A prosecutor moved to dismiss criminal charges against Bell County Clerk Rebecca Blevins and two of her employees on Thursday.
Under the agreement to dismiss the case, Blevins can serve out the remainder of her term, which is over at the end of the year, but can't seek re-election this year or ever hold another elective office.
She had been indicted by a grand jury in December on three counts of abuse of public trust and one count of possessing a forged title to a pickup truck.
The special prosecutor in the case, Assistant Commonwealth's Attorney Ben K. Davis, declined to comment on the reason for seeking the dismissal.
Circuit Judge David A. Tapp, assigned as a special judge in the case, signed an order granting Davis' request to dismiss the charges against Blevins and deputy clerks Kayla Carnes and Connie Watkins.
Blevins' attorney, William Gary Crabtree, said Blevins did not steal money from her office and did not knowingly possess a forged vehicle title.
"I think we would've made an excellent defense" had the case gone to trial, Crabtree said. "I felt confident that the ultimate result would have been in Ms. Blevins' favor."
Watkins' attorney, Ronald Bowling, said there was no evidence she did anything wrong.
Attorney General Jack Conway's office investigated Blevins after audits found financial and accounting problems in her office. The investigation found dozens of cases in which people who bought cars outside Kentucky but registered them in Blevins' office did not get tax refunds they were due, Conway's office said last year.
An investigator in Conway's office, Paul Underwood, described one such case in an affidavit. Underwood said a Bell County man reported that when he bought a truck in Knoxville, the dealer collected $1,256 from him to cover estimated taxes and registration costs, and sent a check for that amount to Blevins' office.
Kentucky and Tennessee have different vehicle-tax rules. Blevins recorded the costs as $837, but did not refund the difference to the man, Underwood said.
There were numerous cases in 2009, 2010 and 2011 in which vehicle buyers did not get refunds and the money was unaccounted for, the investigator said.
Underwood said reports were forged in Blevins' office to cover the suspect transactions.
Audits for 2009 and 2010 identified at least $21,209 that Blevins' office took in, but didn't record or deposit in the bank, according to Auditor Adam Edelen's office.
Blevins was first charged with theft, possession of a forged title, and official misconduct, while Watkins, Carnes and a former deputy clerk also were charged. A district judge dismissed theft and other charges in the case.
In December, however, a grand jury indicted Blevins on new charges. The grand jury indicted Watkins and Carnes for alleged possession of forged titles, but did not indict the former deputy clerk.
Defense attorneys had asked Tapp to suppress evidence from the November search of the clerk's office, arguing Underwood's request for a warrant was not adequate.
They also had sought an order dismissing the case because prosecutors allowed Underwood and an employee of the auditor's office into the grand jury room at the same time, in violation of court rules.
Before the judge ruled on dismissing the case, however, the two sides came to court for a hearing Thursday and said they had worked out an agreement to end the case.
Tapp dismissed the charges without prejudice, which means they could be reinstated. However, Davis said the prosecution has no plan to pursue further action in the case.
The agreement announced Thursday achieves a result acceptable to both sides, Crabtree said.
Blevins faces significant health problems, and that played a role in her decision on resolving the case, Crabtree said.
Crabtree said Blevins has worked in the clerk's office since 1984. She was a deputy for many years, and is finishing her second four-year term as clerk this year.
Paul Conner Cawood, one of seven Republicans seeking the party's nomination for clerk in the May primary, said it seems odd Blevins would be barred from seeking re-election or ever holding elective office again, but allowed to keep her job through the end of the year.
Cawood, whose mother was county clerk for 30 years, said some will question why there were no sanctions for Blevins other than having to leave office after 2014.
"I think it's been a great breach of trust for people," Cawood said of the allegations against Blevins.
By Bill Estep
Bill Estep: (606) 678-4655. Twitter: @billestep1