He was appointed to handle the charges against Smith and Sallee after Jackson County Attorney George "Tommy" Hays recused himself from the case because he works with all the parties.

Many people in Jackson County believe politics motivated Peyman to arrest Smith.

Smith's attorney, Allen, said it is noteworthy that Peyman did not get a court officer or grand jury to sign off on the charges, and that the audit in question did not include a referral to law enforcement, which is common when auditors suspect criminal activity.

Allen also noted that media outlets were alerted to be at the fiscal court meeting where Peyman arrested Smith.

"It was orchestrated for maximum exposure," she said.

Peyman, however, said the arrests had nothing to do with politics. "We're after the truth, and the truth has not come out yet," he said.

Allen declined to comment on whether Smith might file a false-arrest lawsuit against Peyman, who has had his own audit troubles.

A review from 2011, his first year in office, found inadequate bookkeeping; more than $500 in payments for meals for jurors on days with no jury trials; poor oversight of gasoline purchases; and a deficit of $112,889.

Peyman told auditors he had improved record-keeping and would resolve the deficit.

Peyman, a Republican, is running for re-election in the May primary. The crowded field of seven other candidates includes Tim Fee, the incumbent Peyman beat in 2010.

Smith is not seeking another term.

Bill Estep: (606) 678-4655. Twitter: @billestep1

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