The executive committee of the Kentucky Association of Counties is investigating a second escort service charge on a KACo credit card — this time on the card of executive director Bob Arnold.
Arnold denies making the charge and has provided the committee with his phone records to show he did not call any number associated with Campus Cuties, a Lexington-based escort service that bills under the name Calypso Enterprises.
On May 16, 2007, Arnold's card was used to charge $270 for Calypso services. That was during the three-day Spring Conference of Southern County Associations, hosted by KACo at the Embassy Suites Hotel in Lexington.
"I am baffled how it got there," Arnold said in an interview with the Herald-Leader on Thursday. "I have never heard of Calypso 'til you brought it up."
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Previously, the Herald-Leader reported that a $175 Calypso charge appeared on Spencer County Judge-Executive David Jenkins' KACo credit card statement. Jenkins was the group's president in 2008.
Jenkins and KACo are disputing that charge with Central Bank. They also are challenging charges on Jenkins' card to two Louisville strip clubs.
The disputed charges total nearly $900.
Neither man has claimed that his card was stolen, but each says someone else must have made those charges.
Members of KACo's executive committee, however, say they've become increasingly concerned about the expenses.
"Obviously, there's something going on here to have two charges to the same entity in two separate years," said Chris Harris, a Pike County magistrate who is KACo's second vice president. "It certainly doesn't look good for the organization, and we want to find out as much information as possible."
Campus Cuties charges
J. Michael Foster, KACo's president and the Christian County Attorney, said he has asked Central Bank, the credit card issuer, to collect information from the escort service and the two strip clubs.
Foster also asked Jenkins for information pertaining to the charge on Arnold's card, including Jenkins' cell phone records from May 16, 2007.
"He's denied any knowledge of the charge also," Foster said of Jenkins. "I just feel like it's prudent to do some investigating."
Jenkins has not returned phone calls requesting a comment.
Arnold's cell phone bill and room charges at the Embassy Suites Hotel during the May 2007 conference did not show any calls to the number of Campus Cuties, Harris said. KACo officials spent more than $2,650 at the Embassy Suites during the three-day conference. Those charges included a hospitality suite that opened at 9:30 p.m. on the same night that the escort service charge was made on Arnold's card.
Overall, the charges at issue are just a few of the more than $600,000 that the top five KACo employees spent on travel, meals and other expenses over the past two years, the Herald-Leader found in a review of KACo documents requested under the Kentucky Open Records Act.
The organization, which provides lobbying, training and legal services, receives dues from all 120 counties and offers insurance and financing programs.
State Auditor Crit Luallen announced last week that her office will investigate spending and oversight at KACo, as well as at the Kentucky League of Cities.
Foster, KACo's president, implemented some new expense procedures in March and has said KACo's board will look at additional oversight measures after Luallen concludes her audit.
A bank investigation
Before Foster's proposed expense changes in March, Arnold — as the executive director — ultimately signed off on all spending, including his own.
Arnold, who is legally blind, will now route his credit card statements, along with those of other KACo employees, to Tim Sturgill, the association's general counsel.
Arnold said the organization should have been more careful in reviewing the credit cards because he and others weren't aware of the charges to the escort service and strip clubs on Jenkins' card until the Herald-Leader's report.
"I've never heard of Campus Cuties or Calypso ... but it is on my card," Arnold said, Thursday. "I take responsibility that I did not check that card number and see that there was billing on my card that I was unaware of. That was my fault."
Arnold, who has a speaking computer, said he approves expenses by asking employees questions about their bills, but he was not aware of the Calypso charge on his own statement.
KACo has not yet received the results of Central Bank's investigation of the disputed charges.
Steve Kelly, Central Bank's executive vice president of marketing and sales, said bank officials completed the response to KACo's claims and mailed it about 3 p.m. Thursday, although he declined to say what the resolution was.
The bank treated the investigation like any other even though the charges at issue were made well beyond the normal 60-day window for card holders to challenge expenses, Kelly said.
"The signature on the receipts is what we look at first," Kelly said. "If there's still a question about the authenticity of that, we request whatever information (vendors) may have to verify the authenticity."
Arnold said Central Bank officials reported that the Campus Cuties charge was made over the phone.
Calls to Campus Cuties requesting comment haven't been returned.
Strip club policies
Managers of the two Louisville strip clubs whose charges appeared on Jenkins' card said they have strict policies that require patrons who use a credit card to provide a drivers' license.
The Godfather II strip club, where $168 was charged on Jenkins' card in February 2008, has had a machine for several years that takes a photo of the credit card, license and person making the charge, said Scott Lindsay, Godfather's co-owner. He said the establishment doesn't have any records from 2008, but he said it would have been against the club's long-standing policy for anyone to manually enter a credit card number without the actual credit card or an ID.
"I won't even take the card if the gentleman has an ID and it's his wife's card," Lindsay said, adding that the club is trying to avoid refunding money to people who later dispute charges.
A manager at the Thorobred Lounge I in downtown Louisville said that club has similar policies and keeps records for several years, although she declined to provide a copy of the receipt for the charge to Jenkins until the credit card company's investigation is over.
Foster said KACo officers will probably follow up with the clubs to get more information.
"I just feel like it's prudent to do some independent investigation," he said. "So that's what we're trying to do."