FRANKFORT — An Adair County banker manipulated land transactions to inflate by 72 percent the value of property he owned in Columbia, just as the Kentucky Transportation Cabinet needed it to build a bypass, according to public records.
Randy Murray divided his land into at least 10 smaller lots, built a moveable house on the center line of the proposed road (later moving it at state expense) and shifted deeds among himself, a company he owned, family and friends.
Each maneuver forced a delay in the state's road planning and increased the land's price. The cabinet ended up paying Murray more than $1.1 million for property that it originally appraised at $673,500.
Murray's sale was legal, cabinet spokesman Chuck Wolfe said last week. In Kentucky, landowners may do what they wish with their properties even after the state announces the route for a road project and begins the condemnation process, Wolfe said.
"The cabinet was well aware of what he was doing but had no practical or legal way to prevent it," Wolfe said. "The only alternative was to cancel a $27 million highway project. Thus, the policy decision was made to settle with Mr. Murray."
The bypass, which runs five miles around Columbia's northern outskirts, opened in 2008. It's now called the Veterans Memorial Highway.
Murray, 44, is charged with perjury in Franklin Circuit Court as a result of claims he made at a hearing where he demanded more money for moving. A plea deal on the table would reduce the felony charge to a misdemeanor and let him serve 90 days of unsupervised probation and pay the state $150,000 in restitution. Other than that payment, he would keep his money from the sale.
"There is no plan by the cabinet to go to court to try to reopen a property settlement case," Wolfe said.
Murray did not return a call seeking comment. He told Judge Phillip Shepherd in January that he lost his job at the Bank of Columbia after his indictment last year, so he cannot immediately afford to pay the restitution. His next hearing is set for April 13.
If the Transportation Cabinet feels outfoxed, it has only itself to blame, said Murray's lawyer, Mark Stanziano.
"This is the way the world works," Stanziano said. "They're mad that Randy Murray came out on top."
"They may have paid him too much. Or they may not have paid him too much. All I can say for sure is, if the state can't get a better deal than it did, it needs to change the rules of the game or find better people to play the game for it," Stanziano said.
Most of Murray's land shuffling occurred six to eight years ago. That it's coming to light now is due to the cabinet's Office of Inspector General, which investigated Murray for several years, pursuing tips from the cabinet's district office in Somerset, which supervised the bypass construction.
After the cabinet's lawyers in Frankfort told the inspector general that they did not consider Murray's land sale to be fraudulent, inspectors built a perjury case against him.
In a Jan. 13 report, inspectors said Murray lied at a 2008 hearing about $310,000 that he claimed to have paid his 18-year-old step-son, Brandon Bishop, for a parcel of land. The youth reported no such payment on his taxes, and no check, deed, mortgage or bank record exists to verify the property sale as legitimate, inspectors said.
The ease with which Murray flummoxed the Transportation Cabinet is "disheartening" given the millions of dollars every year that the state spends buying land from people, said Franklin Commonwealth's Attorney Larry Cleveland, who is prosecuting Murray. Cleveland said he credits the inspector general's office and the district office in Somerset for forcing the case into the sunlight, despite the lack of interest of their superiors in Frankfort.
"The cabinet would have been glad to drop this whole thing and move on if it had had a choice," Cleveland said. "I think the cabinet just got frustrated and wanted to get the road built and get out of Adair County as fast as it could."
Wolfe, the cabinet spokesman, said the cabinet deserves some credit because its Office of Inspector General uncovered Murray's actions after speaking to the chief district engineer in Somerset.
Last month, Democratic Gov. Steve Beshear fired the cabinet's inspector general, David Ray, without explanation. Ray has declined to discuss his firing. As a non-merit appointee, Ray served at the pleasure of the governor.
'Not entirely honest'
In 2000, the Transportation Cabinet held a public hearing to announce its plans to build a bypass around Columbia, a town of 4,452 people.
Dozens of people owned land along the proposed route, including Murray, a longtime compliance officer at the local bank. As is customary in condemnation, the cabinet had each parcel of land appraised to determine its fair market value. The cabinet then made each owner an offer, with additional money available for relocation expenses if the owner's home would be lost.
Appraisers said Murray's land was worth $673,500. He didn't accept it. Instead, he got to work.
Records show that he divided his land, made sundry improvements and sold and bought parcels among family and friends, although the sales weren't always officially recorded at the county courthouse.
As time passed, the legal value of his land steadily rose.
"Murray exploited the (cabinet's) acquisitions by increasing the value of his properties by way of sham conveyances and mortgages to accomplices for the purpose of inflating the values," investigator Chuck Hines of the Office of Inspector General wrote in his Jan. 13 report.
"In an interview with investigators, one accomplice stated she was paid $1,000 by R. Murray to sign several deeds but never knew she 'owned' any property," Hines wrote. "Other accomplices told investigators they held mortgages but never paid, nor were they asked to pay on them."
In a 2008 email, the cabinet's contract appraiser, Steve Raleigh, told cabinet officials that 16 appraisals that he performed in 2005 and 2006 were for properties "owned by Mr. Randy Murray or ... formerly owned by him and transferred during the course of the project either to his family members or to apparent business associates.
"During the process of interviews, inspections, data research, analysis and valuation of these properties, a number of circumstances came to my attention that made me suspect some activities that are not entirely honest," Raleigh wrote.
Easier to pay than fight
Stanziano, Murray's lawyer, said his client did not break the law in his land deals. In fact, he studied the laws related to land condemnation for highway construction, learning exactly how far he could go and what he could demand from the state, Stanziano said.
At the 2008 administrative hearing that subsequently led to his perjury charge, transcripts show Murray citing at length the rights afforded him under Part 24 of the Uniform Relocation Assistance and Real Property Acquisition Act of 1970.
"Randy Murray knew the rules of the game better than a casino dealer does," Stanziano said.
The cabinet's lawyers, negotiating with Murray, recognized what he was doing, records show. But they also felt pressured to finish the bypass. In 2006, under Republican Gov. Ernie Fletcher, they paid him $1,157,900.
Cabinet attorney Jesse Rowe said in a Jan. 29, 2009, memo to cabinet officials that Murray's "continued manipulation" of the condemnation process forced multiple plan revisions and delayed construction.
The cabinet concluded that it was easier to pay than to fight, Rowe wrote.
"I don't get extra credit for filing lawsuits if I can settle acquisitions without litigation," Rowe wrote. "I was told (U.S. Rep.) Hal Rogers wanted this project cleared for construction, and the Department of Highways met his goal to my knowledge."
Although the bypass is not in his congressional district, Rogers, R-Somerset, did support it, Rogers spokeswoman Danielle Smoot said.
"Congressman Rogers has supported numerous projects across Kentucky over the years, including the Veterans Memorial Highway, to benefit the southern portion of the state," Smoot said.